Wuxi Little Swan Company Limited First Quarter Report 2017 WUXI LITTLE SWAN COMPANY LIMITED FIRST QUARTER REPORT 2017 April 2017 1 Wuxi Little Swan Company Limited First Quarter Report 2017 Section I Important Statements The board of directors (the “Board”), the supervisory board (the “Supervisory Board”), as well as the directors, supervisors and senior executive officers of Wuxi Little Swan Company Limited (the “Company”) hereby guarantee the factuality, accuracy and completeness of the contents of this Report, and shall be jointly and severally liable for any false representation, misleading statements or material omissions in this Report. All directors attended the board meeting for the review of this Report. Mr. Fang Hongbo, chairman of the Board, Mr. Sun Yunan, CFO, and Mr. Xu Yunwei, chief of the accounting organ (chief of accounting), hereby confirm that the financial statements carried in this Report are factual, accurate and complete. This Report and its abstract have been prepared in both Chinese and English. Should there be any discrepancies or misunderstandings between the two versions, the Chinese version shall prevail. 2 Wuxi Little Swan Company Limited First Quarter Report 2017 Section II Company Profile I Key financial results Indicate by tick mark whether the Company retroactively restated any of its accounting data due to changes of accounting policies or correction of accounting errors. □ Yes √ No January-March 2017 January-March 2016 +/-% Operating revenues (RMB) 5,690,391,543.42 4,239,779,074.70 34.21% Net profit attributable to shareholders of the 397,203,444.77 317,052,211.46 25.28% Company (RMB) Net profit attributable to shareholders of the Company before exceptional profit and loss 395,282,206.35 311,794,446.12 26.78% (RMB) Net cash flows from operating activities (RMB) -168,999,611.82 573,548,265.90 -129.47% Basic earnings per share (RMB/share) 0.63 0.50 26.00% Diluted earnings per share (RMB/share) 0.63 0.50 26.00% Weighted average return on equity (%) 6.44% 6.00% 0.44% March 31, 2017 December 31, 2016 +/-% Total assets (RMB) 18,402,498,665.09 18,885,986,837.64 -2.56% Net assets attributable to shareholders of the 6,366,107,331.36 5,983,847,862.72 6.39% Company (RMB) Exceptional profit/loss √ Applicable □ Not applicable Unit: RMB Item January-March 2017 Note Profit/loss on disposal of non-current assets (including offset asset 354,558.14 impairment provisions) Government subsidies charged to the profit/loss for this Reporting Period (except for the government grants closely related to the business of the 1,551,286.69 Company and given at a fixed quota or amount in accordance with the State’s uniform standards) Non-operating income and expense other than the above 845,031.51 Less: Corporate income tax 412,631.45 Minority interests (after tax) 417,006.47 3 Wuxi Little Swan Company Limited First Quarter Report 2017 Total 1,921,238.42 -- Explanation of why the Company classified an item as exceptional profit/loss according to the definition in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Profit and Loss, or reclassified any exceptional profit/loss item given as an example in the said explanatory announcement to recurrent profit/loss □ Applicable √ Not applicable No such cases in this Reporting Period. II Total number of shareholders at the period-end and their shareholdings 1. Numbers of common shareholders and preference shareholders with resumed voting rights, as well as shareholdings of top ten shareholders Unit: share Total number of preference Total number of common 17,346 shareholders with resumed voting 0 shareholders at the period-end rights at the period-end (if any) Top ten shareholders Number of Pledged or frozen Shareholding Total shares Nature of restricted shares Name of shareholder percentage held at the shareholder shares (%) period-end Status Number held Domestic MIDEA GROUP CO., LTD. non-state-own 37.78% 238,948,117 ed corporation Foreign TITONI INVESTMENTS DEVELOPMENT LTD. 14.89% 94,204,942 corporation Foreign GAOLING FUND,L.P. 3.54% 22,389,551 corporation Domestic NATIONAL SOCIAL SECURITY FUND non-state-own 3.34% 21,097,464 PORTFOLIO 108 ed corporation Foreign GREENWOODS CHINA ALPHA MASTER FUND 2.82% 17,846,794 corporation State-owned FINANCE BUREAU OF WUXI 2.70% 17,054,071 corporation Domestic NATIONAL SOCIAL SECURITY FUND non-state-own 2.21% 14,007,456 PORTFOLIO 101 ed corporation 4 Wuxi Little Swan Company Limited First Quarter Report 2017 CENTRAL HUIJIN ASSET MANAGEMENT CO., State-owned 1.61% 10,156,300 LTD. corporation HONG KONG SECURITIES CLEARING Foreign 1.44% 9,103,818 COMPANY LTD. corporation Foreign BILL & MELINDA GATES FOUNDATION TRUST 1.03% 6,537,874 corporation Top ten non-restricted shareholders Number of non-restricted Type of shares Name of shareholder shares held at the period-end Type Number MIDEA GROUP CO., LTD. 238,948,117 