HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 HEFEI MEILING CO., LTD. Semi-Annual Report 2017 August 2017 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Section I. Important Notice, Contents and Paraphrase Board of Directors, Supervisory Committee, all directors, supervisors and senior executives of Hefei Meiling Co., Ltd. (hereinafter referred to as the Company) hereby confirm that there are no any fictitious statements, misleading statements, or important omissions carried in this report, and shall take all responsibilities, individual and/or joint, for the reality, accuracy and completion of the whole contents. Mr. Li Wei, person in charge of the Company, Mr. Zhang Xiaolong, person in change of accounting work and Mr. Luo Bo, person in charger of accounting organ (accountant in charge) hereby confirm that the Financial Report of 2017 Semi-Annual Report is authentic, accurate and complete. The Company did not have directors, supervisors and senior executives of the Company could not guarantee the reality, accuracy and completion of the whole contents or have objections. All the directors attended the board meeting on deliberating the Report on site and by communication. Modified audit opinions notes □ Applicable √ Not applicable The financial report of 2017 semi-annual report has not been audited by CPA Risk warning of the forward-looking statements with future planning involved in semi-annual report √ Applicable □Not applicable Concerning the forward-looking statements with future planning involved in the Report, they do not constitute a substantial commitment for investors, investors and the person concerned should maintain adequate risk awareness, furthermore, differences between the plans, forecast and commitments should be comprehended. Investors are advised to exercise caution of investment risks. Investors are advised to read the full text of semi-annual report, and pay particular attention to the following risk factors. More details about the possible risks and countermeasures in the operation of the Company are described in the report ―X. Risks and countermeasures‖ of ―Section IV Discussion and Analysis of the Operation‖, investors are advised to read the relevant content. 1 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Securities Times, China Securities Journal, Hong Kong Commercial Daily and Juchao Website (www.cninfo.com.cn) are the media for information disclosure for year of 2017 that appointed by the Company. All public information under the name of the Company disclosed on the above said media and website shall prevail, and investors are advised to exercise caution. Does the Company need to comply with disclosure requirements of the special industry: No Profit distribution pre-plan or capitalizing of common reserves pre-plan deliberated by the Board in the semi-annual period □Applicable √Not applicable The Company has no plans of cash distribution, bonus shares and capitalizing of common reserves either. Directors and senior executives of the Company respectively signed Written Confirmation Opinions for 2017 Semi-Annual Report. Supervisory Committee of the Company formed Written Examination Opinions for 2017 Semi-Annual Report. 2 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Contents Section I. Important Notice, Contents and Paraphrase .......................................................... 1 Section II Company Profile and Main Finnaical Indexes....................................................... 5 Section III Summary of Company Business ............................................................................ 9 Section IV Discussion and Analysis of the Operation ........................................................... 14 Section V. Important Events .................................................................................................... 41 Section VI. Changes in Shares and Particulars about Shareholders ................................... 81 Section VII. Preferred Stock .................................................................................................... 88 Section VIII. Particular about Directors, Supervisors and Senior Executives ................... 89 Section IX Corporate Bond ..................................................................................................... 91 Section X. Financial Report ..................................................................................................... 92 Section XI Documents available for Reference.................................................................... 233 3 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Paraphrase Items Refers to Contents Company, the Company or Meiling Refers to HEFEI MEILING CO., LTD Electric Sichuan Changhong or controlling Refers to Sichuan Changhong Electric Co., Ltd. shareholder Changhong Group Refers to Sichuan Changhong Electronics Holding Group Co., Ltd. Hong Kong Changhong Refers to CHANGHONG (HK) TRADING LIMITED Meiling Group Refers to Hefei Meiling Group Holdings Limited Industry Investment Group Refers to Hefei Industry Investment Holding (Group) Co., Ltd. Shine Wing Refers to Shine Wing Certified Public Accountants (LLP) Changhong Air-conditioner Refers to Sichuan Changhong Air-conditioner Co., Ltd. Zhongke Meiling Refers to Zhongke Meiling Cryogenic Technology Co., Ltd. Jiangxi Meiling Refers to Jiangxi Meiling Electric Appliance Co., Ltd. Changhong Ridian Refers to Guangdong Changhong Ridian Technology Co., Ltd. Zhongshan Changhong Refers to Zhongshan Changhong Electric Co., LTD Changmei Technology Refers to Changmei Technology Co., Ltd. Huayi Compressor Refers to Huayi Compressor Co., Ltd. Meiling CANDY Refers to Meiling CANDY Washing Machine Co., Ltd. Candy Group Refers to Candy Hoover Group S.r.l. CSRC Refers to China Securities Regulatory Commission China Securities Regulatory Commission, Anhui Province Anhui Securities Bureau Refers to Securities Regulatory Bureau SSE Refers to Shenzhen Stock Exchange 4 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Section II Company Profile and Main Finnaical Indexes I. Company profile MEILINGDIANQI, Short form of the stock Stock code 000521, 200521 WANMEILING-B Short form of the Stock after changed (if N/A applicable) Stock exchange for listing Shenzhen Stock Exchange Name of the Company (in Chinese) 合肥美菱股份有限公司 Short form of the Company (in Chinese) 美菱电器 Foreign name of the Company (if applicable) HEFEI MEILING CO.,LTD. Abbr. of English name of the Company (if HFML applicable) Legal representative Li Wei II. Person/Way to contact Secretary of the Board Rep. of security affairs Name Li Xia Zhu Wenjie No. 2163, Lianhua Road, Economic and No. 2163, Lianhua Road, Economic and Contact add. Technology Development Zone, Hefei Technology Development Zone, Hefei Tel. 0551-62219021 0551-62219021 Fax. 0551-62219021 0551-62219021 e-mail lixia@meiling.com wenjie.zhu@meiling.com III. Others 1. Way of contact Whether registrations address, offices address and codes as well as website and email of the Company changed in reporting period or not □ Applicable √ Not applicable Registrations address, offices address and codes as well as website and email of the Company has no change in reporting period, found more details in Annual Report 2016. 2. Information disclosure and preparation place Whether information disclosure and preparation place changed in reporting period or not □ Applicable √ Not applicable 5 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 The newspaper appointed for information disclosure, website for semi-annual report publish appointed by CSRC and preparation place for semi-annual report have no change in reporting period, found more details in Annual Report 2016. 3. Other relevant information Whether other relevant information has changed in reporting period or not √Applicable □Not applicable Being deliberated and approved by 33rd meeting of 8th BOD held on 21 July 2017, Mr. Li Wei was selected as chairman of the 8th BOD of the Company with office term same as the BOD’s. And according to the regulation of Article 8 of Article of Association, chairman of the Company is the legal representative of the Company. IV. Main accounting data and financial indexes Whether it has retroactive adjustment or re-statement on previous accounting data or not □Yes √No Increase/decrease in Current period Same period of last year this report y-o-y Operating income (RMB) 8,517,794,193.10 6,866,631,262.68 24.05% Net profit attributable to shareholders 92,075,039.77 109,992,701.28 -16.29% of the listed company(RMB) Net profit attributable to shareholders of the listed company after deducting 66,905,338.98 90,801,654.71 -26.32% non-recurring gains and losses(RMB) Net cash flow arising from operating 484,230,697.91 871,689,504.89 -44.45% activities(RMB) Basic earnings per share (RMB/Share) 0.0881 0.1440 -38.82% Diluted earnings per share 0.0881 0.1440 -38.82% (RMB/Share) 1.33percent point Weighted average ROE 1.79% 3.12% down Increase/decrease in End of current period End of last period this report-end over that of last period-end Total assets (RMB) 16,689,509,751.32 12,507,567,310.84 33.44% Net assets attributable to shareholder 5,119,376,181.33 5,095,160,291.91 0.48% of listed company (RMB) Note: the earnings per share calculated at same period of last year were based on total shares of 763,739,205, 6 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 and the Company offering 280,858,676 common shares (A-stock) by privately placement in October 2016, total shares capital of the Company goes to 1,044,597,881 shares. Therefore, the earnings per shares calculated in the period were based on total shares of 1,044,597,881. V. Accounting data difference under domestic and foreign accounting standards 1.Difference of the net profit and net assets disclosed in financial report, under both IAS (International Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles) □ Applicable √ Not applicable The Company has no difference of the net profit and net assets disclosed in financial report, under both IAS (International Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles) in reporting period. 2. Difference of the net profit and net assets disclosed in financial report, under both foreign accounting rules and Chinese GAAP (Generally Accepted Accounting Principles) √ Applicable □Not applicable In RMB Net profit attributable to shareholders Net assets attributable to shareholders of of listed company listed company Current Period Last Period Period-end Period-begin Chinese GAAP 92,075,039.77 109,992,701.28 5,119,376,181.33 5,095,160,291.91 Items and amount adjusted by foreign accounting rules Foreign accounting rules 92,075,039.77 109,992,701.28 5,119,376,181.33 5,095,160,291.91 The Company had no difference of the net profit or net assets disclosed in financial report, under either foreign accounting rules or Chinese GAAP (Generally Accepted Accounting Principles) in the period. 