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美的集团:2021年第三季度报告(英文版)2021-10-30  

                                                                          Interim Report for the Third Quarter 2021 of Midea Group Co., Ltd.



 Stock code: 000333            Stock abbreviation: Midea Group               Announcement No.: 2021-108


                                       Midea Group Co., Ltd.

                        Interim Report for the Third Quarter 2021

Midea Group Co., Ltd. (hereinafter referred to as the “Company”) and all the members of the

Company’s Board of Directors have warranted that the information given in this Report is true, accurate

and complete, as well as free of any false record, misleading statement or material omission.


Important Reminders:
1. The Board of Directors, the Supervisory Committee as well as all the directors,
supervisors and senior management staff of 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 truthfulness, accuracy and completeness of the
information given in this Report.
2. The legal representative, principal in charge of accounting and head of the accounting
department of the Company have represented and warranted that the financial information
in this Report is true, accurate and complete.
3. Is this Report audited by a CPAs firm?
□ Yes √ No
This report has been prepared in both Chinese and English. Should there be any
discrepancies or misunderstandings between the two versions, the Chinese version shall
prevail.

1. Key financial information

1.1 Major accounting data and financial indicators

Does the Company adjust retrospectively or restate accounting data of previous years?
□ Yes √ No
                                     July-September                         January-
                                                       YoY Change (%)                         YoY Change (%)
                                          2021                           September 2021
Operating revenue (RMB'000)               87,532,404           12.66%         261,341,969                  20.57%
Net profit attributable to
shareholders of the Company                8,446,204             4.40%         23,455,250                   6.53%
(RMB'000)
Net profit attributable to
shareholders of the Company before
                                           7,928,026           10.75%          22,564,537                   9.45%
non-recurring gains and losses
(RMB'000)



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                                                             Interim Report for the Third Quarter 2021 of Midea Group Co., Ltd.



Net cash flows from operating
                                                ——                  ——                 27,896,744                    11.52%
activities (RMB'000)
Basic earnings per share
                                                        1.24                 6.90%               3.41                    7.23%
(RMB/share)
Diluted earnings per share
                                                        1.23                 6.03%               3.39                    6.94%
(RMB/share)
Weighted average ROE (%)                               7.30%                 -0.09%           19.51%                     -0.84%

                                             30 September 2021               31 December 2020              Change (%)

Total assets (RMB'000)                                       376,333,770               360,382,603                       4.43%
Total equity attributable to
shareholders of the Company                                  118,530,537               117,516,260                       0.86%
(RMB'000)



1.2 Non-recurring gains and losses

√ Applicable □ N/A
                                                                                                               Unit: RMB’000
                                                                                       January-September
                             Item                            July-September 2021                                  Note
                                                                                             2021
Gains and losses on disposal of non-current assets                            77,247                  60,162
Except for effectively hedging business related to
normal business operations of the Company, gains
and losses arising from the change in the fair value of
financial assets held for trading, derivative financial
assets, financial liabilities held for trading, derivative                   -21,422             -123,141
financial liabilities and other non-current financial
assets, as well as investment gains and losses
produced from the disposal of the aforesaid financial
assets and liabilities
Other                                                                        693,800            1,238,713


Less: Corporate income tax                                                   219,783                 284,055
        Minority interests (after tax)                                        11,664                    966
Total                                                                        518,178                 890,713        --
Other items that meet the definition of non-recurring gain/loss:
□ Applicable √ N/A
No such cases for the Reporting Period.
Explain the reasons if the Company classifies any non-recurring gain/loss item mentioned in the
 as a recurring gain/loss item
□ Applicable √ N/A
No such cases for the Reporting Period.


1.3 Major changes of main items in financial statements and financial indicators, as well as the
reasons for the changes

√ Applicable □ N/A




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                                                         Interim Report for the Third Quarter 2021 of Midea Group Co., Ltd.



