WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 I. Important Notes The Board of Directors, the Supervisory Committee as well as directors, supervisors and senior management of Wuxi Little Swan Company Limited (hereinafter referred to as “the Company”) warrant that this report does not contain any false or misleading statements or omit any material facts, and will collectively and individually accept the responsibilities for the truthfulness, accuracy and completeness of the whole contents of this report. All directors attended the board session for reviewing this report. Mr. Fang Hongbo and Mr. Chai Xinjian, company principals, Ms. Xiao Li, head of the accounting work, and Mr. Zhong Fangliu, head of the accounting division (head of accounting), hereby declare that the financial report enclosed in this semi-annual report is true and complete. English Translation for Reference Only. Should there be any discrepancy between the two versions, the Chinese version shall prevail. II. Company Profile (I)Basic information A-share code 000418 B-share code 200418 A-share abbreviation XTEA B-share abbreviation XTEB Stock exchange listed with Shenzhen Stock Exchange Legal Chinese name of the 无锡小天鹅股份有限公司 Company Abbr. of the legal Chinese name of the Company Legal English name of the Wuxi Little Swan Company Limited Company Abbr. of the legal English name of the Company Legal representative of the Mr. Fang Hongbo Company Registered address No. 18, Changjiang Road S., National Hi-tech Development Zone, Wuxi Postal code for the registered 214028 address Office address No. 18, Changjiang Road S., National Hi-tech Development Zone, Wuxi Postal code for the office 214028 address Internet website of the http://www.littleswan.com Company Email address IR_littleswan@littleswan.com.cn (II)For contact Company Secretary Securities Affairs Representative Name Ms. Zhou Sixiu Ms. Tian Lin No. 18, Changjiang Road S., National Hi-tech No. 18, Changjiang Road S., National Hi-tech Contact address Development Zone, Wuxi Development Zone, Wuxi Tel. 0510-81082320 0510-81082377 Fax 0510-83720879 0510-83720879 E-mail IR_littleswan@littleswan.com.cn tianlin@littleswan.com.cn (III)About information disclosure and where the semi-annual report is placed Newspapers designated by the Company for Securities Times, Hongkong Ta Kung Pao information disclosure Internet website designated by CSRC for http://www.cninfo.com.cn disclosing the semi-annual report Where the semi-annual report is placed Securities Department of the Company III. Financial and Business Highlights (I)Major accounting data and financial indexes Any retrospective adjustment in previous financial statements? □Yes √ No □Inapplicable Major accounting data Reporting period Same period of last Major accounting data Increase/decrease (%) (Jan.-Jun.) year Gross operating revenues (RMB Yuan) 3,101,328,731.14 6,747,514,122.53 -54.04% Operating profit (RMB Yuan) 252,798,018.99 390,459,337.37 -35.26% Total profit (RMB Yuan) 268,171,299.3 417,740,185.3 -35.8% Net profit attributable to shareholders of the 216,228,135.55 280,338,482.78 -22.87% Company (RMB Yuan) Net profit attributable to shareholders of the Company after deducting non-recurring gains and 202,605,458.74 256,408,437.2 -20.98% losses (RMB Yuan) Net cash flow from operating activities (RMB 909,437,610.73 -509,000,827.63 278.67% Yuan) As at the end of this As at the end of last Increase/decrease (%) reporting period year Total assets (RMB Yuan) 7,826,153,706.1 9,145,185,476.94 -14.42% Owners’ equity attributable to shareholders of the 3,530,947,207.74 3,441,144,937.45 2.61% Company (RMB Yuan) Share capital (share) 632,487,764 632,487,764 0% Major financial indexes Reporting period Same period Major financial indexes Increase/decrease (%) (Jan.-Jun.) of last year Basic EPS (RMB Yuan/share) 0.34 0.44 -22.73% Diluted EPS (RMB Yuan/share) 0.34 0.44 -22.73% Basic EPS after deducting non-recurring gains and 0.32 0.41 -21.95% losses (RMB Yuan/share) Fully diluted ROE(%) 6.12% 8.15% -2.02% Weighted average ROE(%) 6.09% 8.77% -2.68% Fully diluted ROE after deducting non-recurring gains 5.74% 7.45% -1.71% and losses(%) Weighted average ROE after deducting non-recurring 5.71% 8.02% -2.31% gains and losses(%) Net cash flow per share from operating activities (RMB 1.44 -0.8 278.67% Yuan/share) As at the end of this As at the end Increase/decrease (%) reporting period of last year Net assets per share attributable to shareholders of the 5.58 5.44 2.61% Company (RMB Yuan/share) Liability/asset ratio(%) 47.96% 56.64% -8.68% (II)Accounting data differences under the domestic and overseas accounting standards 1. Net profit and net asset differences between financial reports disclosed according to the international and Chinese accounting standards respectively □Applicable √Inapplicable 2. Net profit and net asset differences between financial reports disclosed according to the overseas and Chinese accounting standards respectively □ Applicable √Inapplicable 3. Specific items involving significant difference Naught 4. Notes to accounting data differences under the domestic and overseas accounting standards Naught (III)Items of non-recurring gains and losses √Applicable □Inapplicable Items Amount (RMB Yuan) Notes Gains and losses on disposal of non-current assets 7,549,807.55 Tax rebate, reduction or exemption due to un-authorized approval or the lack of formal approval documents Government grants recognized in the current year, except for those acquired in the ordinary course of business or granted at certain quotas or amounts according to the country’s 4,578,571.99 unified standards Capital occupation fees received from non-financial enterprises that are included in current gains and losses Gains generated when the investment costs of the Company’s acquiring subsidiaries, associates and joint ventures are less than the fair value of identifiable net assets in the investees attributable to the Company in the acquisition of the investments Exchange gains and losses of non-monetary assets Gains and losses through entrusting others to invest or manage assets Various asset impairment provisions due to acts of God such as natural disasters Gains and losses on debt restructuring Enterprise reorganization expenses, such as expenses on employee settlement and integration Gains and losses on the parts exceeding the fair value when prices of transactions become unfair Net current gains and losses from the period-begin to the combination date of subsidiaries due to business combinations under the same control Gains and losses on contingent matters which are irrelevant to the normal operation of the Company Gains and losses on fair value changes of transactional financial assets and liabilities, and investment gains on disposal of transactional financial assets and liabilities and available-for-sale financial assets, except for the effective hedging business related to the Company’s normal operation Reversal of impairment provisions for accounts receivable which are separately tested for impairment signs Gains and losses on entrustment loans from external parties Gains and losses on fair value changes of investing properties for which the fair value method is adopted for subsequent measurement Current gain and loss effect due to a just-for-once adjustment to current gains and losses according to requirements of taxation and accounting laws and regulations Custodian fee income from entrusted operations with the Company Other non-operating incomes and expenses besides the items above 5,234,789.52 Other gain and loss items that meet the definition of non-recurring gains and losses Minority interests effects -1,136,464.99 Income tax effects -2,604,027.26 Total 13,622,676.81 -- Explanation given by the Company to “other gain and loss items that meet the definition of non-recurring gains and losses” and when it recognizes a non-recurring gain and loss item as a recurring one according to the nature and features of its ordinary business: Naught IV. Changes in Share Capital and Particulars about Shareholders (I)Changes in share capital 1. Statement of changes of shares √Applicable □Inapplicable Before the change Increase/decrease (+, -) After the change Capitaliz Issuan ation of Proportion ce of Bonus Proportion Amount public Others Subtotal Amount (%) new shares (%) reserve shares fund I. Shares subject to 256,135,820 40.5% 3,480,185 3,480,185 259,616,005 41.05% trading moratorium 1. State-owned shares 0% 2. State-owned legal 0% person shares 3. Other domestic shares 225,284,106 35.62% 3,480,185 3,480,185 228,764,291 36.17% Including: Shares held by domestic legal 225,176,106 35.6% 3,480,185 3,480,185 228,656,291 36.15% persons Shares held by 108,000 0.02% 108,000 0.02% domestic individuals 4. Shares held by 30,851,714 4.88% 30,851,714 4.88% overseas shareholders Including: Shares held by 30,851,714 4.88% 30,851,714 4.88% overseas legal persons Shares held by 0% overseas individuals 5. Shares held by senior 0% management staff II. Shares not subject to 376,351,944 59.5% -3,480,185 -3,480,185 372,871,759 58.95% trading moratorium 1. Ordinary shares 216,167,786 34.18% -3,480,185 -3,480,185 212,687,601 33.63% denominated in RMB 2. Domestically listed 160,184,158 25.33% 160,184,158 25.33% foreign shares 3. Overseas listed 0% foreign shares 4. Others 0% III. Total shares 632,487,764 100% 632,487,764 100% Approval of share changes (if applicable) Inapplicable Transfers in share changes Inapplicable Influence of share changes on the latest financial indexes such as EPS and net assets per share (if any) Naught Other contents that the Company thinks necessary or is asked by securities regulators to be disclosed Naught 2. Changes of shares subject to trading moratorium √ Applicable □ Inapplicable Shares Shares Shares at the released in increased Shares at the Reason for trading Name of shareholder Date of release year-begin current in current year-end moratorium year year GD Midea Holding Co., Ltd. increased its The increased shareholding in the 6,319,556 shares secondary market, and shall not be reduced committed not to reduce to hold during the GD Midea Holding Co., Ltd. 219,181,386 3,480,185 222,661,571 its shareholding in the shareholding increase Company in the secondary period and legal market during period; others on 18 shareholding increase Nov. 2013. period and legal period. Restricted shares from Cui Kai 108,000 96,271 -11,729 6 Jul. 2012 share splitting reform Wuxi Doushan Restricted shares from Comprehensive Development 540,000 481,356 -58,644 6 Jul. 2012 share splitting reform Co., Ltd. Special Account of the Disposition of Property of Bankrupt Enterprises for Restricted shares from 648,000 577,628 -70,372 6 Jul. 2012 Yangjiang Huayang share splitting reform Construction & Development Co., Ltd. Jiangsu Little Swan Group Restricted shares from 0 140,745 140,745 6 Jul. 2012 Co., Ltd. share splitting reform Total 219,181,386 1,296,000 3,480,185 222,661,571 -- -- (II)Issuance and listing of securities 1. Securities issues in the previous three years √ Applicable □ Inapplicable Name of Number Ending security and its Issuing price Number of Issuing date Listing date approved for date of derivative (yuan/share) issuance listing trade security Stock XTEA 18 Nov. 2010 8.63 84,832,004 2 Dec. 2010 84,832,004 Convertible company bonds, bonds with attached warrant, company bonds, etc. Naught Warrant Naught Notes of securities issues in the previous three years (make notes of bonds that with different interest during the existing period) In accordance with the Reply on Approving the Significant Assets Reorganization of Wuxi Little Swan Co., Ltd. and its Share Issuance to GD Midea Holding Co., Ltd. in exchange of assets (ZJXK[2010] Document No.1577) issued by China Securities Regulatory Committee(CSRC), the Company issued 84,832,004 A-shares to GD Midea Holding Co., Ltd. at the issue price as RMB 8.63 per share, which is the consideration in exchange of 69.47% of Hefei Royalstar Water Industry Facilities Co., Ltd. Under the approval of Shenzhen Stock Exchange, the privately issued 84,832,004 shares of RMB common share were listed in Shenzhen Stock Exchange since 2 Dec. 2010. GD Midea Holding Co., Ltd. made a commitment that it would not transfer the shares of the Company within 36 months after the final day of private issuing, and thereafter will trade according the stipulations of CSRC and Shenzhen Stock Exchange. 2. Changes of the Company’s share number and structure, as well as the corresponding changes in its asset-liability structure □Applicable √Inapplicable 3. Existing employee shares □Applicable √Inapplicable (III)Shareholders and actual controller 1. Total number of shareholders at the end of the reporting period The Company had 39,191 holders in total at the end of the reporting period. 2. Shareholding of the top ten shareholders Particulars about shares held by the top ten shareholders Pledged or frozen Sharehol shares Total shares Number of Nature of ding Num Name of shareholder (full name) held at the non-tradable shareholder percenta Status of ber of period-end shares held ge (%) shares share s Domestic GD MIDEA HOLDING CO., LTD. non-state-owned 35.2% 222,661,571 222,661,571 corporation Overseas GAOLING FUND,L.P. 8.14% 51,464,551 corporation Overseas TITONI INVESTMENTS DEVELOPMENT LTD. 4.88% 30,851,714 30,851,714 corporation On behalf of the FINANCE BUREAU OF WUXI 3.49% 22,057,657 state Overseas BOCI SECURITIES LIMITED 3.32% 20,976,486 corporation GUOTAI JUNAN SECURITIES(HONGKONG) Overseas 2.04% 12,922,523 LIMITED corporation Domestic NATIONAL SOCIAL SECURITY FUND non-state-owned 1.66% 10,500,857 PORTFOLIO 102 corporation Domestic CHINA CONSTRUCTION BANK-CHINAAMC non-state-owned 1.33% 8,385,623 GLOBAL SELECTED STOCK FUND corporation SUN HUNG KAI INVESTMENT SERVICES Overseas 1.1% 6,986,181 LTD-CUSTOMERS A/C corporation Domestic CHINA CONSTRUCTION BANK - PENGHUA non-state-owned 1.1% 6,933,828 VALUE ADVANCED STOCK FUND corporation Notes of particulars of shareholders Naught Particulars about shares held by the top ten shareholders holding shares not subject to trading moratorium √Applicable □Inapplicable Number of tradable Type and number of shares Name of shareholder shares held Type Number GAOLING FUND,L.P. 51,464,551 B-share 51,464,551 FINANCE BUREAU OF WUXI 22,057,657 A-share 22,057,657 BOCI SECURITIES LIMITED 20,976,486 B-share 20,976,486 GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED 12,922,523 B-share 12,922,523 NATIONAL SOCIAL SECURITY FUND PORTFOLIO 102 10,500,857 A-share 10,500,857 CHINA CONSTRUCTION BANK-CHINAAMC GLOBAL SELECTED 8,385,623 A-share 8,385,623 STOCK FUND SUN HUNG KAI INVESTMENT SERVICES LTD-CUSTOMERS A/C 6,986,181 B-share 6,986,181 CHINA CONSTRUCTION BANK-PENGHUA VALUE ADVANCED 6,933,828 A-share 6,933,828 STOCK FUND UBS CUSTODY SERVICES SINGAPORE PTE. LTD. 5,965,705 B-share 5,965,705 TRISKELE CHINA FUND 5,474,665 B-share 5,474,665 Explanation on associated relationship or/and persons acting in concert among the above-mentioned shareholders: GD MIDEA HOLDING CO., LTD. and TITONI INVESTMENTS DEVELOPMENT LTD. are parties acting in concert. 3. Controlling shareholder and actual controller (1)Change of the controlling shareholder and actual controller □Applicable √Inapplicable (2)Particulars about the controlling shareholder and actual controller Is there a new actual controller? □ Yes √ No □Inapplicable Name of the actual controller He Xiangjian Type of the actual controller Individual Particulars: ① About the controlling shareholder Company Name: GD Midea Holding Co., Ltd. Legal Representative: Fang Hongbo Registered Capital: RMB 3,384,347,650 Business Scope: Production, manufacture and selling of household appliances, TV sets, communication equipments and spare parts thereof; technical consulting services for the aforesaid products; manufacture of moulds and production equipments; hotel management; advertisement agency services; marketing services; hardware, electrical appliances and accessories; electronic products; metal materials; construction materials; chemicals (excluding hazardous chemicals); machines; general merchandise; export of products and relevant technologies owned by the company and its subsidiaries; production and processing; plastic products; import of R&D raw and auxiliary materials, machines, instruments and meters, spare parts and relevant technologies; processing of imported materials and three types of processing plus compensation trades (The aforesaid businesses are operated in accordance with the Document [99] Wai-Jing-Mao-Zheng-Shen-Han-Zi No.528 and include no businesses for which a license is needed for operation.) ② Actual controller Name: He Xiangjian Nationality: the People’s Republic of China (with no rights of residence in other countries or regions) Mr. He Xiangjian has been the Chairman of the Board in Midea Group over the past five years. 3) The ownership and controlling relationship between the actual controller of the Company and the Company is detailed as follows: WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 He Xiangjian 94.55% Midea Investment & Holding Co., Ltd. 70% 59.85% 30% Midea Group Co., Ltd. Kailian Industrial Development Co., Ltd. 41.17% 1.66% 0.11% GD Midea Holding Co., Ltd. 100% Midea Holding(BVI)Ltd. 100% Titoni Investments Development Ltd. 4.88% 35.20% Wuxi Little Swan Company Limited (4)The actual controller controls the Company via trust or other ways of asset management. □Applicable √Inapplicable 4. Other corporate shareholders with a shareholding over 10% □Applicable √Inapplicable (IV)Convertible corporate bonds □Applicable √Inapplicable V. Directors, Supervisors and Senior Management (I)Shareholding changes of directors, supervisors and senior management Shareh Shareh Shar olding olding ehol Receives Share Sharehol increas decrea ding Includin payment options Reas ding at e se at g: from held at ons Gen Beginning date of Ending date of the during during the restricte sharehol Name Position Age the for der office term office term period-b this this perio d shares der units period-e chan egin reporti reporti d-en held or other nd ge (share) ng ng d (share) related (share) period period (shar units (share) (share) e) 8 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Chairman 45 Fang Mal Nau of the 21 Aug. 2012 20 Aug. 2015 0 0 0 0 0 0 Yes Hongbo e ght Board General 49 Chai Mal Nau Manager; 21 Aug. 2012 20 Aug. 2015 0 0 0 0 0 0 Xinjian e ght Director Mal 35 Nau Li Feide Director 21 Aug. 2012 20 Aug. 2015 0 0 0 0 0 0 Yes e ght Xiao 42 Mal Nau Minggua Director 21 Aug. 2012 20 Aug. 2015 0 0 0 0 0 0 Yes e ght ng Liu Mal 34 Nau Director 21 Aug. 2012 20 Aug. 2015 0 0 0 0 0 0 Jufeng e ght Director; 39 Zhou Fem Nau Company 21 Aug. 2012 20 Aug. 2015 0 0 0 0 0 0 Sixiu ale ght Secretary Zhao Independe Mal 60 Nau 21 Aug. 2012 9 Sept. 2014 0 0 0 0 0 0 Shuming nt Director e ght Ye Independe Mal 65 Nau 21 Aug. 2012 9 Sept. 2014 0 0 0 0 0 0 Yongfu nt Director e ght Independe Fem 47 Nau Yu Lihui 21 Aug. 2012 20 Aug. 2015 0 0 0 0 0 0 nt Director ale ght Zhang 37 Mal Nau Zhaofen Supervisor 21 Aug. 2012 20 Aug. 2015 0 0 0 0 0 0 Yes e ght g Jiang Mal 36 Nau Supervisor 21 Aug. 2012 20 Aug. 2015 0 0 0 0 0 0 Huafang e ght Ye Mal 40 Nau Supervisor 21 Aug. 2012 20 Aug. 2015 0 0 0 0 0 0 Dexin e ght Hu Mal 55 Nau Vice GM 21 Aug. 2012 20 Aug. 2015 0 0 0 0 0 0 Ziqiang e ght Yin Mal 44 Nau Vice GM 21 Aug. 2012 20 Aug. 2015 0 0 0 0 0 0 Bitong e ght Mal 36 Nau Fu Wei Vice GM 21 Aug. 2012 20 Aug. 2015 0 0 0 0 0 0 e ght Mao Mal 55 Nau Vice GM 21 Aug. 2012 20 Aug. 2015 0 0 0 0 0 0 Zhiliang e ght Fem 35 Nau Xiao Li CFO 21 Aug. 2012 20 Aug. 2015 0 0 0 0 0 0 ale ght Li Mal 46 Nau Director 15 Sept. 2009 21 Aug. 2012 0 0 0 0 0 0 Yes Jianwei e ght Wu Mal 40 Nau Director 15 Sept. 2009 21 Aug. 2012 0 0 0 0 0 0 Ganping e ght Li Mal 32 Nau Supervisor 9 Mar. 2011 21 Aug. 2012 0 0 0 0 0 0 Mingde e ght Total -- -- -- -- -- 0 0 0 0 0 0 -- -- Equity incentives granted to directors, supervisors and senior management during the reporting period □Applicable √Inapplicable (II)Post-holding particulars Post-holding in shareholders units √Applicable □Inapplicable Name of the Receives person holding Name of the shareholder unit Position in the Beginning date of Ending date of payment from the any post in any shareholder unit office term office term shareholder unit? shareholder 9 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 unit Chairman of the Fang Hongbo GD Midea Holding Co., Ltd. Board and 1 Apr. 2010 1 Apr. 2013 Yes President Director and Vice Li Jianwei Midea Group Co., Ltd. 1 Apr. 2000 Yes President Vice Chairman of Li Jianwei GD Midea Holding Co., Ltd. 1 Apr. 2010 1 Apr. 2013 No the Board Director and Li Feide GD Midea Holding Co., Ltd. Secretary to the 1 Apr. 2010 1 Apr. 2013 Yes Board Xiao Assistant of GD Midea Holding Co., Ltd. 1 Nov. 2011 Yes Mingguang President Chief of Audit Zhang GD Midea Holding Co., Ltd. Supervisory 1 Nov. 2011 Yes Zhaofeng Committee Notes to post-holding in Naught shareholder units Post-holding in other units √Applicable □Inapplicable Name of the Receives person holding Beginning date of Ending date of Name of other unit Position in other unit payment from any post in office term office term other unit? other units School of Business of Professor and Ph.D. Zhao Shuming 1 Oct. 1991 Yes Nanjing University Candidate Tutor School of Business of East Yu Lihui China University of Science Associate professor 1 Jul. 1991 Yes and Technology Notes to post-holding in Naught other units (III)Remuneration for directors, supervisors and senior management Decision-making procedure for the The remuneration of directors, supervisors and senior management receiving remuneration from the remuneration of directors, Company is decided after the approval of the Board of Directors. supervisors and senior management The remuneration of directors, supervisors and senior management receiving remuneration from the Company consist of the basic annual salary and performance annual salary. The basic annual salary is decided according to the duties, risks, pressure and other factors born by the directors, supervisors and senior management, and it stays unchanged; while the performance annual salary is linked with the profit completion rate and the appraisal results of target responsibility system of the Company. The Basis for determining the remuneration system of the directors, supervisors and senior management of the Company serves for its remuneration of directors, operating strategy, which is adjusted according to the changes of operation situation of the Company so supervisors and senior as to adapt to the needs of the further development of the Company. The adjustment basis for the management remuneration of directors, supervisors and senior management of the Company is as follows: (1) the increase level of remuneration in the same industry; (2) the inflation level; (3) the earnings of the Company; (4) the adjustment of organization structure; (5) individual adjustment on positions. The allowance for independent directors approved by the Board of Directors is RMB 80,000 per year, and the expenses occurred to execute their responsibilities are born by the Company. Actual payment of the remuneration of directors, The basic salary of directors, supervisors and senior management receiving remuneration from the supervisors and senior Company is paid monthly; the allowance for independent directors is paid quarterly. management 10 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 (IV)Change of directors, supervisors and senior management Name Position Way of change Date of change Reason for change Fang Chairman of the Continue to serve Election at expiration of office 21 Aug. 2012 Hongbo Board in the position terms Chai Director , Continue to serve Election at expiration of office 21 Aug. 2012 Xinjian General Manager in the position terms Newly serve in the Election at expiration of office Li Feide Director 21 Aug. 2012 position terms Xiao Continue to serve Election at expiration of office Director 21 Aug. 2012 Mingguang in the position terms Continue to serve Election at expiration of office Liu Jufeng Director 21 Aug. 2012 in the position terms Director, Secretary Newly serve in the Election at expiration of office Zhou Sixiu 21 Aug. 2012 to the Board position terms Zhao Continue to serve Election at expiration of office Independent director 21 Aug. 2012 Shuming in the position terms Continue to serve Election at expiration of office Ye Yongfu Independent director 21 Aug. 2012 in the position terms Continue to serve Election at expiration of office Yu Lihui Independent director 21 Aug. 2012 in the position terms Chairman of Zhang Continue to serve Election at expiration of office Supervisory 21 Aug. 2012 Zhaofeng in the position terms Committee Jiang Continue to serve Election at expiration of office Supervisor 21 Aug. 2012 Huafang in the position terms Staff Representative Newly serve in the Election at expiration of office Ye Dexin 21 Aug. 2012 Supervisor position terms Newly serve in the Election at expiration of office Hu Ziqiang Vice GM 21 Aug. 2012 position terms Continue to serve Election at expiration of office Yin Bitong Vice GM 21 Aug. 2012 in the position terms Newly serve in the Election at expiration of office Fu Wei Vice GM 21 Aug. 2012 position terms Mao Newly serve in the Election at expiration of office Vice GM 21 Aug. 2012 Zhiliang position terms Continue to serve Election at expiration of office Xiao Li CFO 21 Aug. 2012 in the position terms Election at expiration of office Li Jianwei Director Leave the position 21 Aug. 2012 terms Wu Election at expiration of office Director Leave the position 21 Aug. 2012 Ganping terms Staff Representative Election at expiration of office Li Mingde Leave the position 21 Aug. 2012 Supervisor terms (V)Employees Number of on-job employees 7,462 Number of retired employees for whom the Company shall bear 646 expenses Function structure Type of function Number of personnel Production 5,497 Sale 896 Technical 710 Financial 87 11 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Administration 272 Level of education Level of education Number of personnel Doctor’s degree 5 Master degree 50 University 1,243 Junior college 1,608 High school and below 4,556 Notes to the employee particulars: The above amounts of staffs of the Company include the total amounts of staffs (including dispatched staffs) in the Company and the subsidiaries in the scope of consolidated financial statements. However, in the past years, the amounts of staffs only included the amounts of staffs of the Company (excluding dispatched staffs); the amounts of staffs from high school and below include 2460 persons from technical secondary school. VI. Report of the Board of Directors (I)Discussion and analysis by the management In the reporting period, due to the tightening domestic real estate macro-control policy, the fade-out of the policy of “bringing household appliances to the countryside”, the European debt crisis and other factors, growth in the washing machine industry as a whole slowed down. In the first half of 2012, taking into account the market situation, the Company kept to the shift from “market size-guided” to “profit growth-guided”, simplified and flattened organizational tiers, shut down product subsidiaries, shut down and combined functional departments and reduced management tiers. Meanwhile, it optimized the business flowchart and increased the information transmission efficiency. It also adjusted and optimized the product and customer structures, which improved the gross profit rate and helped the Company keep the profitability at a certain level while its business size shrank considerably. For Jan.-Jun. 2012, the Company achieved operating revenue of RMB 3.101 billion, down 54.04% from a year earlier; net profit of RMB 0.216 billion, representing a year-on-year decrease of 22.87%; and a gross profit rate of 20.88%, up 404 basic points over the same period of last year. During the reporting period, the Company focused on the following for transforming its operating mode: The marketing mode was transformed. During the reporting period, the Company launched a domestic sale reform, setting up 33 product management centers around the country. Except for a few regions, the marketing mode in other regions was transformed from the sales subsidiaries acting as agents mode to the product management centers “direct sale+agent sale” mode. Based on the achievements of integrating channels and optimizing customer and channel structures in previous years, in this domestic sale reform, the Company simplified the organizational structure, reduced intermediate links and reduced risks regarding assets. In terms of export during the reporting period, the Company adjusted the product marketing structure, increased the product power and deepened cooperation with internationally big customers, which ensured basic stability in terms of the export size and greatly increased the gross profit rate of export. The R&D system was improved. During the reporting period, the Company carried on with the product life cycle management system, which has been implemented on over 80% of the R&D projects. It also improved the product design quality and increased the development efficiency. At the same time, the Company formulated divisional expert management teams to revise component technical standards and design specifications, carry out various trainings in different divisions and make components more standardized and universal. Besides, it set up a R&D system guided by innovation, pushed forward the shift from project managers to product managers, and gave full play to creativity, market sensitivity and enthusiasm of engineers. The manufacture efficiency was improved. During the reporting period, the Company focused on making good use of existing assets and strictly controlled new inputs. It put the equipment asset management system to use and set up a mechanism and system for equipment asset management. Meanwhile, it carried forward the application and improvement of the manufacture execution system, implementing real-time monitoring for abnormalities during the production process and fixing them in time, which effectively 12 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 improved the manufacture capability as a whole. Quality control was enhanced. In the reporting period, the Company continued to control the product quality in a strict manner, enhancing QC in terms of the “design and supply quality” and the “manufacture process”. It improved the new product design quality examination system, examining the design quality in a strict manner. It also enhanced QC regarding the supply chain. Meanwhile, it enhanced QC during the production process, increased key QC points and increased CTQ operation testing equipment. For the second half of the year, the Company will carry on the operating transformation, ensuring the size, improving earnings and solidifying the foundation. Its main tasks for the second half of the year are as follows: The Company will continue to reform the domestic marketing organization, simplify the organization, increase the efficiency, reduce costs, specify functions of the product management centers and enhance countermeasures to deal with new changes of domestic marketing channels. Meanwhile, it will enhance cooperation with overseas strategic customers, make use of the relative advantages in product development and the production capacity, continue to expand the export proportion of medium and high-end products and improve export earnings. It will also continue to optimize the production line and re-adjust the existing product layout. Besides, it will increase input for R&D, especially input for basic technology research and application, so as to keep increasing its product competitiveness. Is the Company’s actual business performance 20% lower or higher than any earning forecast or business plan for the reporting period which has been publicly disclosed earlier? □ Yes √ No Analysis to the business and performances of the Company’s main subsidiaries and stock-participating companies: Total Net assets Operating assets at Net profit at the end income in Registered the end of in the of the the Name of capital Main Shareholding the reporting reporting reporting subsidiary (RMB Ten businesses proportion reporting period period period thousand) period (RMB Ten (RMB Ten (RMB Ten (RMB Ten thousand) thousand) thousand) thousand) Development of software products as well as the Wuxi FILIN USD development Electronics 73% 28,734.26 20,862.95 9,555.48 621.84 362.4564 and Co., Ltd manufacture of new electronic components, etc Research & Hefei Royalstar development, Washing USD manufacture Equipment 69.47% 274,068.82 148,640.92 129,426.60 4,092.62 13,552 and sales of Manufacturing washing Co., Ltd. machines Research & Little Swan development, (Jingzhou) manufacture Sanjin Electric 1,107 100% 19,480.47 1,501.92 11,243.06 315.01 and sales of Appliances washing Co., Ltd. machines Wuxi Little Research & Swan General 2,800 development, Electrical manufacture 70% 30,847.56 11,881.14 20,891.32 1,245.95 Appliances and sales of Co., Ltd washing 13 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 machines and dry-cleaning machines All risk factors that might have adverse impact on the Company’s effort to realize its future development strategy and business goals: Naught 1. Main business lines and their operating results (1)Main business lines classified by industries and products Unit: RMB Yuan Increase/decrease Increase/decrease Increase/decrease of operating of gross profit of operating cost Industries/product Gross profit revenue rate compared Operating revenue Operating cost compared with s rate (%) compared with with the same the same period the same period period last year last year (%) last year (%) (%) Industries Household 2,805,116,121.47 2,213,791,209.14 21.08% -52.45% -54.08% 2.81% appliance Products Washing 2,805,116,121.47 2,213,791,209.14 21.08% -52.45% -54.08% 2.81% machines Explanation to the main business performances classified by industries and products: Naught Explanation to the reasons for any significant year-on-year change of the gross profit rate: Naught (2)Main business lines classified by regions Unit: RMB Yuan Increase/decrease compared with the same Region Operating revenue period last year (%) Domestic 1,744,614,729.04 -63.90% Overseas 1,060,501,392.43 -0.57% Explanation to the main business performances classified by regions: Naught Explanation to the main business structure: Naught (3)Reasons for significant changes in main business and its structure √Applicable □Inapplicable In the reporting period, the overseas market basically remained stable while the domestic market saw a slide. Domestic sales slid mainly because in order to deal with market changes, the Company took the initiative to adjust its marketing mode, simplify intermediate links and consume a great deal of inventory. (4)Reasons for significant changes in profitability of main business (gross profit rate) compared with that in the last year □Applicable √Inapplicable (5)Analysis on reasons of significant changes in profit breakdown compared with the last year □Applicable √Inapplicable (6)Business nature, main products/services, net profit and other particulars about subsidiaries which made a contribution over 10% to the Company’s net profit for the reporting period □Applicable √Inapplicable (7) Problems and difficulties encountered in operation Naught 2. Internal control rules in relation to fair value measurement □Applicable √Inapplicable 14 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 3. Foreign-currency financial assets and liabilities held □Applicable √Inapplicable (II)Investments 1. General utilization of the raised funds □Applicable √Inapplicable 2. Projects promised to be invested with raised funds □Applicable √Inapplicable 3. Change of projects invested with raised funds □Applicable √Inapplicable 4. Significant projects invested with non-raised funds √Applicable □Inapplicable Unit: RMB Ten thousand Disclosure date of the Amount for the Project name Project progress Project earnings first announcement project RMB 193.40 million was cumulatively input Investment plans of the Company Unable to measure 18 Mar. 2011 64,870 and the projects that and its subsidiaries for 2011 separately haven’t been invested in are postponed. RMB 92.17 million was No earnings at the The new base in Tianjin 26 Apr. 2011 85,000 cumulatively input and beginning phase of the the project is postponed. project Total 149,870 -- -- Notes to significant projects invested with non-raised funds At the beginning of 2011, considering the market demand growth estimate at that time and its limited production capacity, the Company decided to make an investment of RMB 648.7 million to expand the production capacity of the Jingzhou base and other bases and make an investment of RMB 850 million to build the Tianjin base. During the implementation process, major market changes occurred. The overall demand decreased and the growth in the industry slowed down. In face of these changes, the Company acted quickly to adjust its investment strategy, re-considered some projects and suspended some projects, which avoided a great deal of resources from being wasted and idle. (III)Revision of the Board of Directors’ business plan for the second half of the year □Applicable √Inapplicable (IV)Business performance estimate for Jan.