3. Reasons for the differences of accounting data under accounting rules in and out of China √ Applicable □Not applicable The ―Notice of Relevant Issues of Audit for Company with Domestically Foreign Shares Offering‖ was issued from CSRC dated 12 September 2007, since the day issuing, cancel the previous ―dual audit‖ requirement for companies who offering domestically listed foreign shares (B-share enterprise) while engaging securities practice qualification CPA for auditing. The Company did not compile financial report under foreign accounting rules since 2007, the financial report of the Company is complying on the ―Accounting Standard for Business Enterprise‖ in China, and therefore, there are no differences of accounting data under accounting rules in and out of 7 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 China at period-end. VI. Items and amounts of extraordinary profit (gains)/loss √Applicable □ Not applicable In RMB Item Amount Note Found more in Gains/losses from the disposal of non-current asset ―Non-operating income and (including the write-off that accrued for impairment of -11,095,591.69 expenditure‖, ―Investment assets) income‖ Governmental subsidy reckoned into current gains/losses (not including the subsidy enjoyed in quota Found more in 22,490,062.54 or ration according to national standards, which are ―Non-operating income‖ closely relevant to enterprise’s business) Held transaction financial asset, gains/losses of changes of fair values from transaction financial liabilities, and investment gains from disposal of transaction financial Found more in ―Gains from asset, transaction financial liabilities and financial asset -10,359,085.30 changes of fair value‖ available for sales, exclude the effective hedging business relevant with normal operations of the Company Found more in Other non-operating income and expenditure except for 643,883.35 ―Non-operating income and the aforementioned items expenditure‖ Gain/losses items qualified definition of the Found more in 26,817,170.85 non-recurring gains/losses ―Investment income‖ Less: impact on income tax 3,129,349.31 -- Impact on minority shareholders’ equity (post-tax) 197,389.65 -- Total 25,169,700.79 -- Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, explain reasons □Applicable √Not applicable The Company has no items defined as recurring profit (gain)/loss according to the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, in the period 8 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Section III Summary of Company Business I. Main businesses of the Company in the reporting period Does the Company need to comply with disclosure requirements of the special industry:No The Company is one of China's major electric appliance manufacturers, possesses four major domestic manufacturing bases in Hefei, Mianyang, Jingdezhen and Zhongshan, and two overseas manufacturing bases in Indonesia and Pakistan, covering the full product line including ice, washing, air, kitchen and bath, small household appliances and others, at the same time, the company enters into the fresh e-business, bio-medical and other new industrial fields. Over the past 30 years, the company has always been adhering to the "independent innovation, created in China", elaborately building the core competitiveness of enterprises by technological innovation and product innovation. The company has set up the first RoHS public testing center in Anhui Province, the state-level enterprise technology center and the top-end R & D team, so that Meiling can continue to achieve breakthrough results in the variable frequency, energy saving, frost-free, cryogenic, intelligence and other fields. In recent years, with the rapid development of Internet, cloud computing, big data and a new generation of information technology, the intelligence of home appliance industry has become the future development direction. Faced with the new changes in the industry development, the company puts forward the "Double Three One Core" strategy; "One Core" is intelligence. Under the guidance of "intelligent" strategy, in 2014, the company released CHiQ refrigerator with "cloud image recognition" as the core and CHiQ air conditioner based on "human state perception" technology; in 2015, the company began to implement the "Intelligent Life Project" to explore new path for the enterprise development; in 2016, the company launched the first "Intelligent Home Eco-circle Plan" in the global white goods industry and brought out the world's first temperature-zone free custom-made Internet of Things refrigerator (the second generation ―Space Intelligence" CHiQ refrigerator) and the world's first user free custom-made intelligent air steward (CHiQ intelligent air steward) to accelerate the implementation of intelligent strategy. At the same time, the company successfully raised 1.57 billion Yuan of funds in the capital market by the non-public offering of shares which were mainly used in three key platforms including Meiling intelligent manufacturing, intelligent research and development and intelligent life. Three platforms integrate with each other and work together to boost Meiling to achieve the transformation of ―intelligent gene‖ from the most basic level, and provide strong supports for the company’s development and intelligent transformation. In future, with the help of ―Intelligent Home Eco-circle Plan‖, Meiling will really transform from the integration of single industry chain to the integration 9 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 of eco-development. At present, the company has basically completed the industrial layout for comprehensive white goods. With the landing of a series of CHiQ intelligent products, continuous rising proportion of variable frequency products, diversified layout of product lines, and construction of fresh business platform in Meiling intelligent life O2O community, the company is gradually improving the home Internet layout, accelerating the intelligent process of household appliances, forming the "hardware + service" dual growth engine, driving the transformation and upgrading of the company’s profit model, exploring new value-added pattern for the home appliance enterprise services, meeting new pattern of industry competition, and achieving its own sustained and stable development. In reporting period, main income of the Company coming from refrigerator (freezer), air conditioner, washing machine, small home appliances and kitchen & toilet products etc., total amounting to 8,133.4198 million Yuan, a 95.49% of the operating income II. Major changes in main assets 1. Major changes in main assets Major assets Note of major changes Equity assets No major changes. Fixed assets No major changes. Intangible assets No major changes. The parent company’s intelligent manufacturing project and relocation Construction in progress expansion of Zhongke Meiling 2. Main overseas assets √ Applicable □Not applicable Whether Foreign assets Reason for Operati exist Content of Control measure to ensure accounted for the Asset size Location on Income significant assets the security of assets net assets of formation mode impairme the Company nt risk Details of risks control measures have been 60% equity disclosed by the Company of Investment US$ 7.44 by way of announcement Changhong establishme Pakistan Sales 943,832.83 0.91% N million on appointed media (No. Ruba Trading nt 2011-028, No. 2011-032, Company No. 2014-023, No. 2014-026, No. 2016-027and 10 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 No. 2016-032) on 28 May 2011, 19 April 2014 and 25 March 2016 respectively Details of risks control measures have been 40% equity disclosed by the Company of Investment by way of announcement Changhong US$ 6.524 Manuf establishme Pakistan on appointed media (No. -253,047.79 0.57% N Ruba Electric million acture nt 2011-028, No. 2011-032, Company(Pri No. 2014-023 and No. vate)Ltd. 2014-026) on 28 May 2011 and 19 April 2014 100% equity Details of risks control of KELAP measures have been CHANGHO A disclosed by the Company Investment NG US$ 6 GADIN by way of announcement establishme Sales -2,704,602.28 0.32% N MEILING million G, JKT, on appointed media (No. nt ELECTRIC Indonesi 2016-027 and No. INDONESIA a 2016-032) on 25 March . PT 2016 Other notes N/A III. Core Competitiveness Analysis Does the Company need to comply with disclosure requirements of the special industry: No 1. Brand capacity The Company is one of the famous home appliances manufacturers in the PRC, owns several product lines such as refrigerator, freezing box and air conditioner. Meiling trademark is listed as one of the most valuable brands in China and is the well-known trademarks national-wide. The trademark ―Athena‖ in refrigerator, freezer (services) of the Company was recognized as the famous mark in Anhui Province. The Company released CHiQ intelligent first and second generation refrigerator, AC and intelligent air steward in succession since 2014. And creating a high-end intelligent brand image around the plan of ―Wisdom Home Ecosystem‖ for opening a white intelligence era. While in order to enhance the brand image and further expand the market influence of the brand, the company held a conference for "New LOGO release and offline of the 10th million set of frequency conversion products" in October 2015, comprehensively updated LOGO " ", and launched the new brand proposition of "Meiling, let the good come". Along with the release of new LOGO, Meiling will also implement a brand strategy of "Good Trilogy", including the direct sensory experience of ―experience the good", the spirit soul enjoyment of ―enjoy the good‖, and the lifestyle faith of ―believe in the good‖. 11 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 By our efforts to rebuild our brand, Meiling will realize a young, international and professional brand image. Through gradual construction of the ideas of Wonderful Start Point, Wonderful Life Circle and Wonderful Ecology Circle, Meiling has become a people-oriented artist specializing in white appliances, a smarter scientific expert and a more reliable house keeper. 