RMB common share TITONI INVESTMENTS DEVELOPMENT LTD. 94,204,942 Domestically listed foreign share GAOLING FUND,L.P. 22,389,551 Domestically listed foreign share NATIONAL SOCIAL SECURITY FUND 21,097,464 RMB common share PORTFOLIO 108 GREENWOODS CHINA ALPHA MASTER FUND 17,846,794 Domestically listed foreign share FINANCE BUREAU OF WUXI 17,054,071 RMB common share NATIONAL SOCIAL SECURITY FUND 14,007,456 RMB common share PORTFOLIO 101 CENTRAL HUIJIN ASSET MANAGEMENT CO., 10,156,300 RMB common share LTD. HONG KONG SECURITIES CLEARING 9,103,818 RMB common share COMPANY LTD. BILL & MELINDA GATES FOUNDATION TRUST 6,537,874 RMB common share Related or acting-in-concert parties among the MIDEA GROUP CO., LTD. and TITONI INVESTMENTS shareholders above DEVELOPMENT LTD. are parties acting in concert. Top ten common shareholders conducting securities N/A margin trading (if any) Indicate by tick mark whether any of the top ten common shareholders or the top ten non-restricted common shareholders of the Company conducted any promissory repo during this Reporting Period. □ Yea √ No No such cases in this Reporting Period. 2. Total number of preference shareholders and shareholdings of the top ten of them □ Applicable √ Not applicable 5 Wuxi Little Swan Company Limited First Quarter Report 2017 Section III Significant Events I Changes in the key financial results of this Reporting Period, as well as the reasons for such changes Unit: RMB Ten Thousand Yuan December 31, Item March 31, 2017 +/- +/-% Note 2016 Other accounts 1,632.28 2,369.39 -737.11 -31% Decreased non-operating suspense payments receivable Other non-current 5,371.78 2,565.58 2,806.20 109% Increased prepayments for molds assets Short-term 12,345.51 18,381.31 -6,035.80 -33% Decreased factoring financing borrowings Accounts received 166,229.46 301,434.78 -135,205.32 -45% Due to the sales cycle in advance The performance bonuses for the year 2016 Payroll payable 19,504.65 28,859.22 -9,354.56 -32% had been paid Other Bank’s wealth management products were comprehensive 4,446.89 7,075.75 -2,628.86 -37% undue income January-March January-March Item +/- +/-% Note 2017 2016 Operating 569,039.15 423,977.91 145,061.24 34% The sales volume increased revenues Operating costs 422,870.75 304,729.46 118,141.29 39% The sales revenue increased Selling expenses 86,230.08 63,139.65 23,090.43 37% The sales volume increased Finance cost -1,840.06 -3,069.37 1,229.31 -40% The interest income on deposits decreased Asset impairment Inventory falling price provisions were -372.09 1,803.01 -2,175.10 -121% loss written off Investment Increased income from due bank’s wealth 10,318.76 2,728.33 7,590.43 278% income management products Non-operating 1,277.31 768.45 508.86 66% Increased governmental subsidies revenues Non-operating Decreased loss on disposal of waste fixed 33.11 229.33 -196.22 -86% expense assets 6 Wuxi Little Swan Company Limited First Quarter Report 2017 Net cash flows Decreased accounts received in advance and from operating -16,899.96 57,354.83 -74,254.79 -129% increased cash payments for goods and activities services Net cash flows Smaller increment in investment in bank’s from investing -3,112.29 -120,661.14 117,548.85 97% wealth management products activities Net cash flows from financing -6,035.80 0.00 -6,035.80 -100% Repayment of short-term borrowings activities II Progress of significant events and their influence and solutions □ Applicable √ Not applicable III Overdue commitments of the Company’s actual controller, shareholders, related parties and acquirer, as well as the Company and other commitment makers in this Reporting Period or ongoing at the period-end Date of Period of Commitmen Type of Fulfillme Commitment Contents commitme commitme t maker commitment nt nt making nt Where the controlling shareholder Midea Group plans to sell the Company’s shares released from trading moratorium held by it via the bid trading system of the Shenzhen Commitment Stock Exchange, and Midea Group decreases Commitments made Controlling concerning 02/28/200 Long-stan over 5% shares within six months since the Ongoing in share reform shareholder shareholding 8 ding first reduction of holdings, Midea Group will reduction disclose an indicative public announcement on share selling through the Company two trading days before its first reduction of holdings. 