                                                                                                           Unit: RMB’000
                                      30 September    31 December
    Financial statement items         2021/January-   2020/January-     Change
                                                                                            Reasons for the changes
         (consolidated)                September       September         (%)
                                          2021            2020
                                                                                    Mainly due to the decreased term
Cash at bank and on hand                55,870,709      81,210,482       -31.20%
                                                                                    deposits
                                                                                    Mainly due to the decreased structured
Financial assets held for trading       11,219,571      28,239,601       -60.27%
                                                                                    deposits
                                                                                    Mainly due to the changes in the fair
Derivative financial assets                183,340         420,494       -56.40%
                                                                                    value of derivative financial instruments
                                                                                    Mainly due to the increased advances
Advances to suppliers                    3,621,966       2,763,710        31.05%
                                                                                    to material suppliers
                                                                                    Mainly due to the increased monetary
Other current assets                    65,891,409      33,079,918        99.19%
                                                                                    investment products
                                                                                    Mainly due to the transfer to the current
Other debt investments                   11,511,716     21,456,155       -46.35%
                                                                                    portion of non-current assets
Other non-current financial                                                         Mainly due to the increased equity
                                         5,325,750       3,360,849        58.46%
assets                                                                              investments
                                                                                    Mainly due to the increased business
Investment properties                      887,837         405,559       118.92%
                                                                                    combinations
                                                                                    Mainly due to the increased
Construction in progress                 2,148,934       1,477,302        45.46%
                                                                                    construction in progress
Customer deposits and deposits                                                      Mainly due to the changes in the
from banks and other financial              26,783           87,535      -69.40%    business operations of Midea Group
institutions                                                                        Finance
                                                                                    Mainly due to the changes in the fair
Derivative financial liabilities            82,478         161,225       -48.84%
                                                                                    value of derivative financial instruments
Current portion of non-current                                                      Mainly due to the repayment of
                                         2,017,084       6,310,181       -68.03%
liabilities                                                                         borrowings
                                                                                    Mainly due to the increased government
Deferred income                          1,103,615         779,729        41.54%
                                                                                    subsidies received
                                                                                    Mainly due to the increased share
Treasury stock                          14,188,847       6,094,347       132.82%
                                                                                    repurchase
                                                                                    Mainly due to the acquisition of Beijing
Minority interests                       9,774,931       6,720,840        45.44%
                                                                                    Wandong Medical Technology Co., Ltd.
                                                                                    Mainly due to the changes in the
Interest income                          1,600,306         992,158        61.30%    business operations of Midea Group
                                                                                    Finance
Research and development                                                            Mainly due to the increased research
                                         8,764,926       6,715,806        30.51%
expenses                                                                            and development investments
                                                                                    Mainly due to the increased interest
Financial expenses                       -3,349,461      -1,462,390     -129.04%
                                                                                    income
Gains/(losses) on changes in fair                                                   Mainly due to the changes in the fair
                                          -924,798       1,123,644      -182.30%
value                                                                               value of financial assets
                                                                                    Mainly due to the decreased losses on
Credit impairment losses                  -204,276         -615,091       66.79%
                                                                                    bad debts of accounts receivable
                                                                                    Mainly due to the increased gains on
Losses on disposal of assets                57,969          -36,917      257.03%
                                                                                    disposal of non-current assets
                                                                                    Mainly due to the increased other
Non-operating income                       406,215         223,576        81.69%
                                                                                    income
Net profit attributable to minority                                                 Mainly due to the increased profits of
                                           237,578         175,702        35.22%
interests                                                                           non-wholly-owned subsidiaries
Net cash flows from investing                                                       Mainly due to the increased cash
                                         6,680,656      -32,098,571      120.81%
activities                                                                          received from disposal of investments

                                        -27,666,525      8,101,376      -441.50%    Mainly due to the decreased cash
Net cash flows from financing
                                                                                    received from issuance of short-term



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                                                            Interim Report for the Third Quarter 2021 of Midea Group Co., Ltd.



activities                                                                               financing bonds