-Sept. 2012 Warnings of estimated possible losses or major changes of the accumulative net profit achieved during the period from the beginning of the year to the end of the next reporting period compared with the same period of last year, as well as the reasons □Applicable √Inapplicable (V)Explanation of the Board of Directors on “Non-standard Auditing Report” issued by the CPA firm for the reporting period □Applicable √Inapplicable (VI)Explanation of the Board of Directors on changes and solutions of the issues involved in the “Non-standard Auditing Report” issued by the CPA firm for last year □Applicable √Inapplicable (VII)State the discussion results of the Board of Directors on the reasons and influence of the Company’s accounting policy and estimate alterations or significant accounting error correction □Applicable √Inapplicable (VIII)Formulation and execution of the Company’s cash dividend policy According to the “several regulations regarding amending the cash dividend policy of listed companies” in the CSRC Order No. 57, as reviewed and approved at the 27th Session of the 5th Board of Directors and the 2008 Annual Shareholders’ General Meeting, the Company added an article regarding the cash dividend ratio in its Articles of Association as follows: “The Company may distribute dividends in cash, stock or any other way allowed by laws. The Company shall pay attention to rational investment returns 15 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 for investors and maintain consistency and stability in its profit distribution policy. The profit accumulatively distributed in cash by the Company in the recent three years shall not be less than 30% of the annual average distributable profit achieved by the Company in the recent three years. If the Company cannot reach the aforesaid ratio due to some special reasons, the Board of Directors shall give a special explanation to the Shareholders’ General Meeting.” Taking into account its earnings level and strategic development needs, the Company attached importance to returns for shareholders, especially cash dividend returns. The Company distributed a dividend of RMB 1.00 for every 10 shares in 2010 and a dividend of RMB 2.00 for every 10 shares in 2011. In Jul. 2012, according to the CSRC Notice on Further Implementing Matters Related to Cash Dividend Distribution of Listed Companies (Zheng-Jian-Fa [2012] No. 37) and the Notice of CSRC Jiangsu Bureau on Further Implementing Requirements Related to Cash Dividend Distribution of Listed Companies, taking into account its actual situation, the Company further specified the dividend-related article in its Articles of Association, specifying the dividend ratio, decision-making mechanism, etc.. And the said amendment to the Company’s Articles of Association was reviewed and approved at the 18th Session of the 6th Board of Directors and later at the First Special Shareholders’ General Meeting for 2012. The Company will execute the profit distribution policy in strict compliance with the amended Articles of Association. Independent directors will express their opinion to protect the right of minority shareholders to fully express their opinion and requirements. In this way, legitimate rights and interests of the Company’s shareholders, especially its minority shareholders, are safeguarded. (IX)Pre-plan for profit distribution or turning capital reserve into share capital □Applicable √Inapplicable (X)The accumulative retained profit as at the end of 2011 is a positive number but the Company has not put forward a cash dividend pre-plan. □Applicable √Inapplicable (XI)Other matters that need to be disclosed Naught (XII)The Company’s liabilities, credit changes and future cash arrangements for debt-clearing (Only listed companies with convertible corporate bonds are required to fill the table below.) □Applicable √Inapplicable VII. Significant Events (I)Corporate governance The Company continuously perfected its corporate governance, set up modern enterprise system and standardized its operation strictly in accordance with the requirements of relevant laws and rules such as Company Law, Securities Law and Administrative Rule for Listed Companies issued by CSRC. In the reporting period: 1. In accordance with CSRC Regulations on Establishing Registration Management System for Information Insiders, the Company overall revised and supplemented the Registration System for Information Insiders; 2. The Company promulgated Internal Management System for Entrusted Financial Management to strengthen and standardize the management on the entrusted financial management business of the Company and its subsidiaries, so as to effectively control the risks, increase investment income and protect the interest of the Company and its shareholders; 3. The Company promulgated the Work Plan on Implementation of the Internal Control Rules for 2012, and strictly implemented the Basic Rules of Enterprise Internal Control and Supporting Guidelines of Enterprise Internal Control, as well as based on the trial implementation of internal control rules in 2011, it further improve its work on standardizing internal control in 2012 by including all the subsidiaries into the scope to implement internal control; 4. The Company prepared Relevant Rules on Stock Trading of Directors, Supervisors and Senior Management, so as to strengthen the popularization, implementation and training for directors, supervisors and senior management about insider trading, short-term trading, sensitive period and other laws, and further prevent the risks of trading against legal regulations. 16 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 5. The Company further standardized the operation of Board of Directors, Supervisory Board and Shareholders’ General Meeting, increasing the training and popularization for directors, supervisors and senior executives about relevant laws and rules of securities, so as to enhance their awareness and responsibility of protecting the interest of the Company and shareholders. (II)Execution of the plans for profit distribution, turning capital reserve into share capital or new share issuance which had been made in the previous period and were carried out in the report period √Applicable □Inapplicable The profit distribution plan for 2011 was reviewed and approved at the 2011 Annual Shareholders’ General Meeting held on 19 Apr. 2012. Based on the total 632,487,764 shares as at 31 Dec. 2011, a cash dividend of RMB 2.00 (tax included) was distributed for every 10 shares to all shareholders. The Board of Directors disclosed the Announcement of Wuxi Little Swan Co., Ltd. on Implementation of Equity Distribution for 2011 (Announcement No. 2012-17) on 5 Jun. 2012. For A-share holders, the date of record was 8 Jun. 2012 and the ex-dividend date was 11 Jun. 2012; for B-share holders, the lasting trading date was 8 Jun. 2012, the ex-dividend date was 11 Jun. 2012 and the date of record was 13 Jun. 2012. The profit distribution plan for 2011 was accomplished during the reporting period. (III) Significant litigations and arbitrations □Applicable √Inapplicable The Company was not involved in any significant lawsuit or arbitration during the reporting period. (IV) Bankruptcy or reorganization events □Applicable √Inapplicable (V) Holding equity of other listed companies and joint financial enterprises 1. Securities investment □Applicable √Inapplicable Notes of securities investment: Naught 2. Holding equity of other listed companies √Applicable □Inapplicable Initial Proportion in Closing Gain/loss in Change of owners’ investment the company’s carrying the reporting equity during the Accounting Stock code Stock abbr. Stock source amount total equity amount (RMB period reporting period title (RMB Yuan) (%) Yuan) (RMB Yuan) (RMB Yuan) Available-fo r-sale Private 400038 HXS 100,300 0.01% 228,144 0 -47,980.8 financial offering assets Total 100,300 -- 228,144 0 -47,980.8 -- -- Notes to holding equity of other listed companies: Naught 3. Holding equity of non-listed financial enterprises √Applicable □Inapplicable Name of Proportion Change of Initial Closing Gain/loss in the Number of in the owners’ equity investment carrying the reporting non-listed shares company’s during the Accounting title Stock source amount (RMB amount period (RMB financial held total equity reporting period Yuan) (RMB Yuan) Yuan) enterprise (%) (RMB Yuan) Long-term Bank of Private 1,100,000 2,202,564 0% 1,210,000 123,405.12 0 equity Jiangsu offering investment Total 1,100,000 2,202,564 -- 0 123,405.12 0 -- -- Notes to holding equity of non-listed financial enterprises 17 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Naught 4. Trading stocks of other listed companies □Applicable √Inapplicable Notes to trading stocks of other listed companies: Naught (VI) Assets transaction events 1. Purchase of assets □Applicable √Inapplicable Notes to purchase of assets: 2. Sale of assets □Applicable √Inapplicable Notes to sale of assets: 3. Exchange of assets □Applicable √Inapplicable Notes to exchange of assets: 4. Business combination □Applicable √Inapplicable 5. Progress of these events after the publication of the assets reorganization report or public notices on the purchases or sales of assets, as well as the influences of these events on the operation results and financial status of the Company in this report period □Applicable √Inapplicable (VII) Explanation on shareholding increase scheme during the report period proposed or implemented by the principal shareholders and act-in-concert persons √Applicable □Inapplicable GD Midea Holding Co., Ltd., controlling holder of the Company increased holding of 6,319,556 A-shares of the Company from 15 Dec. 2011 to 16 Jan. 2012 on Shenzhen Stock Exchange System, which takes 1% of total shares of the Company. After the increase, GD Midea Holding Co., Ltd. and TITONI held 253,513,285 shares of the Company in total, which is 40.08% of the total shares of the Company. According to the increase holding plan, GD Midea Holding Co., Ltd.’s increased holding of A-shares should not excess 2% of total shares of the Company in 12 months from the first increase date. (VIII) Implementation situation and influence of equity incentive plan of the Company □Applicable √Inapplicable (IX) Significant related-party transactions 1. Related-party transactions relevant to routine operation √ Applicable □ Inapplicable Conte Pricing Reason for Type Transact Settlement Influenc Market nt of principle Proportion significant of the ion price Transactio method of e on the price the of the in same difference related (RMB n amount the profits (RMB Related party Relationship related related-p kind of between the -party Ten (RMB Ten related-par of the Ten -party arty transaction transaction price transac thousand thousand) ty Compan thousand transac transacti s (%) and the market tion ) transaction y ) tion on price MIDEA Company under Washi SCOTT&ENG the control of the ng Market LISH controlling Sales 1,505.64 0.49% T/T machi price ELECTRONII shareholder of ne CS SDN.BHD the Company Company under Washi PT.Midea the control of the Sales ng Market Planet 719.28 0.23% T/T controlling machi price Indonesia shareholder of ne 18 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 the Company Company under Midea Electric Washi the control of the Trading ng Market controlling Sales 58,511.9 18.87% T/T (Singapore) machi price shareholder of Co. Pte. Ltd. ne the Company Company under Hefei Hualing Electri the control of the Electric c Market controlling Sales 436.63 0.14% Notes Appliances produc price shareholder of Co., Ltd. ts the Company Company under the control of the Hefei Huitong direct relatives of Materi Market New Materials ultimate Sales 1,488.3 0.48% Notes als price Co., Ltd. controlling shareholder of the Company Company under Hefei Midea Electri the control of the Royalstar c Market controlling Sales 118.31 0.04% Notes Refrigerator produc price shareholder of Co., Ltd. ts the Company Company under the control of the Hefei Bainian direct relatives of Molding Materi Market ultimate Sales 2,625.74 0.85% Notes Technology als price controlling Co., Ltd. shareholder of the Company Electri Little Swan Company under c (Jingzhou) the control of the produc Market Electric controlling Sales 383.52 0.12% Notes ts, price Appliances shareholder of materi Co., Ltd. the Company als Company under Hefei Midea the control of the Materials Purcha Materi Market controlling 12,168.85 6.10% Notes Supply Co., se als price shareholder of Ltd. the Company Company under Huaian Weiling the controlling Electri Motor shareholder of Purcha Market c 13,239.58 6.64% Notes Manufacturing the parent se price motor Co., Ltd. company of the Company Company under Receiv the controlling Ningbo Annto ing shareholder of Purcha Market Logistics Co., labor 2,346.37 1.18% Notes the parent se price Ltd. service company of the s Company Company under the control of the Foshan Shunde direct relatives of District Bainian Purcha Market ultimate Mould 22.22 0.01% Notes Technology se price controlling Co., Ltd. shareholder of the Company Little Swan Company under Purcha Materi Market 19.48 0.01% Notes (Jingzhou) the control of the se als price 19 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Electric controlling Appliances shareholder of Co., Ltd. the Company Company under the control of the Hefei Huitong direct relatives of Purcha Materi Market New Materials ultimate 2,948.42 1.48% Notes se als price Co., Ltd. controlling shareholder of the Company Company under the control of the Hefei Bainian direct relatives of Molding Purcha Materi Market ultimate 3,948.13 1.98% Notes Technology se als price controlling Co., Ltd. shareholder of the Company Total -- -- -- -- -- -- Details of large amount of sales returns Naught Necessity and continuity of related-party The above related-party transactions are good for balancing the production capacity of the transaction as well as reason of choosing the Company, ensuring the quality of products, decreasing production costs and realizing the related party (but not other transaction parties) to rational allocation of resources, which have their necessity. conduct the said transaction The above related-party transactions are in line with the principles of fair, just and open, Impacts of related-party transaction on without any harm to the interest of the Company, but have active influence on the independency of the Company Company’s financial situation and operating results during the reporting period and the future. So they won’t affect the independency of the Company. Dependant degree of the Company on related The Company’s main business won’t form significant dependency on related parties due to party and relevant solutions for the dependence (if such kind of transactions. any) As for the prediction on the total amount of During the reporting period, the actual amount of related-party sales accounted for 44% of routine related-party transactions to be occurred the total annual predicted amount of routine related-party transactions; the actual amount of in the reporting period by relevant types, the related-party purchases accounted for 16% of the total annual predicted amount of routine actual performance in the reporting period related-party transactions. Explanation on related-party transaction Naught Related-party transactions relevant to routine operation Selling products and providing labor services to Purchasing products and receiving labor services related parties from related parties Related party Transaction amount Proportion in same kind of Transaction amount Proportion in same kind of (RMB Ten transactions (%) (RMB Ten thousand) transactions (%) thousand) Hefei Midea Royalstar 118.31 0.04% Refrigerator Co., Ltd. Little Swan (Jingzhou) Electric 383.52 0.12% 19.48 0.01% Appliances Co., Ltd. Hefei Hualing Electric Appliances 436.63 0.14% Co., Ltd. PT.Midea Planet Indonesia 719.28 0.23% Hefei Huitong New Materials Co., 1,488.3 0.48% 2,948.42 1.48% Ltd. MIDEA SCOTT&ENGLISH 1,505.64 0.49% ELECTRONIICS SDN.BHD Hefei Bainian Molding 2,625.74 0.85% 3,948.13 1.98% Technology Co., Ltd. Midea Electric Trading 58,511.9 18.87% (Singapore) Co. Pte. Ltd. Huaian Weiling Motor 13,239.58 6.64% 20 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Manufacturing Co., Ltd. Hefei Midea Materials Supply 12,168.85 6.10% Co., Ltd. Wuhu Annto Logistics Co., Ltd. 2,346.37 1.18% Foshan Shunde District Bainian 22.22 0.01% Technology Co., Ltd. Total 65,789.33 21.21% 34,693.06 17.39% Of which: the total amount of related-party transactions of the Company selling products and providing labor services to the controlling shareholder and subsidiaries during the reporting period stood at RMB 626,752,900. 2. Related-party transactions regarding purchase and sales of assets □Applicable √Inapplicable 3. Significant related-party transitions with joint investments □Applicable √Inapplicable 4. Significant credits and liabilities with related parties □Applicable √Inapplicable Capital occupation during the report period and debt-clearing progress □Applicable √Inapplicable The accountability plan put forward by the Board of Directors when the Company had not completed collecting the capital occupied for non-operating purposes by the end of the report period □Applicable √Inapplicable 5. Other significant related-party transactions (1) The Company convened the 10th Session of the 6th Board of Directors on 14 Dec. 2010 and the 1st Special Shareholder’s General Meeting 2011 on 7 Jan. 2011, which reviewed and approved the Proposal on Related Transaction on Trademark Licensing. The Company permitted GD Midea Holding Co., Ltd and its controlled subsidiaries to use trademark of “小天鹅 LITTLE SWAN and picture” in air conditioner commodities, with trademark license fees estimated as no more than RMB 20,000,000. GD Midea Holding Co., Ltd permitted the Company and subsidiaries of the Company to use trademark of “Midea” in production, sales and ad campaign of washing machines and dryers, with trademark license fees estimated as no more than RMB 20,000,000. The aforesaid licensing contracts were all contracted with 0.3% charges of net sales revenue of products with the authorized trademark as trademark license fees, and the licensing period ranged from 1 Jan. 2011 to 31 Dec. 2013. At the same time, the Company will renew and sign the Contract on Trademark Licensing with Little Swan (Jingzhou) Electric Appliances Co., Ltd. As negotiated by both parties, the deadline of licensing period extends from 19 Jun. 2011 to 31 Dec. 2013. (2) The 2011 Annual Shareholder’s General Meeting was convened on 19 Apr. 2012, at which reviewed and approved the Proposal on Prediction of the Line of Routine Related Transaction of the Company for 2012. For details of the routine related transaction, please refer to Note 6 of the financial report. (X) Significant contracts and execution 1. The trust, contract and lease whose profits reaching more than 10% (including 10%) of the total profits of the Company in the report period (1) Status of trust □Applicable √Inapplicable (2)Particulars about contracting □Applicable √Inapplicable (3)Particulars about leasing □Applicable √Inapplicable 21 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 2. Guarantees provided by the Company √Applicable □Inapplicable Unit: RMB Ten Thousand Guarantees provided by the Company for external parties (excluding those for subsidiaries) Guarante Disclosure date of Amount Actual occurrence Actual Execut e for a Type of Period of Guaranteed party relevant for date (date of guarantee ed or related guarantee guarantee announcement guarantee agreement) amount not party or not Total actual occurred Total external guarantee line approved amount of external 0 0 during the reporting period (A1) guarantee during the reporting period (A2) Total actual external Total external guarantee line that has been guarantee balance at approved at the end of the reporting period 0 0 the end of the (A3) reporting period (A4) Guarantees provided by the Company for its subsidiaries Guarante Disclosure date of Amount Actual occurrence Actual Execut e for a Type of Period of Guaranteed party relevant for date (date of guarantee ed or related guarantee guarantee announcement guarantee agreement) amount not party or not Hefei Royalstar Washing Equipment Six 2 Mar. 2012 160,000 29 Feb. 2012 10,953 Warranty No No Manufacturing Co., months Ltd. Hefei Royalstar Washing Equipment Six 2 Mar. 2012 160,000 6 Apr. 2012 1,000 Warranty No No Manufacturing Co., months Ltd. Hefei Royalstar Washing Equipment Six 2 Mar. 2012 160,000 24 Apr. 2012 3,306 Warranty No No Manufacturing Co., months Ltd. Hefei Royalstar Washing Equipment Six 2 Mar. 2012 160,000 24 May 2012 6,527 Warranty No No Manufacturing Co., months Ltd. Hefei Royalstar Washing Equipment Six 2 Mar. 2012 160,000 21 Jun. 2012 6,291 Warranty No No Manufacturing Co., months Ltd. Hefei Royalstar Washing Equipment Six 2 Mar. 2012 160,000 21 Jun. 2012 8,664 Warranty No No Manufacturing Co., months Ltd. Hefei Royalstar Washing Equipment Six 2 Mar. 2012 160,000 1 Jun. 2012 1,074 Warranty No No Manufacturing Co., months Ltd. Total actual occurred Total guarantee line approved for the amount of guarantee subsidiaries during the reporting period 165,000 for the subsidiaries 37,814 (B1) during the reporting period (B2) Total guarantee line that has been approved 165,000 Total actual guarantee 37,814 for the subsidiaries at the end of the balance for the 22 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 reporting period (B3) subsidiaries at the end of the reporting period (B4) Total guarantee amount provided by the Company (total of the above-mentioned two kinds of guarantees) Total actual occurred Total guarantee line approved during the amount of guarantee 165,000 37,814 reporting period (A1+B1) during the reporting period (A2+B2) Total guarantee line that has been approved Total actual guarantee at the end of the reporting period balance at the end of 165,000 37,814 the reporting period (A3+B3) (A4+B4) Proportion of total guarantee amount (A4+B4) to the net assets of the 0.1071 Company Of which: Amount of guarantee for shareholders, actual controller and 0 related parties (C) Amount of debt guarantee provided for the guaranteed party whose asset-liability ratio is not less than 70% directly or 0 indirectly (D) Part of the amount of the total guarantee over 50% of net assets 0 (E) Total amount of the above three guarantees (C+D+E) 0 Explanation on possible bearing joint responsibility of Naught liquidation due to immature guarantee Explanation on provision of guarantees for external parties in Naught violation of the prescribed procedure 3. Entrusted financial management √Applicable □Inapplicable Unit: RMB Ten Thousand Go Withdr Rela thro Amount awal ted- Actual ugh Recogniti of amoun part revenue Actual the Rela Name of on way of principle t of y Amount Initial date Ending date in the revenue legal tions trustee remunerat actually impair trans reportin gained proc hip ion recovere ment actio g period edur d provisi ns or es or on not not Agreed by Nau Bank 176,770 1 Apr. 2012 30 Jun. 2012 negotiatio 176,770 1,151.55 1,151.55 Yes 0 No ght n Total 176,770 -- -- -- 176,770 1,151.55 1,151.55 -- 0 -- -- Total amount of overdue unrecovered principle and revenue 0 (RMB Yuan) The entrusted financing amounts were all used in cycle within the Notes of entrusted financial management approved line. 4. Execution of significant contracts relevant to routine operation Naught 5. Other significant contracts □Applicable √Inapplicable (XI) Explanation on issuing corporate bonds □Applicable √Inapplicable (XII) Performance of commitments 1. Commitments made by the Company or shareholders holding over 5% of the Company’s shares 23 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 in the report period, or such commitments carried down into the report period √Applicable □Inapplicable Peri Time of od Comm Fulfi making of Commitment itment Contents llme commitme com maker nt nt mit ment In the Where the controlling shareholder GD Midea Holding Co., Ltd. (Midea Holding) plans to proc Contro sell the Company’s shares released from trading moratorium held by it via the bid trading Commitment ess lling system of the Shenzhen Stock Exchange, and Midea Holding decreases over 5% shares 28 Feb. on share of shareh within six months since the first reduction of holdings, Midea Holding will disclose the 2008 reform impl older suggestive announcement on share selling through the Company two trading days before eme its first reduction of holdings. ntati on 1. As for Midea Holding’s commitment on share lock-up, it has committed that it will not transfer Little Swan shares held by it within 36 months since the date when the private share offering deal is closed. 2. As for the commitment of avoiding horizontal competition, Midea Holding (the controlling shareholder) and Mr. He Xiangjian (the actual controller) has promised that, for the period after the said transaction when the Company’s controlling shareholder and actual controller remain unchanged, Midea Holding, Mr. He Xiangjian and other subsidiary companies under their control excluding the Company and the Company’s subordinate companies will not increase business or establish new subsidiary companies engaged in business which is the same with or similar to the Company’s main business or forms substantial horizontal competition with the Company. If they act against the commitment above, profits thus generated will be attributable to the Company. 3. As for the commitment for regulating related-party transactions, GD Midea Holding (the controlling shareholder) and Mr. He Xiangjian (the actual controller) have promised that when there are inevitable related-party transactions or such transaction incurred with rational reasons after the completion of the transaction, they will follow the fair, reasonable and market principles in formulating and signing relevant agreements on such related-party transactions and ensure that no harm will be done to interests of the Company and other shareholders. Where GD Midea Holding and Mr. He Xiangjian act against the promise above and damage interests of the Company and other shareholders, In Contro they will assume liabilities for compensation according to relevant provisions. the Commitment lling 4. As for the commitment on independence, GD Midea Holding has promised to proc in the shareh protect Little Swan’s independence in terms of assets, staff, finance, organization and 1 Dec. ess acquisition older business. of report or the and 2010 5. As for the commitment on related-party deposits and borrowings, up to 8 Apr. impl report on actual 2010, the Financial Settlement Center of GD Midea Holding had settled all internal eme equity changes control deposits and borrowings with Hefei Royalstar Washing Equipment Manufacturing Co., ntati ler Ltd.; and GD Midea Holding has promised that there will be no more deposits, on borrowings or other funds flows incurred between the Financial Settlement Center and Hefei Royalstar Washing Equipment Manufacturing Co., Ltd.. 6. The commitment by GD Midea Holding on housing properties with no ownership certificates of the target company for sale is detailed as follows. Two pieces of the buildings of Royalstar Washing Equipment assessed and sold to the Company are of no ownership certificates—the warehouse for half-finished products (176 square meters) and the workshop for injection molding (834 square meters), both located in the old factory of Royalstar Washing Equipment, Hewa Road, Hefei. GD Midea Holding has promised that if loss occurs due to the said two buildings without ownership certificates in the asset disposal process in the future, it will assume the loss thus caused and make compensation to the Company. 7. The commitment by GD Midea Holding on trademarks is detailed as follows. (1) Concerning the “Midea” trademark: Upon approval and implementation of the equity transfer transaction, GD Midea Holding has promised that it will make sure that Royalstar Washing Equipment uses the “Midea” trademark in a proper manner. Royalstar Washing Equipment will be allowed to use the “Midea” trademark with a trademark use fee not more than that paid by Midea Group (the controlling shareholder of GD Midea Holding) and its subsidiaries (currently 3‰ of the annual sales income generated by products using the “Midea” trademark), and upon negotiation and signing of the 24 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 “Agreement for Trademark Use”. The related-party transactions incurred due to the said use of the “Midea” trademark will be submitted to the decision-making organ of the Company for approval according to the stipulated procedure. As such, interests of the Company and its minority shareholders will be safeguarded. (2) Concerning the “Royalstar” trademark: GD Midea Holding has signed the “Contract for Trademark Use” with Royalstar Group and obtained the ordinary use rights of the “Royalstar” (or “荣事 达”) trademark. As the transferor in the transfer transaction of equity interests of Royalstar Washing Equipment, GD Midea Holding has promised that within the scope as agreed in the “Contract for Trademark Use”, if any dispute arises between Royalstar Washing Equipment and Royalstar Group over the former’s execution of the “Contract for Trademark Use”, Little Swan will not be involved. If Royalstar Washing Equipment and Little Swan have to assume any responsibility or loss due to the aforesaid dispute, GD Midea Holding is willing to take on the responsibility instead and make compensations to Royalstar Washing Equipment and Little Swan at full amount. 8. The commitment by GD Midea Holding on social security payment and tax risks is detailed as follows. GD Midea Holding has promised that upon the completion of the said equity transfer deal, if Royalstar Washing Equipment is obliged to take on any responsibility or pay relevant fares as required by relevant government authorities due to its social security payment before the said deal, GD Midea Holding is willing to pay relevant fares for Royalstar Washing Equipment to relevant government authorities in a timely manner and assume any other liability. If any loss thus occurs to Royalstar Washing Equipment or Little Swan, GD Midea Holding is willing to assume relevant responsibilities for compensation. Upon the completion of the said equity transfer deal, if income tax evasion or any other tax risk is found in Royalstar Washing Equipment, GD Midea Holding is willing to assume relevant legal responsibilities and risks and pay relevant taxes in a timely manner to relevant government authorities; and if any loss thus occurs to Little Swan, GD Midea Holding will assume the corresponding responsibility for compensation. Commitments Naugh Nau made in an Naught t ght asset exchange Commitments Naugh made in share Naught t issuance Other commitments Naugh made to Naught t minority shareholders Executed √Yes □No timely or not? Detailed reason for failing to Inapplicable execute and the next plan Make commitments on causing the problems of horizontal √Yes □No competition and related-party transactions or not? Settlement period of Naught commitment When the Company’s controlling shareholder and actual controller remains unchanged, GD Midea Holding, Mr. He Way of Xiangjian and other subsidiary companies under their control excluding the Company and the Company’s subordinate settlement companies will not increase business or establish new subsidiary companies engaged in business which is the same with or similar to the Company’s main business or forms substantial horizontal competition with the Company; when there 25 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 are inevitable related-party transactions or such transaction incurred with rational reasons, they will follow the fair, reasonable and market principles in formulating and signing relevant agreements on such related-party transactions and ensure that no harm will be done to interests of the Company and other shareholders. Fulfillment of Fulfilled commitment 2. The Company’s assets or projects exist profitable prediction and the report period is in such prediction period, it states the profits from the assets or projects reaching original prediction and relevant reasons □Applicable √Inapplicable (XIII) Items of other comprehensive income Unit: RMB Yuan Items Jan.