2. Product capacity In more than 30 years, the company has been focusing on the refrigeration industry, has developed a variety of different types of refrigerator products that lead the industry development trend, including two-door and multi-door Athena series of high-end refrigerators, top-level energy-saving refrigerators with daily power consumption of only 0.23 degrees, CHiQ refrigerator taking "cloud image recognition 'technology as the core, and 2nd generation-CHiQ refrigeration, which can realized the space change along with the food requirements with human-oriented characteristics. The Company owned advanced development and quality assurance systems, and received certification of ISO9001, ISO14001 and OHSAS18001 from domestic and overseas authorities. The products of the Company have good quality and reliable capacities. As for technology development, the Company owned national technology centers, and advanced core technologies in energy-saving, air cooling, intelligence and copious cooling. As for product development, combine with technology development trend and characteristics of demand from upgrades in consumers, the Company, put more efforts on products planning. In 2017, continues to expand the development of medium&high quality products, including CHiQ intellectual products, inverter products, air patenting, multi zone and large volume, the product has obvious upgrade in structures. As for the air conditioning products, the Company adheres to the technical strategy by taking intelligence and variable frequency as the core, intensively studies the human state perception technology and intelligent interactive technology, focuses on completing the research and development of intelligent voice recognition technology and productization, successively releases the first generation of CHiQ air conditioner based on "human state perception" technology and CHiQ intelligent air steward that can automatically change air. The Company continues to adhere to the intelligent and variable frequency products, and promote the Company's products to continuously transform to high end by boosting the follow-up research and development, promotion and technology updates of intelligent and variable frequency products. Meanwhile, the company improves the manufacturing efficiency and product quality, reduces product costs and enhances product competitiveness by comprehensively implementing intelligent upgrading and rebuilding to all production lines. In addition, the company improves the home appliance product line through the layout of kitchen and bath and small household appliances and has initially completed the layout for integrated white goods. Meanwhile, based on "Intelligent Home Eco-circle" plan and taking the existing products as the core, the company will enhance the 12 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 R&D, manufacturing, sales and collaboration capabilities of integrated white goods, and provide users with a set of intelligent white goods system solutions. 3. Operation capacity The Company conducted benchmark management to improve its basic management level. In specific, efficiency enhancement has been made in areas of personnel, money and materials, trying to continuously enhance the internal management. A performance review and sharing system has been established with clear target and quantity index based on performance and layered incentive sharing system, thus to inspire the internal production capacity. Under the mainline of value chain management, the Company continued to carry out value creation and improve its competitiveness. Its ability to prevent risks has been also strengthened through continuous improvement of internal control system. 4. Marketing ability The Company has established a relatively complete sales network and service system, among them, the domestic sales channels emphasizing online and offline collaboration and integration, through the business operation mode system construction (target management, value chain management, sales promotion, product mix and channel strategy, etc.) and promotion, the pace of business in the period constantly tends to be benign, has a balanced development in chain, wholesale, e-commerce and other channels, and the product competitiveness has been improved; the overseas market has been strengthened by increasing the investments in overseas marketing organizations, research and development bases and production bases, we cooperate with world-wide well-known appliance brand dealer and distributor, optimized client’s structure and enhance product structure, the Company has been actively develop the overseas market, and the products have been exported to more than 130 countries and regions. 13 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Section IV Discussion and Analysis of the Operation 1. Summary In 2017, under the international macro-environment of ups and downs in global economic recovery and global overproduction, China's economic upward momentum and downward pressure are still in a weak equilibrium state, and there are still many uncertainties in economic development. In this context, in the first half of 2017, the domestic appliance industry has been facing many factors, such as cost increase in raw materials, saturation in terminal market, increased regulation in real estate, and upgrading of energy efficiency standard, etc.. In the new normal of home appliances, the competition in home-appliance industry becomes increasingly fierce; innovation and breakthrough becomes the key to make the company bigger and stronger. In the first half of 2017, under the strategic guidance of ―Meiling Dream‖ and ―Double Three One Core‖, the company insisted on the operating principle of ―product leading, marketing force, manufacturing breakthrough, mechanism protection‖, overcame the negative factors such as weak increase in macro economy and continuous decline in industry market with the joint efforts of all staff, the domestic refrigerator sales outperformed the industry market, the e-commerce business greatly increased, the market position of export refrigerators (freezers) has been consolidated; air conditioning industry had a rapid growth; washing machine rapidly developed; kitchen and bath and small appliances also had a rapid growth. In first half of 2017, the Company has achieved operating income of RMB 8.518 billion, an increase of 24.05% on a year-on-year basis; net profit attributable to the parent company of RMB 92.0750 million, a decrease of 16.29% on a year-on-year basis. II. Main Business Analysis (I) Overview Shows no difference with the summary disclosed in Report of the Board of Director □Yes √No 1. Summary In first half of 2017, refrigerator and freezer business achieved revenue of approximately RMB 3.712 billion,5.71% increased on a y-o-y basis; air-conditioning business achieved revenue of approximately RMB 3.831 billion,48.55% up y-o-y; washing machine business achieve revenue around RMB 0.227 billion, with year-on-year growth of 5.93 %; other business of small home appliance and kitchen & toilet products have revenue approximately as RMB 0.363 billion with 14 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 9.94% up y-o-y. At the same time, revenue from exportation gains RMB 2.12 billion, a y-o-y growth of 29.63%. 2. Progress of the Company's development strategy and business plan during the reporting period During the reporting period, in accordance with the development strategy and 2017 operating principles, the Company has deployed the annual business plan, arranged the production and management, and carried out the following activities: (1) Product leading: During the reporting period, the company continued to focus on ―intelligent and variable frequency strategy‖ and carry out the product upgrading, in the first half year, the sales of intelligent refrigerator increased by 1.1 percent point compared with the same period of last year, and the sales of inverter refrigerator increased by 16.8 percent point compared with the same period of last year, both achieved the expected goal. In technical research, the company adhered to the fundamental research upgrade of core technology, maintained the existing technological superiority, expanded the innovation and upgrading in technology field, broke through the differentiation, and led the industry benchmark. Among them: in the inverter core technology, further optimized and upgraded, reduced the cost of inverter technology, enhanced product competitiveness, and maintained the industry advanced level; in the simulation supporting technology, obviously promoted the product performance by CFD air duct design capacity building; in the energy-saving key technology, maintained the optimal design capabilities in refrigeration system, focused on the new national standard to carry out the research on ―integrated efficiency optimization program of refrigeration system‖, and achieved fruitful results in integration research on CFD technology and evaporator refrigeration system, and effectively promoted the research and development of low-cost new energy-saving refrigerator. (2) Marketing force: During the reporting period, the company's domestic refrigerator and washing machine sales outperformed the industry market, the market position has been further consolidated and enhanced. From the offline market sales, CMM’s data showed the retail sales of refrigerator industry declined by 1.23% on a year-on-year basis, but the retail sales of the company's refrigerator rose by 2.17% on a year-on-year basis; the retail sales of air-conditioning industry rose by 14.75% on a year-on-year basis, while the retail sales of the company's air-conditioning rose by 8.86% on a year-on-year basis; the retail sales of washing machine industry rose by 0.25% on a year-on-year basis, while the retail sales of the company's washing machine greatly rose by 15.45% on a 15 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 year-on-year basis. From the online sales, AVC (All View Cloud) data showed that the company’s online refrigerator and air conditioning sales have further enlarged the results. Among them, the retail sales of refrigerator industry rose by 64.04% on a year-on-year basis, and the retail sales of the company’s refrigerator rose by 93.05% on a year-on-year basis; the retail sales of air-conditioning industry rose by 128.79% on a year-on-year basis, while the retail sales of the company’s air-conditioning rose by 91.95% on a year-on-year basis. As for the export business, the company's refrigerator and air-conditioning product lines have continued to