1. As for the commitment of avoiding horizontal competition, Midea Group (the Commitments made controlling shareholder) and Mr. He in acquisition Controlling Commitment Xiangjian (the actual controller) has promised 12/01/201 documents or shareholder of avoiding that, for the period after the said transaction 0, Long-stan Ongoing shareholding and actual horizontal when the Company’s controlling shareholder 06/06/201 ding alteration controller competition and actual controller remain unchanged, the 4 documents actual controller Mr. He Xiangjian, his immediate family, Midea Group and its controlled other enterprises neither recently 7 Wuxi Little Swan Company Limited First Quarter Report 2017 nor in the future will engage in any production or operation activity the same as or similar to the recently main business of Little Swan or its controlled enterprises, as well as will neither engage in nor participate in any competitive business the same as the recently main business of Little Swan or its controlled enterprises through controlling other economic entities, institutions, economic organizations. If Little Swan and its controlled enterprises further developed its scope of the operation business on the basis of the recently business, and if the actual controller Mr. He Xiangjian, his immediate family, Midea Group and its controlled other enterprises had executed production of that, would solve the corresponding horizontal competition problems within the reasonable period. If recently there was no any production or operation, would not engage in the similar new business that competed with Little Swan and its controlled enterprises. If there was any situation violated the above commitments, the profits gained from the business related to operation were belongs to Little Swan. 2. The commitment by Midea Group and the actual controller on the specification of the related-party transaction. Midea Group (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 Commitment Controlling and actual controller remain unchanged, the 12/01/201 on regulation shareholder actual controller Mr. He Xiangjian, his 0, Long-stan of Ongoing and actual immediate family, Midea Group and its 06/06/201 ding related-party controller controlled other enterprises will specify and 4 transactions try their best to reduce the related-party transactions with Little Swan and its controlled enterprises. If occurred the unavoidable related transactions with Little Swan and its controlled enterprises, would sign the normative related-party transactions agreement Little Swan according to laws and 8 Wuxi Little Swan Company Limited First Quarter Report 2017 would execute the approval procedure according to the relevant regulations to ensure the fairness of the price of the related-party transactions; ensure to execute the information disclose obligation of related-party transactions according to the relevant regulations; ensure not to make advantage of the related-party transactions for illegally transferring the assets and profits of Little Swan, as well as not to make advantage of the related-party transactions for harming to the interests of Little Swan and the shareholders; would not require Little Swan to offer any more favorable condition compared with that offered to the independent third party in any fair trade market transaction; execute the voting debarb obligation when involved in the voting of the related events of the actual controller Mr. He Xiangjian, his immediate family, Midea Group and its controlled other enterprises. If Midea Group and Mr. He Xiangjian violated the above commitments and promises that led to the harm for the equity of Little Swan or other shareholders, Midea Group and Mr. He Xiangjian should take the responsibility of the corresponding liability for damage. 3. As for the commitment on independence, Midea Group and the actual controller Mr. He Xiangjian has promised that, to further ensure the independent operation of Little Swan, Mr. Controlling 12/01/201 Commitment He Xiangjian, Midea Group and its controlled shareholder 0, Long-stan on other enterprises would maintain the mutual Ongoing and actual 06/06/201 ding independence independent in terms of personnel, finance, controller 4 assets, business and institutions with Little Swan according to the relevant laws and regulations as well as the normative documents. 4. As for the commitment on related-party Commitment deposits and borrowings, up to April 8, 2010, on Controlling the Financial Settlement Center of Midea 12/01/201 Long-stan related-party Ongoing shareholder Group had settled all internal deposits and 0 ding deposits and borrowings with Hefei Midea Washing borrowings Machine Co., Ltd.; and Midea Group has 9 Wuxi Little Swan Company Limited First Quarter Report 2017 promised that there will be no more deposits, borrowings or other funds flows incurred between the Financial Settlement Center and Hefei Midea Washing Machine Co., Ltd.. 5. The commitment by Midea Group on housing properties with no ownership certificates of the target company for sale is detailed as follows. Two pieces of the buildings of Hefei Midea Washing Machine Commitment Co., Ltd. assessed and sold to the Company on housing are of no ownership certificates—the Controlling properties warehouse for half-finished products (176 12/01/201 Long-stan Ongoing shareholder with no square meters) and the workshop for injection 0 ding ownership molding (834 square meters), both located in certificates the old factory on Hewa Road, Hefei. Midea Group 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. 