-Jun. 2012 Jan.-Jun. 2011 1. Profits/(losses) from available-for-sale financial assets -56,448 9,408 Less: Effects on income tax generating from available-for-sale financial assets -8,467.2 1,411.2 Net amount transferred into profit and loss in the current period that recognized into other comprehensive income in prior period Subtotal -47,980.8 7,996.8 2. Interests in the investee entities’ other comprehensive income as per equity method Less: Effects on income tax generating from the interests in the investee entities’ other comprehensive income as per equity method Net amount transferred into profit and loss in the current period that recognized into other comprehensive income in prior period Subtotal 3. Profits/(losses) from cash flow hedging instrument Less: Effects on income tax generating from cash flow hedging instrument Net amount transferred into profit and loss in the current period that recognized into other comprehensive income in prior period The adjustment value that is the converted initial recognition amount of arbitrage project Subtotal 4. Converted amount of foreign currency financial statements 119,668.34 -754,385.29 Less: Net value of disposal of oversea operations that recognized into current profit and loss Subtotal 119,668.34 -754,385.29 5. Other Less: Effects on income tax generating from the others that included into other comprehensive income Net amount transferred into profit and loss in the current period that recognized into other comprehensive income in prior period Subtotal Total 71,687.54 -746,388.49 (XIV)Particulars about researches, visits and interviews received in this reporting period Main discussion and Place of Way of Visitor Time of reception Visitor materials provided by reception reception type the Company Conference Institutio Overall operation of 9 Jan. 2012 Room of the Field research Sinolink Securities n the Company Company Conference Institutio Overall operation of 13 Mar. 2012 Room of the Field research Sinolink Securities, E Fund Management n the Company Company 26 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Conference Institutio Overall operation of 22 Mar. 2012 Room of the Field research Huatai United Securities, Bosera Funds n the Company Company Conference Institutio Jinling Evening Nes, Huatai Securities Overall operation of 23 Apr. 2012 Room of the Field research n and individual shareholders the Company Company Conference Morgan Stanley, Keywise Capital, Institutio Overall operation of 8 May 2012 Room of the Field research Azentus Capital, UG Investment, n the Company Company Comgest, Norges Bank Conference Institutio Overall operation of 16 May 2012 Room of the Field research ChinaAMC n the Company Company Conference Institutio Changjiang Securities, PICC Asset Overall operation of 23 May 2012 Room of the Field research n Management the Company Company Conference Institutio Overall operation of 28 May 2012 Room of the Field research Dacheng Fund Management n the Company Company (XV) Particulars about engagement and disengagement of CPAs firm Has this semi-annual report been audited? □Yes √ No □ Inapplicable Whether changed to engage the CPAs firm? □Yes √ No □ Inapplicable (XVI) Particulars about punishment and rectification order received by the Company, its directors, supervisors, senior executives, shareholders, actual controller and acquirer □Applicable √Inapplicable (XVII) Explanation on other significant events □Applicable √Inapplicable (XVIII) Particulars about significant changes in the profitability, asset status and credit status of the Company’s convertible bonds guarantor (Only listed companies which issue convertible corporate bonds are required to fill the form below.) □Applicable √Inapplicable (XIX) Index for information disclosure Internet website for disclosing Newspapers for disclosing Event Publishing date information and the searching information and relevant page approach Announcement on Shareholding Increase by Controlling Shareholder Securities Times: D33,Ta Kung Pao 17 Jan. 2012 www.cninfo.com.cn of Wuxi Little Swan Company B8 Limited Announcement on Resolutions Made at the 15th Session of the 6th Securities Times: D24,Ta Kung Pao 2 Mar. 2012 www.cninfo.com.cn Board of Directors of Wuxi Little B14, B15 Swan Company Limited Abstract of 2011 Annual Report of Securities Times: D24,Ta Kung Pao 2 Mar. 2012 www.cninfo.com.cn Wuxi Little Swan Company Limited B14, B16 Announcement on Prediction of the Line of 2012 Annual Routine Securities Times: D24,Ta Kung Pao 2 Mar. 2012 www.cninfo.com.cn Related-party Transactions of Wuxi B14, B17 Little Swan Company Limited Announcement on the Accumulated Securities Times: D24,Ta Kung Pao Guarantee Line for Controlled 2 Mar. 2012 www.cninfo.com.cn B14, B18 Subsidiaries Provided by Wuxi 27 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Little Swan Company Limited Announcement on Carrying Out Forward Foreign Exchange Securities Times: D24,Ta Kung Pao 2 Mar. 2012 www.cninfo.com.cn Transactions of Wuxi Little Swan B14, B19 Company Limited Notice on Convening the 2011 Annual Shareholders’ General Securities Times: D24,Ta Kung Pao 2 Mar. 2012 www.cninfo.com.cn Meeting of Wuxi Little Swan B14, B20 Company Limited Announcement on Resolutions Made at the 13th Session of the 6th Securities Times: D24,Ta Kung Pao 2 Mar. 2012 www.cninfo.com.cn Supervisory Committee of Wuxi B14, B21 Little Swan Company Limited Announcement on Correction in Securities Times: D20,Ta Kung Pao 2011 Annual Report of Wuxi Little 6 Mar. 2012 www.cninfo.com.cn B5 Swan Company Limited Announcement on Resolutions Made at the 16th Session of the 6th Securities Times: B28,Ta Kung Pao 31 Mar. 2012 www.cninfo.com.cn Board of Directors of Wuxi Little B2 Swan Company Limited Announcement on Entrusting Financial Management with Securities Times: B28,Ta Kung Pao 31 Mar. 2012 www.cninfo.com.cn Self-owned Idle Funds of Wuxi B2 Little Swan Company Limited Announcement on the Line of 2012 Annual Routine Related-party Securities Times: B28,Ta Kung Pao Transactions Newly Increased by 31 Mar. 2012 www.cninfo.com.cn Subsidiaries of Wuxi Little Swan B2 Company Limited Announcement on Resolutions Made at the 14th Session of the 6th Securities Times: B28,Ta Kung Pao 31 Mar. 2012 www.cninfo.com.cn Supervisory of Wuxi Little Swan B2 Company Limited Announcement on Adding Special Proposals and Supplementing Securities Times: B20,Ta Kung Pao Notice for 2011 Annual 7 Apr. 2012 www.cninfo.com.cn Shareholders’ General Meeting of B7 Wuxi Little Swan Company Limited Announcement on Resolutions Made at the 2011 Annual Securities Times: D28,Ta Kung Pao 20 Apr. 2012 www.cninfo.com.cn Shareholders’ General Meeting of B2 Wuxi Little Swan Company Limited Announcement on Summary of the Securities Times: C53,Ta Kung Pao First Quarterly Report for 2012 of 23 Apr. 2012 www.cninfo.com.cn A18 Wuxi Little Swan Company Limited Announcement on Implementation of 2011 Annual Equity Distribution Securities Times: D13,Ta Kung Pao 5 Jun. 2012 www.cninfo.com.cn of Wuxi Little Swan Company B3 Limited Suggestive Announcement on Releasing from Trading Moratorium Securities Times: D20,Ta Kung Pao 4 Jul. 2012 www.cninfo.com.cn of Wuxi Little Swan Company B10 Limited Announcement on Resolutions Made at the 18th Session of the 6th Securities Times: D20,Ta Kung Pao 31 Jul. 2012 www.cninfo.com.cn Board of Directors of Wuxi Little B7 Swan Company Limited Notice on Convening the First Securities Times: D20,Ta Kung Pao Special Shareholders’ General 31 Jul. 2012 www.cninfo.com.cn B7 Meeting for 2012 of Wuxi Little 28 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Swan Company Limited Announcement on Resolutions Made at the 16th Session of the 6th Securities Times: D20,Ta Kung Pao 31 Jul. 2012 www.cninfo.com.cn Supervisory Committee of Wuxi B7 Little Swan Company Limited VIII. Financial Report (I)Audit opinion Has this semi-annual report been audited? □Yes √ No □ Inapplicable (II)Financial statements Consolidated statements or not? √ Yes □ No □ Inapplicable The monetary unit in the financial statements of the financial report is RMB Yuan if not specified otherwise. Monetary unit of notes to financial statements: RMB Yuan 1. Consolidated balance sheet Prepared by Wuxi Little Swan Co., Ltd. Unit: RMB Yuan Item Note 30 Jun. 2012 31 Dec. 2011 Current Assets: Monetary funds 3,120,949,620.15 2,415,450,351.24 Settlement reserves Intra-group lendings Transactional financial assets 4,292,300 Notes receivable 1,001,881,578.18 2,757,923,958.94 Accounts receivable 995,885,577.81 929,389,061.45 Accounts paid in advance 216,011,619.87 250,051,980.25 Premiums receivable Reinsurance premiums receivable Receivable reinsurance contract reserves Interest receivable Dividend receivable Other accounts receivable 18,887,033.61 15,548,447.5 Financial assets purchased under agreements to resell Inventories 622,818,920.09 809,400,728.98 Non-current assets due within 1 year Other current assets 61,849,729.4 112,052,669.26 Total current assets 6,038,284,079.11 7,294,109,497.62 Non-current assets: Loans by mandate and advances granted Available-for-sale financial assets 228,144 284,592 Held-to-maturity investments Long-term accounts receivable Long-term equity investment 5,889,739.26 5,838,851.75 Investing property 5,146,268.73 5,242,947.48 Fixed assets 1,328,967,037.77 1,365,332,660.33 Construction in progress 4,954,600 29 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Engineering materials Disposal of fixed assets Production biological assets Oil-gas assets Intangible assets 312,965,665.76 316,860,016.08 R&D expense Goodwill Long-term deferred expenses 43,120,404.2 52,754,858.43 Deferred income tax assets 86,597,767.27 104,762,053.25 Other non-current assets Total of non-current assets 1,787,869,626.99 1,851,075,979.32 Total assets 7,826,153,706.1 9,145,185,476.94 Current liabilities: Short-term borrowings 6,961,486.36 Borrowings from Central Bank Customer bank deposits and due to banks and other financial institutions Intra-group borrowings Transactional financial liabilities Notes payable 1,131,522,411.92 1,539,319,483.44 Accounts payable 2,023,593,612.48 2,815,488,171.38 Accounts received in advance 358,450,431.48 485,754,049.8 Financial assets sold for repurchase Handling charges and commissions payable Employee’s compensation payable 97,311,748.42 135,480,654.26 Tax payable -49,512,188.46 1,463,883.21 Interest payable Dividend payable 3,710,206.21 2,838,070.21 Other accounts payable 161,576,058.72 165,405,271.16 Reinsurance premiums payable Insurance contract reserves Payables for acting trading of securities Payables for acting underwriting of securities Non-current liabilities due within 1 year Other current liabilities Total current liabilities 3,726,652,280.77 5,152,711,069.82 Non-current liabilities: Long-term borrowings Bonds payable Long-term payables Specific payables Estimated liabilities 19,418,640.4 20,152,637.08 Deferred income tax liabilities 19,176.6 671,488.8 Other non-current liabilities 7,318,250 6,621,250 Total non-current liabilities 26,756,067 27,445,375.88 Total liabilities 3,753,408,347.77 5,180,156,445.7 Owners’ equity (or shareholders’ equity) 30 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Paid-up capital (or share capital) 632,487,764 632,487,764 Capital reserves 1,096,109,333.71 1,096,157,314.51 Less: Treasury stock Specific reserves Surplus reserves 249,433,912.28 249,433,912.28 Provisions for general risks Retained profits 1,555,341,091.53 1,465,610,508.78 Foreign exchange difference -2,424,893.78 -2,544,562.12 Total equity attributable to owners of the Company 3,530,947,207.74 3,441,144,937.45 Minority interests 541,798,150.59 523,884,093.79 Total owners’ (or shareholders’) equity 4,072,745,358.33 3,965,029,031.24 Total liabilities and owners’ (or shareholders’) 7,826,153,706.1 9,145,185,476.94 equity Legal representative: Mr. Fang Hongbo Person-in-charge of the accounting work: Ms. Xiao Li Chief of the accounting division: Mr. Zhong Fangliu 2. Balance sheet of the Company Unit: RMB Yuan Item Note 30 Jun. 2012 31 Dec. 2011 Current Assets: Monetary funds 2,148,447,862.14 1,550,043,784.36 Transactional financial assets 2,668,300 Notes receivable 615,569,148.23 1,764,588,946.47 Accounts receivable 724,430,774.58 707,158,935.38 Accounts paid in advance 369,346,206.58 338,046,007.02 Interest receivable Dividend receivable Other accounts receivable 18,126,904.01 11,930,349.24 Inventories 358,435,523.7 449,255,444.14 Non-current assets due within 1 year Other current assets 40,284,918.81 75,984,449.98 Total current assets 4,274,641,338.05 4,899,676,216.59 Non-current assets: Available-for-sale financial assets 228,144 284,592 Held-to-maturity investments Long-term accounts receivable Long-term equity investment 1,669,633,818.33 1,669,582,930.82 Investing property 5,146,268.73 5,242,947.48 Fixed assets 610,184,450.15 630,160,566.16 Construction in progress 970,000 Engineering materials Disposal of fixed assets Production biological assets Oil-gas assets Intangible assets 108,318,198.07 109,720,754.23 R&D expense Goodwill Long-term deferred expenses 40,332,094.49 46,948,131.13 31 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Deferred income tax assets 47,204,452.96 61,626,184.39 Other non-current assets Total of non-current assets 2,482,017,426.73 2,523,566,106.21 Total assets 6,756,658,764.78 7,423,242,322.8 Current liabilities: Short-term borrowings Transactional financial liabilities Notes payable 753,384,896.6 1,046,275,176.33 Accounts payable 1,754,670,097.35 1,923,823,612.54 Accounts received in advance 230,430,806.6 385,922,579.96 Employee’s compensation payable 23,040,782.47 42,610,721.5 Tax payable -11,156,266.17 54,075,370.51 Interest payable Dividend payable 3,710,206.21 2,838,070.21 Other accounts payable 181,668,477.24 192,113,998.82 Non-current liabilities due within 1 year Other current liabilities Total current liabilities 2,935,749,000.3 3,647,659,529.87 Non-current liabilities: Long-term borrowings Bonds payable Long-term payables Specific payables Estimated liabilities 384,464.01 1,199,402.08 Deferred income tax liabilities 19,176.6 427,888.8 Other non-current liabilities 900,000 1,200,000 Total non-current liabilities 1,303,640.61 2,827,290.88 Total liabilities 2,937,052,640.91 3,650,486,820.75 Owners’ equity (or shareholders’ equity) Paid-up capital (or share capital) 632,487,764 632,487,764 Capital reserves 1,258,161,388.94 1,258,209,369.74 Less: Treasury stock Specific reserves Surplus reserves 236,783,768.38 236,783,768.38 Retained profits 1,692,173,202.55 1,645,274,599.93 Foreign exchange difference Total owners’ (or shareholders’) equity 3,819,606,123.87 3,772,755,502.05 Total liabilities and owners’ (or shareholders’) 6,756,658,764.78 7,423,242,322.8 equity 3. Consolidated income statement Unit: RMB Yuan Item Note Jan.-Jun. 2012 Jan.-Jun. 2011 I. Total operating revenues 3,101,328,731.14 6,747,514,122.53 Including: Sales income 3,101,328,731.14 6,747,514,122.53 Interest income Premium income Handling charge and commission income 32 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 II. Total operating cost 2,849,301,204.78 6,398,355,750.97 Including: Cost of sales 2,453,880,581.19 5,611,799,841.3 Interest expenses Handling charge and commission expenses Surrenders Net claims paid Net amount withdrawn for the insurance contract reserve Expenditure on policy dividends Reinsurance premium Taxes and associate charges 15,731,754.99 15,808,434.08 Selling and distribution expenses 283,844,635.96 524,121,604.12 Administrative expenses 123,624,901.19 239,982,133.45 Financial expenses -30,539,990.76 1,111,770.69 Asset impairment loss 2,759,322.21 5,531,967.33 Add: Gain/(loss) from change in fair value (“-” means loss) -4,292,300 11,689,065.84 Gain/(loss) from investment (“-” means loss) 5,062,792.63 29,611,899.97 Including: share of profits in associates and joint ventures Foreign exchange gains (“-” means loss) III. Business profit (“-” means loss) 252,798,018.99 390,459,337.37 Add: non-operating income 19,060,727.43 35,813,800.82 Less: non-operating expense 3,687,447.12 8,532,952.89 Including: loss from non-current asset disposal IV. Total profit (“-” means loss) 268,171,299.3 417,740,185.3 Less: Income tax expense 34,029,106.95 84,435,392.66 V. Net profit (“-” means loss) 234,142,192.35 333,304,792.64 Including: Net profit achieved by combined parties before the combinations Attributable to owners of the Company 216,228,135.55 280,338,482.78 Minority shareholders’ income 17,914,056.8 52,966,309.86 VI. Earnings per share -- -- (I) Basic earnings per share 0.34 0.44 (II) Diluted earnings per share 0.34 0.44 Ⅶ. Other comprehensive incomes 71,687.54 -746,388.49 Ⅷ. Total comprehensive incomes 234,213,879.89 332,558,404.15 Attributable to owners of the Company 216,299,823.09 279,592,094.29 Attributable to minority shareholders 17,914,056.8 52,966,309.86 Where business mergers under the same control occurred in this report period, the net profit achieved by the merged parties before the business mergers was RMB 0.00. Legal representative: Mr. Fang Hongbo Person-in-charge of the accounting work: Ms. Xiao Li Chief of the accounting division: Mr. Zhong Fangliu 4. Income statement of the Company Unit: RMB Yuan Item Note Jan.-Jun. 2012 Jan.-Jun. 2011 I. Total sales 1,895,174,546.25 4,503,507,595.18 Less: cost of sales 1,465,593,618.16 3,859,258,085.70 Business taxes and surcharges 12,694,175.13 7,417,194.31 33 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Distribution expenses 183,560,344.78 318,150,362.73 Administrative expenses 72,560,340.83 153,475,177.1 Financial costs -25,175,650.73 753,612.67 Impairment loss -13,852.04 12,206,134.25 Add: gain/(loss) from change in fair value (“-” means loss) -2,668,300 8,843,355.56 Gain/(loss) from investment (“-” means loss) 3,227,992.63 72,317,097.26 Including: income form investment on associates and joint ventures II. Business profit (“-” means loss) 186,515,262.75 233,407,481.24 Add: non-business income 12,106,147.22 17,807,847.27 Less: non-business expense 3,224,662.42 6,674,075.6 Including: loss from non-current asset disposal III. Total profit (“-” means loss) 195,396,747.55 244,541,252.91 Less: income tax expense 22,000,592.14 43,893,886.62 IV. Net profit (“-” means loss) 173,396,155.41 200,647,366.29 V. Earnings per share -- -- (I) Basic earnings per share (II) Diluted earnings per share VI. Other comprehensive income -47,980.8 7,996.8 VII. Total comprehensive income 173,348,174.61 200,655,363.09 5. Consolidated cash flow statement Unit: RMB Yuan Item Jan.-Jun. 2012 Jan.-Jun. 2011 I. Cash flows from operating activities: Cash received from sale of commodities and rendering of service 3,674,745,722.64 3,434,839,906.65 Net increase of deposits from customers and dues from banks Net increase of loans from the central bank Net increase of funds borrowed from other financial institutions Cash received from premium of original insurance contracts Net cash received from reinsurance business Net increase of deposits of policy holders and investment fund Net increase of disposal of tradable financial assets Cash received from interest, handling charges and commissions Net increase of intra-group borrowings Net increase of funds in repurchase business Tax refunds received 79,016,919.17 99,468,275.47 Other cash received relating to operating activities 53,681,539.89 22,789,774.26 Subtotal of cash inflows from operating activities 3,807,444,181.7 3,557,097,956.38 Cash paid for goods and services 2,160,266,283.45 2,993,839,332.97 Net increase of customer lendings and advances Net increase of funds deposited in the central bank and amount due from banks Cash for paying claims of the original insurance contracts Cash for paying interest, handling charges and commissions Cash for paying policy dividends Cash paid to and for employees 248,006,127.35 292,624,388.63 Various taxes paid 172,805,301.91 228,116,211.42 34 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Other cash payment relating to operating activities 316,928,858.26 551,518,850.99 Subtotal of cash outflows from operating activities 2,898,006,570.97 4,066,098,784.01 Net cash flows from operating activities 909,437,610.73 -509,000,827.63 II. Cash flows from investing activities: Cash received from withdrawal of investments Cash received from return on investments 5,011,905.12 12,179,078.24 Net cash received from disposal of fixed assets, intangible assets 5,409,242.65 18,117,988.9 and other long-term assets Net cash received from disposal of subsidiaries or other business -3,027,789.49 units Other cash received relating to investing activities Subtotal of cash inflows from investing activities 10,421,147.77 27,269,277.65 Cash paid to acquire fixed assets, intangible assets and other 86,310,128.35 151,044,435.96 long-term assets Cash paid for investment Net increase of pledged loans Net cash paid to acquire subsidiaries and other business units Other cash payments relating to investing activities Subtotal of cash outflows from investing activities 86,310,128.35 151,044,435.96 Net cash flows from investing activities -75,888,980.58 -123,775,158.31 III. Cash Flows from Financing Activities: Cash received from capital contributions Including: Cash received from minority shareholder investments by subsidiaries Cash received from borrowings 76,635,770.48 Cash received from issuance of bonds Other cash received relating to financing activities Subtotal of cash inflows from financing activities 0 76,635,770.48 Repayment of borrowings 6,961,486.36 46,065,260.92 Cash paid for interest expenses and distribution of dividends or 118,658,592 76,637,741.32 profit Including: dividends or profit paid by subsidiaries to minority shareholders Other cash payments relating to financing activities Sub-total of cash outflows from financing activities 125,620,078.36 122,703,002.24 Net cash flows from financing activities -125,620,078.36 -46,067,231.76 IV. Effect of foreign exchange rate changes on cash and cash equivalents V. Net increase in cash and cash equivalents 707,928,551.79 -678,843,217.7 Add: Opening balance of cash and cash equivalents 2,279,653,302.57 2,119,023,194.93 VI. Closing balance of cash and cash equivalents 2,987,581,854.36 1,440,179,977.23 6. Cash flow statement of the Company Unit: RMB Yuan Item Jan.-Jun. 2012 Jan.-Jun. 2011 I. Cash flows from operating activities: Cash received from sale of commodities and rendering of service 2,247,822,270.5 2,148,607,456.5 Tax refunds received 12,058,954.37 34,686,957.95 Other cash received relating to operating activities 42,551,391.25 12,645,168.45 Subtotal of cash inflows from operating activities 2,302,432,616.12 2,195,939,582.9 35 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Cash paid for goods and services 1,096,066,119.14 2,121,912,978.38 Cash paid to and for employees 137,373,199.9 156,651,462.53 Various taxes paid 132,773,784.78 120,478,532.57 Other cash payment relating to operating activities 185,171,318.69 331,378,118.59 Subtotal of cash outflows from operating activities 1,551,384,422.51 2,730,421,092.07 Net cash flows from operating activities 751,048,193.61 -534,481,509.17 II. Cash flows from investing activities: Cash received from retraction of investments Cash received from return on investments 3,137,105.12 46,179,183 Net cash received from disposal of fixed assets, intangible assets 5,297,792.57 16,635,964.5 and other long-term assets Net cash received from disposal of subsidiaries or other business 37,500,000 units Other cash received relating to investing activities Subtotal of cash inflows from investing activities 8,434,897.69 100,315,147.5 Cash paid to acquire fixed assets, intangible assets and other 62,176,366.55 33,198,788.79 long-term assets Cash paid for investment Net cash paid to acquire subsidiaries and other business units 200,000 Other cash payments relating to investing activities Subtotal of cash outflows from investing activities 62,176,366.55 33,398,788.79 Net cash flows from investing activities -53,741,468.86 66,916,358.71 III. Cash Flows from Financing Activities: Cash received from capital contributions Cash received from borrowings 76,635,770.48 Other cash received relating to financing activities Subtotal of cash inflows from financing activities 0 76,635,770.48 Repayment of borrowings Cash paid for interest expenses and distribution of dividends or 118,658,592 60,923,741.32 profit Other cash payments relating to financing activities Sub-total of cash outflows from financing activities 118,658,592 60,923,741.32 Net cash flows from financing activities -118,658,592 15,712,029.16 IV. Effect of foreign exchange rate changes on cash and cash equivalents V. Net increase in cash and cash equivalents 578,648,132.75 -451,853,121.3 Add: Opening balance of cash and cash equivalents 1,470,854,364.19 1,492,995,931.54 VI. Closing balance of cash and cash equivalents 2,049,502,496.94 1,041,142,810.24 36 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 7. Consolidated statement of changes in owners’ equity Reporting period Unit: RMB Yuan Reporting period Equity attributable to owners of the Company Item Paid-up Less: Specifi Gener Minority Total owners’ capital (or treasur c al risk interests equity Capital reserve Surplus reserve Retained profit Others share y reserv reserv capital) stock e e I. Balance at the end of the previous year 632,487,764 1,096,157,314.51 249,433,912.28 1,465,610,508.78 -2,544,562.12 523,884,093.78 3,965,029,031.23 Add: change of accounting policy Correction of errors in previous periods Other II. Balance at the beginning of the year 632,487,764 1,096,157,314.51 249,433,912.28 1,465,610,508.78 -2,544,562.12 523,884,093.78 3,965,029,031.23 III. Increase/ decrease of amount in the year -47,980.8 89,730,582.75 119,668.34 17,914,056.8 107,716,327.09 (“-” means decrease) (I) Net profit 216,228,135.55 17,914,056.8 234,142,192.35 (II) Other comprehensive incomes -47,980.8 119,668.34 71,687.54 Subtotal of (I) and (II) -47,980.8 216,228,135.55 119,668.34 17,914,056.8 234,213,879.89 (III) Capital paid in and reduced by owners 0 0 0 0 0 0 0 0 0 0 1. Capital paid in by owners 2. Amounts of share-based payments recognized in owners’ equity 3. Others (IV) Profit distribution 0 0 0 0 0 0 -126,497,552.8 0 0 -126,497,552.8 1. Appropriations to surplus reserves 2. Appropriations to general risk provisions 3. Appropriations to owners (or -126,497,552.8 -126,497,552.8 shareholders) 4. Other 37 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 (V) Internal carry-forward of owners’ 0 0 0 0 0 0 0 0 0 0 equity 1. New increase of capital (or share capital) from capital public reserves 2. New increase of capital (or share capital) from surplus reserves 3. Surplus reserves for making up losses 4. Other (Ⅵ) Specific reserve 1. Withdrawn for the period 2. Used in the period (Ⅶ) Other IV. Closing balance 632,487,764 1,096,109,333.71 249,433,912.28 1,555,341,091.53 -2,424,893.78 541,798,150.58 4,072,745,358.33 Last year Unit: RMB Yuan Last year Equity attributable to owners of the Company Item Paid-up Less: Specifi Gener Minority Total owners’ capital (or treasur c al risk interests equity Capital reserve Surplus reserve Retained profit Others share y reserv reserv capital) stock e e I. Balance at the end of the previous year 632,487,764 1,099,965,927.1 212,889,613.44 1,112,075,620.21 -937,948.99 454,361,306.04 3,510,842,281.8 Add: retrospective adjustments due to business combinations under the same control Add: change of accounting policy Correction of errors in previous periods Other II. Balance at the beginning of the year 632,487,764 1,099,965,927.1 212,889,613.44 1,112,075,620.21 -937,948.99 454,361,306.04 3,510,842,281.8 III. Increase/ decrease of amount in the year -3,808,612.59 36,544,298.84 353,534,888.57 -1,606,613.13 69,522,787.75 454,186,749.44 (“-” means decrease) 38 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 (I) Net profit 353,534,888.57 85,236,787.75 438,771,676.32 (II) Other comprehensive incomes -23,990.4 -1,606,613.13 -1,630,603.53 Subtotal of (I) and (II) -23,990.4 353,534,888.57 -1,606,613.13 85,236,787.75 437,141,072.79 (III) Capital paid in and reduced by owners 0 -3,784,622.19 0 0 0 0 0 0 -15,714,000 -19,498,622.19 1. Capital paid in by owners 2. Amounts of share-based payments recognized in owners’ equity 3. Others -3,784,622.19 -15,714,000 -19,498,622.19 (IV) Profit distribution 0 0 0 0 0 0 0 0 0 0 1. Appropriations to surplus reserves 2. Appropriations to general risk provisions 3. Appropriations to owners (or shareholders) 4. Other (V) Internal carry-forward of owners’ 0 0 0 0 0 0 0 0 0 0 equity 1. New increase of capital (or share capital) from capital public reserves 2. New increase of capital (or share capital) from surplus reserves 3. Surplus reserves for making up losses 4. Other (Ⅵ) Specific reserve 1. Withdrawn for the period 2. Used in the period (Ⅶ) Other IV. Closing balance 632,487,764 1,096,157,314.51 249,433,912.28 1,465,610,508.78 -2,544,562.12 523,884,093.78 3,965,029,031.23 39 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 8. Statement of changes in owners’ equity of the Company Reporting period Unit: RMB Yuan Reporting period Specifi Item General Paid-up capital (or share Less: treasury c Capital reserve Surplus reserve risk Retained profit Total owners’ equity capital) stock reserv reserve e I. Balance at the end of the previous year 632,487,764 1,258,209,369.74 236,783,768.38 1,645,274,599.93 3,772,755,502.05 Add: change of accounting policy Correction of errors in previous periods Other II. Balance at the beginning of the year 632,487,764 1,258,209,369.74 236,783,768.38 1,645,274,599.93 3,772,755,502.05 III. Increase/ decrease of amount in the year -47,980.8 46,898,602.62 46,850,621.82 (“-” means decrease) (I) Net profit 173,396,155.42 173,396,155.42 (II) Other comprehensive incomes -47,980.8 -47,980.8 Subtotal of (I) and (II) -47,980.8 173,396,155.42 173,348,174.62 (III) Capital paid in and reduced by owners 0 0 0 0 0 0 0 0 1. Capital paid in by owners 2. Amounts of share-based payments recognized in owners’ equity 3. Others (IV) Profit distribution 0 0 0 0 0 0 -126,497,552.8 -126,497,552.8 1. Appropriations to surplus reserves 2. Appropriations to general risk provisions 3. Appropriations to owners (or -126,497,552.8 -126,497,552.8 shareholders) 4. Other (V) Internal carry-forward of owners’ equity 0 0 0 0 0 0 0 0 40 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 1. New increase of capital (or share capital) from capital public reserves 2. New increase of capital (or share capital) from surplus reserves 3. Surplus reserves for making up losses 4. Other (Ⅵ) Specific reserve 1. Withdrawn for the period 2. Used in the period (Ⅶ) Other IV. Closing balance 632,487,764 1,258,161,388.94 236,783,768.38 1,692,173,202.55 3,819,606,123.87 Last year Unit: RMB Yuan Last year Specifi Item General Paid-up capital (or share Less: treasury c Capital reserve Surplus reserve risk Retained profit Total owners’ equity capital) stock reserv reserve e I. Balance at the end of the previous year 632,487,764 1,258,233,360.14 200,239,469.54 1,379,624,686.82 3,470,585,280.5 Add: change of accounting policy Correction of errors in previous periods Other II. Balance at the beginning of the year 632,487,764 1,258,233,360.14 200,239,469.54 1,379,624,686.82 3,470,585,280.5 III. Increase/ decrease of amount in the year -23,990.4 36,544,298.84 265,649,913.11 302,170,221.55 (“-” means decrease) (I) Net profit 365,442,988.35 365,442,988.35 (II) Other comprehensive incomes -23,990.4 -23,990.4 Subtotal of (I) and (II) -23,990.4 365,442,988.35 365,418,997.95 (III) Capital paid in and reduced by owners 0 0 0 0 0 0 0 0 41 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 1. Capital paid in by owners 2. Amounts of share-based payments recognized in owners’ equity 3. Others (IV) Profit distribution 0 0 0 0 36,544,298.84 0 -99,793,075.24 -63,248,776.4 1. Appropriations to surplus reserves 36,544,298.84 -36,544,298.84 2. Appropriations to general risk provisions 3. Appropriations to owners (or -63,248,776.4 -63,248,776.4 shareholders) 4. Other (V) Internal carry-forward of owners’ equity 0 0 0 0 0 0 0 0 1. New increase of capital (or share capital) from capital public reserves 2. New increase of capital (or share capital) from surplus reserves 3. Surplus reserves for making up losses 4. Other (Ⅵ) Specific reserve 1. Withdrawn for the period 2. Used in the period (Ⅶ) Other IV. Closing balance 632,487,764 1,258,209,369.74 236,783,768.38 1,645,274,599.93 3,772,755,502.05 42 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 (III) Company profile Wuxi Little Swan Company Ltd. (hereinafter referred to as “the Company”) was founded as a oriented-collection company limited with the approval of Su-Ti-Gai-Sheng (1993) No. 253 document from Economic Reform Commission of Jiangsu Province. Then the Company issued 70,000,000 shares of B-share and transformed to a state-collectively–owned enterprise with the approval of (1996) No. 52 document from Jiangsu Jiangsu Province of the People’s Republic of China (the “PRC”), Zheng-Wei-Fa (1996) No. 14 document from China Securities Regulatory Commission of the State Council and Shen-Zheng-Ban-Han (1996) No. 4 from Shenzhen Municipal Securities Regulatory Office. And the total raised fund from this issuance of B-share totaled RMB 310 million, and the Company was formally listed in Shenzhen Stock Exchange on Jul. 1996 with the short form of stock as Little Swan B and stock code as 200418. In Mar. 1997, the Company publicly issued 60,000,000 shares of renminbi ordinary share (including 9,000,000 shares of staff-share) by adopting the way of internet pricing with the approval of Zheng-Jian-Fa-Zi (1997) No. 55 from CSRC. And the total raised fund from this issuance of A-share totaled RMB 720.83 million, and the Company was formally listed in Shenzhen Stock Exchange in Mar. 1997 with the short form of stock as Little Swan A and stock code as 000418. The Company finished the Equity Division Reform Plan on 7 Aug. 2006: the Company’s A-share holders registered on the changing date of equity ownership gained 2.5 shares of consideration share from un-tradable shareholders with their every ten shares of tradable A-share. All un-tradable shareholders paid for shares consideration of shares totaling 18 million, of which they acquired shares’ rights for trading. The Company’s resolutions of Shareholders’ General Meeting for Y2007: the newly added registered capital was RMB 182,551,920, adding five shares to every ten shares basing on the total share capital of 365,103,840 shares at the end of 2007, transferring the public reserves to 182,551,920 shares with par value of RMB 1 per share, thus the added share capital totaled RMB 182,551,920. According to the resolutions of the 4th Session of the Sixth Board of Directors and the 1st Provisional Shareholders General Meeting in 2010, having approved by China Securities Regulatory Commission (SFC license [2010] 1577), the company launched directional add-issuance of 84,832,004 A shares to buy 69.47% of the shares of Hefei Royalstar Washing Machine Manufacture Co., Ltd from its shareholder Midea Electric Appliances Co., Ltd. Par value per share is RMB 1, and the issue price is RMB8.63 per share. This add-issuance increased the share capital by RMB 84,832,004. As of 31 Dec. 2011, registered capital of the company is RMB 632,487,764, among which the restricted exchange-traded A shares are 225,284,106 shares, accounting for 35.62% of the whole shares; the unrestricted exchange-traded A shares are 216,167,786 shares, accounting for 34.18%; the restricted exchange-traded B shares are 30,851,714 shares, accounting for 4.88% of the whole shares; and the unrestricted exchange-traded B shares are 160,184,158 shares, account for 25.33% of the whole shares. Registered Address: No. 18, Changjiang South Road, National High-tech Industrial Development Zone, Wuxi Office Address: No. 18, Changjiang South Road, Wuxi, Jiangsu Province Structure of the company: Share-holding Company The Company belongs to household appliances so the main business scope is as follows: manufacture and sales as well as after-sale service of household appliances, industrial ceramics, environmental dry-cleaning equipment, cleaning mechanical equipment, subsequent finishing equipment and accessory; cleaning service; machinery processing; import and export business of “Little Swan” or agent products and technologies (excluding the products or technology restricted to operate, export or import in China); technical service for household appliances; contracting foreign engineering in international bidding (operate with effective certificate) Parent company: GD MIDEA HOLDING CO.,LTD. Ultimate controller: Mr. He Xiangjian The financial statements were approved and authorized for issue by the board of directors on the date of 23 Aug. 2012. (Ⅳ) Main accounting policies, accounting estimates and corrections of prior accounting errors 43 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 1. Preparation basis of the financial statements The company recognizes and measures transactions occurred according to Chinese Accounting Standards – Basic standard and other related accounting standards, prepares the financial statements based on accrual accounting and the underlying assumption of going concern. 