maintain a rapid growth like a few years ago. According to the customs data and statistics, the amount of exports of refrigerator industry rose by 19.75% on a year-on-year basis, and the company's amount of exports rose by 17.45% on a year-on-year basis; the amount of exports of air conditioning industry rose by 2.23% on a year-on-year basis, while the amount of exports of the company's air conditioning rose by 15.87% on a year-on-year basis, and achieved good development. (3) Manufacturing breakthrough: During the reporting period, the intelligent manufacturing, efficient production line project in Jiangxi Province, large refrigerator efficiency enhancing project, recruit upgrade projects and other projects advanced in an orderly manner, which overall pulled the improvement of manufacturing efficiency. (4) Mechanism protection: During the reporting period, the company further implemented the incentive mechanism to activate the team, constantly explored the team potential and enhanced the competitiveness of the company by implementing the medium and long term performance incentive plan and continuously promoting the operation activation plan and other multilevel, multiform incentive sharing. In the talent mechanism, the company continued to promote the 100 people echelon project to select and train all kinds of key employees; in the innovation mechanism, brought the innovative spirit and fault-tolerant mechanism into the relevant management system; in the accountability mechanism, confirmed the main idea of accountability system construction, sorted out the key and core system of main business process, and defined the accountability subject and assess the specific objectives; in the benchmarking mechanism, 32 projects have been proposed and promoted after assessment by establishing working mechanism during the reporting period. (II) Year-on-year changes of main financial data In RMB Current period Same period of last Y-o-y Reasons for changes 16 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 year increase/d ecrease Operation revenue 8,517,794,193.10 6,866,631,262.68 24.05% -- Operation cost 6,996,226,048.85 5,432,461,687.10 28.79% -- Sales expenses 1,140,172,032.08 1,075,647,750.60 6.00% -- Administrative 222,533,091.74 175,964,420.95 26.46% -- expenses Financial cost -33,454,482.67 -39,699,342.16 15.73% -- Taxable income declined on a y-o-y basis in the Income tax expense 9,439,557.86 18,816,185.98 -49.83% period R&D expenses 184,681,025.99 207,876,418.69 -11.16% -- Net cash flow Commodity purchased increased and note payable on arising from 484,230,697.91 871,689,504.89 -44.45% due on a y-o-y growth in the period operation activities Net cash flow The principal paid for entrust financing increased in arising from -564,891,050.65 374,877,700.49 -250.69% the period on a y-o-y basis investment activities Net cash flow Short-term loans from parent company increased on a arising from 911,251,695.82 682,926,101.22 33.43% y-o-y basis financing activities Net increase of cash Same reason as ―Net cash flow arising from 823,360,098.63 1,941,723,175.47 -57.60% and cash equivalent investment activities‖ The note receivable did not expire temporarily at Note receivable 2,511,715,429.41 1,421,429,723.73 76.70% period-end increased The credit sales increased on a y-o-y basis in the Account receivables 2,048,332,541.11 1,118,960,552.49 83.06% period The account paid in advance at period, for bidding Account paid in the plants and office and land use right under the 289,836,060.91 134,706,488.38 115.16% advance name of Anhui Dongwei Solar Energy Technology Co., Ltd. The export rebates increased without received in the Other receivables 68,537,511.44 39,553,919.44 73.28% period and the petty cash increased in the period The inventory increased with the y-o-y growth of Inventory 2,582,538,614.47 1,974,526,734.86 30.79% sales volume The long-term fixed time deposit from subsidiary Non-current assets 46,133,664.00 12,625,340.00 265.41% Zhongshan Changhong, were re-classified to due within one year non-current assets due within one year at period-end Financial assets 31,000,000.00 17,000,000.00 82.35% More investment for Hongyun Fund in the Period available for sale 17 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 The parent company’s intelligent manufacturing Construction in 148,626,411.17 107,037,409.95 38.85% project and construction of relocation and expansion progress revamp from Zhongke Meiling Development More investment for research and development in the 73,961,222.33 45,023,750.60 64.27% expenditure period Long-term The long-term assets to be amortized increased from amortization 2,583,106.23 1,132,075.48 128.17% subsidiary Sichuan Air-Conditioner in the period expenses Other non-current - 34,615,630.00 -100.00% Same as ―Non-current assets due within one year‖ assets Parent company’s short-term loans increased in the Short-term loans 1,432,622,701.07 288,343,724.73 396.85% period Financial liability measured by fair value and whose Changes of fair value of forward foreign exchange 9,671,394.08 559,249.58 1629.35% change is recorded contract in the period in current gains and losses The note payable did not expire temporarily at Note payable 4,573,857,981.57 2,635,051,740.30 73.58% period-end increased Material purchasing increased with the growth of Account payable 3,168,053,679.32 2,331,899,310.82 35.86% procurement scale in the period The salary and year-end bonus and performance Wages payable 103,531,061.56 189,592,039.00 -45.39% incentive fund, which were accrual last year, are paid in the period Payable VAT at period-end increased over that of Taxes payable 85,377,009.73 59,849,032.13 42.65% year-beginning for the selling seasons Interest of loan payable are paid by parent company Interest payable 708,602.61 1,617,352.01 -56.19% in the period Dividend issued in the period, and some of the Dividend payable 16,972,722.88 2,545,801.23 566.69% shareholders are not withdrawing yet Other account Other payables which were not paid temporary 812,770,528.06 622,580,323.43 30.55% payable increased at period-end The long-term loans are due for payment, which were Non-current liability 59,718,504.77 272,202,590.10 -78.06% re-classified as non-current liability due within one due within one year year Parent company’s long-term loans increased in the Long-term loans 253,460,000.00 38,908,788.00 551.42% period The government specific fund are paid by subsidiary Special payable 980,000.00 1,400,000.00 -30.00% Zhongshan Changhong, in line with the joint 18 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 development agreement, which are not accepted temporary Other Changes of the foreign currency rates from overseas’ comprehensive 938,467.33 3,474,546.95 -72.99% subsidiary income Same of the subsidiary earns in the period and Minority interests 98,755,957.79 70,921,198.01 39.25% purchasing minority from some of the subsidiaries Changing income of Losses from fair value changes in forward foreign -10,359,085.30 -1,278,570.21 -710.21% fair value exchange contract Income from entrust financing received in the period Investment income 23,593,349.66 4,153,090.95 468.09% increased on a y-o-y basis Investment income on affiliated -3,226,328.17 -833,210.42 -287.22% Joint venture has a y-o-y losses in the period company and joint venture Non-operating Losses from assets disposal for relocation from 11,455,300.63 1,818,874.18 529.80% expenditure subsidiary Mianyan Refrigeration Income of non-current assets 11,359,875.16 1,545,129.64 635.21% Same as ―Non-operating expenditure‖ disposal Minority Some of the non-wholly-owned subsidiary earns on a shareholders’ gains 6,019,661.62 -69,054.44 8817.27% y-o-y basis in the period and losses (III)Major changes on profit composition or profit resources in reporting period □ Applicable √ Not applicable No major changes on profit composition or profit resources occurred in reporting period (IV) Constitution of main business In RMB Increase or Increase or Increase or decrease of decrease of decrease of Gross operating operating cost gross profit Operating revenue Operating cost profit ratio revenue over over same ratio over same period of period of last same period last year year of last year According to industries Manufacture of household 8,133,419,814.85 6,646,020,504.49 18.29% 22.58% 27.16% -2.94% appliances According to products 19 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Refrigerators, 3,712,357,454.31 3,021,413,721.30 18.61% 5.71% 14.39% -6.18% freezers Air conditioning 3,830,599,287.94 3,157,180,107.27 17.58% 48.55% 49.09% -0.30% Washing machine 227,162,009.50 177,357,302.38 21.92% 5.93% 1.43% 3.45% Small appliances 264,195,096.38 229,232,770.78 13.23% 37.13% 31.73% 3.55% & kitchen & bath Others 99,105,966.72 60,836,602.76 38.61% -28.08% -48.69% 24.65% According to region Domestic 6,013,436,261.57 4,647,630,149.87 22.71% 20.27% 23.50% -2.02% Foreign 2,119,983,553.28 1,998,390,354.62 5.74% 29.63% 36.57% -4.78% III. Analysis of the non-main business √ Applicable □Not applicable In RMB Ratio in total Amount Note Whether be sustainable profit Investment income 23,593,349.66 21.94% Income from financial services N Loss from fair value changes of Changes in fair -10,359,085.30 9.63% the forward foreign exchange N value contract Receivable bad debt accruals Asset impairment 45,493,272.74 42.31% N increased in the period Non-operating Government grants received in the 23,491,147.85 21.85% N income period Losses from assets disposal for Non-operating 11,455,300.63 10.65% relocation from subsidiary N expense Mianyan Refrigeration IV. Assets and liability 1. Major changes of assets composition In RMB End of current period Same period of last year Ratio in Ratio in Ratio Notes of major changes Amount total Amount total changes assets assets Total assets at period-end Monetary fund 4,918,185,647.77 29.47% 4,136,998,121.62 35.19% -5.72% increased on a y-o-y basis Account 2,048,332,541.11 12.27% 1,950,050,884.81 16.59% -4.32% No major changes 20 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 receivable Inventory 2,582,538,614.47 15.47% 1,591,370,410.84 13.54% 1.93% No major changes Investment real 12,871,340.33 0.08% 13,679,922.44 0.12% -0.04% No major changes estate Long-term equity 90,247,745.70 0.54% 78,801,651.30 0.67% -0.13% No major changes investment Fix assets 1,214,541,611.12 7.28% 1,250,350,428.82 10.64% -3.36% No major changes Construction in 148,626,411.17 0.89% 67,818,577.71 0.58% 0.31% No major changes progress Short-term 1,432,622,701.07 8.58% 718,762,164.03 6.11% 2.47% No