6. The commitment by Midea Group on trademarks is detailed as follows. (1) Concerning the “Midea” trademark: Upon approval and implementation of the equity The use transfer transaction, Midea Group has right of promised that it will make sure that Hefei the Midea Washing Machine Co., Ltd. uses the “Royalstar “Midea” trademark in a proper manner. Hefei ” Midea Washing Machine Co., Ltd. will be trademark allowed to use the “Midea” trademark with a detailed in trademark use fee not more than that paid by (2) expired Controlling Commitment Midea Group (the controlling shareholder of 12/01/201 on March Ongoing shareholder on trademarks Midea Group) and its subsidiaries (currently 0 31, 2013 3‰ of the annual sales income generated by and was products using the “Midea” trademark), and not upon negotiation and signing of the renewed. “Agreement for Trademark Use”. The And the related-party transactions incurred due to the other said use of the “Midea” trademark will be commitme submitted to the decision-making organ of the nt Company for approval according to the continues. stipulated procedure. As such, interests of the Company and its minority shareholders will be safeguarded. (2) Concerning the 10 Wuxi Little Swan Company Limited First Quarter Report 2017 “Royalstar” trademark: Midea Group has signed the “Contract for Trademark Use” with Hefei Royalstar Group and obtained the ordinary use rights of the “Royalstar” (both in Chinese and English) trademark. As the transferor in the transfer transaction of equity interests of Royalstar Washing Equipment, Midea Group has promised that within the scope as agreed in the “Contract for Trademark Use”, if any dispute arises between Hefei Midea Washing Machine Co., Ltd. and Hefei Royalstar Group over the former’s execution of the “Contract for Trademark Use”, Little Swan will not be involved. If Hefei Midea Washing Machine Co., Ltd. and Little Swan have to assume any responsibility or loss due to the aforesaid dispute, Midea Group is willing to take on the responsibility instead and make compensations to Hefei Midea Washing Machine Co., Ltd. and Little Swan at full amount. 7. The commitment by Midea Group on social security payment and tax risks is detailed as follows. Midea Group has promised that upon the completion of the said equity transfer deal, if Hefei Midea Washing Machine Co., Ltd. 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, Midea Commitment Group is willing to pay relevant fares for on social Controlling Hefei Midea Washing Machine Co., Ltd. to 12/01/201 Long-stan security Ongoing shareholder relevant government authorities in a timely 0 ding payment and manner and assume any other liability. If any tax risks loss thus occurs to Hefei Midea Washing Machine Co., Ltd. or Little Swan, Midea Group 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 Hefei Midea Washing Machine Co., Ltd., Midea Group is willing to assume relevant legal responsibilities and risks and 11 Wuxi Little Swan Company Limited First Quarter Report 2017 pay relevant taxes in a timely manner to relevant government authorities; and if any loss thus occurs to Little Swan, Midea Group will assume the corresponding responsibility for compensation. 8. The commitment by Midea Group on capital safety at the finance companies of the Company: during the validity period of the Financial Services Agreement, when Midea Commitment Group occurred emergency situation of Controlling 03/18/201 Three on capital payment difficulty at finance companies, it Ongoing shareholder 5 years safety should adopt the effective measures such as increase the capital fund of the finance companies according to the actual needs of solving the payment difficulty to ensure the capital safety of the Company. Commitments made in time of asset restructuring Commitments made in time of IPO or refinancing Stock ownership incentive commitments Other commitments made to Minority interests Executed on time or Yes not Specific reasons for failing to fulfill commitments on N/A time and plans for next step IV Operating result forecast for January-June 2017 Warning of a forecast deficit or considerable YoY change in the accumulative net profit made during the period from the beginning of the year to the end of the next reporting period, as well as explanation of why: □ Applicable √ Not applicable 12 Wuxi Little Swan Company Limited First Quarter Report 2017 V Securities investments □ Applicable √ Not applicable No such cases in the Reporting Period. VI Investments in derivative financial instruments □ Applicable √ Not applicable No such cases in the Reporting Period. VII Visits paid to the Company in the Reporting Period for purposes of research, communication, interview, etc. □ Applicable √ Not applicable VIII Illegal provision of guarantees for external parties □ Applicable √ Not applicable No such cases in the Reporting Period. IX Occupation of the Company’s funds by the controlling shareholder or its related parties for non-operating purposes □ Applicable √ Not applicable No such cases in the Reporting Period. 