2. Statement of compliance with Enterprise accounting standards The financial statements of the company comply with the requirements of Accounting Standards; the company's financial position, operating results, cash flows and other relevant information are truly and completely disclosed in the financial statements. 3. Accounting period The company's accounting year is from 1st January to 31st December for each calendar year. 4. Recording currency The recording currency of the company is Renminbi Recording currency of overseas subsidiaries: The recording currency of overseas subsidiaries is US Dollar 5. Accounting processing method of business combination under the same control and not under the same control (1) The business combinations which are under the same control The assets and liabilities that the combining party obtains in a business combination shall be measured on the basis of their carrying amount in the combined party on the combining date. As for the balance between the carrying amount of the net assets obtained by the combining party and the carrying amount of the consideration paid by it (or the total par value of the shares issued), the additional paid-in capital shall be adjusted. If the additional paid-in capital is not sufficient to be offset, the retained earnings shall be adjusted. (2) The business combinations which are not under the same control The acquirer shall recognize the initial cost of combination under the following principles: a) When business combination is achieved through a single exchange transaction, the cost of a business combination is the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity securities issued by the acquirer, in exchange for control of the acquiree; b)For the business combination involved more than one exchange transaction, the cost of the combination is the aggregate cost of the individual transactions; All direct expenses related to the combination paid by the acquirer, including the auditor fee, evaluation expense, legal service expense, etc will be recorded into the profit and loss of the current period. The acquirer shall recognize the difference that the combination costs are over the fair value of the identifiable net assets obtained from acquiree as goodwill; if the combination costs are less than the fair value of the identifiable net assets obtained from acquiree, the acquirer shall reexamine the measurement of the fair values of the identifiable assets, liabilities and contingent liabilities obtained from the acquiree as well as the combination costs; and then after the reexamination, the result is still the same, the difference shall be recorded in the profit and loss of the current period. 44 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 6. Preparation method of consolidated financial statements (1) Preparation methods for consolidated financial statements The combination scope of the consolidated financial statement will be determined on the basis of the actual control. The consolidated financial statements will be subject to the No. 33 Enterprise Accounting Standards –Consolidated Financial Statement. In preparing the consolidated financial statements, all key accounts and transactions between the company and subsidiaries, subsidiaries and subsidiaries will be offset. The net assets of merged subsidiaries that are attributable to the minority of shareholder equities will be separately listed in the shareholder equities of consolidated financial statements In case the accounting policies and accounting periods of subsidiaries differ from those of parent company, the financial statements of subsidiaries will be adjusted. For those subsidiary acquired not under the same control, the Company has made relevant adjustment in the subsidiary’ financial statement according to the fair value of identifiable net assets; for those subsidiary acquired under the same control, when preparing the consolidated financial statements, the reporting subject after combination is considered to operate since the ultimate controller carried out control, and adjusted the opening balance of consolidated balance sheet as well as the relevant items in the consolidated statements. (2) As for the event about purchasing and then selling (or selling and then purchasing) equities of the same subsidiary, the Company shall disclose relevant accounting treatment methods. Naught 7. Recognition criterion of cash and cash equivalent For the purposes of the cash flow statement, cash refers to all cash in hand and all deposits which are readily available for payment. Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 8. Foreign currency transactions and translations (1) Foreign currency All foreign currency transactions during the period have been translated in to RMB at the spot exchange rate issued by The People’s Bank of China on the transaction date. The foreign currency conversions and any transactions involved foreign currency conversions have been translated in to RMB at the actually used exchange rate during the transaction process. On the balance sheet date, the company treats the foreign currency monetary items and foreign currency non-monetary items according to the following provisions: A. The foreign currency monetary assets and liabilities items have been translated at the spot exchange rate issued by The People’s Bank of China on the balance sheet date. The exchange difference arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange rate at the time of initial recognition shall be recorded in the exchange difference in the current period. Of which, the exchange difference arising from those foreign currency borrowings specifically for the construction of fixed assets shall be treated by the principle for capitalization of borrowing cost; and the exchange difference happened during the handling period shall be recorded as handling charges; other cost shall be recorded as current financial expenses. B. A foreign currency non-monetary item measured at the historical costs shall still be translated at the spot exchange rate by The People’s Bank of China on the transaction date, of which the amount of functional currency shall not be changed; the foreign currency non-monetary items measured at their fair values have been translated at the spot exchange rate issued by The People’s Bank of China on the recognition date for the fair value, the exchange difference thereupon shall be considered as changes in fair value, and recorded into gains and losses of the current period. 45 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 (2) Translation of foreign currency financial statements The asset and liability items in the balance sheet about the overseas businesses of the company have been translated at the spot exchange rate on the balance sheet date. Among the owner’s equity items, except for the items as “undistributed profits”, other items have been translated at the spot exchange rate at the time when they are incurred. The income and expense items in the profit statement have been translated at an exchange rate which is approximate to the spot exchange rate of the transaction date. The differences arising from the translation of foreign currency financial statements in compliance with the aforesaid items have been presented separately under the owner’s equities of the balance sheets. Foreign currency cash flows and the cash flows of foreign subsidiaries have been translated at an exchange rate which is approximate to the spot exchange rate at the time when the cash flows incurred. The differences arising from fluctuations in exchange have been presented separately in the statement of cash flows. 9. Financial instruments (1) Classification of financial assets Based on the investment purpose and economic essence, the company classifies the financial assets into the following four categories: transactional financial assets, financial assets available for sale, account receivables and held-to-maturity investments. (2) Recognition basis and measurements for financial instruments Transactional financial assets are measured at fair value with variations of fair value accounted into current income account; financial assets available for sale are measured at fair value with the variations accounted into shareholders' equity; account receivables and held-to-maturity investments are measured at the post-amortization costs. The company has divided its financial liabilities into one category measured at fair value with variations accounted into current profit and loss and another category measured at the post-amortization costs. (3) Recognition and Accounting Method for Transfer of Financial Assets The term "transfer of a financial asset" refers to the company’s (the transferor's) transferring or delivering a financial asset to a party other than the issuer of the financial asset (the transferee). Transfer of a financial asset could be the whole asset or part of it. It includes the following two cases: 1. The Company transfers the right to another party for receiving the cash flow of the financial asset; and; 2. The Company transfers the financial asset to another party, but maintains the right to receive the cash flow of the financial asset and undertakes the obligation to pay the cash flow it receives to the final recipient. Where the Company has transferred nearly all of the risks and rewards related to the ownership of the financial asset or part of this asset to the transferee, it shall stop recognizing the financial asset or part of this asset. The difference arising from the sum of consideration received from the transfer and the book value of this asset should be accounted into the profit and loss. If it retained nearly all of the risks and rewards related to the ownership of the financial asset, it shall not stop recognizing all or part of the financial asset, and the consideration received shall be recorded as the financial liability. Where the Company does not transfer or retain nearly all of the risks and rewards related to the ownership of a financial asset, but it does not give up its control over the financial asset, it shall, according to the extent of its continuous involvement in the transferred financial asset, recognize the related financial asset and recognize the relevant liability accordingly. (4) Recognition Conditions for Termination of Financial Liabilities Where a financial asset satisfies any of the following requirements, the recognition of it shall be terminated: Where the contractual rights for collecting the cash flow of the said financial asset are terminated; or Where the said financial asset has been transferred and meets the conditions for recognizing the termination of financial assets as provided for in Accounting Standards for Enterprises No. 23 - Transfer of Financial Assets. 46 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the financial liability be terminated in all or partly. (5) Recognition of Financial Assets and Financial Liabilities In the active market, the quoted prices of the Company for the financial assets it holds or the financial liabilities it plans to assume shall be the present actual offer; where there is no available offer or charge for a financial asset or financial liability, , the enterprise shall adopt the market quoted price of the latest transaction or market quoted price after adjustment in latest transaction to determine the fair value of the said financial asset or financial liability, except for there is clear evidence proving that the said market quoted price is not fair value. Where there is no active market for a financial instrument, the enterprise concerned shall adopt value appraisal techniques to determine its fair value. The value appraisal techniques mainly include the prices adopted by the parties, who are familiar with the condition, in the latest market transaction upon their own free will, the current fair value obtained by referring to other financial instruments of the same essential nature. (6) Withdrawal of Impairment Provision for Financial Assets (excluding Accounts Receivable) The Company shall carry out an inspection, on the balance sheet day, on the carrying amount of the financial assets other than transactional financial assets. Where there is any objective evidence proving that such financial asset has been impaired, an impairment provision shall be made. An impairment test shall be made on the financial assets with significant single amounts. If any objective evidence shows that it has been impaired, the impairment-related losses shall be recognized and shall be recorded into the profits and losses of the current period. With regard to the financial assets with insignificant single amounts, an independent impairment test may be carried out, or they may be included in a combination of financial assets with similar credit risk features so as to carry out an impairment-related test. The expression "objective evidence proving that the financial asset has been impaired" refers to the actually incurred events which, after the financial asset is initially recognized, have an impact on the predicted future cash flow of the said financial asset that can be reliably measured by the enterprise. The objective evidences that can prove the impairment of a financial asset shall include: 1. A serious financial difficulty occurs to the issuer or debtor; 2. The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the payment of interests or the principal, etc.; 3. The creditor makes any concession to the debtor which is in financial difficulties due to economic or legal factors, etc. 4. The debtor will probably become bankrupt or carry out other financial reorganizations; 5. The financial asset can no longer continue to be traded in the active market due to serious financial difficulties of the issuer; 6. It is impossible to identify whether the cash flow of a certain asset within a certain combination of financial assets has decreased or not. But after making an overall appraisal according to the public data available, it is found that the predicted future cash flow of the said combination of financial assets has indeed decreased since it was initially recognized and such decrease can be measured, for example, the ability of the debtor of the said combination of financial assets worsens gradually, the unemployment rate of the country or region where the debtor is situated increases, the prices of the region where the guaranty is situated are obviously dropping, or the industrial sector concerned is in slump, etc.; 7. Any seriously disadvantageous change has occurred to technical, market, economic or legal environment, etc. 47 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 wherein the debtor operates its business, which makes the investor of an equity instrument unable to take back its investment; 8. Where the fair value of the equity instrument investment drops significantly or not contemporarily; 9. Other objective evidences showing the impairment of the financial asset. Where a financial asset measured on the basis of post-amortization costs is impaired, the impairment losses shall be the balance between the carrying amount of the said financial asset and the current value of the predicted future cash flow discounted at the original actual rate. Where any financial asset measured on the basis of post-amortization costs is recognized as having suffered from any impairment loss, if there is any objective evidence proving that the value of the said financial asset has been restored, and it is objectively related to the events that occur after such loss is recognized, the impairment-related losses as originally recognized shall be reversed and be recorded into the profits and losses of the current period. However, the reversed carrying amount shall not be any more than the post-amortization costs of the said financial asset on the day of reverse under the assumption that no provision is made for the impairment. Where an available-for-sale financial asset is impaired, the accumulative losses arising from the decrease of the fair value of the owner’s equity which was directly included shall be transferred out and recorded into the profits and losses of the current period. (7) Notes on Basis of Hold-to-Maturity Investment undue that reclassified into Available-for-Sales Financial Assets 10. Recognition and Withdrawal Method for Bad-debt Provisions for Accounts Receivable (1) Provisions for Bad-debt Accounts Receivable with a significant single amount The accounts receivable whose individual amount accounts for over 10% (including 10%) of accounts receivable balance at the end of this period or amount of the individual account receivable which is greater than RMB 10 millions (and Definition or amount criteria for an account receivable with a including 10 millions); the other receivable whose individual significant single amount amount accounts for over 10% (including 10%) of other receivables balance at the end of this period or amount of the individual other receivable which is greater than RMB 5 millions (and including 5 millions). For the individually significant receivables, the impairment test is carried on individually; the Company withdraws Making individual bad-debt provisions for accounts provision for impairment loss for the amount which is receivable with a significant single amount measured as the difference between the asset's carrying amount and the present value of estimated future cash flows. (2) Accounts receivable for which bad-debt provisions are made on the group basis Group name Withdraw method Basis for recognition of group Aging group Aging analysis Aging In the groups, those adopting aging analysis method to withdraw bad debt provision: √Applicable □Inapplicable Provision rate for Accounts Aging Provision rate for Other Receivables(%) Receivable(%) 48 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Within 1 year (including 1 year) 5% 5% From 1-2 years 10% 10% From 2-3 years 20% 20% Over 3 years 60% 60% From 3-4 years 60% 60% From 3-5 years 60% 60% Over 5 years 100% 100% In the groups, those adopting balance percentage method to withdraw bad debt provision: □Applicable √Inapplicable In the groups, those adopting other methods to withdraw bad debt provision: □Applicable √Inapplicable (3) Accounts receivable with an insignificant single amount but for which the bad debt provision is made independently Reason for bad debt provision: Insignificant single amount but is of big risk by credit risk Withdrawal method: The bad-debt provision is recognized impairment loss and made according to the difference between the present value of the account’s future cash flows and the account’s carrying amount. 11. Inventory (1) Category of Inventory Inventories are those under the Company’s possession for the purpose of selling, in the process of production, or materials and goods used in production process or providing of services, including raw materials, low-value consumables, products in process, stock merchandises (finished goods) and consigned goods. (2) Pricing method for distributed inventories □First-in first-out method □Weighted average method □Specific identification method √Other Inventories are measured at cost when procured, including purchase cost, processing cost, and other costs. Actual costs are recognized at weight average when delivered. (3) Recognition basis of net realizable value of inventories and withdrawal method for impairment provision of inventories On the balance sheet date, inventories are accounted depending on which is lower between the cost and the net realizable value. At overall verification of inventories at the end of year, when the net realizable value is lower than the cost, provisions for impairment of inventories shall be drawn. Provisions for impairment of inventories shall be accounted according to the difference between the cost of individual inventory items and the net realizable value. Including: for inventories such as finished products, goods or materials which will be directly sold, in the normal operation, the realizable net value will be the balance of estimated selling price less sales expenses and relative taxations; For those inventories need further processing, in the normal operation, the realizable net value will be the balance of estimated sales price less costs to make it finished, less estimated sales expenses, and less relative taxation. On the balance sheet day, inventories with contract prices will be determined 49 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 for realizable value separately from those without contract prices. Where certain items of inventory have similar purposes or end uses and relate to the same product line produced and marketed in the same geographical area, and therefore cannot be practicably evaluated separately from other items in that product line, costs and net realizable values of those items may be determined on an aggregate basis. For large quantity and low value items of inventories, cost and net realizable value are determined based on categories of inventories. (4) Inventory system of inventories √ Perpetual inventory system □ Periodic inventory system □ Other The Company uses perpetual inventory system. Inventories are checked periodically and the gains and losses from inventory checking are accounted into current gain/loss account. (5) Amortization method of low-value consumption goods and packages Low-value consumption goods Amortization method: one time method Adopting one time method. Packages Amortization method: one time method Adopting one time method. 12. Long-term equity investment (1) Recognition for initial cost The initial cost of the long-term equity investment formed in the merger of the Company shall be recognized in accordance with the ways of gaining: ① For the merger of enterprises under the same control, it shall, on the date of merger, regard the share of the book value of the owner's equity of the merged enterprise as the initial investment cost of the long-term equity investment; the difference between the acquisition cost and the initial investment cost of the long-term equity investment shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. ② For the merger of enterprises not under the same control, the initial cost of long-term equity investment is the fair value of assets paid, equity bonds issued, or liabilities undertaken by the Company. The identifiable assets and liabilities undertaken (including contingent liabilities) of merged party shall be measured by the fair value without considering the amount attributable to minority interest. Where the cost of a business combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference shall be recognized as goodwill. Where the cost of combination is less than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, after reassessment, the difference shall be recognized in consolidated income statement. ③ The initial cost of a long-term equity investment obtained by other ways A. The initial cost of a long-term equity investment obtained by making payment in cash shall be the purchase cost which is actually paid. B. The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall be the fair value of the equity securities issued. C. The initial cost of a long-term equity investment of an investor shall be the value stipulated in the investment contract or agreement except the unfair value stipulated in the contract or agreement. D. Long-term equity investment is acquired by exchange of non-monetary assets, if this transaction has commercial substance, the fair values of these swap-out assets will be deemed as the initial investment cost of swap-in long-term equity investment; if the non-currency asset exchange does not have commercial substance, the carrying amount of these swap-out assets will be deemed as the initial investment cost of swap-in long-term equity investment. E. The initial cost of a long-term equity investment obtained by recombination of liabilities shall be recognized as 50 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 the fair value of the long-tern equity investment. (2) Subsequent measurement and recognition of gains and losses 1. Adopting cost method for investment in subsidiaries The subsidiary is the equity investment held by the Company, on which the Company can carry out control. If the Company holds more than 50% equity of an entity, or the Company holds less than 50% equity but has actual control on such entity, then the entity can be considered as the subsidiary of the Company. 2. Adopting equity method for investment on joint ventures or associated enterprises Joint venture is the equity investment held by the Company, which can carry out joint control over an invested entity with other joint ventures; associated enterprise is the equity investment held by the Company, which can have significant influence over an invested entity. If the Company held 20% to 50% equity of an entity, and have not actual control on such entity, or the Company holds less than 20% equity of the entity but have not significant influence on such entity, then the entity will be the Company’s joint venture or associated enterprise. The investing enterprise shall, on the ground of the fair value of all identifiable assets of the invested entity when it obtains the investment, recognize the attributable share of the net profits and losses of the invested entity after it adjusts the net profits of the invested entity. If the accounting policies and accounting periods adopted by the invested entity are different from those adopted by the investing enterprise, an adjustment shall be made to the financial statements of the invested entity in accordance with the accounting policies and accounting periods of the Company and recognize the investment profits or losses. Where any change is made to the owner's equity other than the net profits and losses of the invested entity, the book value of the long-term equity investment shall be adjusted and be included in the owner's equity. 3. The long-term equity investment existing no control, joint control or significant influence by the Company The long-term equity investment without quotation in the active market and its fair value can’t be reliably measured, which shall be measured by cost method. The long-term equity investment with quotation in the active market or its fair value can be reliably measured, which is listed under the item of available-for-sale financial assets and measured by fair value, whose change in fair value shall be recorded into owners’ equity. (3) Recognition basis of jointly control and significant influence in invested units Common control to investee is the mutual control of investors over an economic action basing on a contract, only effective when it is agreed by all of the investors who have the share of control on the financial and business control power. Significant influences to investee mean an entity has the power to participate in the decision making of another, but cannot dominate individually or jointly with other parties. (4) Impairment test method and withdrawal method for impairment provision At period-end, if evidence showing that impairment occurred on the long-term equity investment, the recoverable amount shall be estimated. When the recoverable amount of the long-term equity investment is lower than the book value, asset impairment provision should be withdrawn in accordance with the difference between the recoverable amount and the book value is recognized. As for long-term equity investment without quotation in the active market and its fair value can’t be reliably measured, the balance of its carrying amount lower than the current value of the future cash flow of similar financial assets capitalized according to the returns ratio of the market at the same time shall be recognized as impairment losses and be recorded into the profits and losses of the current period. Once impairment loss of the long-term equity investment, excluding available-for-sale financial assets, is recognized, it will not be switched back in following fiscal terms, while the impairment loss of available-for-sale financial assets can be switched back, while the said impairment provision can be written back through equity 51 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 accounts. 13. Investment real estate Investment real estate is measured according to the initial cost. Cost of real estate purchased from outside includes purchasing price, tax, and other expenses directly related to the real estate; cost of real estate constructed by the Company itself is constructed by the essential costs to make the real estate usable. Investment properties invested by investors are booked at the value according to the investment contract, whereas when the contract value is not fairly acceptable, it will be booked at the fair value. The company employs the cost mode to make a follow-up measurement on the investment properties, while employs the straight method to calculate the depreciation and amortization during the estimated useful life. And the house property is depreciated by 20 years (adopt the lower one between the legal useful life and the predicted useful life), while the landed property is amortized by 50 years (legal useful life). The withdrawal method of the impairment provision for investment properties is in accordance with the relevant withdrawal method of fixed assets. 