Net increase in cash and cash                                                            Mainly due to the increased net cash
                                          6,662,307            870,074        665.72%
equivalents                                                                              flows from investing activities



 2. Shareholder information

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

                                                                                                                     Unit: share
                                                                                Total number of preference
  Total number of ordinary shareholders at                                      shareholders with resumed
                                                            455,639                                                  0
  the period-end                                                                voting rights at the
                                                                                period-end (if any)
                                                       Top ten shareholders
                                                             Sharehol                                    Pledged or frozen
                                                                                           Number of           shares
                                               Nature of       ding        Number of
             Name of shareholder                                                            restricted
                                              shareholder    percenta      shares held
                                                                                           shares held Status of Number of
                                                              ge (%)                                    shares      shares
                                            Domestic
  Midea Holding Co., Ltd.                non-state-owned         31.06     2,169,178,713                Pledged 100,000,000
                                           corporation
  Hong Kong Securities Clearing              Foreign
                                                                 18.61     1,299,563,430                     -                -
  Company Limited                          corporation
                                            Domestic
  China Securities Finance Co., Ltd.     non-state-owned          2.84       198,145,134                     -                -
                                           corporation
                                               Domestic
  Fang Hongbo                                                     1.68       116,990,492 87,742,869          -                -
                                               individual
  Canada Pension Plan Investment
                                                Foreign
  Board- own funds (stock                                        1.49       103,913,897                     -                -
                                              corporation
  exchange)
  Central Huijin Asset Management             State-owned
                                                                  1.29        90,169,354                     -                -
  Ltd.                                        corporation
                                               Domestic
  Huang Jian                                                      1.23        86,140,000                     -                -
                                               individual
                                                Foreign
  Li Jianwei                                                      0.72                                       -                -
                                               individual                     50,100,000
                                               Domestic
  Huang Xiaoxiang                                                 0.56        39,257,832                Pledged   14,779,556
                                               individual
                                               Domestic
  Yuan Liqun                                                      0.54        37,888,882                     -                -
                                               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.                           2,169,178,713                        2,169,178,713
                                                                                            ordinary share
                                                                                           RMB-denominated
     Hong Kong Securities Clearing Company Limited                    1,299,563,430                        1,299,563,430
                                                                                            ordinary share
                                                                                           RMB-denominated
               China Securities Finance Co., Ltd.                     198,145,134                           198,145,134
                                                                                            ordinary share
  Canada Pension Plan Investment Board- own funds                                         RMB-denominated
                                                                      103,913,897                           103,913,897
                  (stock exchange)                                                          ordinary share
                                                                                           RMB-denominated
             Central Huijin Asset Management Ltd.                      90,169,354                            90,169,354
                                                                                            ordinary share



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                                                           Interim Report for the Third Quarter 2021 of Midea Group Co., Ltd.



                                                                                         RMB-denominated
                         Huang Jian                                 86,140,000                                   86,140,000
                                                                                          ordinary share
                                                                                         RMB-denominated
                           Li Jianwei                               50,100,000                                   50,100,000
                                                                                          ordinary share
                                                                                         RMB-denominated
                      Huang Xiaoxiang                               39,257,832                                   39,257,832
                                                                                          ordinary share
                                                                                         RMB-denominated
                         Yuan Liqun                                 37,888,882                                   37,888,882
                                                                                          ordinary share
                                                                                         RMB-denominated
                 Merrill Lynch International                        37,191,573                                   37,191,573
                                                                                          ordinary share
Explanation of related relationship or/and
acting-in-concert parties among the above-mentioned N/A
shareholders
                                                            The Company’s shareholder Huang Xiaoxiang holds 28,679,832
                                                            shares in the Company through his common securities account
                                                            and 10,578,000 shares in the Company through his account of
                                                            collateral securities for margin trading, representing a total
                                                            holding of 39,257,832 shares in the Company.
Top ten non-restricted ordinary shareholders taking
part in securities margin trading
                                                            The Company’s shareholder Yuan Liqun holds 705,000 shares
                                                            in the Company through her common securities account and
                                                            37,183,882 shares in the Company through her account of
                                                            collateral securities for margin trading, representing a total
                                                            holding of 37,888,882 shares in the Company.
Note: 116,828,832 ordinary shares (or 1.67% of the Company’s total share capital) were held in the special account for
repurchased shares of Midea Group Co., Ltd. at the end of 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