major changes loans Long-term 253,460,000.00 1.52% 50,290,088.80 0.43% 1.09% No major changes loans 2. Assets and liability measured by fair value √ Applicable □ Not applicable In RMB Accumulati Devaluatio Amount Changes of fair ve changes n of of Amount Amount at the value Amount in the Items of fair value withdrawi purchas of sale in beginning period gains/losses in end of period reckoned ng in the e in the the period this period into equity period period Financial assets 1. Financial assets measured by fair value and whose change is recorded in 12,060,213.30 -1,246,940.80 10,813,272.50 current gains and losses(excluding derivative financial assets) 2. Derivative financial assets 3. Financial assets available for sale Subtotal of financial 12,060,213.30 -1,246,940.80 10,813,272.50 assets Investment real estate 21 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Productive biological asset Other Total 12,060,213.30 -1,246,940.80 10,813,272.50 Financial liabilities 559,249.58 9,112,144.50 9,671,394.08 Whether there have major changes on measurement attributes for main assets of the Company in report period or not □ Yes √No 3. Assets right restricted ended as reporting period Ended as the reporting period, the Company has no major assets been closed down, detain, freeze or pledge and guarantee V. Investment 1. Overall situation √ Applicable □ Not applicable Investment in the same period of last Investment in the reporting (RMB) Changes year ( RMB) 199,413,900 140,650,000 41.78% 2. The major equity investment obtained in the reporting period √ Applicable □ Not applicable 22 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 In RMB Date of Meth Capit Term Whet Share Status as of Expect Current disclosure Index of disclosure Name of od of Amount of al of Type of her Principal business holdi Partners the balance ed investment (if (if applicable investee invest investment sourc invest products litigat ng sheet date return profit and loss ment es ment ion applicable ) ) R&D, sales and after-sale Meiling services of washing Newl Contributes www.cninfo.com.cn CANDY Owne Washing Not machines; own and operate y Candy Hoover 20- 30 million Juchao Website: Washing 90,000,000 60% d machine applica -56,041.83 N 2017-3-30 all types of goods and establ Group S.r.l year Yuan in the www.cninfo.com.cn( Machine fund etc. ble technology import & export ished period No.: 2017-010 ) Co., Ltd. business Manufacturing and sales of the following: air-conditioner, air cooler, air purifier, heat pump, new wind system equipment, electric heater, electric fan, Home Zhongshan refrigerators and freezers, Newl Zhuhai Samyou www.cninfo.com.cn Owne appliances Contributes Not Hongyou water heating, water filter, y Environmental Long Juchao Website: 24,000,000 60% d as 0 Yuan in applica -- N 2017-3-14 Electric Co., humidifier, clothes dryer, establ Technology -term www.cninfo.com.cn( fund air-conditi the period ble Ltd. dehumidifier, air water ished Co., Ltd. No.: 2017-006 ) oner etc. machine, electric fireplace, kitchen appliance and tools as well as refrigerating unit and home appliances; sales of electric raw/auxiliary materials, electrical parts; 23 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 goods and technology import & export business Sichuan Hongyun Venture Equity Investment Management Co., Ltd., State Development & Investment Venture business: act on Corp., Sichuan behalf of institution or Technology Contributes individuals as other venture Transfer Center, 14 million firms in a venture business; Sichuan Sichuan Yuan in the investment advisory Capit www.cninfo.com.cn Hongyun Owne Changhong period, Not business; providing venture al 8- Not Juchao Website: New – G IT 40,000,000 16% d Electric Co., invested 26 applica -- N 2015-08-12 management services for incre year applicable www.cninfo.com.cn( Venture fund Ltd., Chengdu million ble venture; participate in ment No.: 2015-035 ) Capital Fund Tianfu Yuan establishing a venture Innovation accumulativ business and management Equity ely. consulting organ for the Investment venture Fund Center (Limited Partner), Sichuan Changhong Jiahua Digital Technology Co., Ltd. Changmei Development, production Stock 46,320,000 92.64 Owne Management 20- Fresh food In reporting Not -450.13 N 2016-11-26 www.cninfo.com.cn 24 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Technology and sales of computer rights %d team of year e-commer period, applica Juchao Website: Co., Ltd. hardware & software, assig fund Changmei ce transfer ble www.cninfo.com.cn( technology development, ning Technology 2.64% No.: 2016-068 ) production and sales of equity (not internet of Things funded by equipment, development and part of the maintenance of E-commerce no-core software, information employees), service, technical transfer Contributes and services of the internet, 528,000 domestic AD designing, Yuan in the production, agencies and period, and release, sales of prepackaged 18.528 food, dairy products, general million merchandise, alcohol, Yuan funded beverage and agricultural accumulativ products, crop planting, ely self-support goods and technology import and export business.(except items prohibited or restricted by laws and regulations) Guangzhou Commodity wholesale Changhong trading (except for the Trade Co., Newl Contributes www.cninfo.com.cn licensed commodities); Owne Not Ltd. y Long Not one million Juchao Website: goods import & export 1,000,000 100% d N/A applica -25,239.22 N 2016-11-26 Guangzhou establ -term applicable Yuan in the www.cninfo.com.cn( business (exclusive fund ble Changhong ished period No.: 2016-068 ) monopoly commodities); Trade Co., technology import & export Ltd. 25 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Zhongshan Hongling Trade Newl Contributes www.cninfo.com.cn Owne Not Co.,Ltd. Domestic trading; goods and y Long Not 0.6 million Juchao Website: 1,000,000 100% d N/A applica -231,100.18 N 2016-11-26 Zhongshan technology import & export establ -term applicable Yuan in the www.cninfo.com.cn( fund ble Hongling ished period No.: 2016-068 ) Trade Co., Ltd. Not Total -- -- 202,320,000 -- -- -- -- -- -- applica -312,831.36 -- -- -- ble 26 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 3. The major non-equity investment doing in the reporting period √ Applicable □ Not applicable 27 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Industr Accrued y Accrued Reasons for Investment Actual Inves Fixed involve Realized not Reaching Amount in Investment Capita tment Invest d in Income up the Planned Disclosed Index (if Project Name this Amount up l Project Anticipated Disclosed Meth ments Invest to the End Schedule and any) Reporting to the End Sourc Schedule Income Date (if any) od or not ment of Reporting Anticipated Period of Reporting e Project Period Income Period s The intelligent production line for one million 1 million sets of Home Project is sets of environmental and applian under environmental energy saving ce Complete planning www.cninfo.com.c Self- Self-o and Not 2017-3-14 refrigerator intelligent Yes manufa 18,700,000 18,700,000 8.92% of total during the n built wned energy-saving Applicable production line cturing investment reporting ( Announcement Funds refrigerators shall construction project industr period, no No. 2017-006) be formed after (Note 1) y income yet. this project being put into operation The The production Home company capacity of 2 Project is applian successfully million sets of under 2 million sets of ce Self-o bade for the automatic planning Not www.cninfo.com.c automatic washing Self- 2017-3-30, machines production built Yes manufa 134,585,900 134,585,900 wned plant, office washing machine during the applicable 2017-4-14 n (Announcement cturing Funds building and shall be formed reporting No. 2017-010, No. base project (Note 2) industr land use rights after this project period, no 2017-024) y under the being put into income yet. name of Anhui operation 28 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Dongwei Solar Technology Co., Ltd. from the judicial sale with its own funds of RMB134,585, 900, the project is under planning at present Total -- -- -- 153,285,900 153,285,900 -- -- -- -- -- -- -- Note 1: In order to meet the increasing market demands, make up for the insufficient capacity, enhance the operating efficiency of the company's production line, and further promote the company's intelligent manufacturing process, the 28th meeting of the company's 8th Board of Directors approved and agreed the company’s subsidiary Jiangxi Meiling Electric Appliance Co., Ltd. (Hereinafter referred to as ―Jiangxi Meiling‖) to invest RMB 209,600,000 to build 1 million sets of environmental and energy saving refrigerator intelligent production line construction project, meanwhile, in order to ensure the smooth implementation of this investment and construction project, agreed the company to increase capital of RMB 200 million to Jiangxi Meiling for investing in this project. See details on ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that the company disclosed in the form of announcement (Announcement No. 2017-006) on March 14, 2017. At present, this project is going well, plant construction and equipment procurement are underway. Note 2: According to the company's strategic development plan, combined with the company's business needs, and in order to make up for the insufficient research and manufacturing capacity of washing machine industry so as to meet the market demands, the 29th meeting of the company's 8th Board of Directors approved and agreed the company’s to invest no more than RMB 371,210,000 in the construction of the 2 million sets of automatic washing machines production base project. In addition, the 29th meeting of the company's 8th Board of Directors approved and agreed the company to successfully bid for the plant and office building (covering an area of 86,087.65 square meters) and land use rights (covering an area of 116,233.61 square meters) under the name of Anhui Dongwei by public auction organized by the court with its 29 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 own funds of RMB134,585,900, and use the plant and land as the washing machine production base for construction. See details on ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that the company disclosed in the form of announcement (Announcement No. 2017-010, No. 2017-024) on March 30, 2017 and April 14, 2017. The project construction is still under planning at present. In order to launch the self-built washing machine manufacturing base project