13 Wuxi Little Swan Company Limited First Quarter Report 2017 Section IV Financial Statements I Financial statements 1. Consolidated balance sheet Unit: RMB Item Closing balance Opening balance Current assets: Monetary funds 4,181,117,303.03 4,272,077,211.11 Settlement reserve Interbank lendings Financial assets at fair value through profit/loss Derivative financial assets Notes receivable 1,478,890,302.67 1,297,609,202.29 Accounts receivable 1,400,073,560.81 1,465,654,497.90 Accounts paid in advance 133,343,509.48 131,513,792.18 Premiums receivable Reinsurance premiums receivable Receivable reinsurance contract reserve Interest receivable 31,844,191.18 26,755,807.07 Dividends receivable Other accounts receivable 16,322,824.31 23,693,886.54 Financial assets purchased under agreements to resell Inventories 1,252,235,093.98 1,724,837,944.69 Assets held for sale Non-current assets due within one year Other current assets 8,264,728,111.43 8,385,724,282.16 Total current assets 16,758,554,896.89 17,327,866,623.94 Non-current assets: Loans and advances to customers Available-for-sale financial assets 200,000.00 200,000.00 Held-to-maturity investments Long-term accounts receivable 14 Wuxi Little Swan Company Limited First Quarter Report 2017 Long-term equity investments Investment property 63,891,876.25 64,854,903.25 Fixed assets 979,174,930.68 970,859,291.03 Construction in progress Engineering materials Disposal of fixed assets Productive living assets Oil-gas assets Intangible assets 190,973,951.44 192,283,486.15 R&D expenses Goodwill Long-term deferred expenses 4,477,822.34 4,387,728.14 Deferred tax assets 351,507,376.69 299,879,029.23 Other non-current assets 53,717,810.80 25,655,775.90 Total non-current assets 1,643,943,768.20 1,558,120,213.70 Total assets 18,402,498,665.09 18,885,986,837.64 Current liabilities: Short-term borrowings 123,455,086.90 183,813,064.12 Borrowings from the Central Bank Money deposits accepted and inter-bank deposits Interbank borrowings Financial liabilities at fair value through profit/loss Derivative financial liabilities Notes payable 2,812,341,286.89 2,620,549,815.47 Accounts payable 3,283,950,717.98 3,335,089,672.06 Accounts received in advance 1,662,294,599.30 3,014,347,762.24 Financial assets sold for repurchase Fees and commissions payable Payroll payable 195,046,514.35 288,592,163.29 Taxes payable 486,228,300.38 412,238,029.96 Interest payable Dividends payable 7,150,684.06 7,150,684.06 Other accounts payable 214,809,660.69 199,926,402.04 Reinsurance premiums payable 15 Wuxi Little Swan Company Limited First Quarter Report 2017 Insurance contract reserve Payables for acting trading of securities Payables for acting underwriting of securities Liabilities held for sale Non-current liabilities due within one year Other current liabilities 2,220,797,766.56 1,844,413,154.26 Total current liabilities 11,006,074,617.11 11,906,120,747.50 Non-current liabilities: Long-term borrowings Bonds payable Of which: Preference shares Perpetual bonds Long-term accounts payable Long-term payroll payable 15,511,381.91 16,101,348.60 Special payables Provisions 1,727,340.89 1,727,340.89 Deferred income 2,829,033.24 2,942,333.25 Deferred tax liabilities Other non-current liabilities Total non-current liabilities 20,067,756.04 20,771,022.74 Total liabilities 11,026,142,373.15 11,926,891,770.24 Owners’ equity: Share capital 632,487,764.00 632,487,764.00 Other equity instruments Of which: Preference shares Perpetual bonds Capital reserve 1,202,834,758.89 1,191,490,133.01 Less: Treasury shares Other comprehensive income 44,468,922.57 70,757,524.61 Special reserve Surplus reserve 332,594,722.29 332,594,722.29 Provisions for general risks Retained earnings 4,153,721,163.61 3,756,517,718.81 Equity attributable to owners of the Company 6,366,107,331.36 5,983,847,862.72 16 Wuxi Little Swan Company Limited First Quarter Report 2017 Minority interests 1,010,248,960.58 975,247,204.68 Total owners’ equity 7,376,356,291.94 6,959,095,067.40 Total liabilities and owners’ equity 18,402,498,665.09 18,885,986,837.64 2. Balance sheet of the Company Unit: RMB Item Closing balance Opening balance Current assets: Monetary funds 2,392,057,674.52 2,397,428,457.92 Financial assets at fair value through profit/loss Derivative financial assets Notes receivable 1,167,769,362.91 1,088,559,252.21 Accounts receivable 2,703,374,457.44 2,310,254,576.98 Accounts paid in advance 91,519,964.89 