3. Other significant events

□ Applicable √ N/A


4. Financial statements

4.1 Financial statements

4.1.1 Consolidated and Company balance sheets

                                        Consolidated and Company Balance Sheets


Prepared by Midea Group Co., Ltd.                           As at 30 September 2021                        Unit: RMB’000
                                               30 September 2021   31 December 2020    30 September 2021     31 December 2020
                  ASSETS
                                                 Consolidated        Consolidated          Company               Company
Current assets
   Cash at bank and on hand                           55,870,709         81,210,482           42,060,082            49,240,180
   Financial assets held for trading                  11,219,571         28,239,601            6,405,484            16,614,658
   Derivative financial assets                           183,340            420,494                    -                      -
   Notes receivable                                    6,044,674           5,304,510                   -                      -
   Accounts receivable                                25,984,593         22,978,363                    -                      -
   Receivables financing                              15,622,773         13,901,856                    -                      -




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                                                                Interim Report for the Third Quarter 2021 of Midea Group Co., Ltd.



    Advances to suppliers                                   3,621,966            2,763,710              76,720               45,306
    Contract assets                                         4,098,681            3,236,848                   -                     -
    Loans and advances                                     20,228,082           16,469,069                   -                     -
    Other receivables                                       2,968,794            2,973,945          32,579,418            28,318,670
    Inventories                                            33,198,146           31,076,529                   -                     -
    Current portion of non-current assets                  14,204,709                    -          13,524,924                     -
    Other current assets                                   65,891,409           33,079,918          57,116,390            20,533,745
Total current assets                                     259,137,447           241,655,325         151,763,018           114,752,559
Non-current assets
    Other debt investments                                 11,511,716           21,456,155           9,769,859            20,064,155
    Long-term receivables                                   1,102,818             981,623                    -                     -
    Loans and advances                                       942,420             1,113,501                   -                     -
    Long-term equity investments                            3,762,188            2,901,337          63,318,896            54,991,161
    Investments in other equity instruments                    43,866               46,651                   -                     -
    Other non-current financial assets                      5,325,750            3,360,849             695,688               80,937
    Investment properties                                    887,837              405,559              450,200              476,839
    Fixed assets                                           22,415,206           22,239,214             659,683              749,835
    Construction in progress                                2,148,934            1,477,302             679,537              204,304
    Right-of-use assets                                     2,129,219                                   12,964
    Intangible assets                                      17,651,834           15,422,393             672,592              684,997
    Goodwill                                               28,857,740           29,557,218                   -                     -
    Long-term prepaid expenses                              1,288,533            1,300,962              77,418               97,078
    Deferred tax assets                                     7,680,751            7,208,635             286,823              287,360
    Other non-current assets                               11,447,511           11,255,879          10,535,554            10,141,031
Total non-current assets                                 117,196,323           118,727,278          87,159,214            87,777,697
TOTAL ASSETS                                             376,333,770           360,382,603         238,922,232           202,530,256


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



                                       Consolidated and Company Balance Sheets (Cont’d)