14. Fixed assets (1) Recognition of fixed assets Fixed assets is defined as the tangible assets which are held for the purpose of producing goods, providing services, lease or for operation & management, and have more than one year of service life, whose relevant economic interest is likely to flow into the Company. (2) Recognition basis and pricing method for fixed assets acquired under finance lease Where a lease of fixed asset satisfies one or more of the following criteria, it shall be recognized as a finance lease: 1. The ownership of the leased asset is transferred to the lessee when the term of lease expires; 2. The Company has the option to buy the leased asset at a price which is expected to be far lower than the fair value of the leased asset at the date when the option becomes exercisable. Thus, on the lease beginning date, it can be reasonably determined that the option will be exercised; 3. Even if the ownership of the asset is not transferred, the lease term covers the major part of the use life of the leased asset; 4. In the case of the lessee, the present value of the minimum lease payments on the lease beginning date amounts to substantially all of the fair value of the leased asset on the lease beginning date; 5. The leased assets are of a specialized nature that only the Company can use them without making major modifications. For the fixed asset leased by financial lease, on the lease beginning date, the Company shall record the lower one of the fair value of the leased asset and the present value of the minimum lease payments on the lease beginning date as the entering value in an account, recognize the amount of the minimum lease payments as the entering value in an account of long-term account payable, and treat the balance between the recorded amount of the leased asset and the long-term account payable as unrecognized financing charges. The initial direct costs such as commissions, attorney's fees and traveling expenses, stamp duties directly attributable to the leased item incurred during the process of lease negotiating and signing the leasing agreement shall be recorded in the asset value of the current period. The unrecognized financing charge shall be amortized to each period during the lease term at the actual rate. The depreciation method of fixed assets acquired under finance lease is consistent with that for the Company’s fixed assets. If the Company can reasonably confirm that it will obtain the ownership of leased asset at the end of lease term, the leased asset shall be depreciated during the useful life of the leased asset. If the Company cannot 52 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 reasonably confirm that it will obtain the ownership of leased asset at the end of lease term, the leased asset shall be depreciated during shorter of the useful life of the leased asset and the lease term. (3) Depreciation method of various fixed assets Other than fixed assets which have already been provided depreciations in full but still in use, the Company provides depreciations upon all of the fixed assets. The Company adopted annual depreciation rate method to withdraw depreciation. Categories Estimated useful life (years) Residual value (%) Annual depreciation rate (%) Houses & buildings 30-40 years 5% 2.38-3.17% Machineries 10-18 years 5% 5.28-9.00% Electronic equipment 3-8 years 5% 11.88-31.67% Vehicles 4-12 years 5% 7.92-23.75% Other equipments 5-8 years 5% 11.88-19% Fixed assets acquired under -- -- -- finance lease Of which: houses & buildings Machineries Electronic equipment Vehicles Others (4) Impairment test method and withdrawal method for impairment provision of fixed assets The Company checks the fixed asset at the period end, if it has the following situations, then the Company shall check the recoverable amount to judge whether such asset has been impaired. Where its recoverable amount is lower than its book value, the Company shall, basing on the difference between the recoverable amount and the relevant book value, make the provision for the impairment of the assets. When withdrawing the impairment provision for a single asset, and if it is difficult to do so, it shall determine the recoverable amount of the group assets on the basis of the asset group to which the asset belongs. Once the impairment loss was recognized, it will not be switched back in coming fiscal terms. 1 The current market price of assets falls, and its decrease is obviously higher than the expected drop over time or due to the normal use; 2 The assets have become obsolete or have been damaged substantially; 3 The expected usage mode of an asset has significant adverse change, such as the asset becomes idle, or the Company plans to discontinue or to reorganize the business of the asset, or dispose of an asset before the previously expected date, etc., which cause adverse impact on the Company; 4 The economic, technological or legal environment in which the enterprise operates, or the market where the assets is situated will have any significant change in the current period or in the near future, which will cause adverse impact on the enterprise; 5 The market interest rate or any other market investment return rate at the same period has risen in the current period, and thus the discount rate of the enterprise for calculating the expected future cash flow of the assets will be affected, which will result in great decline of the recoverable amount of the assets; 6 Any evidence in the internal report of the enterprise shows that the economic performance of the assets have 53 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 been or will be lower than the expected performance, for example, the net cash flow created by assets or the operating profit (or loss) realized is lower (higher) than the excepted amount, etc.; and 7 Other evidence indicates that the impairment of assets has probably occurred. (5) Other notes 15. Construction in Progress (1) Categories of construction in process (2) Standards and time of transferring construction in process into fixed asset Construction in progress is transferred to fixed assets by project budget, construction cost or actual project cost when the project is substantially ready for its intended use, and made provision for depreciation from the next month. Then the Company shall adjustment on the difference caused by the original value of fixed assets after finishing the final account. (3) Impairment test method and withdrawal method for impairment provision of construction in process At the end of the year, the Company shall assess the overall construction in progress, if there is evidence providing that the value of project was impaired, the Company shall estate the recoverable amount, and make the provision for the impairment loss in accordance with the balance of the project’s recoverable amount lower than its book value. Once any loss of asset impairment is recognized, it shall not be switched back in the future accounting periods. 16. Borrowing costs (1) Recognition principles for capitalization of borrowing costs The borrowing costs shall include interest on borrowings, amortization of discounts or premiums on borrowings, ancillary expenses, and exchange balance on foreign currency borrowings. The Company’s borrowing costs, caused by occupying the special borrowings or general borrowings to gain the fixed assets, investment properties, and inventories that need one year or more than one year’s acquisition or construction, shall be capitalized, and recorded in the cost of relevant assets. Other borrowing costs shall be recognized as expense upon their occurrence, and recorded into current profits and losses. The relevant borrowing expenses start to be capitalized when all of the followings are satisfied: 1 The capital expenditures have incurred; 2 The borrowing costs have incurred; 3 The acquisition and construction activities that are necessary to bring the asset to its expected usable condition have commenced. (2) Capitalization period of borrowing costs The borrowing costs caused by acquiring or constructing fixed assets, investment properties and inventories, which meet the above capitalization conditions and happened before the assets reaching expected useful status or available-for-sale status, shall be recorded into costs of assets. (3) Period for suspending capitalization of borrowing costs Capitalization of borrowing costs shall be suspended during periods in which the acquisition or construction is interrupted abnormally, and the interruption period is three months or longer. These borrowing costs shall be recognized directly in profit or loss during the current period until the acquisition or construction activities resume again; Capitalization of borrowing costs ceases when the qualifying asset being acquired or constructed is substantially ready for its intended use. Subsequent borrowing costs shall be directly recorded into current finance expense upon occurrence. 54 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 (4) Calculation method of capitalized amount of borrowing costs To the extent that funds are borrowed specifically for the purpose of acquiring & constructing or producing a qualifying asset, the to-be-capitalized amount of interests shall be determined in light of the actual interests incurred of the specially borrowed loan at the present period minus the income of interests earned on the unused borrowing loans as a deposit in the bank or as a temporary investment. To the extent that funds are borrowed generally and used for the purpose of acquiring & constructing or producing a qualifying asset, the Company shall calculate and determine the to-be-capitalized amount of interest from the general borrowing by multiplying the weighted average asset disbursement of the part of the accumulative asset disbursements minus the general borrowing by the capitalization rate of the general borrowing used. The capitalization rate shall be calculated and determined in light of the weighted average interest rate of the general borrowing. 17. Biological assets Naught 18. Oil gas assets Naught 19. Intangible assets (1) Pricing method of intangible assets The intangible assets refer to the land-use right, patent, non-patent technology and software. Intangible assets purchased are booked at the actual cost to purchase and relative expenses. Intangible assets inputted by investors are booked at the contract or agreement price, but if the contract or agreement price is not fairly acceptable, it will be booked at fair value. Intangible assets is acquired by exchange of non-monetary assets, if this transaction has commercial substance, the fair values of these swap-out assets will be deemed as the initial investment cost of intangible assets; if the non-currency asset exchange does not have commercial substance, the carrying amount of these swap-out assets will be deemed as the initial investment cost of intangible assets. Intangible asset is acquired by debt reorganization, which shall be recognized by the fair value. Expenditures for the self-researched and developed intangible asset incurred during its research phase shall be recognized as current profits and losses upon its occurrence. Expenditures incurred during the development phase shall be recognized as an intangible asset if, and only if, the Company can demonstrate all of the following: 1 It is feasible technically to finish intangible assets for use or sale; 2 It is intended to finish and use or sell the intangible assets; 3 There is a potential market for the products manufactured by applying the intangible assets or there is a potential market for the intangible assets itself 4 It is able to finish the development of the intangible assets, and able to use or sell the intangible assets, with the support of sufficient technologies, financial resources and other resources; 5 The development expenditures of the intangible assets can be reliably measured. 6The use of the intangible products cycle is more than 1 year. (2) Estimated useful life of intangible assets with limited useful life The land-use rights is amortized straightly to the useful life, from the starting date when accept the land-use rights; The patent, non-patent technology and other intangible assets are amortized straightly to the lest number among the expected useful life, contract years and the effective year of the law. The amortization assigned to the related assets and current profit and loss. 55 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Item Estimated useful life Basis (3) Judgment basis of intangible assets with uncertain useful life The profitable period is uncertain. (4) Withdrawal of impairment provision of intangible assets The Company shall carry out impairment test on intangible assets without certain useful life, such as trade mark, at year-end. And the Company shall estimate its recoverable amount and make the provision for impairment loss of such intangible asset by the balance of the recoverable amount lower than its book value. The Company shall check the other intangible assets at the year-end, where there is any evidence indicating a possible impairment of assets, the Company shall estimate the recoverable amount, and make provision for impairment losses of such intangible asset in accordance with the balance of the recoverable amount lower than the book value. Once intangible asset impairment losses are recognized, they will not be written back in successive fiscal periods. 1. It has been replaced by other new technologies, and significantly decreased its ability to create economic interests for the company; 2. The price fell sharply in current period, and is not expected to increase in its remaining amortization period; 3. Over the time limit of legal protection, but still has some use-value; 4. Other facts that prove the assets actually impaired. (5) Criteria of dividing the research phase and development phase of internal R&D project The term “research” refers to undertaking of collecting relevant materials, conducting market research on the basis of planned investigation, which means the research project has received approval from the Board of Directors or relevant management level. The term "development" refers to the application of research achievements and other knowledge to a certain plan or design, prior to the commercial production or use, so as to produce any new material, device or product, or substantially improved material, device and product. (6) Calculation of the expenditures of internal R&D project R&D expenditure refer to various expense directly arising from R&D of products (including research of fundermental projects). They are: 1) New product design expense, new art processing expense and technical books material fees and translation of materials that relevant to R&D activities. 2) Expenditure on materials, fuel and power that directly comsume on R&D activities. 3) Wages, salary, bonus, allowance and subsidy that directly arising from personnel that conducting R&D activities (excluding social insurance fees, housing fund and labour cost for out-contract R&D personnel). 4) Depreciation charges or rent charges for appliances and equipments specified on R&D activities. 5) Amortization charges on intangible assets such as software, patent fees, non-patent technology etc. that specified on R&D activities. 6) Expense specified on modules for intermidiate experience and product trial-manufacture, development of art equipments and manufacture fees. 7) Expense on proving, review and verification of R&D achievements. 8) Out-sourcing expenditure that satisfied the above seven scopes. 9) Equipment adjustment expense and test charges on appliances for intermidiate experience and product trial-manufacture, acquisition fees for samples and general test method and test fees for tria-manufacture products. 56 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 10) Expenditure on maintainence and repair of fixed assets that applying for R&D activities. 11) Meeting charges, travel fees, office fees, business fees, fees on trains of R&D personnel, professional consultancy charges, training fees, insurance charges on R&D of high-tech., etc..that directly relevant to R&D projects. 12) Expenditure on appraisal of achievements, application charges, register charges, agent fees, etc. of interllectual property. 13) Other expenses arising from R&D process. Including expense on purchase of samples and components, expense on drawing of plank, internal distribution of materials, technology guidance, industrial design and so on. All of the above mentioned expense items accouting by specific items on R&D item. 20. Amortization method of long-term deferred expenses The Company recognizes all expenses which have occurred during the period but shall be amortized beyond one year (excluding one year), including expenses of molds and technical guide, etc. The Company amortizes long-term deferred expenses using straight-line method according to relevant beneficial periods or its usage life if there are, otherwise, amortizes in five years. 21. Assets transfer with repurchasing conditions Naught 22. Estimated liabilities (1) Criteria of estimated liabilities When responsibilities occurred in connection to contingent issues, and all of the following conditions are satisfied, they are recognized as estimated liability in the balance sheet: 1. This responsibility is a current responsibility undertaken by the Company; 2. Execution of this responsibility may cause financial benefit outflow from the Company; 3. Amount of the liability can be reliably measured. (2) Measurement of estimated liabilities Estimated liabilities are initially measured at the best estimation on the expenses to exercise the current responsibility, and with considerations to the relative risks, uncertainty, and periodic value of currency. When the periodic value of currency is with major influence, then the best estimation will be determined at the discount of future cash outflow. The book value of estimated liability is revised at balance sheet day, and adjustment will be made to reflect current best estimation. 23. Share-based payment and equity instruments Naught (1) Categories of share-based payment Naught (2) Recognition method of fair value of equity instruments Naught (3) Recognition basis of the best estimate of the vested equity instruments Naught (4) Accounting treatment relevant to implement, revise and terminate share-based payment plan Naught 24. Repurchase of shares of the Company Naught 57 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 25. Revenue (1) Criteria for recognition time of revenue from sale of goods When all of the following conditions are satisfied, the sales of goods are recognized as sales income according to the contract amount received or receivable from the buyer: 1.Main risks and rewards attached to the ownership of the goods have been transferred to the buyer; 2 No succeeding power of administration or effective control is reserved which are usually attached to ownership; 3 Amount received can be reliably measured; 4 Related financial benefit may inflow to the Company; 5 Relative costs, occurred or will occur, can be reliably measured; 6 When collection of contract payment is by differed way, and practically with financing characters, sales income shall be recognized at the fair value of the receivable contract amount. (2) Recognition basis of revenue from transferring use rights of assets Income is recognized when the financial benefit in connection with the demising of asset using rights was received and the amount can be reliably measured. (3) Recognition basis and method for the schedule of contracted project when recognizing the revenue from providing labour services and construction contract by percentage-of-completion method The Company measures the completion progress (percentage-of-completion) in accordance with the proportion of the costs incurred against the estimated total costs. 26. Government grants (1) Types 1. The government subsidies pertinent to income 2. The government subsidies pertinent to assets (2) Accounting treatment method The government subsidies pertinent to income, if used to to retrieve expense or loss of the Company in further period, the government grants are recognized as deferred income, and shall be recorded in profit and loss when that expense or loss occurred. To retrieve expense or loss of the Company in current period, the government grants shall be recorded directly in current profit and loss. The government subsidies pertinent to assets shall be recognized as deferred income, equally distributed within the useful lives of the relevant assets, and included in the current profits and losses. But the government subsidies measured at their nominal amounts shall be directly included in the current profits and losses. 27. Deferred income tax assets and liabilities (1) Recognition basis of deferred income tax assets On the balance sheet date, if enough evidences prove that the taxable income amounts that maybe probably obtained in the future periods may be used to deduct the deductible temporary differences, they will be confirmed as the deferred income tax assets that have not been confirmed in the previous accounting periods. (2) Recognition basis of deferred income tax liabilities If taxable temporary differences would increase taxable income tax and income tax payable when it was written in, which leads to the outflow of the Company’s financial profit, it shall be recognized as differed income liabilities when is constitutes responsibility of taxes payable in occurrence period. 58 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 28. Operating lease and finance lease (1) Accounting treatments of operating lease Naught (2) Accounting treatments of finance lease Naught 29. Assets held for sale (1) Recognition criteria of available-for-sale assets Naught (2) Accounting treatments of the assets held for sale Naught 30. Capitalization of assets business Naught 31. Hedging accounting The term " hedging" refers to one or more hedging instruments which are designated by the company for avoiding the risks of foreign exchange, interest rate, commodity price, stock price, credit and etc., and which is expected to make the changes in fair value or cash flow of hedging instrument(s) to offset all or part of the changes in the fair value or cash flow of the hedged item. The "hedged items" refer to items which make the company faced with changes in fair value or cash flow and are designated as the hedged objectives. For a hedging which satisfies all the following conditions, the company will deal with it through the hedging accounting method. (1) At the commencement of the hedging, the company shall specify the hedging relationship formally and prepare a formal written document on the hedging relationship, risk management objectives and the strategies of hedging. (2) The hedging expectation is highly efficient and meets the risk management strategy, which is confirmed for the hedging relationship by the company at the very beginning. (3) For a cash flow hedging of forecast transaction, the forecast transaction shall be likely to occur and shall make the company faced to the risk of changes in cash flow, which will ultimately affect the profits and losses. (4) The effectiveness of hedging can be reliably measured. (5) The hedging is highly effective in the accounting period in which the hedging relationship is designated. 32. Changes in main accounting policies and estimates Were the main accounting policies or estimates changed during the reporting period? □Yes √No □Inapplicable (1) Change of accounting policies Were the main accounting policies changed during the reporting period? □Yes √No □Inapplicable (2) Change of accounting estimates Were the main accounting estimates changed during the reporting period? □Yes √No □Inapplicable 59 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 33. Correction of previous accounting errors Was any accounting error made in previous periods discovered in the reporting period? □Yes √No □Inapplicable (1) Retrospective restatement method Was any previous accounting errors adopting retrospective restatement method discovered in the reporting period? □Yes √No □Inapplicable (2) Prospective application method Was any previous accounting errors adopting prospective application method discovered in the reporting period? □Yes √No □Inapplicable 34. Other main accounting policies, accounting estimates as well as compilation method of financial statements Naught (Ⅴ) Taxation 1. Main taxes and tax rate Category of taxes Tax basis Tax rate Balance of output tax of taxation revenue after VAT 17% deducting input tax. Business tax Urban maintenance and Taxation revenue 5% construction tax VAT Payable circulating tax amount 7% Corporate income tax Payable income tax amount 25% or 15% Education Surcharge Payable circulating tax amount 4% or 5% Flood Control Security Fund Operating revenue 0.1% or 0.06% Levee fee Circulating tax amount 2% The income tax rates adopted by each subsidiary and branch factory Naught 2. Tax preference and official documents With the certification of hi-tech enterprise of the Company and its subsidiary, Wuxi Little Swan GE Co., Ltd. and Wuxi Filin Electronics Co., Ltd. was expired after 3-years term, their relevant certification of review were in process. According to Su-Gao-Qi-Xie [2012] No. 15 document and Su-Gao-Qi-Xie [2012] No. 15 document of Work and Coordinated Team on Management of Certifying High-tech Enterprise of Jiangsu Province, review of the said companies have been approved. According to Circular of the State Administration of Taxation on the Issues concerning the Administration of Enterprise Income Tax Deduction and Exemption (Guo-Shui-Fa [2008] No. 111 document) and Circular of the State Administration of Taxation on the Issues concerning Hi-tech Enterprise Paying Corporate Income Tax in 2008 (Guo-Shui-Han [2008] No. 985), the Company and its subsidiary, Hefei Royalstar Water Industry Facilities Co., Ltd., and Wuxi Little Swan GE Co., Ltd. as well as Wuxi Filin Electronics Co., Ltd. were approved to enjoy income tax rate 15%. 60 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 3. Other explanation Naught (Ⅵ) Business combination and consolidated financial statements General instruction of business combination and consolidated financial statements: Naught 61 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 1. Subsidiaries (1) Subsidiaries obtained by establishment and investment Unit: RMB Yuan Balance of parent The The Includ company’s equity after Actual amount proporti proporti ed in Other Deductible deducting the difference Registered Business Registered Currenc Business of investments on of on of consol Minority Subsidiaries Type essential minority that loss of minority place nature capital y scope at the holding voting idated interest investment interests interests exceed equity period-end shares( rights(% statem obtained by minority %) ) ent shareholders Wuxi Little Swan Manufacture Holding General Electric of washing subsidiar Wuxi Production 28,000,000.00 CNY 19,600,000 70% 70% Yes 29,938,800 Appliances Co. , machine and ies Ltd. dryers Wuxi Little Swan Development Driving & Control Holding & research of Development subsidiar Wuxi R&D 5,000,000.00 CNY driving & 4,500,000 97.3% 100% Yes 313,400 control Technology Co. , ies technology Ltd. Manufacture Wuxi Filin Holding of computer control Electronics Co. , subsidiar Wuxi Production 3,624,600.00 USD 19,620,000 73% 73% Yes 56,330,000 components Ltd. ies for washing machine Manufacture Wuxi Little Swan Holding and sale of Washing Machine subsidiar Wuxi Production 49,679,500.00 CNY commercial 37,259,600 99.91% 99.91% Yes -37,968,700 Co. , Ltd. ies washing machine , 62 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 dryers and spare parts Wuxi Meitian Holding Sales of Refrigerator subsidiar Wuxi Trading 4,000,000.00 USD 24,840,000 75% 75% Yes -28,467,700 refrigerator Market Co., Ltd. ies Jiangsu Little Holding Sales of Swan Marketing household subsidiar Wuxi Trading 419,500,000.00 CNY 417,550,000 99.64% 99.64% Yes -65,580,500 and Sales Co. , electrical ies appliances Ltd. Import & Wuxi Little Swan Holding Import & export of Import & Export subsidiar Wuxi 65,000,000.00 CNY electric 57,500,000 88.46% 88.46% Yes -15,037,400 Export machine Co. , Ltd ies products Wholly- Manufacture MIDAQI. Little owned of washing Swan Prima Malaysia Sales 1,000,000.00 USD machine and 4,224,700 51% 51% No subsidiar air Industries y conditioners Little Swan Wholly- International owned Investmen Singapore 5,000,000.00 USD Investment 5,000,000 100% 100% Yes (Singapore) Co., subsidiar t Ltd. y Wholly- Manufacture Tianjin Little owned Tianjin Production 200,000,000.00 CNY of washing 200,000,000 100% 100% Yes Swan Co., Ltd. subsidiar machine y Other notes to subsidiaries obtained by establishment and investment: Naught 63 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 (2) Subsidiaries obtained by business combination under same control Unit: RMB Yuan Incl The The uded Balance of parent company’s Actual proporti proporti in equity after deducting the amount of Deductible Register Business Registered Currenc Business Other essential on of on of cons Minority difference that loss of Subsidiaries Type investments minority ed place nature capital y scope investment holding voting olida interest minority interests exceed at the interests shares( rights(% ted equity obtained by minority period-end %) ) state shareholders ment Little Swan Wholly- (Jing Zhou) Manufacture owned Electronic Jingzhou Production 11,070,200.00 CNY of washing 11,869,400 100% 100% Yes subsidiar Appliances machines y Co., Ltd. Hefei Royalstar Washing Holding Manufacture Hefei Production 135,520,000.00 USD of washing 830,962,300 69.47% 69.47% Yes 451,382,600 Machine subsidiar machines Manufacture ies Co., Ltd. Hefei Midea Washing Holding Manufacture Machine subsidiar Hefei Production 20,000,000.00 CNY of washing 20,000,000 62.523% 90% Yes 2,037,200 Manufacture ies machines Co., Ltd. Other notes to subsidiaries obtained by business combination under same control: (3) Subsidiaries obtained by business combination not under same control Unit: RMB Yuan 64 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 The The Actual propor proporti Balance of parent company’s equity after Regist Busine Regist Busine amount of tion of Included in Subsidia Curren Other essential on of Minority Deductible deducting the difference that loss of Type ered ss ered ss investment holdin consolidated ries cy investment voting interest minority interests minority interests exceed equity obtained by place nature capital scope s at the g statement rights(% minority shareholders period-end shares( ) %) Other notes to subsidiaries obtained by business combination not under same control: 65 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 2. Special purpose entities or operating entities with control right formed by entrusted operation or lease □Applicable √Inapplicable Other explanation on special purpose entities or operating entities with control right formed by entrusted operation or lease: 3. Explanation on changes in consolidated scope Explanation on changes in consolidated scope: MIDAQI. Little Swan Prima Industries has been stopped operation for year, and the closing procedure has started; the Company has made full provision for impairment on long-term investment and it hasn’t been combined in the consolidated scope yet. □Applicable √Inapplicable 4. Subsidiaries that newly combined into consolidation scope in the reporting period Naught The subsidiaries, special purpose entities and operating entities with control right formed by entrusted operation or lease that newly included in the consolidated scope Unit: RMB Yuan Name Closing net assets Net profit in current period The subsidiaries, special purpose entities and operating entities with control right formed by entrusted operation or lease that not longer included in the consolidated scope Unit: RMB Yuan Net profit from year-begin to Name Net asset at the disposal date disposal date Other notes to changes in consolidated scope: 5. Business combination under same control during the reporting period Unit: RMB Yuan Cash flow arising Judgment basis of The consolidated The consolidated from operating business Actual controller of income from net profit from The combined party activities between combination under the same control period-begin to period-begin to period-begin and the same control combination date combination date combination date Other notes to business combination under same control: 6. Business combination not under same control during the reporting period Unit: RMB Yuan The combined party Amount of goodwill Calculation method of goodwill Other notes to business combination not under same control: 7. Subsidiaries reduced by selling equities without control right during the reporting period 66 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Name of subsidiary Disposal date Recognition method of gains and losses Other notes to subsidiaries reduced by selling equities without control right during the reporting period: 8. The counter purchases in the reporting period Calculation method of goodwill Judgment basis of counter Recognition method of recognized or included into The backdoor party purchase combination costs current gains and losses in the combination Other notes to counter purchases: 9. Mergers in the reporting period Unit: RMB Yuan Type of merger Main assets merged in Main liabilities merged in Mergers under the same control Item Amount Item Amount Mergers not under the same control Item Amount Item Amount Other notes to mergers: 10. Exchange rates of major items in financial statements for foreign entities Assets and liabilities on the Balance Sheet shall adopted the spotted exchange rate on the Balance Sheet Day. Except for retained profit item on shareholders’ equity, other items adopt the exchange rate on occurrence when calculated. (Ⅶ) Notes on major items in consolidated financial statements of the Company 1. Monetary funds Unit: RMB Yuan Closing balance Opening balance Item Amount in foreign Exchan Amount in Exchange Amount in RMB Amount in RMB currency ge rate foreign currency rate Cash: -- -- 210,062.94 -- -- 184,735.57 RMB -- -- 210,062.94 -- -- 184,735.57 Bank deposit: -- -- 2,987,371,791.42 -- -- 2,279,468,567.00 RMB -- -- 2,612,078,927.97 -- -- 2,050,330,126.87 USD 56,129,241.39 6.3249 355,011,838.84 34,251,584.61 6.3009 215,815,809.48 EUR 2,570,943.51 7.871 20,235,896.37 1,632,175.27 8.1625 13,322,630.65 JPY 566,596.02 0.0796 45,128.24 Other monetary funds: -- -- 133,367,765.79 -- -- 135,797,048.67 RMB -- -- 132,711,936.09 -- -- 134,175,616.33 67 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 USD 103,690.13 6.3249 655,829.70 257,333.45 6.3009 1,621,432.34 Total -- -- 3,120,949,620.15 -- -- 2,415,450,351.24 Special explanation shall be made for the accounts limited by being mortgaged, pledged or frozen, deposited overseas or with potential collecting risks: 2. Trading financial assets (1) Trading financial assets Unit: RMB Yuan Item Closing fair value Opening fair value Trading bonds investment Trading equity instruments investment The financial assets which are measured at their fair values and the variation of which is recorded into the profits and losses of the current period Derivative financial assets 0.00 4,292,300.00 Hedging instruments Others Total 4,292,300.00 (2) Trading financial assets with realizable limit Unit: RMB Yuan Trading restriction or other significant limits in Item Closing balance realization (3) Hedging instruments and notes to relevant hedging transaction 3. Notes receivable (1) Category of notes receivable Unit: RMB Yuan Category Closing balance Opening balance Bank acceptance bill 1,001,881,578.18 2,757,923,958.94 Total 1,001,881,578.18 2,757,923,958.94 (2) Notes receivable pledged at period-end Unit: RMB Yuan Issuing entity Date of issuance Expiring date Amount Remark Total -- -- -- Notes: Naught 68 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 (3) Notes transferred to accounts receivable because drawer of the notes fails to execute the contract or agreement, and undue notes endorsed