as soon as possible and find a suitable place for the project implementation, after the field research, assessment and analysis, the company has agreed to participate in the judicial sale of the plant, office building and land use rights under the name of Anhui Dongwei Solar Technology Co., Ltd. (Hereinafter referred to as ―Anhui Dongwei‖) that Shushan District People's Court of Hefei City published on the website of Hefei Public Resource Trading Center with its own funds of no more than RMB158,085,900, and participated in this bidding in accordance with legal procedures. The company finally received the Execution Ruling in Writing (No. (2016)W0104Z009) issued by Shushan District People's Court of Hefei City on April 12, 2017. At present, the company is actively handling the procedures related to assets transfer in accordance with the Execution Ruling in Writing issued by Shushan District People's Court of Hefei City. 30 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 4. Financial assets investment (1) Securities investment □ Applicable √ Not applicable The Company had no securities investment in the reporting period. (2) Derivative investment √ Applicable □ Not applicable 31 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 In 10 thousand Yuan Amount of Ratio of reserve for investment Relate Whether Investment Amount Amount sales in devaluation Investment amount at Actual d related Initial Operator Type Start date End date amount at purchased in the the reporting of amount at period-end in net gains/losses in relatio trade or investment period-begin reporting period period withdrawing period-end assets of the period nship not (if Company at applicable) period-end Forward Financial foreign N/A No 63,230.44 2016-6-8 2018-6-26 37,890.69 146,171.07 83,257.22 - 100,081.32 19.55% 723.22 institution exchange contract Total 63,230.44 -- -- 37,890.69 146,171.07 83,257.22 - 100,081.32 19.55% 723.22 Capital resource(if applicable) Owned fund Lawsuit involved (if applicable) Not applicable Disclosure date for approval from the Board 2017-3-30 for investment of derivatives (if applicable) Disclosure date for approval from board of shareholders for investment of derivatives (if 2017-5-4 applicable) 1. Market risk: domestic and international economic situation changes may lead to exchange rate fluctuations, forward foreign exchange transactions are under certain Risk analysis and controlling measures for market risk. Forward foreign exchange business is aiming to reducing impact on corporate profits by foreign exchange settlement and sale prices, exchange rate derivatives holdings in the Period (including fluctuations. The Company will follow up the exchange fluctuation, on the basis of target rate determined from the business, relying on the research of the foreign currency but not limited to market risk, liquidity risk, exchange rates, combined with prediction of consignments, and burdening ability to price variations due to exchange rate fluctuations, then determine the plan of forward credit risks, operation risk and law risks etc.) foreign exchange contracts, and make dynamic management to the business, to ensure reasonable profit level. 2. Liquidity risk: all foreign exchange transactions are based on a reasonable estimate of the future import and export business, to meet the requirements of the trade 32 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 authenticity. In addition, forward foreign exchange transactions are processed with bank credit, will not affect liquidity of company funds. 3. Bank default risk: if cooperative banks collapse within the contract time, the Company will not be able to transact the original foreign exchange contracts with contract price, which leads the risk of income uncertainty. So the Company chose Bank of China, Agricultural Bank of China, Industrial and Commercial Bank of China, China Construction Bank and other Chinese Banks and part of the larger foreign Banks (such as Deutsche Bank, UOB, Overseas Chinese Bank, HSBC, etc.) to conduct the trading of foreign exchange capital. These banks share a solid strength and management whose failure and the risk of loss may bring to the Company is very low. 4. Operational risk: improper operation of the person in charge of forward foreign exchange transactions may cause related risk also. The Company has formulated related management system which defines the operation process and responsibility to prevent and control risks. 5. The legal risks: unclear terms based in contract signed with banks for related transactions may lead legal risks when forward foreign exchange transactions are processing. The Company will strengthen legal review, and choose good bank to carry out this kind of business as to risk control. Invested derivative products have changes in The Company determines fair value in accordance with the Chapter VII ―Determination of Fair Value‖ carried in the Accounting Standards for Business Enterprises No.22 - market price or fair value in the Period, as Recognition and Measurement of Financial Instruments. Fair-value is basically obtained according to prices offered by bank and other pricing services. While fair-value of for analysis of the fair value of derivatives, derivatives is mainly obtained according to the balance between prices given by outstanding contracts and forward prices given by contracts signed during the reporting disclosed specific applied methods and period with bank. The differences are identified as trading financial assets and liabilities. During the reporting period, forward foreign exchange contracts and losses of the correlation assumption and parameter setting Company is RMB 7.2322 million. Specific principle of the accounting policy and calculation for derivatives in the Period Not applicable compared with last period in aspect of major changes Upon inspection, the independent directors of the Company believes that: during the reporting period, the Company carried out its foreign exchange forward deals in strict compliance with the standardized operation guidelines for listed issuer on main board (2015 amended) issued by Shenzhen Stock Exchange, the Articles of Association, Authorization Management of the Company, Management System in relating to Foreign Exchange Forward Deals of Hefei Meiling Co., Ltd., and these deals were conducted within the aut horization scope under general meeting and board meeting. The Company conducts no foreign exchange transactions on the purpose of getting Special opinion on derivative investment and profit only, all of the forward foreign exchange transactions are operates based on normal operating and production, which is relying on specific business operations with risk control by independent directors purpose of avoiding the preventing the risks in exchange rate. The forward foreign exchange transactions of the Company are beneficial to prevent the exchange risks exposed by import and export business and thus met its requirement for operation development. There was no speculative operation, no break of relevant rules and regulations and relevant business was conducted under corresponding decision-making procedures. Interests of the Company and entire shareholders, especially minority shareholders, were not prejudiced. 33 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 VI. Sales of major assets and equity 1. Sales of major assets □ Applicable √ Not applicable The Company had no sales of major assets in the reporting period. 2. Sales of major equity □ Applicable √ Not applicable 34 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 VII. Analysis of main holding company and stock-jointly companies √ Applicable □ Not applicable (I) Particular about main subsidiaries and stock-jointly companies net profit over 10% In RMB Register Company name Type Main business Industry Total assets Net Assets Operating revenue Operating profit Net profit capital Research and Zhongke Meiling development, Cryogenic manufacturing and Manufact Subsidiary 68,150,000 226,577,616.47 115,862,492.11 60,567,937.18 2,936,293.64 2,968,339.70 Technology Co., sales of ultra-low uring Ltd. temperature freezer Jiangxi Meiling Manufacturing of Electric Manufact Subsidiary refrigeration and 50,000,000 610,043,716.32 88,495,146.09 340,298,917.37 223,238.07 1,883,499.28 Appliance Co., uring freezer Ltd. Mianyang Manufacturing of Meiling Manufact Subsidiary refrigeration and 100,000,000 151,479,226.93 93,466,447.72 82,194,556.20 -2,862,555.47 -4,531,208.61 Refrigeration Co., uring freezer Ltd. Sichuan R&D, Changhong manufacturing and Manufact Subsidiary 200,000,000 3,526,134,410.37 577,588,200.20 2,781,737,556.72 33,535,396.53 36,882,767.44 Air-conditioner domestic sales of uring Co., Ltd. air-conditioner R&D, Zhongshan manufacturing and Manufact Changhong Subsidiary 184,000,000 1,597,637,700.67 231,496,283.85 1,384,285,987.97 -12,543,826.48 -14,522,841.05 domestic sales of uring Electric Co., LTD air-conditioner 35 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Hefei Meiling Electric Sales of white Appliance Subsidiary Sales 55,000,000 278,321,076.78 -266,636,231.93 802,402,320.20 41,454,464.99 41,789,074.03 goods Marketing Co., Ltd Hefei Meiling Sales of white Group Holdings Subsidiary Sales 80,000,000 1,006,170,550.42 85,757,235.04 1,476,038,071.44 3,629,197.39 2,860,990.99 goods Limited Changmei E-business of Fresh foo Technology Co., Subsidiary agricultural d e-com 50,000,000 12,091,268.44 7,723,134.41 9,131,880.78 -4,860,660.93 -4,858,959.95 Ltd. products and fresh merce R&D, Guangdong manufacturing and Changhong sales of kitchen Manufact Ridian Subsidiary and toilet 83,000,000 248,987,291.99 113,175,193.72 208,290,529.53 4,394,461.91 4,057,326.42 uring Technology Co., products, small Ltd. home appliances and water purifier 36 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 (II) Notes of holding and shareholding companies √ Applicable □ Not applicable The method of obtaining and Company Name handling The influence to the whole production and performance subsidiaries during the report period Co-invested and established with Candy Group on April 27, 2017, mainly takes charge of the production, research and development, and sales of washing machine products, which is conducive to improving the comprehensive competitiveness of the company's washing machine products. The company will make full use of the production capacity, product Meiling CANDY Washing Investment development capabilities, sales channels, manufacturing scale Machine Co., Ltd. and quality control and other advantages that the