Prepared by Midea Group Co., Ltd.                                As at 30 September 2021                         Unit: RMB’000
                                                   30 September 2021    31 December 2020     30 September 2021     31 December 2020
LIABILITIES AND SHAREHOLDERS’ EQUITY
                                                      Consolidated        Consolidated           Company               Company
Current liabilities
    Short-term borrowings                                   8,179,959            9,943,929                   -              799,314
    Borrowings from the Central Bank                          19,841                     -                   -                     -
    Customer deposits and deposits from
                                                              26,783               87,535                    -                     -
      banks and other financial institutions
    Derivative financial liabilities                          82,478              161,225                    -                     -
    Notes payable                                         32,082,602            28,249,939                   -                     -
    Accounts payable                                      61,601,702            53,930,261                   -                     -
    Contract liabilities                                  20,326,814            18,400,922                   -                     -
    Employee benefits payable                               6,323,912            6,954,822             557,932              562,954
    Taxes payable                                           4,333,343            5,758,058             874,220             1,326,219
    Other payables                                          4,553,324            4,501,391         172,317,366           123,120,354
    Current portion of non-current liabilities              2,017,084            6,310,181               8,127             4,000,000
    Other current liabilities                             49,188,675            49,852,239               2,172             3,048,794




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                                                              Interim Report for the Third Quarter 2021 of Midea Group Co., Ltd.



Total current liabilities                               188,736,517                184,150,502              173,759,817           132,857,635
Non-current liabilities
    Long-term borrowings                                 48,636,926                 42,827,287               12,600,000             5,800,000
    Lease liabilities                                     1,417,967                                               4,912
    Long-term payables                                        1,115                    13,260                          -                     -
    Provisions                                              353,284                   298,110                          -                     -
    Deferred income                                       1,103,615                   779,729                          -                     -
    Long-term employee benefits payable                   1,716,207                  2,159,675                         -                     -
    Deferred tax liabilities                              5,373,260                  5,223,954                   70,527                67,792
    Other non-current liabilities                           689,411                   692,986                          -                     -
Total non-current liabilities                            59,291,785                 51,995,001               12,675,439             5,867,792
Total liabilities                                       248,028,302                236,145,503              186,435,256           138,725,427
Shareholders’ equity
    Share capital                                         6,984,237                  7,029,976                6,984,237             7,029,976
    Capital surplus                                      19,386,312                 22,488,105               26,220,162            29,123,547
    Less: Treasury stock                                (14,188,847)               (6,094,347)              (14,188,847)           (6,094,347)
    Other comprehensive income                           (1,691,296)               (1,549,003)                    2,917              (16,009)
    General risk reserve                                    587,984                   587,984                          -                     -
    Special reserve                                          14,842                    12,730                          -                     -
    Surplus reserve                                       7,966,362                  7,966,362                7,966,362             7,966,362
    Undistributed profits                                99,470,943                 87,074,453               25,502,145            25,795,300
    Total equity attributable to shareholders of
                                                        118,530,537                117,516,260               52,486,976            63,804,829
       the Company
    Minority interests                                    9,774,931                  6,720,840                         -                     -
Total shareholders’ equity                             128,305,468                124,237,100               52,486,976            63,804,829
TOTAL LIABILITIES AND SHAREHOLDERS’
                                                        376,333,770                360,382,603              238,922,232           202,530,256
   EQUITY


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




4.1.2 Consolidated and Company income statements for the nine months ended 30 September
2021

                                           Consolidated and Company Income Statements


Prepared by Midea Group Co., Ltd.                     For the nine months ended 30 September 2021                          Unit: RMB’000
                                                               For the nine             For the nine           For the nine        For the nine
                                                             months ended 30          months ended 30        months ended 30     months ended 30
                               Item                          September 2021           September 2020         September 2021      September 2020
                                                               Consolidated            Consolidated              Company            Company
Total revenue                                                     262,942,589             217,753,150               1,381,918          1,336,559
   Including: Operating revenue                                   261,341,969             216,760,786               1,381,918          1,336,559
              Interest income                                          1,600,306                 992,158                     -                   -
              Fee and commission income                                     314                      206                     -                   -
Total operating cost                                            (237,666,842)            (194,931,822)                865,983            620,765
   Including: Cost of sales                                     (199,138,296)            (161,943,461)                (26,639)           (39,989)
              Interest costs                                            (76,088)                 (95,096)                    -                   -
              Fee and commission expenses                                (5,209)                  (9,243)                    -                   -
              Taxes and surcharges                                 (1,172,144)             (1,152,606)                (31,835)           (27,730)




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                                                                  Interim Report for the Third Quarter 2021 of Midea Group Co., Ltd.