89,477,823.29 Interest receivable 23,257,010.49 18,798,031.69 Dividends receivable Other accounts receivable 11,244,547.08 16,176,106.89 Inventories 795,962,784.83 1,068,494,123.28 Assets held for sale Non-current assets due within one year Other current assets 4,886,453,220.85 4,965,682,855.69 Total current assets 12,071,639,023.01 11,954,871,227.95 Non-current assets: Available-for-sale financial assets 150,000.00 150,000.00 Held-to-maturity investments Long-term accounts receivable Long-term equity investments 1,375,785,041.57 1,375,785,041.57 Investment property 7,457,569.02 7,546,955.16 Fixed assets 508,411,436.85 490,047,802.72 Construction in progress Engineering materials Disposal of fixed assets Productive living assets Oil-gas assets Intangible assets 91,918,592.57 92,591,167.64 17 Wuxi Little Swan Company Limited First Quarter Report 2017 R&D expenses Goodwill Long-term deferred expenses 2,182,777.60 1,817,228.83 Deferred tax assets 235,361,232.00 197,091,251.29 Other non-current assets 31,229,500.20 18,313,858.80 Total non-current assets 2,252,496,149.81 2,183,343,306.01 Total assets 14,324,135,172.82 14,138,214,533.96 Current liabilities: Short-term borrowings 79,489,819.18 123,943,093.80 Financial liabilities at fair value through profit/loss Derivative financial liabilities Notes payable 1,889,791,518.86 1,508,017,904.49 Accounts payable 4,144,096,482.16 3,913,090,507.89 Accounts received in advance 966,664,635.76 1,854,711,663.46 Payroll payable 145,780,276.01 216,530,836.37 Taxes payable 329,229,818.80 249,034,768.38 Interest payable Dividends payable 7,150,684.06 7,150,684.06 Other accounts payable 132,711,123.11 143,124,857.82 Liabilities held for sale Non-current liabilities due within one year Other current liabilities 1,428,776,934.56 1,173,641,937.69 Total current liabilities 9,123,691,292.50 9,189,246,253.96 Non-current liabilities: Long-term borrowings Bonds payable Of which: Preference shares Perpetual bonds Long-term payables Long-term payroll payable Special payables Provisions Deferred income Deferred tax liabilities 18 Wuxi Little Swan Company Limited First Quarter Report 2017 Other non-current liabilities Total non-current liabilities Total liabilities 9,123,691,292.50 9,189,246,253.96 Owners’ equity: Share capital 632,487,764.00 632,487,764.00 Other equity instruments Of which: Preference shares Perpetual bonds Capital reserve 1,361,027,672.05 1,350,656,531.65 Less: Treasury shares Other comprehensive income 27,861,473.36 37,515,343.84 Special reserve Surplus reserve 319,944,578.39 319,944,578.39 Retained earnings 2,859,122,392.52 2,608,364,062.12 Total owners’ equity 5,200,443,880.32 4,948,968,280.00 Total liabilities and owners’ equity 14,324,135,172.82 14,138,214,533.96 3. Consolidated income statement Unit: RMB Item January-March 2017 January-March 2016 1. Operating revenues 5,690,391,543.42 4,239,779,074.70 Including: Sales income 5,690,391,543.42 4,239,779,074.70 Interest income Premium income Fee and commission income 2. Operating costs 5,288,019,742.72 3,845,333,762.02 Including: Cost of sales 4,228,707,468.84 3,047,294,578.28 Interest expenses Fee and commission expenses Surrenders Net claims paid Net amount provided as insurance contract reserve Expenditure on policy dividends Reinsurance premium Taxes and surtaxes 29,239,701.58 25,562,733.25 19 Wuxi Little Swan Company Limited First Quarter Report 2017 Selling expenses 862,300,832.44 631,396,475.18 Administrative expenses 189,893,301.82 153,743,559.27 Finance costs -18,400,643.85 -30,693,728.10 Asset impairment loss -3,720,918.11 18,030,144.14 Add: Profit on fair value changes (“-” means loss) Investment income (“-” means loss) 103,187,613.01 27,283,315.31 Including: Share of profit/loss of associates and joint ventures Exchange gains (“-” means loss) 3. Operating profit (“-” means loss) 505,559,413.71 421,728,627.99 Add: Non-operating income 12,773,084.59 7,684,539.49 Including: Profit on disposal of non-current assets 378,918.14 99,572.65 Less: Non-operating expense 331,135.41 2,293,319.12 Including: Loss on disposal of non-current assets 24,360.00 4. Total profit (“-” means loss) 518,001,362.89 427,119,848.36 Less: Corporate income tax 79,585,643.44 66,073,486.70 5. Net profit (“-” means loss) 438,415,719.45 361,046,361.66 Net profit attributable to owners of the Company 397,203,444.77 317,052,211.46 Minority interests’ income 41,212,274.68 43,994,150.20 6. Other comprehensive income net of tax -32,896,936.37 12,551,896.48 Other comprehensive income net of tax attributable to owners -26,288,602.05 11,324,431.84 of the Company 6.1 Other comprehensive income that will not be reclassified into profit/loss 6.1.1 Changes in net liabilities or assets with a defined benefit plan upon re-measurement 6.1.2 Share of other comprehensive income of investees that cannot be reclassified into profit/loss under the