to other parties at the end of the period Unit: RMB Yuan Issuing entity Date of issuance Expiring date Amount Remark Total -- -- 50,000,000.00 -- Notes: Naught Undue notes endorsed to other parties by the Company Unit: RMB Yuan Issuing entity Date of issuance Expiring date Amount Remark Jiangxi Gannan Midea Refrigerating Equipment 28 Mar. 2012 28 Sep. 2012 10,000,000.00 Marketing Co., Ltd. Changzhou Midea Refrigeration Product 29 Mar. 2012 29 Sep. 2012 10,000,000.00 Marketing Co., Ltd. Yichang Midea Refrigeration Product 29 Mar. 2012 29 Sep. 2012 10,000,000.00 Marketing Co., Ltd. Yichang Midea Refrigeration Product 29 Mar. 2012 29 Sep. 2012 10,000,000.00 Marketing Co., Ltd. Guizhou Midea Refrigeration Product 28 Mar. 2012 28 Sep. 2012 10,000,000.00 Marketing Co., Ltd. Total -- -- 50,000,000.00 -- Notes: Notes of bank acceptance bill that already discounted or pledged. Naught 4. Dividends receivable Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance Dividends receivable aging less than one year Of which: Dividends receivable aging over one year 69 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Of which: -- -- -- -- Total Note: Naught 5. Interest receivable (1) Interest receivable Unit: RMB Yuan Increase in current Decrease in current Item Opening balance Closing balance period period Total (2) Overdue interest Unit: RMB Yuan Borrowing entity Overdue days (day) Amount of overdue interest Total -- (3) Notes to interest receivable 6. Accounts receivable (1) Accounts receivable listed by categories Unit: RMB Yuan Closing balance Opening balance Book balance Bad debt provision Book balance Bad debt provision Category Proporti Proporti Proporti Proport Amount Amount Amount Amount on (%) on (%) on (%) ion (%) Accounts receivable with significant single amount and individually 0.00 0% 0.00 0% 0.00 0% 0.00 0% withdrawn bad debt provision Accounts receivable for which bad debt provisions are made on the group basis Aging group 1,049,004,026.09 99.89% 53,313,570.48 5.08% 979,012,513.46 99.88% 50,073,451.81 5.11% Subtotal of group 1,049,004,026.09 99.89% 53,313,570.48 5.08% 979,012,513.46 99.88% 50,073,451.81 5.11% Accounts receivable with insignificant single amount and individually 1,201,107.52 0.11% 1,005,985.33 83.75% 1,201,107.52 0.12% 751,107.72 62.53% withdrawn bad debt provision 70 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Total 1,050,205,133.61 -- 54,319,555.80 -- 980,213,620.98 -- 50,824,559.53 -- Notes to category of accounts receivable: Naught Accounts receivable with significant single amount and individually withdrawn bad debt provision □Applicable √Inapplicable In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision: √Applicable □Inapplicable Unit: RMB Yuan Closing balance Opening balance Aging Book balance Provision for bad Book balance Provision for bad Amount Proportion debts Amount Proportion debts Within 1 year Including: -- -- -- -- -- -- 1,038,276,282.84 98.98% 51,913,814.14 960,988,170.25 98.16% 48,049,408.52 Subtotal of within 1,038,276,282.84 98.98% 51,913,814.14 960,988,170.25 98.16% 48,049,408.52 1 year 1-2 years 9,857,995.48 0.94% 985,799.55 17,498,321.16 1.79% 1,749,832.12 2-3 years 348,800.54 0.03% 69,760.11 103,505.15 0.01% 20,701.03 Over 3 years 441,876.39 0.04% 265,125.83 422,516.90 0.04% 253,510.14 3 to 4 years 4 to 5 years Over 5 years 79,070.85 0.01% 79,070.85 0% Total 1,049,004,026.09 -- 53,313,570.48 979,012,513.46 -- 50,073,451.81 In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision □Applicable √Inapplicable In the groups, accounts receivable adopting other methods to withdraw bad debt provision □Applicable √Inapplicable Other closing individually insignificant but provisions for bad debts individually accounts receivable: √Applicable □Inapplicable Unit: RMB Yuan Content of accounts Book balance Bad debt provision Withdrawal proportion Reason for withdrawal receivable Accounts receivable with insignificant single Of comparatively high amount and individually 1,201,107.52 1,005,985.33 83.75% credit risk withdrawn bad debt provision 71 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Total 1,201,107.52 1,005,985.33 83.75% -- (2) Accounts receivable reversed or collected in the reporting period Unit: RMB Yuan Recognition basis of Reversed or collected Content of accounts Reversed or collected Reversed or collected original bad debt amount of the accrued receivable reason amount provision bad debt provision Total -- -- 0.00 -- The withdrawal of bad debt provision of accounts receivable with significant single amount or insignificant single amount but individually made impairment test at the end of reporting period: Withdrawing Content Book balance Bad debt amount Reason proportion(%) Total -- -- Notes to accounts receivable with insignificant single amount but large risks of groups after grouping by credit risks characteristics: (3) The write-off accounts receivable Unit: RMB Yuan Whether arising Nature of accounts Name of entity Write-off time Write-off amount Write-off reason from related party receivable transaction or not? Total -- -- -- -- Notes to write off of accounts receivable: (4) Particulars about accounts receivable due to shareholders holding 5% (including 5%) voting rights of the Company □Applicable √Inapplicable (5) Information of top 5 accounts receivable: Unit: RMB Yuan The relationship Name of entity Amount Aging Proportion with the Company Related Midea Electric Trading (Singapore) Co. Pte. Ltd. 222,437,144.08 Within 1 year 21.18% relationship Non-related GEA PRODUCTS 135,859,162.81 Within 1 year 12.94% relationship Non-related Kronen Internacional S.A. 55,474,778.83 Within 1 year 5.28% relationship Beijing Midea Refrigeration Product Marketing Non-related 53,687,063.05 Within 1 year 5.11% Co., Ltd. relationship 72 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Non-related Nanjing Purchase of Suning Appliance Co., Ltd. 48,022,000.19 Within 1 year 4.57% relationship Total -- 515,480,148.96 -- 49.08% (6) The amounts due from related parties Unit: RMB Yuan The relationship with the Name of entity Amount Proportion Company Total -- (7) Information of accounts receivable that terminated recognition Unit: RMB Yuan Gains or loses related to the termination of Item Amount of termination recognition Total (8) If securitization is carried out on accounts receivable as the underlying assets, please list amount of assets and liabilities arising from further involvement Unit: RMB Yuan Item Period-end Assets: Subtotal of assets Liabilities: Subtotal of liabilities 7. Other accounts receivable (1) Other accounts receivable disclosed by type: Unit: RMB Yuan Closing balance Opening balance Provision for doubtful Provision for doubtful Category Book balance Book balance debts debts Proporti Proporti Proporti Proporti Amount Amount Amount Amount on (%) on (%) on (%) on (%) Other accounts receivable that is individually significant and 0.00 0% 0.00 0% 0.00 0% 0.00 0% provisions for bad debts individually Other accounts receivable that provisions for bad debts by group 73 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Aging group 21,479,278.55 98.98% 2,592,244.94 12.07% 18,288,490.78 98.81% 2,740,043.28 14.98% Subtotal of group 21,479,278.55 98.98% 2,592,244.94 12.07% 18,288,490.78 98.81% 2,740,043.28 14.98% Other accounts receivable that is individually insignificant but 221,666.34 1.02% 221,666.34 100% 221,066.34 1.19% 221,066.34 100% provisions for bad debts individually Total 21,700,944.89 -- 2,813,911.28 -- 18,509,557.12 -- 2,961,109.62 -- Notes for categories of other accounts receivable: Naught Other closing accounts receivable that is individually significant and provisions for bad debts individually. □Applicable √Inapplicable In the group, other accounts receivable that provisions for bad debts by aging analysis: √Applicable □Inapplicable Unit: RMB Yuan Period-end Period-begin Book balance Book balance Aging Provision for bad Provision for bad Proporti Proporti Amount debts Amount debts on on Within 1 year Including: Within 1 year 12,874,553.35 59.94% 643,727.67 12,046,610.07 65.87% 606,818.71 Subtotal of within 1 year 12,874,553.35 59.94% 643,727.67 12,046,610.07 65.87% 606,818.71 1-2 years 5,992,988.52 27.9% 599,298.85 2,968,361.21 16.23% 292,347.92 2-3 years 573,308.98 2.67% 114,661.80 336,837.63 1.84% 67,367.53 Over 3 years 2,009,677.70 9.36% 1,205,806.62 2,907,931.87 15.9% 1,744,759.12 3 to 4 years 4 to 5 years Over 5 years 28,750.00 0.13% 28,750.00 28,750.00 0.16% 28,750.00 Total 21,479,278.55 -- 2,592,244.94 18,288,490.78 -- 2,740,043.28 In the group, other accounts receivable that provisions for bad debts by balance percentage: □Applicable √Inapplicable In the group, other accounts receivable that provisions for bad debts by other methods: □Applicable √Inapplicable Other closing individually insignificant but provisions for bad debts individually accounts receivable: □Applicable √Inapplicable (2) Information of other accounts receivable reversed or recovered in the reporting period Unit: RMB Yuan 74 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Reason for reversed or Basis for determination Accrued amount before Amount of reversed or Other accounts receivable recovered of bad debts provision reversal or recovery recovered Total -- -- 0.00 -- Withdrawal of closing individually significant or insignificant but provisions for bad debts individually accounts receivable: Content Book balance Provision for bad debts Withdrawal percentage Reason Total -- -- Notes of individually insignificant but was of big risk after grouped by credit risk other accounts receivable: (3) Information of other accounts receivable written off in the reporting period Unit: RMB Yuan Whether arising from Nature of other Name of company Write off date Write off amount Write off reason related party accounts receivable transactions or not Total -- -- 0.00 -- -- Notes of written-off of other accounts receivable: Naught (4) Other accounts receivable is due from shareholders with more than 5% (including 5%) of the voting shares of the Company □Applicable √Inapplicable (5) Nature or details of other significant accounts receivable Unit: RMB Yuan Nature or details of the Name of entity Amount Proportion of the total (%) amount Total 0.00 -- 0% Notes: Naught (6) Information of top five other accounts receivable Unit: RMB Yuan Relationship Proportion of the Name of entity with the Amount Aging total (%) Company Not related Wuxi Little Swan Ceramic Co., Ltd. 2,386,444.38 4-5 years 11% relationship Financial Treasury Payment Centre of Hefei High-tech Not related 1,000,000.00 2-3 years 4.61% 75 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Technology Industrial Development Zone relationship Industrial and Commercial Bank of China Limited, Beijing Not related 900,000.00 2-3 years 4.15% Branch Assets Custody Account relationship Not related Wuxi Costume of PRC 711,000.00 1-2 years 3.28% relationship Not related Wuxi China Resources Natural Gas Co., Ltd. 639,184.85 Within 1 year 2.95% relationship Total -- 5,636,629.23 -- 25.97% (7) Information of the amounts due from related parties Unit: RMB Yuan Name of entity Relationship with the Company Amount Proportion Total -- 0.00 0% (8) Information of other accounts receivable that terminated recognition Unit: RMB Yuan Gains or loses related to the termination of Item Amount of termination recognition Total 0.00 0.00 (9) If securitization is carried out on other accounts receivable as the underlying assets, please list amount of assets and liabilities arising from further involvement Unit: RMB Yuan Item Closing balance Assets: Subtotal of assets Liabilities: Subtotal of liabilities 0.00 8. Prepayment (1) List by aging analysis: Unit: RMB Yuan Closing balance Opening balance Aging Proportion Proportion Amount Amount (%) (%) Within 1 year 131,577,849.92 60.91% 240,224,053.71 96.07% 76 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 1 year to 2 83,083,172.76 38.46% 9,071,326.54 3.63% years 2 years to 3 596,557.19 0.28% 756,600.00 0.3% years Over 3 years 754,040.00 0.35% Total 216,011,619.87 -- 250,051,980.25 -- Notes of aging of prepayment: (2) Information of the top 5 prepayment Unit: RMB Yuan Relationship with Reason for Name of entity Amount Aging the Company unsettled Administration Committee of Non-related-party Advance land 74,258,965.00 18 Apr. 2011 DevelopmentZone of Jingzhou supplier payment Yanshan Operating Dept. of Sinopec Non-related-party Advance land 38,307,132.28 13 Jun. 2012 Chemical Sales Company Limited supplier payment Beijing Zhongtian Riyue Advertising Co., Non-related-party Not service was 34,618,278.00 9 Mar. 2012 Ltd. supplier provided East China Chemical Sales of PetroChina Non-related-party Advance material 10,674,000.00 20 Jun. 2012 Company Limited supplier payment Non-related-party Advance material Sumitomo Chemical Asia Pte Ltd 5,145,536.14 30 Jun. 2012 supplier payment Total -- 163,003,911.42 -- -- Notes of important companies of prepayment: Naught (3) Information about amount due from shareholders with more than 5% (including 5%) of the voting shares of the Company in prepayment □Applicable √Inapplicable (4) Notes of prepayment Naught 9. Inventory (1) Category Unit: RMB Yuan Closing balance Opening balance Item Impairment of Impairment of Book balance Book value Book balance Book value inventories inventories Raw materials 68,730,776.63 990,222.29 67,740,554.34 67,170,191.52 4,846,662.22 62,323,529.30 Construction 18,722,292.43 18,722,292.43 22,713,702.97 763,423.76 21,950,279.21 contract assets 77 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Inventory goods 558,730,522.53 22,374,449.21 536,356,073.32 746,889,129.82 22,993,564.94 723,895,564.88 Turnover material Consumable biological assets Consign for 1,231,355.59 1,231,355.59 processing materials Total 646,183,591.59 23,364,671.50 622,818,920.09 838,004,379.90 28,603,650.92 809,400,728.98 (2) Impairment of inventories Unit: RMB Yuan Decrease Category Opening balance Increase Closing balance Reversal Written off Raw materials 4,846,662.22 3,856,439.93 990,222.29 Construction contract 763,423.76 763,423.76 assets Inventory goods 22,993,564.94 619,115.73 22,374,449.21 Turnover material Consumable biological assets Total 28,603,650.92 0.00 619,115.73 4,619,863.69 23,364,671.50 (3) Details of provision for falling price of inventories Proportion of reversal of Basis on provision for falling price Item Reasons for reversal provision for impairment of of inventories inventories to closing balance Realizable net value is lower than Raw materials cost of inventory Realizable net value is lower than Effect on write-off of inventory value 0.09% Inventory goods cost of inventory was disappeared Construction contract Realizable net value is lower than assets cost of inventory Realizable net value is lower than Turnover material cost of inventory Consumable Realizable net value is lower than biological assets cost of inventory Notes of inventory: naught 10. Other current assets Unit: RMB Yuan 78 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Item Closing balance Opening balance Deferred expense-module 61,849,729.40 112,052,669.26 Total 61,849,729.40 112,052,669.26 Notes of other current assets: naught 11. Available-for-sale financial assets (1) Information of available-for-sale financial assets Unit: RMB Yuan Item Closing fair value Opening fair value Available-for-sale bonds Available-for-sale equity instruments 228,144.00 284,592.00 Others Total 228,144.00 284,592.00 In the reporting period, the Company reclassified the held-to-maturity investment into available-for-sale financial assets, a total of RMB0.00 was reclassified, which takes 0% of total matured investment before reclassification. Notes of available-for-sale financial assets: Naught (2) Long-term liability investment of available-for-sale financial assets Unit: RMB Yuan Accrued Initial Interest in the accounts Opening Closing Item Category Book balance investment Matured date reporting receivable or balance balance cost period received interest Total -- -- 0.00 -- 0.00 0.00 0.00 0.00 Notes of long-term liability investment of available-for-sale financial assets: 12. Held-to-maturity investment (1) Information Unit: RMB Yuan Item Closing book balance Opening book balance Total Notes of held-to-maturity investment: Naught (2) Information of held-to-maturity investment sold in the reporting period but was not matured Unit: RMB Yuan Item Amount Percentage of the investment amount before sales Total -- 79 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Notes of undue held-to-maturity investment sold in the reporting period: 13. Long-term accounts receivable Unit: RMB Yuan Category Closing balance Opening balance Financing leases Including: unrealized financing gains Installment sales Installment offering service Others Total 80 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 14. Investment to joint ventures and associated enterprises Unit: RMB Yuan Percen tage of Voting Total holdin Registrat Legal percentage operation Net profit of Nature of Nature of Registered g Total closing Net closing Name of Name of investee ion represen of the Total closing assets revenue of the the reporting enterprises business capital shares liabilities assets investee place tative Company reporting period of the in investee period Comp any I. Joint ventures II. Associated enterprises Attend Logistics Limited Guangzh Ye Logistics 10,000,000.00 CNY 20% 20% 24,663,800.00 7,265,103.69 17,398,696.31 3,877,666.11 254,437.56 Co., Ltd. company ou Weilong Notes if significant differences exist between the important accounting policies and accounting estimations of joint ventures, associated enterprises and the Company: naught 15. Long-term equity investment (1) List of long-term equity investment Unit: RMB Yuan Explanation for Withdrawn Share holding Voting indifferences between impairment Cash bonus in Accounting Initial Opening Increase/decrea Impairmen Investee Closing balance percentage in percentage in the share holding provision in the reporting method investment cost balance se t provision investee investee percentage and voting the reporting period percentage in investee period Attend Logistics Co., Equity method 2,000,000.00 3,428,851.75 50,887.51 3,479,739.26 20% 20% Ltd. 81 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Hengtai Insurance Cost method 1,000,000.00 1,000,000.00 1,000,000.00 3.33% 3.33% Brokers Co., Ltd Suzhou People's Cost method 150,000.00 150,000.00 150,000.00 40,000.00 Shopping Mall Bank of Cost method 1,100,000.00 1,210,000.00 1,210,000.00 123,405.12 Jiangsu Inner Mongolia Baotou Cost method 50,000.00 50,000.00 50,000.00 Department Store Co., Ltd. (Malaysia) Midaqi Little USD4,224,744. 4,224,744. Cost method 51% 51% Swan Prima 00 00 Industries 4,224,744. Total -- 8,524,744.00 5,838,851.75 50,887.51 5,889,739.26 -- -- -- 0.00 163,405.12 00 (2) Information of the limitation on the capability to transfer capital to investee Unit: RMB Yuan Item that with limitation on the capability to transfer capital to investee Reason for limitation Investment losses unrecognized in current period Notes of long-term equity investment: Naught 82 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 16. Investment property (1) Investment property calculated by cost √Applicable □Inapplicable Unit: RMB Yuan Decrease in Increase in the Closing book Item Opening book balance the reporting reporting period balance period I. Total original book value 6,948,011.11 0.00 0.00 6,948,011.11 1. Houses and buildings 6,948,011.11 6,948,011.11 2. Land use right II. Accumulated depreciation and amortization 1,705,063.63 96,678.75 0.00 1,801,742.38 1. Houses and buildings 1,705,063.63 96,678.75 1,801,742.38 2. Land use right III. Book value of investment property 5,242,947.48 0.00 0.00 5,146,268.73 1. Houses and buildings 5,242,947.48 5,146,268.73 2. Land use right IV. Accumulated impairment provision of 0.00 0.00 0.00 0.00 investment property 1. Houses and buildings 2. Land use right V. Book value of investment property 5,242,947.48 -96,678.75 0.00 5,146,268.73 1. Houses and buildings 5,242,947.48 -96,678.75 5,146,268.73 2. Land use right Unit: RMB Yuan Reporting period Depreciation and amortization amount 96,678.75 Impairment provision of investment property 0.00 (2) Investment property calculated by fair value □Applicable √Inapplicable Notes of investment property that altered calculated mode and failed to accomplish certification of property, and notes of reason that the fail accomplish and estimated accomplish date 17. Fixed assets (1) Fixed assets details Unit: RMB Yuan Opening book Decrease in the Closing book Item Increase in the reporting period balance reporting period balance I. Total original book value 1,773,575,819.51 29,366,021.58 13,583,462.73 1,789,358,378.36 83 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Including: Property and 815,492,151.98 7,356,898.48 1,438,375.11 821,410,675.35 building Machineries 845,108,028.64 15,421,635.66 8,627,346.17 851,902,318.13 Vehicles 24,790,333.56 3,090,048.48 1,251,800.08 26,628,581.96 Electronic equipments and 88,185,305.33 3,497,438.96 2,265,941.37 89,416,802.92 other Opening book Increase in Withdrawal in Decrease in the Closing book -- balance reporting period reporting period reporting period balance II. Accumulated 382,756,933.70 0.00 62,895,617.89 3,293,958.62 442,358,592.97 depreciation Including: Property and 0.00 84,359,978.23 19,306,934.84 256,824.78 103,410,088.29 building Machineries 246,699,298.80 0.00 33,273,273.14 1,406,048.09 278,566,523.85 Vehicles 8,232,096.48 0.00 1,847,653.44 760,218.25 9,319,531.67 Electronic equipments and 0.00 43,465,560.19 8,467,756.47 870,867.50 51,062,449.16 other Opening book Closing book -- -- balance balance III. The net book value of 1,390,818,885.81 -- 1,346,999,785.39 fixed assets Including: Property and 731,132,173.75 -- 718,000,587.06 building Machineries 598,408,729.84 -- 573,335,794.28 Vehicles 16,558,237.08 -- 17,309,050.29 Other equipment 44,719,745.14 -- 38,354,353.76 IV. Total impairment 25,486,225.48 -- 18,032,747.62 provision Including: Property and 14,229,192.09 -- 14,229,192.09 building Machineries 8,017,255.22 -- 2,008,782.39 Vehicles 400,745.04 -- - Electronic equipments and 2,839,033.13 -- 1,794,773.14 other V. Total book value of fixed 1,365,332,660.33 -- 1,328,967,037.77 assets Including: Property and 716,902,981.66 -- 703,771,394.97 building Machineries 590,391,474.62 -- 571,327,011.89 Vehicles 16,157,492.04 -- 17,309,050.29 Electronic equipments and 41,880,712.01 -- 36,559,580.62 other Depreciation amount of this reporting period was RMB62,895,617.892; original value of RMB0.000 was transferred into fixed assets from construction project. (2) Temporary idle fixed assets Unit: RMB Yuan 84 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Accrued Impairment Item Original book value Net book value Note depreciation provision Property and 0.00 building Machineries 0.00 Vehicles 0.00 (3) Fixed assets leased in from financing lease □Applicable √Inapplicable (4) Fixed assets leased out from operation lease □Applicable √Inapplicable (5) Information of hold-for-sale fixed assets at period-end Unit: RMB Yuan Item Book value Fair value Estimated disposal cost Estimated settle date (6) Information of fixed assets failed to accomplish certification of property Item Reason Estimated accomplish date Notes of fixed assets: 18. Construction in progress (1) Unit: RMB Yuan Closing balance Opening balance Item Impairment Impairment Book balance Book value Book balance Book value provision provision Sewage reform project 1,138,000.00 1,138,000.00 0.00 Basic construction of 3,816,600.00 3,816,600.00 industrial park Total 4,954,600.00 0.00 4,954,600.00 0.00 0.00 85 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 (2) Changes in significant construction in progress Unit: RMB Yuan Ope Transfer Including: Source Name Other Project input Project Capitalizatio Capitalization Budge ning Incr red to capitalization of of Closing of decrea percentage of proces n of of interest rate t bala ease fixed interest this fundin balance project se budget s interest (%) nce assets period g Total 0.00 0.00 0.00 0.00 0.00 -- -- 0.00 0.00 -- -- 0.00 Notes of changes in construction in progress: (3) Impairment provision of construction in progress Unit: RMB Yuan Increase in the Decrease in the Reason for Item Opening amount Closing balance reporting period reporting period withdrawal Total 0.00 0.00 0.00 0.00 -- (4) Information of procedures of significant construction in progress Item Project process Note (5) Notes of construction in progress 19. Engineering materials Unit: RMB Yuan Increase in the Decrease in the Item Opening balance Closing balance reporting period reporting period Total 0.00 0.00 Notes of engineering materials: 20. Clearance of fixed assets Unit: RMB Yuan Reason for transferring to Item Opening book value Closing book value clearance Total -- Notes of clearance process of fixed assets with a clearance term of over 1 year since the transfer into fixed assets: 21. Productive biological assets (1) Calculated by cost □Applicable √Inapplicable (2) Calculated by fair value □Applicable √Inapplicable 22. Oil and gas assets Unit: RMB Yuan 86 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Opening book Closing book Item Increase Decrease balance balance I. Total original book value 1. Property rights of proved mining area 2. Property rights of unproved mining area 3. Well and relevant facilities II. Total accumulated depreciation 1. Property rights of proved mining area 2. Well and relevant facilities a III. Total accumulated oil and gas assets depreciation 1. Property rights of proved mining area 2. Property rights of unproved mining area 3. Well and relevant facilities IV. Total book value of oil and gas assets 1. Property rights of proved mining area 2. Property rights of unproved mining area 3. Well and relevant facilities Notes of oil and gas assets: Naught 23. Intangible assets (1) Information Unit: RMB Yuan Increase in the Decrease in the Item Opening balance Closing balance reporting period reporting period I. Total original book value 347,534,249.75 0.00 0.00 347,534,249.75 Land use right 343,859,928.19 343,859,928.19 Non-patent technology 1,992,000.00 1,992,000.00 Software, etc. 1,682,321.56 1,682,321.56 II. Accumulative amortization 30,674,233.67 3,894,350.32 0.00 34,568,583.99 Land use right 27,720,807.36 3,628,263.76 31,349,071.12 Non-patent technology 1,842,600.00 116,678.82 1,959,278.82 Software, etc. 1,110,826.31 149,407.74 1,260,234.05 III. Total net book value of 316,860,016.08 0.00 0.00 312,965,665.76 intangible assets Land use right 316,139,120.83 312,510,857.07 Non-patent technology 149,400.00 32,721.18 Software, etc. 571,495.25 422,087.51 IV. Total impairment provision 0.00 0.00 0.00 0.00 87 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Land use right Non-patent technology Software, etc. Total book value of intangible 316,860,016.08 0.00 0.00 312,965,665.76 assets Land use right 316,139,120.83 312,510,857.07 Non-patent technology 149,400.00 32,721.18 Software, etc. 571,495.25 422,087.51 Amortization was of RMB 3,894,350.32 in the reporting period. (2) Company development expense Unit: RMB Yuan Decrease Item Opening balance Increase Recognized into Recognized as Closing balance current gains/losses intangible assets Total Development expense percentage of total expenditure of R&D projects in the reporting period. Percentage intangible assets arising from inner R&D of the Company of closing book value of intangible assets. Notes of R&D projects of the Company, those that includes individual value of more than RMB 1 million and recognized with a basis of assessed value, please disclose name of evaluation authority and method of evaluation: (3) Information of intangible assets that failed to accomplish certification of property 24. Goodwill Unit: RMB Yuan Impairment Name of investee or event that Increase in the Decrease in the Opening balance Closing balance provision at generated goodwill reporting period reporting period period-end Total Notes of test method of goodwill impairment and impairment withdrawal method: 25. Long-term amortization expense Unit: RMB Yuan Amortization Reason for other Item Opening balance Increase Other decrease Closing balance balance decrease Module 46,671,803.43 7,505,530.91 15,684,547.28 38,492,787.06 IT consultant 4,762,160.26 546,248.46 1,327,647.15 3,980,761.57 expense Improvement of 1,320,894.74 674,039.17 646,855.57 lease expense Total 52,754,858.43 8,051,779.37 17,686,233.60 43,120,404.20 -- Notes of long-term amortization expense: Naught 88 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 26. Deferred tax assets and liabilities (1) Deferred tax assets and liabilities are not listed as the net value after offset □Applicable √Inapplicable (2) Deferred income tax assets and liabilities are listed as the net value after offset √Applicable □Inapplicable Notes of deferred income tax assets and liabilities Unit: RMB Yuan Deductible or Deferred income Deductible or taxable Deferred income taxable temporary assets or liabilities temporary differences assets or liabilities as Item differences as at the as at the end of as at the end of at the beginning of beginning of reporting period reporting period reporting period reporting period Deferred income tax assets: Provision for assets impairment 12,438,451.21 82,923,008.02 13,848,685.40 92,267,684.65 Formation expenses Deductible losses Remuneration and dismiss expense 6,813,459.43 45,423,062.89 7,208,346.05 48,055,640.35 Withdrawal expense 58,996,687.65 393,311,250.98 75,474,152.06 503,161,013.70 Internal unrealized profit 3,875,419.53 25,836,130.22 3,653,800.80 24,358,671.97 Estimated liabilities 2,912,796.06 19,418,640.40 3,022,895.56 20,152,637.08 Deferred income (government subsidy) 243,510.00 1,623,400.00 236,730.00 1,578,200.00 Investment differences 1,317,443.38 8,782,955.88 1,317,443.38 8,782,955.88 Subtotal 86,597,767.26 577,318,448.40 104,762,053.25 698,356,803.63 Deferred income tax liabilities: Estimated value of trading financial instruments, derivative financial 643,845.00 4,292,300.00 instruments Fair value changes on available-for-sale financial assets that recognized into 19,176.60 127,844.00 27,643.80 184,292.00 capital reserves Subtotal 19,176.60 127,844.00 671,488.80 4,476,592.00 List of deferred income tax assets and deferred income tax liabilities: Unit: RMB Yuan Item Counter off-set amount in reporting period Notes of deferred income tax assets and liabilities 89 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 27. List of provision for assets impairment Unit: RMB Yuan Opening book Decrease Closing book Item Increase balance Reversal Written off balance I. Provision for bad debt 53,785,669.15 3,378,437.93 30,640.00 57,133,467.08 II. Provision for inventory falling 28,603,650.92 0.00 619,115.73 4,619,863.69 23,364,671.50 price III. Impairment provision of available-for-sale financial assets IV. Impairment provision of held-to-maturity investment V. Impairment provision of 4,224,744.00 0.00 4,224,744.00 long-term equity investment VI. Impairment provision of 0.00 0.00 0.00 investment property VII. Impairment provision of fixed 25,486,225.48 7,453,477.86 18,032,747.62 assets VIII. Impairment provision of engineering materials IX. Impairment provision of 0.00 0.00 0.00 construction in progress X. Impairment provision of productive biological assets Including: mature productive biological assets XI. Impairment provision of oil gas assets XII. Impairment provision of 0.00 0.00 0.00 intangible assets XIII. Impairment provision of goodwill XIV. Others Total 112,100,289.55 3,378,437.93 619,115.73 12,103,981.55 102,755,630.20 Notes of the list of assets impairment: Naught 28. Other non-current assets Unit: RMB Yuan Item Closing balance Opening balance Total Notes of other non-current assets: Naught 29. Short-term loan (1)Category Unit: RMB Yuan Category Closing balance Opening balance Pledge loan 90 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Mortgage loan 6,961,486.36 Guarantee loan Credit loan Total 6,961,486.36 Notes of category of short-term loan: (2) List of unsettled mature short-term loan Unit: RMB Yuan Reason for Name of creditor Amount of loan Rate of loan Usage Estimated settle date unsettlement Total -- -- -- -- RMB000 was paid back after the Balance Sheet Date. Notes of short-term loan, for those gaining extended term, notes term of extension and new maturity day: 30. Trading financial liabilities Unit: RMB Yuan Item Closing fair value Opening fair value Public trading bonds Financial liabilities designed to recognized with a basis on fair value and with its changes recognized into current gains and losses Derivative financial liabilities Other financial liabilities Total Notes of trading financial liabilities: 31. Notes payable Unit: RMB Yuan Category Closing balance Opening balance Trade acceptance bill Bank acceptance bill 1,131,522,411.92 1,539,319,483.44 Total 1,131,522,411.92 1,539,319,483.44 RMB58,277.94 will be due in next fiscal period. Notes of notes payable: bank acceptance bill provided guarantee of RMB132.498 million. 