               Selling and distribution expenses                     (24,405,142)     (20,179,953)                 -                 -
               General and administrative expenses                    (7,454,498)      (6,298,047)        (701,472)         (384,608)
               Research and development expenses                      (8,764,926)      (6,715,806)                 -                 -
               Financial income                                        3,349,461        1,462,390         1,625,929         1,073,092

               Including: Interest expenses                             (989,334)        (954,362)       (1,671,992)      (1,378,594)

                           Interest income                             3,842,498        2,664,883         3,318,208         2,467,387

       Add:                                                            1,043,294        1,098,444           102,686          124,619
               Investment income                                       1,999,228        1,646,879         8,764,498       10,941,133
               Including: Investment income from associates
                                                                         410,522          390,672           195,952          185,464
                            and joint ventures
               Gains/(Losses) on changes in fair value                  (924,798)       1,123,644         (239,518)          424,720
               Asset impairment losses                                  (171,668)        (162,323)                 -                 -
               Credit impairment losses                                 (204,276)        (615,091)            (492)           (5,790)
               Losses on disposal of assets                               57,969          (36,917)            (891)                43
Operating profit                                                      27,075,496       25,875,964        10,874,184       13,442,049
    Add:                                                                 406,215          223,576            31,299            10,196
    Less: Non-operating expenses                                        (139,501)        (151,595)         (48,782)          (91,306)
Total profit                                                          27,342,210       25,947,945        10,856,701       13,360,939
    Less: Income tax expenses                                         (3,649,382)      (3,753,942)         (88,176)          (57,984)
Net profit                                                            23,692,828       22,194,003        10,768,525       13,302,955
   (1) Classified by continuity of operations
      Net profit from continuing operations                           23,692,828       22,194,003        10,768,525       13,302,955
      Net profit from discontinued operations                                     -              -                 -                 -
   (2) Classified by ownership of the equity
      Attributable to shareholders of the Company                     23,455,250       22,018,301        10,768,525       13,302,955
      Minority interests                                                 237,578          175,702                  -                 -
Other comprehensive income, net of tax                                  (180,401)        (802,684)           18,926           (7,965)
    Other comprehensive income attributable to equity
                                                                        (139,373)        (492,675)           18,926           (7,965)
        owners of the Company, net of tax
    (1) Other comprehensive income items which will not be
                                                                         131,437          (90,143)                 -                 -
          reclassified subsequently to profit or loss
          1) Changes arising from remeasurement of
                                                                         129,967          (90,143)                 -                 -
                defined benefit plan
          2) Changes in fair value of investments in other
                                                                           1,470                 -                 -                 -
                equity instruments
    (2) Other comprehensive income items which will be
                                                                        (270,810)        (402,532)           18,926           (7,965)
          reclassified subsequently to profit or loss
          1) Other comprehensive income that will be
                transferred subsequently to profit or loss                15,944          (12,495)           18,926           (7,965)
                under the equity method
             2) Cash flow hedging reserve                               (199,762)         411,163                  -                 -
          3) Differences on translation of foreign currency
                                                                         (86,992)        (801,200)                 -                 -
                financial statements
    Other comprehensive income attributable to minority
                                                                         (41,028)        (310,009)                 -                 -
       shareholders, net of tax
Total comprehensive income                                            23,512,427       21,391,319        10,787,451       13,294,990
    Attributable to equity owners of the Company                      23,315,877       21,525,626        10,787,451       13,294,990
    Attributable to minority interests                                   196,550         (134,307)                 -                 -
Earnings per share:
    (1) Basic earnings per share                                            3.41             3.18     Not applicable    Not applicable
    (2) Diluted earnings per share                                          3.39             3.17     Not applicable    Not applicable


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




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                                                                 Interim Report for the Third Quarter 2021 of Midea Group Co., Ltd.