equity method 6.2 Other comprehensive income to be subsequently -26,288,602.05 11,324,431.84 reclassified into profit/loss 6.2.1 Share of other comprehensive income of investees that will be reclassified into profit/loss under the equity method 6.2.2 Profit/loss on fair value changes of -26,287,126.90 11,325,961.79 available-for-sale financial assets 6.2.3 Profit/loss on reclassifying held-to-maturity investments into available-for-sale financial assets 6.2.4 Effective profit/loss on cash flow hedges 6.2.5 Currency translation differences -1,475.15 -1,529.95 6.2.6 Other 20 Wuxi Little Swan Company Limited First Quarter Report 2017 Other comprehensive income net of tax attributable to -6,608,334.32 1,227,464.64 minority interests 7. Total comprehensive income 405,518,783.08 373,598,258.14 Attributable to owners of the Company 370,914,842.72 328,376,643.30 Attributable to minority interests 34,603,940.36 45,221,614.84 8. Earnings per share 8.1 Basic earnings per share 0.63 0.50 8.2 Diluted earnings per share 0.63 0.50 4. Income statement of the Company Unit: RMB Item January-March 2017 January-March 2016 1. Operating revenues 4,189,686,640.88 3,090,853,563.00 Less: Operating costs 3,213,206,584.63 2,259,939,915.08 Taxes and surtaxes 19,175,030.95 19,651,012.59 Selling expenses 559,809,986.80 481,965,327.52 Administrative expenses 164,027,140.24 125,466,388.65 Finance costs -16,399,560.75 -25,425,553.41 Asset impairment loss -1,435,675.97 13,164,671.57 Add: profit on fair value changes (“-” means loss) Investment income (“-” means loss) 44,422,835.24 7,682,222.22 Including: Share of profit/loss of associates and joint ventures 2. Operating profit (“-” means loss) 295,725,970.22 223,774,023.21 Add: Non-operating income 1,412,826.87 2,209,315.20 Including: Profit on disposal of non-current assets 56,502.60 99,572.65 Less: Non-operating expense 298,795.41 1,374,415.91 Including: Loss on disposal of non-current assets 3. Total profit (“-” means loss) 296,840,001.68 224,608,922.50 Less: Corporate income tax 46,081,671.31 34,660,291.98 4. Net profit (“-” means loss) 250,758,330.37 189,948,630.52 5. Other comprehensive income net of tax -9,653,870.47 8,512,924.14 5.1 Other comprehensive income that will not be reclassified into profit and loss 5.1.1 Changes in net liabilities or assets with a defined benefit plan upon re-measurement 5.1.2 Share of other comprehensive income of investees that cannot be reclassified into profit/loss under the equity method 21 Wuxi Little Swan Company Limited First Quarter Report 2017 5.2 Other comprehensive income to be subsequently reclassified -9,653,870.47 8,512,924.14 into profit/loss 5.2.1 Share of other comprehensive income of investees that will be reclassified into profit/loss under the equity method 5.2.2 Profit/loss on fair value changes of available-for-sale -9,653,870.47 8,512,924.14 financial assets 5.2.3 Profit/loss on reclassifying held-to-maturity investments into available-for-sale financial assets 5.2.4 Effective profit/loss on cash flow hedges 5.2.5 Currency translation differences 5.2.6 Other 6. Total comprehensive income 241,104,459.90 198,461,554.66 7. Earnings per share 7.1 Basic earnings per share 7.2 Diluted earnings per share 5. Consolidated cash flow statement Unit: RMB Item January-March 2017 January-March 2016 1. Cash flows from operating activities: Cash received from sale of commodities and rendering of service 3,956,810,503.02 3,078,123,735.58 Net increase in money deposits from customers and interbank placements Net increase in loans from the Central Bank Net increase in funds borrowed from other financial institutions Cash received from premium of original insurance contracts Net cash received from reinsurance business Net increase in deposits of policy holders and investment fund Net increase in disposal of financial assets at fair value through profit/loss Interest, fees and commissions received Net increase in interbank borrowings Net increase in funds in repurchase business Tax refunds received 16,580,287.82 Cash received from other operating activities 21,257,432.18 29,195,276.02 Subtotal of cash inflows from operating activities 3,994,648,223.02 3,107,319,011.60 Cash paid for goods and services 2,973,752,966.09 1,460,899,639.17 Net increase in loans and advances to customers 22 Wuxi Little Swan Company Limited First Quarter Report 2017 Net increase in funds deposited in the Central Bank and interbank placements Cash paid for claims of original insurance contracts Interest, fees and commissions paid Cash paid as policy dividends Cash paid to and for employees 368,240,959.82 298,371,022.35 Taxes paid 173,229,722.56 226,899,499.05 Cash paid for other operating activities 648,424,186.37 547,600,585.13 Subtotal of cash outflows due to operating activities 4,163,647,834.84 2,533,770,745.70 Net cash flows from operating activities -168,999,611.82 573,548,265.90 2. Cash flows from investing activities: Cash received from retraction of investments 1,535,000,000.00 1,895,000,000.00 Cash received as investment income 103,187,613.01 27,283,315.31 Net cash received from disposal of fixed assets, intangible assets 425,120.74 116,500.00 and other long-term assets Net cash received from disposal of subsidiaries or other business units Cash received from other investing activities 14,223,931.51 20,632,286.64 Subtotal of cash inflows from investing activities 1,652,836,665.26 1,943,032,101.95 Cash paid to acquire fixed assets, intangible assets and other 53,959,515.98 3,643,548.60 long-term assets Cash paid for investment 1,630,000,000.00 3,146,000,000.00 Net increase in pledged loans Net cash paid to acquire subsidiaries and other business units Cash paid for other investing activities Subtotal of cash outflows due to investing activities 1,683,959,515.98 3,149,643,548.60 Net cash flows from investing activities -31,122,850.72 -1,206,611,446.65 3. Cash flows from financing activities: Cash received from capital contributions Including: Cash received from minority shareholder investments by subsidiaries Cash received as borrowings Cash received from issuance of bonds Cash received from other financing activities Subtotal of cash inflows from financing activities Repayment of borrowings 60,357,981.22 23 Wuxi Little Swan Company Limited First Quarter Report 2017 Cash paid for interest expenses and distribution of dividends or profit Including: dividends or profit paid by subsidiaries to minority interests Cash paid for other financing activities Sub-total of cash outflows due to financing activities 60,357,981.22 Net cash flows from financing activities -60,357,981.22 4. Effect of foreign exchange rate changes on cash and cash equivalents 5. Net increase in cash and cash equivalents -260,480,443.76 -633,063,180.75 Add: Opening balance of cash and cash equivalents 4,171,689,917.21 2,792,685,328.69 6. Closing balance of cash and cash equivalents 3,911,209,473.45 2,159,622,147.94 6. Cash flow statement of the Company Unit: RMB Item January-March 2017 January-March 2016 1. Cash flows from operating activities: Cash received from sale of commodities and rendering of service 2,642,335,799.19 1,884,113,725.72 Tax refunds received Cash received from other operating activities 8,534,729.25 17,939,349.96 Subtotal of cash inflows from operating activities 2,650,870,528.44 1,902,053,075.68 Cash paid for goods and services 1,837,967,509.35 1,162,262,194.02 Cash paid to and for employees 270,566,541.10 212,137,786.99 Taxes paid 90,098,052.42 155,701,868.69 Cash paid for other operating activities 451,445,149.64 417,610,973.90 Subtotal of cash outflows due to operating activities 2,650,077,252.51 1,947,712,823.60 Net cash flows from operating activities 793,275.93 -45,659,747.92 2. Cash flows from investing activities: Cash received from retraction of investments 885,000,000.00 1,000,000,000.00 Cash received as investment income 44,422,835.24 7,682,222.22 Net cash received from disposal of fixed assets, intangible assets 105,897.44 116,500.00 and other long-term assets Net cash received from disposal of subsidiaries or other business units Cash received from other investing activities 11,123,931.51 15,104,692.20 Subtotal of cash inflows from investing activities 940,652,664.19 1,022,903,414.42 Cash paid to acquire fixed assets, intangible assets and other 26,323,172.01 1,142,846.70 long-term assets 24 Wuxi Little Swan Company Limited First Quarter Report 2017 Cash paid for investment 910,000,000.00 1,586,000,000.00 Net cash paid to acquire subsidiaries and other business units Cash paid for other investing activities Subtotal of cash outflows due to investing activities 936,323,172.01 1,587,142,846.70 Net cash flows from investing activities 4,329,492.18 -564,239,432.28 3. Cash flows from financing activities: Cash received from capital contributions Cash received as borrowings Cash received from issuance of bonds Cash received from other financing activities Subtotal of cash inflows from financing activities Repayment of borrowings 44,453,274.62 Cash paid for interest expenses and distribution of dividends or profit Cash paid for other financing activities Sub-total of cash outflows due to financing activities 44,453,274.62 Net cash flows from financing activities -44,453,274.62 4. Effect of foreign exchange rate changes on cash and cash equivalents 5. Net increase in cash and cash equivalents -39,330,506.51 -609,899,180.20 Add: Opening balance of cash and cash equivalents 2,353,708,554.75 1,866,443,114.64 6. Closing balance of cash and cash equivalents 2,314,378,048.24 1,256,543,934.44 II Auditor’s report Is this Report audited? □ Yes √ No This Report is not audited. Wuxi Little Swan Company Limited Legal representative: Fang Hongbo April 22, 2017 25