32. Accounts payable (1) Unit: RMB Yuan Item Closing balance Opening balance Within 1 year 1,939,294,485.47 2,732,569,705.52 1 years to 2 years 42,552,916.42 39,885,209.61 91 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 2 years to 3 years 16,108,656.10 18,043,425.86 3 years to 5 years 16,027,471.91 17,016,288.79 Over 5 years 9,610,082.58 7,973,541.60 Total 2,023,593,612.48 2,815,488,171.38 (2) The accounts payable to shareholders with more than 5% (including 5%) of the voting shares of the Company □Applicable √Inapplicable Notes of the accounts payable aging over one year: 33. Advance from customers (1) Unit: RMB Yuan Item Closing balance Opening balance Receive in advance 358,450,431.48 485,754,049.80 Total 358,450,431.48 485,754,049.80 (2) Advanced from customers from shareholders with more than 5% (including 5%) of the voting shares of the Company □Applicable √Inapplicable Notes of significant advance from customers aging over one year: 34. Payroll payable Unit: RMB Yuan Item Opening book balance Increase Decrease Closing book balance I. Salary, bonus, 60,888,997.15 137,431,653.51 167,703,891.43 30,616,759.23 allowance, subsidy II. Employee welfare 3,865,587.77 11,169,785.93 11,724,494.95 3,310,878.75 III. Social insurance 8,645,065.78 45,292,050.67 48,438,294.91 5,498,821.54 IV. Housing fund 5,347,178.36 12,426,867.24 12,024,366.48 5,749,679.12 V. Redemption for terminations of labor 52,792,171.57 1,704,574.88 6,259,492.58 48,237,253.87 contract VI. Others 3,941,653.63 1,812,289.28 1,855,587.00 3,898,355.91 Total 135,480,654.26 209,837,221.51 248,006,127.35 97,311,748.42 RMB 0.00 is the amounts in arrears in the payroll payable. The labor union budget and employee education budget is RMB 1,812,289.28, and the non-monetary benefits are RMB0.00, as well as the compensation for terminating the labor contract is RMB 1,704,574.88. The estimated distribution date and amount as well as other arrangements for payroll payable: Naught 35. Taxes payable Unit: RMB Yuan Item Closing balance Opening balance Value-added tax -82,113,500.81 -75,048,177.29 Consumption tax 92 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Business tax 1,930,713.13 2,013,293.60 Corporate income tax 17,177,485.73 63,401,496.70 Personal income tax 7,184,136.99 281,459.64 Urban maintenance and construction tax 710,358.80 1,998,223.92 Property tax 1,223,856.82 1,897,977.50 Land use tax 253,595.93 1,959,774.34 Stamp tax 721,059.67 Education surtax 537,120.95 1,372,998.32 Other 3,584,044.00 2,865,776.81 Total -49,512,188.46 1,463,883.21 Notes of taxes payable: for the taxable income of branch companies and factories approved to be inter-adjusted by their local tax authorities, the Company shall specified their calculation procedure. Naught 36. Interest payable Unit: RMB Yuan Item Closing balance Opening balance Interest payable on long-term borrowings that interest was paid by stages and principle was repay upon due Interest of corporate bond Interest payable on short-term borrowings Total Notes: Naught 37. Dividends payable Unit: RMB Yuan Reason for unsettlement over 1 Name of company Closing balance Opening balance year Other corporate shareholder with 3,710,206.21 2,838,070.21 Unpaid trading moratorium Total 3,710,206.21 2,838,070.21 -- Notes: 38. Other accounts payable (1) Unit: RMB Yuan Item Closing balance Opening balance Within 1 year 140,513,192.15 128,170,235.14 1 years to 2 years 7,341,587.24 22,787,614.91 2 years to 3 years 7,787,825.31 8,593,080.06 3 years to 5 years 3,433,580.75 2,291,622.53 Over 5 years 2,499,873.27 3,562,718.52 93 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Total 161,576,058.72 165,405,271.16 (2) Other accounts payable from shareholders with more than 5% (including 5%) of the voting shares of the Company √Applicable □Inapplicable Unit: RMB Yuan Name of entity Closing balance Opening balance Guangdong Midea Electric Appliances Co., Ltd. 390,636.00 390,636.00 Total 390,636.00 390,636.00 (3) Notes of the other large amount accounts payable aging over 1 year Naught (4) Notes of other accounts payable with significant amount Naught 39. Estimated liabilities Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance External offering guarantee Unsettled lawsuit Product quality guarantee 18,953,235.00 19,034,176.39 Responsibility of reorganization Dismissal welfare Loss contract to be executed Other 1,199,402.08 384,464.01 Total 20,152,637.08 0.00 0.00 19,418,640.40 Notes: The washing machines produced by subsidiary of the company, Wuxi Little Swan General Electric Co., Ltd., are mainly sold to the United States and other foreign markets. Overseas sale of these washing machines involves the two kinds of risks:1) The insurance company may only afford an insufficient compensation when the quality problems take place, and 2) there is a risk of liability for damages when the failure rate is higher than FCR stipulated in the contract with General Electric Company. As of 30 Jun. 2012, the company has a risk loss of RMB 19,034,200 for the sold products. 40. Non-current liabilities due within 1 year (1) Unit: RMB Yuan Item Closing balance Opening balance Long-term loan due within 1 year Bonds payable due within 1 year 94 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Long-term accounts payable due within 1 year Total (2) Long-term loan due within 1 year Long-term loan due within 1 year Unit: RMB Yuan Item Closing balance Opening balance Pledge loan Mortgage loan Guarantee loan Credit loan Total RMB000 of long-term loan due within 1 year was of mature loan with extended term. Top five long-term loan due within 1 year Unit: RMB Yuan Closing balance Opening balance Starting Foreign Foreign Creditor Ending date Currency Rate (%) RMB RMB date currency currency balance balance balance balance Total -- -- -- -- -- -- Mature loan of long-term loan due within 1 year: Unit: RMB Yuan Reason for Estimated settle Creditor Amount of loan Overdue date Annual rate (%) Usage unsettlement date Total -- -- -- -- -- RMB000 was paid back after Balance Sheet Date: Notes of long-term borrowings due within 1 year: Naught (3)Bonds payable due within 1 year Unit: RMB Yuan Accrued Interest paid Opening Closing Issuance Issuing interest in in the Closing Name Par value Term interest interest date amount current reporting balance payable payable period period Notes: Naught (4) Long-term accounts payable due within 1 year Unit: RMB Yuan 95 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Creditor Term Initial amount Rate (%) Accrued interest Closing balance Conditions Notes of long-term accounts payable due within 1 year: 41. Other current liabilities Unit: RMB Yuan Item Closing book balance Opening book balance Deferred income 7,318,250.00 6,621,250.00 Total 7,318,250.00 6,621,250.00 Notes: Naught 42. Long-term loan (1)Category of long-term loan Unit: RMB Yuan Item Closing balance Opening balance Pledge loan Mortgage loan Guarantee loan Credit loan Total Notes: (2)The top five long-term loans Unit: RMB Yuan Closing balance Opening balance Starting Foreign Foreign Creditor Ending date Currency Rate (%) RMB RMB date currency currency amount amount amount amount Total -- -- -- -- -- -- Notes of long-term loan: for the long-term loans arising from mature loans with extended term, the Company shall explain the conditions of extension, principal, interest, expected repayment arrangement: Naught 43. Bonds payable Unit: RMB Yuan Interest paid Opening Closing Closing Issuance Issuing in the Name Par value Term interest interest interest Name date amount reporting payable payable payable period Notes of bonds payable, including the conditions and date of conversion of the convertible corporate bonds: inapplicable 96 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 44. Long-term payable (1) The top five long-term payable Unit: RMB Yuan Conditions of Company Term Initial amount Rate (%) Accrued interest Closing balance loan (2) List of the financing lease payable under the long-term loan Unit: RMB Yuan Closing balance Opening balance Company Foreign currency RMB Foreign currency RMB Total RMB000 was guarantee for the Company’s financing lease provided by the independent third party. Notes of the long-term payable: Naught 45. Specific payable Unit: RMB Yuan Decrease in Increase in Item Opening balance reporting Closing balance Note reporting period period Total -- Notes of specific payable: Naught 46. Other non-current liabilities Unit: RMB Yuan Item Closing book balance Opening book balance Deferred income 7,318,250.00 6,621,250.00 Total 7,318,250.00 6,621,250.00 Notes of other non-current liabilities, including each government grants relevant to assets and income received in the reporting period and their closing amounts: RMB1,012,600.00. 47. Share capital Unit: RMB Yuan Increase/Decrease (+/-) Opening Capitalization Closing Issuing new balance Bonus shares of public Other Subtotal balance shares reserves Total shares 632,487,764 0 0 632,487,764 Notes of changes in share capital, for those action of increasing capital or decreasing capital in the reporting period, the Company shall disclose the name of the accounting firm executing the capital verification and document number of the capital verification 97 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 report; for joint-stock companies running for less than three years, only the net assets shall be specified for particulars before establishment; while for case of totally changing the limited liability companies into joint-stock companies, capital verification on the establishment shall be specified: 48. Treasury stock Notes of treasury stock: 49. Special reserves Notes of special reserves: 50. Capital reserves Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance Capital premium (share 1,055,182,718.57 1,055,182,718.57 capital premium) Other capital reserves Capital reserves transferred 39,179,385.00 39,179,385.00 from original system Gains and losses from fair value 156,648.20 47,980.80 108,667.40 changes Equity investment preparation 1,638,562.74 1,638,562.74 Total 1,096,157,314.51 0.00 47,980.80 1,096,109,333.71 Notes: 51. Surplus reserves Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance Statutory surplus reserves 249,433,912.28 249,433,912.28 Discretional surplus reserves Reserve fund Enterprise development funds Other Total 249,433,912.28 0.00 0.00 249,433,912.28 Notes of surplus reserves: for surplus reserves transferred to share capital, compensating losses and distributed as dividends, relevant resolutions shall be explained: 52. Provision for general risk Notes of provision for general risk: 53. Retained profits Unit: RMB Yuan Withdrawal or distributed Item Amount proportion Opening balance of retained profits before 1,465,610,508.78 -- 98 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 adjustments Adjustments of opening balance of retained -- profits (“+” means add, “-” means reduce) Opening balance of retained profits after 1,555,341,091.53 -- adjustments Add: Net profit attributable to owners of the 216,228,135.55 -- Company Less: Withdrawal of statutory surplus reserves Withdrawal of discretional surplus reserves Withdrawal of provision for general risk Dividend of common stock payable 126,497,552.80 Dividend of common stock converted into share capital Closing retained profits 1,555,341,091.53 -- List of adjustment of opening retained profits: 1) RMB0.00 opening retained profits was affected by retrospective adjustment conducted according to the Accounting Standards for Business Enterprises and relevant new regulations. 2) RMB0.00 opening retained profits was affected by changes on accounting policies. 3) RMB0.00 opening retained profits was affected by correction of significant accounting errors. 4) RMB0.00 opening retained profits was affected by changes in combination scope arising from same control. 5) RMB0.00 opening retained profits was affected totally by other adjustments. Notes: as for IPO companies, if the accumulated profits were enjoyed by new and original shareholders according to the resolutions made at the shareholders’ general meeting before public offering, the Company shall explain clearly; if the accumulated profits were distributed before public offering and enjoyed by the original shareholders according to the resolutions made at the shareholders’ general meeting, the Company shall clearly disclose the audited profits of dividends payable enjoyed by the original shareholders: inapplicable. 54. Revenue and Cost of Sales (1) Revenue, Cost of Sales Unit: RMB Yuan Item Reporting period Same period of last year Sales of main business 2,805,116,121.47 5,899,254,923.62 Other operating income 296,212,609.67 848,259,198.91 Cost of sales 2,453,880,581.19 5,611,799,841.30 (2)Main business (Classified by industry) √Applicable □Inapplicable Unit: RMB Yuan Industry Reporting period Same period of last year 99 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Revenue of sales Costs of sales Revenue of sales Costs of sales Home appliances 2,805,116,121.47 2,213,791,209.14 5,899,254,923.62 4,821,212,065.16 Total 2,805,116,121.47 2,213,791,209.14 5,899,254,923.62 4,821,212,065.16 (3)Main business (Classified by product) √Applicable □Inapplicable Unit: RMB Yuan Reporting period Same period of last year Product Revenue of sales Costs of sales Revenue of sales Costs of sales Washing machine 2,805,116,121.47 2,213,791,209.14 5,899,254,923.62 4,821,212,065.16 Total 2,805,116,121.47 2,213,791,209.14 5,899,254,923.62 4,821,212,065.16 (4) Main business (Classified by area) √Applicable □Inapplicable Unit: RMB Yuan Reporting period Same period of last year Area Revenue of sales Costs of sales Revenue of sales Costs of sales Domestic market 1,744,614,729.04 1,185,059,471.28 4,832,628,273.73 3,764,076,508.18 Overseas market 1,060,501,392.43 1,028,731,737.86 1,066,626,649.89 1,057,135,556.98 Total 2,805,116,121.47 2,213,791,209.14 5,899,254,923.62 4,821,212,065.16 (5) The revenue of sales from the top five customers Unit: RMB Yuan Customer Main business revenue Proportion of total business revenue (%) MideaElectricTrading (Singapore) 585,119,029.41 18.87% Co. Pte. Ltd. Guizhou Midea Refrigeration 76,018,704.94 2.45% Product Marketing Co., Ltd. Kronen Internacional S.A. 57,696,354.34 1.86% Wuhan Midea Refrigeration 49,641,146.79 1.6% Product Marketing Co., Ltd. Hunan Midea Refrigeration 49,422,775.51 1.59% Product Marketing Co., Ltd. Total 817,898,010.99 26.37% Notes: Naught 55. Revenue from the construction contracts □ Applicable □ Inapplicable Notes of revenue from the construction contracts: 100 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 56. Business tax and surtax Unit: RMB Yuan Item Reporting period Same period of last year Calculation and payment standard Consumption tax Business tax 451,411.83 6,375.00 Urban maintenance and construction 8,913,533.50 9,630,579.72 tax Education surtax 6,366,809.66 5,923,722.68 Resources tax Other 247,756.68 Total 15,731,754.99 15,808,434.08 -- Notes: Naught 57. Gains and losses from changes in fair value Unit: RMB Yuan Source Reporting period Same period of last year Trading financial assets -4,292,300.00 11,689,065.84 Including: gains from the changes in fair value of derivative financial instruments Trading financial liabilities Investment property calculated in fair value Other 0.00 0.00 Total -4,292,300.00 11,689,065.84 Notes: 58. Investment income (1) List of investment income Unit: RMB Yuan Item Reporting period Same period of last year Long-term equity investment income accounted by 163,405.12 30,000.00 cost method Long-term equity investment income accounted by 50,887.51 -1,078,070.63 equity method Investment income arising from disposal of 18,510,892.36 long-term equity investments Investment income received from holding of trading 4,848,500.00 12,149,078.24 financial assets 101 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Investment income received from holding of held-to-maturity investments Investment income received from holding of available-for-sale financial assets Investment income received from disposal of trading financial assets Investment income received from holding of held-to-maturity investments Investment income received from available-for-sale financial assets Other Total 5,062,792.63 29,611,899.97 (2) Long-term equity investment income accounted by cost method Unit: RMB Yuan Same period of last Name of investee Reporting period Reason for increase/decrease year Suzhou People's Shopping Mall 40,000.00 30,000.00 Bank of Jiangsu 123,405.12 Total 163,405.12 30,000.00 -- (3) Long-term equity investment income accounted by equity method Unit: RMB Yuan Same period of last Name of investee Reporting period Reason for increase/decrease year Attend Logistics Co., Ltd. 50,887.51 -158,936.44 BSW Household Appliances Co., Ltd. -919,134.19 Total 50,887.51 -1,078,070.63 -- Notes of investment income: make notes if there is significant limitation for recovery of investment income. If there isn’t the said limitation, notes too: Naught 59. Impairment losses Unit: RMB Yuan Item Reporting period Same period of last year I. Bad debts losses 3,378,437.94 6,432,722.94 II. Inventory falling price losses -619,115.73 -900,755.61 III. Impairment losses of available-for-sale financial assets IV. Impairment losses of held-to-maturity of investment V. Impairment losses of long-term equity investment 102 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 VI. Impairment losses of investment property VII. Impairment losses of fixed assets VIII. Impairment losses of engineering materials IX. Impairment loss of construction in progress X. Impairment losses of productive biological assets XI. Impairment losses of oil and gas assets XII. Impairment losses of intangible assets XIII. Impairment losses of goodwill XIV. Other Total 2,759,322.21 5,531,967.33 60. Non-operating gains (1) Unit: RMB Yuan Item Reporting period Same period of last year Total gains from disposal of non-current assets 8,366,649.38 15,741,216.89 Including:Gains from disposal of fixed assets 8,366,649.38 15,741,216.89 Gains from disposal of intangible assets Gains from debt reconstruction Gains from non-monetary assets exchange Acceptance of donations Government grants 4,578,571.99 16,731,627.64 Penalty income 3,752,149.92 1,504,773.46 Other 2,363,356.14 1,836,182.83 Total 19,060,727.43 35,813,800.82 (2) List of government grants Unit: RMB Yuan Item Reporting period Same period of last year Note Special funds on business 1,694,300.00 development VAT refund upon collection 902,394.27 10,143,935.44 Rewards from the foreign trade and economic development project 640,000.00 400,000.00 funds Subsidies for investment on Midea 5,331,500.00 Washing Machine Industrial Park 103 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Rewards for municipal technology 200,000.00 center of enterprise Rewards for outstanding enterprise 200,000.00 in high-tech industry Subsidies for overseas investment 90,000.00 Subsidies for large taxpayer 40,000.00 Rewards for production expansion 33,640.00 of foreign-trading enterprise Relocation subsidies 25,200.00 Patent subsidies from Science & 13,000.00 Technology Bureau Subsidy on export letter of credit 353,200.00 Subsidy on technology 300,000.00 development plan project Subsidy on developing international famous brand of 200,000.00 Jiangsu Province Special funds on attracting 150,000.00 investment Subsidies for AICA of export 115,200.00 products Rewards on patent by Science 63,400.00 Bureau Reward for Commending Excellent Enterprises 2011 by Economic and 50,000.00 Trade Bureau Financial subsidy on the Top Ten 35,000.00 Software Corporations of Wuxi Other 75,077.72 254,352.20 Total 4,578,571.99 16,731,627.64 -- Notes 61. Non-operating expenses Unit: RMB Yuan Item Reporting period Same period of last year Loss on disposal of non-current assets Including: Loss on disposal of fixed assets 816,841.83 2,017,512.26 Loss on disposal of intangible assets 104 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Loss on debt reconstruction Loss on exchange of non-monetary assets External donation expense Losses on disposal of fixed assets 8,686.22 Penalty expense 75,975.18 2,044.73 Compensation expense Donation expense 50,000.00 Local fees (flood prevention and security funds etc.) 1,989,888.75 4,648,031.79 Other 796,055.14 1,815,364.11 Total 3,687,447.12 8,532,952.89 Notes: 62. Income tax expense Unit: RMB Yuan Item Reporting period Same period of last year Current income tax expense accounted by tax and relevant 16,508,665.99 104,460,824.48 regulations Adjustment of income tax 17,520,440.96 -20,025,431.82 Total 34,029,106.95 84,435,392.66 63. Calculation procedure of basic earnings per share and diluted earnings per share Profit in reporting period Reporting period Same period of last year Basic EPS Deluted EPS Weighted Basic EPS Deluted EPS Weighted Average ROE Average ROE Net profit attributable to 0.34 0.34 6.09% 0.44 0.44 8.77% common shareholders of the Company (I) Net profit attributable to 0.32 0.32 5.71% 0.41 0.41 8.02% common shareholders of the Company after deduction of non-recurring profit and loss (II) Same period of last Item No. Reporting period year Net profit attributable to common shareholders of the 1 Company(NP) 216,228,135.55 280,338,482.78 Non-recurring gains and losses of net profit attributable to 2 common shareholders of the Company after deducting 13,622,676.81 23,930,045.58 105 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 influence on income tax Net profit attributable to common shareholders of the 3=1-2 Company after deducting non-recurring gains and losses 202,605,458.74 256,408,437.20 Total shares as at 30 Jun. 2012 4 632,487,764.00 632,487,764.00 Additional shares increased due to capital reserves converted to shares or distribution of dividends, etc. 5 - - in reporting period Additional shares due to issuance of new share or 6 debts converted into shares, etc. in reporting period - - The number of months from the next month when increasing shares due to issuance of new share or 7 - - debts converted into shares, etc. Reduced shares due to buy-back business etc. in 8 reporting period - - The number of months from the next month when 9 reducing shares - - Number of shares reduced in reporting period 10 - - Number of months in reporting period 11 6.00 6.00 Weighted average of common shares issued 12=4+5+6×7÷11-8×9 outside(Ⅰ) ÷11-10 632,487,764.00 632,487,764.00 Weighted average of common shares issued outside 13 adjusted for merger under common control(Ⅱ) 632,487,764.00 632,487,764.00 Basic earnings per share(Ⅰ) 14=1÷13 0.34 0.44 Basic earnings per share(Ⅱ) 15=3÷12 0.32 0.41 Diluting potential common share interests recognized 16 as expenses - - Income tax rate 17 15% 15% Transformation expense 18 - - Amount of shares increased by transforming or exercising of company bond, subscription certificate, 19 - - or share option 106 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 20=[1+(16-18)×(1-17) Diluted EPS(Ⅰ) ]÷(13+19) 0.34 0.44 21=[3+(16-18)×(1-17) Diluted EPS(Ⅱ) ]÷(12+19) 0.32 0.41 64. Other comprehensive income Unit: RMB Yuan Reporting Same period of Item period last year 1. Profits/(losses) from available-for-sale financial assets -56,448.00 9,408.00 Less: Effects on income tax generating from available-for-sale financial assets -8,467.20 1,411.20 Net amount transferred into profit and loss in the current period that recognized into other comprehensive income in prior period Subtotal -47,980.80 7,996.80 2. Interests in the investee entities’ other comprehensive income as per equity method Less: Effects on income tax generating from the interests in the investee entities’ other comprehensive income as per equity method Net amount transferred into profit and loss in the current period that recognized into other comprehensive income in prior period Subtotal 0.00 0.00 3. Profits/(losses) from cash flow hedging instrument Less: Effects on income tax generating from cash flow hedging instrument Net amount transferred into profit and loss in the current period that recognized into other comprehensive income in prior period The adjustment value that is the converted initial recognition amount of arbitrage project Subtotal 0.00 0.00 4. Converted amount of foreign currency financial statements 119,668.34 -754,385.29 Less: Net value of disposal of oversea operations that recognized into current profit and loss Subtotal 119,668.34 -754,385.29 5. Other Less: Effects on income tax generating from the others that included into other comprehensive income Net amount transferred into profit and loss in the current period that recognized into other comprehensive income in prior period Subtotal 0.00 0.00 Total 71,687.54 -746,388.49 Notes: Naught 107 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 65. Notes of Cash Flow Statement (1) Other cash received relevant to operating activities Unit: RMB Yuan Item Amount Penalty income 3,752,149.92 Subsidy on income, etc. 3,676,177.72 Interest income from normal bank deposit 34,084,424.15 Actual rent received from operating lease 688,729.60 Other cash income from non-operation 11,480,058.50 Total 53,681,539.89 Notes: Naught (2) Other cash paid relevant to operating activities Unit: RMB Yuan Item Amount Sales expense paid in reporting period 251,648,858.50 Administration expense paid in reporting period 59,672,804.27 Handling charges for financial expense in reporting period 1,441,800.51 Other 4,165,394.98 Total 316,928,858.26 Notes: Naught (3) Other cash received relevant to investment activities Unit: RMB Yuan Item Amount Total Notes: Naught (4) Other cash paid relevant to investment activities Unit: RMB Yuan Item Amount Total Notes: Naught 108 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 (5) Other cash received relevant to financing activities Unit: RMB Yuan Item Amount Total Note to other cash receipts relating to financing activities None (6) Other cash payments relating to financing activities Unit: RMB Yuan Item Amount Total Note to other cash payments relating to financial activities: None. 66. Appendix of Cash Flow Statement (1) Appendix of Cash Flow Statement Unit: RMB Yuan Amount of this Amount of last Item period period 1. Reconciliation of net profit to net cash flows generated from -- -- operating activities Net profit 234,142,192.35 333,304,792.64 Add: Provision for impairment of assets 2,759,322.21 5,531,967.33 Depreciation of fixed assets, of oil-gas assets, of productive 62,992,296.64 49,139,540.41 biological assets Amortization of intangible assets 3,894,350.32 3,080,816.34 Amortization of long-term deferred expense 17,686,233.60 22,566,793.19 Losses on disposal of property, plant and equipment, intangible assets and other -7,549,807.55 -13,723,704.63 long-term assets (gains: negative) Loss on retirement of fixed assets (gains: negative) Financial cost (gains: negative) 4,292,300.00 -11,689,065.84 Investment loss (gains: negative) 425,127.33 Decrease in deferred income tax assets (gains: negative) -5,062,792.63 -29,611,899.97 Increase in deferred income tax liabilities (decrease: negative) 18,164,285.98 -18,482,204.81 109 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Decrease in inventory (gains: negative) -643,845.00 1,075,074.65 Decrease in accounts receivable from operating activities (gains: 191,820,788.31 132,708,678.56 negative) Increase in payables from operating activities (decrease: negative) 1,659,302,504.82 -2,709,576,003.39 Other -1,272,360,218.32 1,726,249,260.57 Net cash flows generated from operating activities II. Investing and financing activities that do not involving 909,437,610.73 -509,000,827.63 cash receipts and payment: Conversion of debt into capital -- -- Convertible bond due within one year Fixed assets financed by finance leases III. Net increase in cash and cash equivalents Closing balance of cash -- -- Less: Opening balance of cash 2,987,581,854.36 Closing balance of cash equivalents 1,440,179,977.23 2,119,023,194.93 Add: Closing balance of cash equivalents Less: Opening balance of cash equivalents Net increase in cash and cash equivalents 707,928,551.79 -678,843,217.70 (2)Information about acquisition or disposal of subsidiary and other business units in the reporting period Unit: RMB Yuan Supplementary Information Amount of this period Amount of last period I. Information about acquisition of subsidiaries and other -- -- business units: 1. Price of the acquisition of subsidiaries and other business units 2. Cash and cash equivalents paid for the acquisition of subsidiaries and other business units Less: Cash and cash equivalents held by subsidiaries and other business units 3. Net cash paid for the acquisition of subsidiaries and other business units Net assets from the acquisition of subsidiaries 0.00 0.00 Current assets Non-current assets Current liabilities None current liabilities 110 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 II. Information about disposal of subsidiaries and other -- -- business units 1. Price of the disposal of subsidiaries and other business units 2. Cash and cash equivalents received from the disposal of subsidiaries and other business units Less: Cash and cash equivalents held by subsidiaries and other business units 3. Net cash received from the disposal of subsidiaries and -3,027,789.49 other business units 4. Net assets from the disposal of subsidiaries 0.00 0.00 Current assets Non-current assets Current liabilities None current liabilities (3) Composition of cash and cash equivalents Unit: RMB Yuan Item Closing amount Opening amount I. Cash 2,987,581,854.36 1,440,179,977.23 Including: cash in hand 210,062.94 184,735.57 Bank deposit can be used for payment at any 2,987,371,791.42 2,279,468,567.00 time Other monetary funds can be used for payment at any time Deposits in central bank can be used for payment Deposits in other banks Call loans to banks II. Cash equivalents Including: bond investments due within three months III. Closing balance of cash and cash equivalents 2,987,581,854.36 2,279,653,302.57 Note to Supplementary Information of Cash Flow Statement 67. Note to changes in owners’ equity Explain the “Other” items to be adjusted at the end of the first half year and the adjusted amount; the retroactive adjustment due to consolidation of enterprises under the same control: 111 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 (VIII) Accounting treatment of asset securitization business 1. Main transaction arrangements, accounting treatments and bankruptcy remoteness terms of asset securitization None. 2. Special purpose entities that the company doesn’t own but bears the risks Unit: RMB Yuan Total assets at Total liabilities Net assets at Operating Net profits of Name the end of at the end of the end of revenue of Remark current period period period period current period 112 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 (Ⅸ)Relationship and Related Party Transactions 1. Particulars about the parent company: Unit: RMB Yuan Proportions Proportions of parent of parent Ultimate Name of company’s company’s Enterprise Legal controller Organization parent Relationship Registration place Business nature Registered capital Currency shareholding voting nature representative of the code company to the right to the company company company (%) (%) Manufacture and sales of commercial air GD Joint conditioners, Midea Parent He stock Foshan, Guangdong Fang Hongbo refrigerators 3,384,347,650.00 CNY 40.08% 40.08% 19033709-2 Holding company Xiangjian company washing-machines Co., Ltd. and compressors, after-sale service of productions Note of the parent company: None. 2. Particulars about the subsidiaries: Unit: RMB Yuan Shareholding Voting right Enterprise Registration Legal Business Registered Organization Name of subsidiaries Relationship Currency to the to the nature place representative nature capital code company company (%) 113 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 (%) Wuxi Little Swan General Wholly-owned Production Wuxi Chai Xinjian Production 28,000,000.00 CNY 70% 70% 76355342-0 Electric Appliances Co. , Ltd. subsidiary Wuxi Little Swan Driving & Wholly-owned Control Development R&D Wuxi Chai Xinjian R&D 5,000,000.00 CNY 97.3% 97.3% 79538539-6 subsidiary Technology Co. , Ltd. Wholly-owned Wuxi Filin Electronics Co. , Ltd. Production Wuxi Chai Xinjian Production 3,624,600.00 USD 73% 73% 74815875-6 subsidiary Wuxi Little Swan Washing Wholly-owned Production Wuxi Chai Xinjian Production 49,679,500.00 CNY 99.91% 99.91% 60792331-1 Machine Co. , Ltd. subsidiary Wuxi Meitian Refrigerator Wholly-owned Trading Wuxi Chai Xinjian Trading 4,000,000.00 USD 75% 75% 71490141-7 Market Co., Ltd. subsidiary Jiangsu Little Swan Marketing Wholly-owned Trading Wuxi Chai Xinjian Trading 419,500,000.00 CNY 99.64% 99.64% 73330538-9 and Sales Co. , Ltd. subsidiary Wuxi Little Swan Import & Wholly-owned Import & Import & Wuxi Chai Xinjian 65,000,000.00 CNY 88.46% 88.46% 13600714-8 Export Co. , Ltd subsidiary Export Export Wholly-owned P.T. Little Swan Prima Industries Trading Malaysia Zhu Dekun Trading 1,000,000.00 USD 51% 51% subsidiary Little Swan International Wholly-owned Investment Singapore Chai Xinjian Investment 5,000,000.00 USD 100% 100% (Singapore) Co., Ltd. subsidiary Wholly-owned Production Production Tianjin Little Swan Co., Ltd. Tianjin Fang Hongbo 200,000,000.00 CNY 100% 100% 57230359-2 subsidiary Little Swan (Jingzhou) Wholly-owned Production production Jingzhou Chai Xinjian 11,070,200.00 CNY 100% 100% 72614223-5 Electronic Appliances Co., Ltd. subsidiary of washing 114 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 machine Production Hefei production Hefei Royalstar Washing Wholly-owned Fang Hongbo of washing 135,520,000.00 USD 69.47% 69.47% 14906761-7 Machine Manufacture Co., Ltd. subsidiary machine Production Hefei production Hefei Midea Washing Machine Wholly-owned Fang Hongbo of washing 20,000,000.00 CNY 62.523% 90% Manufacture Co., Ltd. subsidiary machine 3. Information on co-operated or joint operated of the Company Unit: RMB Yuan Proportio Proportio Total Total Operating Net Legal n of Business Registrati Business Registere n of Organizat liabilities assets at revenue of profits of Relations Organizat Item represent Currency holding Type on place scope d capital voting ion code at the end the end of current current hip ion code ative shares rights (%) of period period period period (%) 1. co-operat -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- ed 2. joint -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- operated Guangzh Limited ou Attend Guangzh Ye Logistics 10,000,00 24,663,80 7,265,103 17,398,69 3,877,666. 254,437. 