4.1.3 Consolidated and Company cash flow statements for the nine months ended 30 September
2021

                                       Consolidated and Company Cash Flow Statements


Prepared by Midea Group Co., Ltd.                         For the nine months ended 30 September 2021                 Unit: RMB’000
                                                              For the nine       For the nine        For the nine        For the nine
                                                            months ended 30    months ended 30     months ended 30     months ended 30
                          Item                              September 2021     September 2020      September 2021      September 2020
                                                              Consolidated      Consolidated          Company             Company
1. Cash flows from operating activities
   Cash received from sales of goods or rendering of
                                                                227,937,641        182,997,506                    -                    -
     services
   Net decrease in deposits with the Central Bank,
                                                                   1,347,924            61,267                    -                    -
     banks and other financial institutions
   Net increase in borrowings from the Central Bank                  19,841                    -                  -                    -
   Cash received from interest, fee and commission                 1,536,829         1,011,706                    -                    -
   Refund of taxes and surcharges                                  6,789,422         4,574,603                    -                    -
   Cash received relating to other operating activities            4,897,712         4,047,145          51,113,226           28,363,419
     Sub-total of cash inflows                                  242,529,369        192,692,227          51,113,226           28,363,419
   Cash paid for goods and services                            (149,209,825)      (105,250,492)                   -                    -
   Net increase in loans and advances                            (3,676,530)        (5,257,382)                   -                    -
   Net decrease in customer deposits and deposits
                                                                    (60,752)            (6,424)                   -                    -
     from banks and other financial institutions
   Cash paid for interest, fee and commission                       (82,085)          (105,503)                   -                    -
   Cash paid to and on behalf of employees                      (24,558,796)       (21,507,371)            (12,798)            (19,492)
   Payments of taxes and surcharges                             (11,392,788)       (10,611,998)          (437,678)            (322,104)
   Cash paid relating to other operating activities             (25,651,849)       (24,938,422)         (6,070,874)         (5,651,559)
     Sub-total of cash outflows                                (214,632,625)      (167,677,592)         (6,521,350)         (5,993,155)
   Net cash flows from operating activities                      27,896,744         25,014,635          44,591,876           22,370,264
2. Cash flows from investing activities
   Cash received from disposal of investments                   104,890,385         82,922,131          43,296,962           66,110,300
   Cash received from returns on investments                       4,360,871         3,554,642          11,345,718           12,156,396
   Net cash received from disposal of fixed assets,
                                                                    236,010             47,157                  86                  255
     intangible assets and other long-term assets
   Net cash received from disposal of subsidiaries and
                                                                    182,133             43,344                    -                    -
     other business units
   Cash received relating to other investing activities              10,251                    -                  -                    -
     Sub-total of cash inflows                                  109,679,650         86,567,274          54,642,766           78,266,951
   Cash paid to acquire fixed assets, intangible assets
                                                                 (5,875,219)        (3,206,463)          (573,214)            (166,141)
     and other long-term assets

   Cash paid to acquire investments                             (95,094,863)      (114,914,846)        (60,960,461)        (89,827,000)
   Net cash paid to acquire subsidiaries and other
                                                                 (2,028,912)          (544,536)                   -                    -
     business units
     Sub-total of cash outflows                                (102,998,997)      (118,665,845)        (61,533,675)        (89,993,141)
   Net cash flows from investing activities                        6,680,656       (32,098,571)         (6,890,909)        (11,726,190)
3. Cash flows from financing activities
   Cash received from capital contributions                        1,474,377         2,351,094           1,431,805            2,351,094
   Including: Cash received from capital contributions
                by minority shareholders of                          42,572                    -                  -                    -
                subsidiaries
   Cash received from borrowings                                 13,864,476         12,222,629           6,800,000             799,314
   Cash received from issuance of short-term
                                                                   2,999,629        21,998,500           2,999,629           21,998,500
     financing bonds




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                                                                Interim Report for the Third Quarter 2021 of Midea Group Co., Ltd.