company and Candy Group have in washing machine so as to rapidly lay out the washing machine market, expand the product market shares of Meiling brand and Candy brand, and enhance the company's profitability and comprehensive competitiveness. Established on May 11, 2017, mainly engaged in research and development, and sales of air-conditioning products, which is Zhongshan Hongyou Electric conducive to enhancing the competitiveness of Investment Co., Ltd. air-conditioning products, further optimizing the product structure, and expanding the overseas business development of air-conditioning. Guangzhou Changhong Trade Minor effect on the overall production and operation and Investment Co., Ltd. performance of the company Zhongshan Hongling Trade Minor effect on the overall production and operation and Investment Co.,Ltd. performance of the company Xi’an Meizhilai Electric Minor effect on the overall production and operation and Clearing off Appliance Marketing Co., Ltd. performance of the company Notes of holding and shareholding companies: Nil VIII. Structured vehicle controlled by the Company □ Applicable √ Not applicable IX. Prediction of business performance from January – September 2016 Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or the warning of its material change compared with the corresponding 37 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 period of the last year and explanation on reason □ Applicable √ Not applicable X. Risks and countermeasures (1) risks and countermeasures In the 2017, faced with the more intense competition in home appliance market and other objective factors, the enterprise will have worse survival environment. In the future, the company will face the weak macroeconomic growth, severe industry situation, intensifying competition, rising costs, new business models and the impact of Internet era and other risks. Faced with the above risks, on the one hand, the company will raise awareness of risk prevention and make layout in product, technology, and market ahead of time. Along with the smooth implementation of intelligent manufacturing, intelligent research and intelligent life, the company’s products are transforming to high end and intelligence, the company will insist on the intelligent and variable frequency product strategy, at the same time, enrich the product lines and build a comprehensive home appliance enterprise. On the other hand, under the leadership of the board of directors and the guideline of ―Meiling Dream‖, the company will carry out the guideline for management of ―product leading, marketing force, manufacturing breakthrough, mechanism protection‖, take globalization as a platform to continue to promote technological innovation, and improve the product competitiveness from quality, high end and fashion technology by promoting the manufacturing efficiency and technological level; speed up the online and offline channel integration by improving the offline terminal marketing capacity of domestic sales and breaking through the weak regional market; actively and positively explore the private brand construction in overseas markets, and accelerate the pace of overseas merger and acquisition; give full play to the driving force of internal system changes and management mechanism innovation, and activate the team independent innovation power so as to provide mechanism guarantee for the company’s sustainable and healthy development. (ii) Business plan in the next half year Under the guidelines of strategic planning, in the second half of 2017, the company will continue to focus on the ―product leading, marketing force, manufacturing breakthrough, mechanism protection‖ to carry out business and management work and achieve the company's healthy and sustainable development. Aiming at the deficiencies and risks in the first half year, the company's industrial units need to accomplish following work: 1. Refrigerator (Freezer) Continue to adhere to the intelligence and variable frequency two core product strategies. In the intelligence aspect, speed up the development and upgrading of a new generation of intelligent 38 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 product, and implement the company's intelligent strategy; in the variable frequency aspect, strengthen the standardization of variable frequency products; expand the cost advantages and technology leadership, enhance the competitiveness of variable frequency products; promote the high-end and intelligent upgrading of the company's product structure, and drive the company's industrial transformation and upgrading; at the same time, improve the manufacturing efficiency and product quality, reduce the product costs and enhance the product competitiveness by fully implementing intelligent upgrading and rebuilding to the production lines. The domestic market takes frequency leading, intelligent pilot, multi-door becoming stronger, back to back getting bigger, air-cooling jump start as the thinking, makes reasonable planning, promote the products’ combination ability, and enhance the domestic sales capacity by adjusting the product structure. Overseas markets should adhere to the brand structure of ―own brands + OEM / ODM‖, enhance product quality, expand sales scale, maintain sustainable competitiveness, and promote internationalization process; improve the additional value of medium-end products by promoting the industrial design and differentiation strategy; speed up the development of high-end products and market introduction, improve profitability and consolidate the cooperation with strategic customers. 2. Air conditioning Continue to take the opportunities of industry development and industry competition pattern adjustment, take market planning as a leader, increase R & D investment, integrate supply chain resources, improve efficiency, and steadily develop traditional business; orderly lay out emerging businesses, strengthen the promotion of central air conditioning business, further strengthen the in-depth cooperation with MIUI and other enterprises, expand ODM / OEM business, and actively seek increment; actively explore new business models, promote O2O, promote online and offline business balance development; increase the scale of export business, control costs, and increase incomes; fully integrate the air conditioning manufacturing resources in Mianyang and Zhongshan, complete manufacturing upgrades and intelligent transformation, and provide guarantee for business development. 3. Washing machine On the one hand, strengthen the construction of the core stores of retail channel, continue to promote and speed up the progress of new products, protect the supply of new products, ensure the sales demand, and achieve balanced development of market; on the one hand, strengthen the communication and coordination with Candy Group, and launch front loading washing machine suitable for Chinese market, improve product quality, and control product costs. In addition, accelerate the promotion of top loading washing machine and the development of production line by introducing professionals. 4. Small appliances 39 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Develop e-commerce channels, supplement and enrich the existing online products; in the offline market, make in-depth maintenance and expansion to the existing and newly opened channel customers, establish promotion models by investment attraction channels to drive the outlet sales of traditional channels; continue to improve the intelligent products camp, enrich the intelligent product models of common internet of things, and develop the high-end intelligent products with automatic speech recognition and screen, and continue to promote the development of small appliance product lines. 5. Bio-medical care As the platform for the comprehensive development of bio-medical industry and the company’s subsidiary listed on new three board, in the second half of 2017, Zhongke Meiling will continue to implement the strategy of ―diversification of related industries‖, steadily expand the cold chain storage business and complete the family health industry technical reserves based on the existing cold storage business, and timely expand its own business lines. 6. Intelligent life new business model Continue to promote the investment project ―intelligent life project‖ and build Meiling intelligent life O2O community fresh business platform with steady operating strategy. Rely on the company’s advantages in intelligent and refrigeration fields to promote the layout in intelligent terminal and refrigeration self pick-up cabinet; the direct sales business of fresh food focus on regionalization and localization, intensify the superior products and the resource integration capabilities of supply chain; gradually integrate the regional and national brand enterprises entering business and continue to promote the construction of intelligent life O2O service platform based on the intelligent terminal and fresh e-commerce business. The goal of the company is to transform to ―equipment + service‖ model by means of food management, provide exploration for the intelligent transformation of refrigerator, help the company to move towards high-frequency service sales from low-frequency hardware sales, form the "hardware + service" double growth engine, and drive the transformation and upgrading of the company’s profit model. The above business plan and business objectives do not represent the listed company’s profit forecast of 2017, whether it can be achieved depends on the changes in market condition, the efforts of management team and other factors, there are a lot of uncertainties, investors should pay special attention to it. 40 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Section V. Important Events I. AGM and extraordinary general meeting 1. AGM held in the period Participati on ratio Meeting Type Holding date Disclosure date Index for investors Juchao Website Annual general (www.cninfo.com.cn), Resolution 2016 AGM 30.73% 2017-5-4 2017-5-5 meeting Notice of AGM of 2016 (Notice No.: 2017-031) First Juchao Website Extraordinary Extraordinary (www.cninfo.com.cn), Resolution General General 30.36% 2017-6-20 2017-6-21 Notice of First Extraordinary Meeting of Meeting General Meeting of 2017 (Notice 2017 No.: 2017-041) 2. Request for extraordinary general meeting by preferred stockholders with rights to vote □ Applicable √ Not applicable II. Profit distribution plan and capitalizing of common reserves in the period □ Applicable √ Not applicable There are no cash