72993557 liability CNY 20% 20% No Logistics ou Weilong services 0.00 0.00 .69 6.31 11 56 -2 company Co. Ltd. 115 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 4. Other related parties of the Company Name of the parties Relationship Organization code Guangzhou Attend Logistics Co. Ltd. Joint – operative 72993557-2 Under control of controlling Midea Electric Espana, S.L. shareholder of the Company Under control of controlling Midea Europe GMBH shareholder of the Company Under control of controlling MIDEA ITALIA SRL shareholder of the Company MIDEA SCOTT&ENGLISH Under control of controlling ELECTRONIICS SDN.BHD shareholder of the Company Midea Electric Trading (Singapore) Co. Pte Under control of controlling Ltd shareholder of the Company Under control of controlling PT. Midea Planet Indonesia shareholder of the Company GD Midea Heating & Ventilating Equipment Under control of controlling 78115339-1 Co., Ltd. shareholder of the Company Under control of controlling Guangdong Zhengli Precision Machinery shareholder of the Company's parent 72111191-5 Co., Ltd. company Under control of controlling Hefei Hua Ling Share Holding Co. , Ltd. 61031550-1 shareholder of the Company Under control of family member close Hefei Huitong New Materials Co., Ltd. 67759766-2 to the actual controller Hefei Midea Heating & Ventilating Under control of controlling 56341004-6 Equipment Co., Ltd. shareholder of the Company Under control of controlling Hefei Midea Royalstar Refrigerator Co., Ltd. 14906759-6 shareholder of the Company Under control of family member close Hefei Bainian Molding Technology Co., Ltd. 66293360-0 to the actual controller Under control of controlling Hefei Midea Materials Supply Co., Ltd. 55183611-1 shareholder of the Company Under control of controlling Huai'an Welling Motor Manufacturing Co., shareholder of the Company's parent 75968160-6 Ltd. company Under control of controlling Jiangsu Midea Chunhua Electric Appliance shareholder of the Company's parent 13479435-2 Co., Ltd. company Ningbo Annto Logistics Co. Ltd. Under control of controlling 57051088-9 116 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 shareholder of the Company's parent company Under control of controlling Wuhu Annto Logistics Co. Ltd. shareholder of the Company's parent 71992943-5 company Under control of controlling Wuhu Bainian Technology Development shareholder of the Company's parent 75096265-5 Co., Ltd. company Little Swan (Jingzhou) Electronic Under control of controlling 70696333-5 Appliances Co., Ltd. shareholder of the Company Zhongshan Midea Environmental Electric Under control of controlling Engineering Products Installation Service shareholder of the Company's parent 68445743-0 Co., Ltd. company Note of other related parties of the Company 5.Related party transactions (1) Purchase of goods, services received among the related-party Unit: RMB Yuan Amount of this period Amount of last period Proporti Proporti Pricing on in on in Name of Content of related principle of transacti transacti company transaction Amount Amount related parties ons of ons of the same the same kind kind Ningbo Annto services received 23,463,717.88 1.18% 27,036,646.43 0.51% Logistics Co. Ltd. Little Swan (Jingzhou) Electronic Purchase of goods 194,845.68 0.01% 0% Appliances Co., Ltd. Huai'an Welling Motor Purchase of goods 132,395,847.71 6.64% 399,380,921.66 7.47% Manufacturing Co., Ltd. Foshan Bainian Technology Purchase of goods 222,222.22 0.01% 0% Development Co., Ltd. Hefei Midea Materials Supply Purchase of goods 121,688,477.77 6.1% 277,321,296.44 5.19% Co., Ltd. 117 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Gd Midea Purchase of goods 0% 426,558.61 0.01% Holding Co., Ltd Hefei Bainian Molding Purchase of raw 39,481,301.16 1.98% 96,373,786.26 1.8% Technology Co., materials Ltd. Hefei Huitong New Materials Purchase of goods 29,484,171.35 1.48% 51,264,056.42 0.96% Co., Ltd. Sales of goods, services provided among the related-party Unit: RMB Yuan Amount of this period Amount of last period Proporti Proporti Pricing on in on in Name of Content of related principle of transacti transacti company transaction Amount Amount related parties ons of ons of the same the same kind kind Hefei Bainian Molding Sales of goods 26,257,407.35 0.85% 94,506,066.93 1.4% Technology Co., Ltd. Hefei Midea Royalstar Sales of goods 1,183,120.26 0.04% 45,467.70 0% Refrigerator Co., Ltd. Little Swan (Jingzhou) Electronic Sales of goods 3,835,200.67 0.12% 0% Appliances Co., Ltd. Midea Electric Trading Sales of goods 585,119,029.41 18.87% 368,361,923.73 5.46% (Singapore) Co. Pte. Ltd. Hefei Huitong New Materials Sales of goods 14,882,970.07 0.48% 19,332,683.73 0.29% Co., Ltd. Hefei Hua Ling Share Holding Sales of goods 4,366,304.17 0.14% 8,340,053.04 0.12% Co. , Ltd. GD Midea Heating & Ventilating Sales of goods 0% 382,733.02 0.01% Equipment Co., Ltd. 118 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 MIDEA ITALIA Sales of goods 0% 3,743,138.01 0.06% SRL Midea Europe Sales of goods 0% 8,816,013.32 0.13% GMBH Midea Electric Sales of goods 0% 2,371,230.02 0.04% Espana, S.L. PT. Midea Planet Sales of goods 7,192,798.91 0.23% 5,904,681.70 0.09% Indonesia MIDEA SCOTT&ENGLI SH Sales of goods 15,056,432.44 0.49% 2,369,180.82 0.04% ELECTRONIICS SDN.BHD (2) Particulars about related trusteeship and guarantees Table of particulars about trusteeship/contracting of the company Unit: RMB Yuan Income Pricing from Starting Ending basis of Influence Type of trusteeshi Name of Name of Trusted/co Amount date of date of income of the trusted/co p/contracti trustor/em trustee/co ntracted trusted/co trusteeshi trusteeshi from income on ntracted ng ployer ntractor asset ntracted p/contracti p/contracti trusteeshi the asset confirmed ng ng p/contracti company in the ng report Table of particulars about trusteeship/employment of the company Unit: RMB Yuan Expense Pricing for Starting Ending basis of Influence Type of trusteeshi Name of Name of Trusted/e Amount date of date of expense of the trusted/em p/employ trustor/em trustee/co mployed trusted/em trusteeshi trusteeshi for income on ployed ment ployer ntractor asset ployed p/employ p/employ trusteeshi the asset confirmed ment ment p/employ company in the ment report Note to related trusteeship and contracting (3)Particulars about related lease Table of particulars of issuing lease Unit: RMB Yuan 119 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Lease Influence Pricing income of the Type of Condition Amount Starting Ending Name of Name of basis of confirmed lease leased of leased of leased date of date of lesser lessee lease within the income on asset asset asset lease lease income reporting the period company Table of particulars of receiving lease Unit: RMB Yuan Lease Influence Pricing expense of the Type of Condition Amount Starting Ending Name of Name of basis of confirmed lease leased of leased of leased date of date of lesser lessee lease within the income on asset asset asset lease lease expense reporting the period company Note to particulars about related lease (4)Particulars about related guarantees Unit: RMB Yuan Whether Amount Starting date of Ending date of guarantee is Guarantor Guaranteed party guaranteed guarantee guarantee completely fulfilled Particulars about related guarantees: In accordance with capital demand for production and operation as well as business operation development requirement of subsidies of the Company, the Company: 1. provided guarantee amount of RMB One billion six hundred million to subsidy Hefei Royalstar Washing Machine Manufacture Co., Ltd. for its application of bank credit amount; 2. provided guarantee amount of RMB 50 million to subsidy Wuxi Little Swan General Electric Appliances Co., Ltd. for its application of bank credit amount. The above guarantees of three subsidies have provided counter guarantee for the Company with their whole assets. (5)Lending and borrowing of related parties Unit: RMB Yuan Related party Amount Starting date Ending date Explanation Borrowing 120 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Lending (6)Details of property transfer and debt restructuring between related parties Unit: RMB Yuan Pricing Amount of current period Amount of last period method and Type of Proporti Proporti Content of decision-maki related on in on in Related party related ng procedure transactio Amount similar Amount similar transaction of related n transacti transacti transaction ons (%) ons (%) and (7)Other related transactions 6. Amount due to/from related parties Receivable from the related parties Unit: RMB Yuan Item Name of related parties Closing amount Opening amount Midea Electric Trading(Singapore) Co. Pte Ltd 222,437,144.08 336,640,501.81 Hefei Hua Ling Share Holding Co. , Ltd. 1,505,397.52 5,451,575.78 Hefei Midea Royalstar Refrigerator Co., Ltd. 12,005.81 Jiangsu Midea Chunhua Electric Appliance Co., Ltd. 100,000.00 MIDEA ITALIA SRL 706,673.25 Midea Electric Espana, S.L. 2,397,592.23 MIDEA SCOTT&ENGLISH ELECTRONILCS 15,336,671.53 8,957,356.60 SDN.BHD PT. Midea Planet Indonesia 12,624,272.76 14,234,767.83 Little Swan (Jingzhou) Electronic Appliances Co., 202,849.40 245,238.66 Ltd. GD Midea Heating & Ventilating Equipment Co., Ltd. 1,013,933.83 Hefei Royalstar Refrigerator Co., Ltd. 206,182.52 Payable to the related parties Unit: RMB Yuan Item Name of related parties Closing amount Opening amount Huai'an Welling Motor Manufacturing Co., Ltd. 40,796,633.78 66,518,916.19 Hefei Midea Materials Supply Co., Ltd. 10,259,205.33 26,951,123.97 Hefei Bainian Molding Technology Co., Ltd. 18,411,746.39 16,807,415.87 121 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Wuhu Bainian Technology Development Co., Ltd. 22,600.00 3,553,500.18 Foshan Bainian Technology Development Co., Ltd. 234,600.00 Hefei Huitong New Materials Co., Ltd. 26,156,878.79 2,061,078.86 Zhongshan Midea Environmental Electric Engineering 633,832.00 228,417.39 Products Installation Service Co., Ltd. Guangdong Zhengli Precision Machinery Co., Ltd. 122,100.00 112,100.00 Wuhu Annto Logistics Co. Ltd. 681,649.55 681,649.55 Ningbo Annto Logistics Co. Ltd. 2,134,712.61 Little Swan (Jingzhou) Electronic Appliances Co., 226,577.45 Ltd. Wuxi Huayin Electric Appliances Co., Ltd. 2,081,473.92 (Ⅹ)Stock payment 1. Overall condition of stock payment Total amount of equity instruments granted by the company in current period Total amount of equity instruments executed by the company in current period Total amount of equity instruments of the company that become invalid in current period The range of the vesting prices for the share options issued outward at the end of period, and the remainder of the contractual period The range of the vesting prices for the other equity instruments at the end of period, and the remainder of the contractual period Note to particular about stock payment None. 2. Particular about stock payment settled by equity Unit: RMB Yuan Method to determine the fair value of the equity instruments at the date of granting Method to determine the best estimation to the quantity of the executable equity instruments Reason of the significance difference between the estimations in current period and last period The accumulated amount of the stock payment settled by equity in capital reserve Total amount confirmed by stock payment settled by 122 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 equity Note to stock payment settled by equity None. 3. Particulars about stock payment settled by cash Unit: RMB Yuan Method to determine the fair value of the liabilities of the company that are calculated on the basis of stock or other equity instruments The accumulated amount of liabilities arising from stock payment settled by cash The total amount confirmed by stock payment settled by cash Note to stock payment settled by cash None. 4. Particulars about services gained by stock payment Unit: RMB Yuan Total amount of employee service gained by stock payment Total amount of other services gained by stock payment 5. Particulars about modification and termination of stock payment (XI) Contingencies 1. The contingent liability and its financial impact arising from pending litigation or arbitration As of June 30, 2012, no significant contingencies should be disclosed. 2. The contingent liability and its financial impact arising from providing debt guarantees to other units As of June 30, 2012, no significant contingencies should be disclosed. Other contingent liabilities and their financial impacts: (XII) Commitments 1. Significant commitments As of June 30, 2012, no significant commitments should be disclosed. 2. Fulfillment of early commitments As of June 30, 2012, no significant commitments should be disclosed. (XIII) Events after the balance sheet date 1. Note to significant events after the balance sheet date Unit: RMB Yuan Extent of impact on the Reason why the extent of Item Content financial condition and impact cannot be estimated operating results 123 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 2. Note to particulars about profit distribution after the balance sheet date Unit: RMB Yuan Profits or dividends to be distributed Profits or dividends issued after approval 3. Other events after the balance sheet date As of June 30, 2012, no other significant commitment issues should be disclosed. (XIV) Particulars about other significant events 1. Non-monetary asset exchange As of June 30, 2012, no other significant commitment issues should be disclosed. 2. Debt restructuring As of June 30, 2012, no other significant commitment issues should be disclosed. 3. Consolidation of enterprise As of June 30, 2012, no other significant commitment issues should be disclosed. 4 Lease As of June 30, 2012, no other significant commitment issues should be disclosed. 5. Financial instruments that are issued outward at the end of period and can be transferred to shares As of June 30, 2012, no other significant commitment issues should be disclosed. 6. Contents and major changes in annuities As of June 30, 2012, no other significant commitment issues should be disclosed. 7. Other significant events should be disclosed As of June 30, 2012, no other significant commitment issues should be disclosed. (XV)Notes to the financial statements of parent Company 1.Accounts receivable (1) Accounts receivable Unit: RMB Yuan Closing balance Opening balance Provision for bad Provision for bad Book value Book value Items debts debts Propor Propo Proport Propor Amount Amount Amount Amount tion rtion ion tion Account receivable with large individual 0.00 0% 0.00 0% 0.00 0% 0.00 0% amount and provision for bad debt Account receivable with consolidated provision for bad debt Consolidation 1: aging 398,804,241. 53.29 389,054,823. 20,278,446. 23,139,452.72 5.8% 53.44% 5.21% consolidation 64 % 78 25 124 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Consolidation 2: account received in the 348,570,863. 46.57 337,932,558. 46.42% range of consolidated 47 % 05 statements Subtotal of 747,375,105. 99.86 726,987,381. 20,278,446. 23,139,452.72 3.1% 99.85% 2.79% consolidation 11 % 83 25 Account receivable with small individual 81.53 57.39 1,056,206.22 0.14% 861,084.03 1,056,206.22 0.15% 606,206.42 amount and provision % % for bad debt 748,431,311. 728,043,588. 20,884,652. Total -- 24,000,536.75 -- -- -- 33 05 67 Note to type of account receivable: None. Account receivable with large individual amount and provision for bad debt at the end of period □ Applicable √ Not applicable Account receivable in the consolidation with provision for bad debt by aging analysis method: √ Applicable □ Not applicable Unit: RMB Yuan Closing balance Opening balance Book balance Book balance Aging Provision for Provision for Proportio Proportio Amount bad debts Amount bad debts n n Within 1 year Included: -- -- -- -- -- -- Within 1 year 729,058,604.99 97.55% 21,297,922.65 710,670,881.71 97.76% 18,636,916.18 1-2 years 18,217,699.58 2.44% 1,821,769.96 16,217,699.58 2.23% 1,621,769.96 2-3 years 98,800.54 0.01% 19,760.11 98,800.54 0.01% 19,760.11 Over 3 years 3-4 years 4-5 years Over 5 years Total 747,375,105.11 -- 23,139,452.72 726,987,381.83 -- 20,278,446.25 Account receivable in the consolidation with provision for bad debt by balance percentage method: □ Applicable √ Not applicable Account receivable in the consolidation with provision for bad debt by other method: □ Applicable √ Not applicable Account receivable with small individual amount and provision for bad debt at the end of period 125 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 □ Applicable √Not applicable (2)Particulars about account receivable returned or withdrawn in the reporting period Unit: RMB Yuan Accumulated amount Foundation to Content of account Reason of return or of provision for bad Amount returned or confirm provision receivable withdrawal debt before return or withdrawn for bad debt withdrawal Total -- -- -- Provision for bad debt of account receivable with large individual amount, or with small individual amount and devaluation test at the end of period: Content of account Book balance Amount of bad debt Proportion (%) Reason receivable Total -- -- Note to account receivable with small individual amount and with high risk after being consolidated according to credit risk characteristics: (3)Particulars about account receivable actually written off in the reporting period Unit: RMB Yuan Whether or not Type of account Time of writing Amount of Reason of writing Company name due to related receivable off writing off off transactions Total -- -- 0.00 -- -- Note to writing off account receivable: (4)Particulars about the shareholder units holding 50% or more voting shares in the account receivable within the reporting period □Applicable √Not applicable (5)Type or content of other account receivables with large amount None. (6)Top 5 companies with largest amount of account receivable Unit: RMB Yuan Proportion in total amount Company name Relationship Amount Year limit of account receivable (%) Suning Appliance Co., Ltd. Nanjing Non-related 38,917,503.28 Within 1 5.2% 126 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Purchase Office party year TOSHIBA INTERNATIONAL Non-related Within 1 31,096,783.42 4.15% PROCUREME party year Beijing Midea Refrigerating Products Non-related Within 1 30,365,732.20 4.06% Sales Co., Ltd. party year Non-related Within 1 Kronen Internacional S.A. 27,619,466.94 3.69% party year Shanghai Midea Refrigerating Products Non-related Within 1 24,345,258.05 3.25% Sales Co., Ltd. party year 152,344,743.8 Total -- -- 20.36% 9 (7)Account receivable from related parties Unit: RMB Yuan Proportion in total amount Company name Relationship Amount of account receivable (%) Total -- 0.00 0% (8) The amount of transfer of the account receivable not conforming to termination confirmation condition is 0.00 Yuan. (9) The relevant transaction arrangements should be explained if the assets targeted with account receivable are securitized. None. 2. Other receivables (1) Other receivables Unit: RMB Yuan Closing balance Opening balance Provision for bad Provision for bad Book value Book value Items debts debts Proporti Proport Proport Amount Proportion Amount Amount Amount on ion ion Other receivables with large individual amount 0.00 0% 0.00 0% 0.00 0% 0.00 0% and provision for bad debt Other receivables with consolidated provision for bad debt Consolidation 1: aging 20,310,391. 58.46% 2,183,487.4 10.75% 14,162,247. 45.56% 2,241,696.5 15.83% 127 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 consolidation 42 1 81 9 Consolidation 2: other receivables in the range 14,432,938. 14,432,938. 16,925,787. 16,915,989. 41.54% 100% 54.44% 99.94% of consolidated 18 18 41 39 statements 34,743,329. 16,616,425. 31,088,035. 19,157,685. Subtotal of consolidation 100% 47.83% 100% 61.62% 60 59 22 98 Other receivables with small individual amount 0.00 0.00 0.00 0.00 and provision for bad debt 34,743,329. 16,616,425. 31,088,035. 19,157,685. Total -- -- -- -- 60 59 22 98 Note to type of other receivables: None. Other receivables with large individual amount and provision for bad debt at the end of period: □Applicable √ Not applicable Other receivables in the consolidation with provision for bad debt by aging analysis method: √ Applicable □ Not applicable Unit: RMB Yuan Closing balance Opening balance Book balance Book balance Aging Provision for Provision for Proportio Proportio Amount bad debts Amount bad debts n n Within 1 year Included: -- -- -- -- -- -- Within 1 year 7,776,504.66 22.38% 388,825.23 12,731,633.95 40.95% 3,074,737.08 1-2 years 8,610,423.67 24.78% 861,042.37 4,752,107.23 15.29% 3,524,525.94 2-3 years 15,312,973.57 44.07% 13,519,001.37 10,960,866.34 35.26% 10,960,866.34 Over 3 years 3,014,677.70 8.68% 1,818,806.62 2,614,677.70 8.41% 1,568,806.62 3-4 years 4-5 years Over 5 years 28,750.00 0.08% 28,750.00 28,750.00 0.09% 28,750.00 Total 34,743,329.60 -- 16,616,425.59 31,088,035.22 -- 19,157,685.98 Other receivables in the consolidation with provision for bad debt by balance percentage method: □ Applicable √ Not applicable Other receivables in the consolidation with provision for bad debt by other methods: □ Applicable √Not applicable 128 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Other receivables with small individual amount and provision for bad debt at the end of period: □ Applicable √Not applicable (2) Particulars about other receivables returned or withdrawn in the reporting period Unit: RMB Yuan Accumulated amount Foundation to Content of other Reason of return or of provision for bad Amount returned or confirm provision receivables withdrawal debt before return or withdrawn for bad debt withdrawal Total -- -- -- Provision for bad debt of other receivables with large individual amount, or with small individual amount and devaluation test at the end of period: Content of account Book balance Amount of bad debt Proportion(%) Reason receivable Total -- -- Note to other receivables with small individual amount and with high risk after being consolidated according to credit risk characteristics: (3) Particulars about other receivables actually written off in the reporting period Unit: RMB Yuan Whether or not Type of other Time of writing Amount of Reason of writing Company name due to related receivables off writing off off transactions Total -- -- -- -- Note to writing off other receivables: None. (4) Particulars about the shareholder units holding 50% or more voting shares in other receivables within the reporting period □Applicable √Not applicable (5) Type or content of other receivables with large amount None. (6)Top 5 companies with largest amount of other receivables Unit: RMB Yuan Year Proportion in total amount Company name Relationship Amount limit of account receivable(%) Wuxi Little Swan Ceramics Co., Ltd. Stock right 2,386,444.3 4-5 years 6.87% 129 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 transfer 8 Industrial and Commercial Bank of China Beijing Branch Partner 900,000.00 2-3 years 2.59% Special Account for Asset Custody Governmental Wuxi Customs of P.R.C. 711,000.00 1-2 years 2.05% department Within Wuxi China Resources Gas Co., Ltd. Partner 639,184.85 1.84% one year Tianjin Boxincheng International Trade Co., Within Partner 310,833.00 0.89% Ltd. one year 4,947,462.2 Total -- -- 14.24% 3 (7) Other account receivables from related parties Unit: RMB Yuan Proportion in total amount Company name Relationship Amount of account receivable(%) Total -- (8) The amount of transfer of the other receivables not conforming to termination confirmation condition is 0.00 Yuan (9) The relevant transaction arrangements should be explained if the assets targeted with other receivables are securitized. None. 130 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 3. Long-term equity investments Unit: RMB Yuan Proportion Accurred Amount of Initial Invested Proportions of Impairment Cash Invested entities Method Opening amount Increase/decrease Closing amount of voting impairment investment entities shareholding(%) provision dividends rights(%) provision Guangzhou Antaida Equity 2,000,000.00 3,428,851.75 50,887.51 3,479,739.26 20% 20% Logistical Co., Ltd. method Wuxi Little Swan Cost Import & Export Co. , 57,500,000.00 57,500,000.00 57,500,000.00 88.46% 88.46% method Ltd Wuxi Little Swan Cost Washing Machine Co. , 37,259,587.50 37,259,587.50 37,259,587.50 75% 75% method Ltd. Wuxi Meitian Cost Refrigerator Marketing 24,840,000.00 24,840,000.00 24,840,000.00 75% 75% method and Sale Co., Ltd. Jiangsu Little Swan Cost Marketing and Sales 417,550,000.00 417,550,000.00 417,550,000.00 99.54% 99.54% method Co. , Ltd. Wuxi Filin Electronics Cost 19,620,041.50 25,660,308.10 25,660,308.10 73% 73% Co. , Ltd. method Wuxi Little Swan Cost General Electric 19,600,000.00 19,600,000.00 19,600,000.00 70% 70% method Appliances Co. , Ltd. 131 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 San Jin(Jing Zhou) Cost Electrical Appliances 11,869,431.12 11,869,431.12 11,869,431.12 100% 100% method Co. , Ltd. Wuxi Little Swan Driving & Control Cost 4,500,000.00 4,500,000.00 4,500,000.00 90% 90% Development method Technology Co. , Ltd. Little Swan Cost International(Singapore) 34,052,500.00 34,052,500.00 34,052,500.00 100% 100% method Co., Ltd. Hefei Royalstar Washing Machine Cost 830,962,252.35 830,962,252.35 830,962,252.35 69.47% 69.47% Equipment method Manufacturing Co., Ltd. Tianjin Little Swan Cost Washing Machine Co. , 200,000,000.00 200,000,000.00 200,000,000.00 100% 100% method Ltd. (Malaysia) Midaqi Cost Little Swan Industry 4,224,744.00 51% 51% method Co., Ltd. Hengtai Insurance Cost 1,000,000.00 1,000,000.00 1,000,000.00 3.33% 3.33% Brokers Co., Ltd. method Suzhou People's Cost 150,000.00 150,000.00 150,000.00 Shopping Mall(100,000 method 132 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 shares) Bank of Cost Jiangsu(2,202,564 1,100,000.00 1,210,000.00 1,210,000.00 method shares) Total -- 1,666,228,556.47 1,669,582,930.82 50,887.51 1,669,633,818.33 -- -- -- 4,224,744.00 0.00 0.00 133 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Note to long-term equity investments 4. Operating revenues and costs (1) Operating revenues, operating costs Unit: RMB Yuan Item Amount of current period Amount of last period Revenue from main 1,729,468,582.51 4,036,124,263.71 business Revenue from other 165,705,963.74 467,383,331.47 business Operating costs 1,709,218,976.13 4,351,260,566.76 Total (2) Main business(by industry) □ Applicable √Not applicable (3) Main business(by product) □ Applicable √Not applicable (4) Main business(by region) □Applicable √Not applicable (5) Operating revenues of the top 5 clients of the company Unit: RMB Yuan Total operating Proportion in total Name of client revenues operating revenue(%) Midea Electric Trading(Singapore) Co. Pte Ltd 411,678,787.98 21.72% Kronen Internacional S.A. 57,696,354.34 3.04% UNIVERSAL CO.FOR METAL AND SUPPORTING 43,789,703.60 2.31% INDUSTRIES Guizhou Midea Refrigerating Product Sales Co., Ltd. 41,813,871.07 2.21% Hunan Midea Refrigerating Product Sales Co., Ltd. 41,793,586.03 2.21% Total 596,772,303.02 31.49% Note to operating revenues None. 5. Investment income (1) Details of investment income Unit: RMB Yuan Item Amount of current period Amount of last period Income from long-term equity investment 163,405.12 36,696,000.00 calculated by cost method Income from long-term equity investment 50,887.51 -1,078,070.63 134 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 calculated by equity method Investment income from disposal of 27,215,984.89 long-term equity investment Investment income gained during the period of holding transaction financial assets Investment income gained during the period of holding the held-to-maturity investment Investment income gained during the period of holding marketable financial assets Investment income from disposal of 3,013,700.00 9,483,183.00 transaction financial assets Investment income from held-to-maturity investment Investment income from marketable financial assets Others Total 3,227,992.63 72,317,097.26 (2) Income from long-term equity investment calculated by cost method Unit: RMB Yuan Reason of Amount of Amount of last Invested company increase/decrease in current current period period period Suzhou People’s Department 40,000.00 30,000.00 Store Commercial Bank of Jiangsu 123,405.12 Wuxi Little Swan General 36,666,000.00 Electric Appliances Co. , Ltd. Total 163,405.12 36,696,000.00 -- (3) Income from long-term equity investment calculated by equity method Unit: RMB Yuan Reason of Amount of Amount of last Invested company increase/decrease in current current period period period Guangzhou Antaida Logistical 50,887.51 -158,936.44 Co., Ltd. Boxiwei Home Appliance Co., -919,134.19 Ltd. Total 50,887.51 -1,078,070.63 -- 135 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Note to investment income: None. 6. Appendix of Cash Flow Statement Unit: RMB Yuan Amount of this Amount of last Item period period 1. Reconciliation of net profit to net cash flows -- -- generated from operating activities Net profit 173,396,155.41 200,647,366.29 Add: Provision for impairment of assets -13,852.04 12,206,134.25 Depreciation of fixed assets, of oil-gas assets, of productive 24,461,367.47 27,731,719.58 biological assets Amortization of intangible assets 1,402,556.16 1,424,556.18 Amortization of long-term deferred expense 13,639,702.36 11,733,662.41 Losses on disposal of property, plant and equipment, intangible assets and other -5,449,947.67 -13,783,890.63 long-term assets(gains: negative) Loss on retirement of fixed assets(gains: negative) Financial cost(gains: negative) 2,668,300.00 -8,843,355.56 Investment loss(gains: negative) 425,127.33 Decrease in deferred income tax assets(gains: negative) -3,227,992.63 -72,317,097.26 Increase in deferred income tax liabilities(decrease: 14,421,731.43 -24,259,297.67 negative) Decrease in inventory(gains: negative) -400,245.00 1,326,503.33 Decrease in accounts receivable from operating 96,058,899.86 32,651,234.06 activities(gains: negative) Increase in payables from operating activities(decrease: 1,096,344,881.03 -1,807,997,391.86 negative) Other -662,253,362.78 1,104,573,220.37 Net cash flows generated from operating activities II. Investing and financing activities that do not involving 751,048,193.61 -534,481,509.17 cash receipts and payment: Conversion of debt into capital -- -- Convertible bond due within one year Fixed assets financed by finance leases III. Net increase in cash and cash equivalents 136 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 Closing balance of cash -- -- Less: Opening balance of cash 2,049,502,496.94 1,041,142,810.24 Closing balance of cash equivalents 1,470,854,364.19 1,492,995,931.54 Add: Closing balance of cash equivalents Less: Opening balance of cash equivalents Net increase in cash and cash equivalents 578,648,132.75 -451,853,121.30 7. Assets and liabilities recorded as assessed value under counter purchase Unit: RMB Yuan Name of the assets and liabilities recorded as Assessed value Original book value assessed value Assets Liabilities (XVI) Supplementary information 1. Return on equity and earnings per share Unit: RMB Yuan Weighted average Earnings per share Profits in the reporting period return on equity(%) Basic EPS Diluted EPS Net profits belonging to 6.09% 0.34 0.34 shareholders of common shares Net profits belonging to shareholders of common shares 5.71% 0.32 0.32 after deducting non-recurring profit and loss 2. Main items in the accounting statements and movements thereof: Unit: RMB Ten thousand 30 Jun. 31 Dec. Reasons for Item Increase/decreaseIncrease/decrease 2012 2011 movement Monetary fund 70,549.93 29% Collections from 312,094.96 241,545.04 due notes receivable increased Transaction - -429.23 -100% Foreign exchange monetary assets 429.23 long-term 137 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 contracting business due Notes receivable -175,604.24 -64% Collections from 100,188.16 275,792.40 due notes and endorsement increased Other receivables 333.86 21% Non-operating 1,888.70 1,554.84 receivables and temporary payments increased Inventory -18,658.18 -23% Operating risk 62,281.89 80,940.07 reduced and inventory scale controlled Other current -5,020.29 -45% Production molds assets 6,184.97 11,205.27 amortized and devaluated Construction in - 495.46 Construction of process 495.46 foundation and wastewater treatment system of the industrial park in process Short-term - -696.15 -100% Borrwoings due borrowing 696.15 Notes payable -40,779.71 -26% Self-issued bank 113,152.24 153,931.95 acceptance due and paid Accounts -79,189.46 -28% Payment due and payable 202,359.36 281,548.82 paid Advance -12,730.36 -26% Advance from received from 35,845.04 48,575.40 customers reduced customers due to impact of financial equipment and marketing circle Payroll payble -3,816.89 -28% Annual 9,731.17 13,548.07 performance award of 2011 paid and payroll 138 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 payable reduced Tax payble -5,097.61 -3482% Tax payable -4,951.22 146.39 reduced due to impact of production and marketing circle Dividends payble 87.21 31% Dividends of 2011 371.02 283.81 not paid to certain shareholders Deferred income 1.92 -65.23 -97% Fair value of tax liabilities 67.15 transaction financial assets and marketable finical assets reduced Operating -364,618.54 -54% Sales value of revenues 310,132.87 674,751.41 product reduced due to impact and market Operating costs -315,791.93 -56% Reduced along 245,388.06 561,179.98 with the sales value Sales expenses -24,027.70 -46% Reduced along 28,384.46 52,412.16 with the sales value Management -11,635.72 -48% Operating risk expenses 12,362.49 23,998.21 reduced, expense control enforced, and expense effectively decreased Financial -3,165.18 -2847% Income from expenses -3,054.00 111.18 deposit interest increased Loss from -277.26 -50% Bad debts impairment of 275.93 553.20 decreased assets comparing to the same period of last year Income from -1,598.14 -137% Income from change in fair -429.23 1,168.91 change in fair 139 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 value value of foreign exchange long-term contract reduced Income from -2,454.91 -83% Income gained investments 506.28 2,961.19 from disposal of subsidiary Huayin Motor during the same period last year Non-operating -1,675.31 -47% Government revenues 1,906.07 3,581.38 subsidies and income from disposal of fixed assets decreased comparing to same period of last year Non-operating -484.55 -57% Local expenses expenses 368.74 853.30 reduced along with decrease of sales value Total profit -14,956.89 -36% Total profits 26,817.13 41,774.02 reduced along with decrease of sales value Income tax -5,040.63 -60% Reduced along expense 3,402.91 8,443.54 with total profits Net profit -9,916.26 -30% Reduced along 23,414.22 33,330.48 with total profits Minority interest -3,505.23 -66% Profits of 1,791.41 5,296.63 non-wholly owned subsidiaries decreased comparing to same period of last year Other 7.17 81.81 110% Translation reserve comprehensive -74.64 reduced incomes Net cash flows 141,843.84 279% Cash paid for from operating 90,943.76 -50,900.08 purchasing goods activities and receiving labor 140 WUXI LITTLE SWAN COMPANY LIMITED INTERIM REPORT 2012 reduced in current period Net cash flows 4,788.62 39% Cash paid for from investment -7,588.90 -12,377.52 purchasing fixed activities assets reduced in current period Net cash flows -7,955.28 -173% Cash paid for from financing -12,562.01 -4,606.72 dividend activities distribution increased IX. Documents Available for Reference Documents Available for Reference 1. Text of the Interim Report 2011 with the signature of the Chairman of the Board of Directors. 2. Accounting statements with signatures and seals of the legal representative, the chief financial officer and the head of accounting. 3. Originals of all documents and announcements of the Company ever disclosed on Securities Times and Hong Kong Ta Kung Pao in the reporting period. Chairman of the Board: Fang Hongbo 23 August, 2012 141