   Cash received relating to other financing activities             51,159                 13,276                    -                       -
     Sub-total of cash inflows                                  18,389,641          36,585,499              11,231,434             25,148,908
   Cash repayments of borrowings                               (12,723,723)         (5,068,760)         (4,799,314)                 (350,064)
   Cash paid for repayment of short-term financing
                                                                (6,000,000)         (9,000,000)         (6,000,000)                (9,000,000)
      bonds
   Cash payments for interest expenses and
                                                               (12,415,831)        (12,277,952)        (12,871,936)               (12,348,759)
      distribution of dividends or profits
   Including: Cash payments for dividends or profit to
                                                                  (289,414)          (173,752)                       -                       -
                 minority shareholders of subsidiaries
   Cash payments relating to other financing activities        (14,916,612)         (2,137,411)        (13,807,786)                (2,024,942)
     Sub-total of cash outflows                                (46,056,166)        (28,484,123)        (37,479,036)               (23,723,765)
   Net cash flows from financing activities                    (27,666,525)          8,101,376         (26,247,602)                 1,425,143
4. Effect of foreign exchange rate changes on
   cash                                                           (248,568)          (147,366)                       -                       -
      and cash equivalents
5. Net increase in cash and cash equivalents                     6,662,307             870,074              11,453,365             12,069,217
   Add: Cash and cash equivalents at the beginning of
                                                                23,548,508          30,441,760              16,595,063             12,408,650
          the period
6. Cash and cash equivalents at the end of the
                                                                30,210,815          31,311,834              28,048,428             24,477,867
   period


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




4.2 Adjustments to the financial statements

4.2.1 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


                                             Consolidated and Company Balance Sheets


Prepared by Midea Group Co., Ltd.                                                                                        Unit: RMB’000
                                                             Consolidated                                        Company
                 ASSETS
                                              2020-12-31      2021-01-01      Adjustment       2020-12-31        2021-01-01          Adjustment
Current assets

    Cash at bank and on hand                    81,210,482     81,210,482                  -    49,240,180         49,240,180                     -
    Financial assets held for trading           28,239,601     28,239,601                  -    16,614,658         16,614,658                     -
    Derivative financial assets                    420,494       420,494                   -                -                 -                   -
    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                     -




                                                                                                                                                 10
                                                                 Interim Report for the Third Quarter 2021 of Midea Group Co., Ltd.



    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                -                -                -            -
    Long-term equity investments               2,901,337         2,901,337                -    54,991,161        54,991,161              -
    Investments in other equity
                                                  46,651            46,651                -                -                -            -
       instruments
    Other non-current financial assets         3,360,849         3,360,849                -       80,937            80,937               -
    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 progress                   1,477,302         1,477,302                -      204,304           204,304               -
    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 expenses                 1,300,962         1,300,962                -       97,078            97,078               -
    Deferred tax assets                        7,208,635         7,208,635                -      287,360           287,360               -
    Other non-current assets                  11,255,879        11,255,879                -    10,141,031        10,141,031              -
Total non-current assets                     118,727,278       120,856,446     2,129,168       87,777,697        87,788,037         10,340

TOTAL ASSETS                                 360,382,603       362,511,771     2,129,168      202,530,256      202,540,596          10,340




                                         Consolidated and Company Balance Sheets (Cont’d)


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

 LIABILITIES AND SHAREHOLDERS’                               Consolidated                                     Company
              EQUITY                         2020-12-31        2021-01-01    Adjustment       2020-12-31       2021-01-01       Adjustment
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




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                                                     Interim Report for the Third Quarter 2021 of Midea Group Co., Ltd.



    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             -
    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              -             -               -            -
    Special 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.




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                                             Interim Report for the Third Quarter 2021 of Midea Group Co., Ltd.



4.2.2 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


4.3 Auditor’s report

Is this Report audited by a CPAs firm?
□ Yes √ No
This Report is not audited by a CPAs firm.




                                                  The Board of Directors of Midea Group Co., Ltd.
                                                                         30 October 2021




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