dividend, bonus and capitalizing of common reserves carried out in the semi-annual III. Commitments that the company, shareholders, actual controller, offeror, directors, supervisors, senior management or other related parties have fulfilled during the reporting period and have not yet fulfilled by the end of reporting period □ Applicable √ Not applicable There are no commitments that the company, shareholders, actual controller, offeror, directors, supervisors, senior management or other related parties have fulfilled during the reporting period and have not yet fulfilled by the end of reporting period. IV. Appointment and non-reappointment (dismissal) of CPA Whether the semi-annual financial report had been audited 41 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 □Yes √ No The semi-annual report was not audited V. Explanation on “Qualified Opinion” from CPA by the Board and Supervisory Committee □ Applicable √ Not applicable VI. Explanation from the Board for “Qualified Opinion” of last year’s □ Applicable √ Not applicable VII. Bankruptcy reorganization □ Applicable √ Not applicable No bankruptcy reorganization in Period. VIII. Lawsuits 1. Material lawsuits and arbitration □ Applicable √ Not applicable No material lawsuits and arbitration in the reporting 2. Other lawsuits √ Applicable □ Not applicable To maintain the independence and integrity of "Meiling" trademark and trade name, the company has launched a series of litigation and arbitration related to "Meiling" trademark, please see 2014 first quarter report, 2014 semi-annual report, the 2014 annual report disclosed respectively on April 19, 2014, August 12, 2014, and March 26, 2014 for the relevant progress. Up to now, Hefei Meiling Household Appliances Co., Ltd., Hefei Meiling Environmental Protection Equipment Technology Co., Ltd., Hefei Meiling Purifying Equipment Technology Co., Ltd., Hefei Meiling Electrical Appliances Co., Ltd., Hefei Meiling Cabinet Electrical Appliance Co., Ltd., Hefei Meiling Vehicle Industry Co., Ltd., Hefei Meiling Intelligent Technology Co., Ltd. (former Hefei Meiling Communication Technology Co., Ltd., which changed its business name as Hefei Meiling Intelligent Technology Co., Ltd. by themselves, the Company is pursue legal responsibility by the law) have had no right to use "Meiling" trademark. At present, only the kitchen ventilator, cooker, water heater, water purifiers and household electrical appliances manufactured and sold by the Company and its wholly-owned subsidiary - Guangdong Changhong Ridian Technology Co., Ltd. are the company's regular products, any other small household appliances using same or similar trademark as our company or using the trade 42 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 name similar to the Company’s name are the Company’s products. In view of the infringement to the Company’s trademark and trade name, false propaganda and unfair competition in the market, the Company has carried out many ways including administrative reports, criminal investigation and civil litigation to fight against infringement and counterfeiting behavior in the whole country. IX. Penalty and rectification □ Applicable √ Not applicable No penalty and rectification for the Company in reporting period. X. Integrity of the company and its controlling shareholders and actual controllers □ Applicable √ Not applicable During the reporting period, the Company and the controlling shareholders and the actual controllers have had good reputation, and there is no large amount due unliquidated debt sentenced by the court. XI. Implementation of the company’s stock incentive plan, employee stock ownership plan or other employee incentives √ Applicable □ Not applicable Implementation for annual performance incentive fund On August 9, 2012 and August 28, 2012, the Company considers the adoption of "Hefei Meiling annual performance incentive fund implementation plan" (hereinafter referred to as "" stimulus "") on the 16th meeting of the 7th board of directors and the 2012-second provisional shareholders meeting. Details were disclosed on information disclosure media appointed by the Company as "Securities Times", "Chinese Securities Daily", "Hong Kong Commercial Daily" and the Juchao network (www.cninfo.com.cn) on August 10, 2012 and August 29th in the form of announcement (No.: 2012-028, No.:2012-035). 1. Implementation about 2012, 2013 and 2014 performance incentive fund provision and distribution plan See details in " Implementation about 2012, 2013 and 2014 performance incentive fund provision and distribution plan" in "XV Implementation of the company's stock incentive plan, employee stock ownership plan, or other employee incentive measures" in "Section V Significant Events" of the company's "2016 Annual Report" disclosed on March 30, 2017. 2. The implementation of provision and allocation program of 2016 annual performance incentive funds According to the ―Incentive Plan‖ approved by the company, the audited operating results and 43 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 actual operation of the company in 2016 have met the requirements for awarding the annual performance incentive funds. The company held the 29th meeting of the 8the Board of Directors and the 15th meeting of the 8th Board of Supervisors and the Annual General Meeting of Shareholders of 2016 on March 28, 2017 and May 4, 2017, the independent directors made independent opinions, and the benefited directors abstained from voting, the meetings considered and approved the ―Proposal on the Provision for the Company's 2016 Annual Performance Incentive Funds‖. In addition, the company held the 32nd meeting of the 8th Board of Directors, the 17th meeting of the 8th Board of Supervisors, and the first extraordinary general meeting of shareholders in 2017 on June 2, 2017 and June 20, 2017, the independent directors made independent opinions, and the benefited directors abstained from voting, the meetings considered and approved the ―Allocation Plan for the Company's 2016 Annual Performance Incentive Funds‖, the details are as follows: (1) Incentive range and number of people: 39 eligible objects (senior management, middle management, core technical staff and the core backbone staff). (2) Source of funds: withdraw performance incentive funds of RMB 24,182,200 by 10% of the audited net profits attributable to shareholders of listed companies in 2016, and allocate RMB 23.63 million of the withdrawn incentive funds to 39 incentive objects (senior management, middle management, core technical staff and the core backbone staff) whom conform to national laws and regulations and the requirements of ―Incentive Plan‖. The incentive objects purchase the Company’s stock by their received performance incentive funds (after paying the relevant tax) plus no less than 30% of their annual total remuneration (annual total remuneration except for the performance incentive funds and after paying the corresponding income tax and five social insurances and housing fund) through the open market. (3) Shareholding situation: According to the provisions of ―Incentive Plan‖ approved by the company, in the premise of conforming to the listing rules of the Shenzhen Stock Exchange and other applicable Chinese laws and regulation, the incentive objects promise to purchase the Company’s stock through the open market within 60 working days (The time shall be postponed in case of a period that the regulator requires the Company’s stock cannot be trade) after receiving the performance incentive funds. As of the disclosure date of this report, this incentive plan is still in progress. (4) Changes in equity interests arising from disposal shares due to incentive objects: aim at shares purchased by incentive objects without disposal during the reporting period. (5) Commitment on restricted holding shares: according to the regulations of ―Incentive Plan‖ and the commitment of all incentive objects, the Company’ shares purchased by them shall not be reduced by any market approach in the next year from the date of purchase, but the holding shares can be reduced by 50% after the second year according to the laws and regulations, and the 44 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 remaining 50% can be reduced after the third year according to the laws and regulations. In addition, some directors, supervisors and senior executives among the incentive objects promise to handle the shares in accordance with the relevant management methods of the Company Law, the Securities Law, and the Company’s Shares Held by the Directors, Supervisors and Senior Management of List Company and the Shares’ Change Management Rules, including but not limited to: during the term of office, the annual transfer of shares shall not exceed 25% of the Company’s shares held by oneself; cannot sell the Company’s share within 6 months after the purchase or repurchase within six months after the sale; cannot transfer the company’s shares within six months after dimission. See details on ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that the company disclosed in the form of announcement (Announcement No. 2017-010, No. 2017-011, No. 2017-015, No. 2017-031, No. 2017-035, No. 2017-036, No. 2017-037, No. 2017-041) on March 30, 2017, May 5, 2017, June 3, 2017, and June 21, 2017. 3. Share holding and reduction of the company’s performance incentive objects As of June 30, 2017, all incentive objects held a total of 10,079,679 shares, accounting for 0.9649% of the company’s general capital, of which 8,746,547 shares of A share, accounting for approximately 0.8373% of the company’s general capital, 1,333,132 shares of B share, and accounting for about 0.1276% of the company’s general capital. Some 2012 and 2013 annual performance incentive objects (not directors, supervisors or senior management) have totally reduced share of 3,477,477 shares from September 2014 to the end of the this reporting period, accounting for approximately 0.3329% of the company’s general capital, and reduced holding of 222,900 shares in this reporting period. XII. Major related transaction 1. Related transaction with routine operation concerned √ Applicable □ Not applicable (1) Related transaction with routine operation concerned 45 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Whet her Trading over Availab Related Proport limit the Related Clearing Type of transaction ion in le Date of Seri Content of Pricing transaction approve appro form for Related related amount similar Relationship related principl price (in 10 related similar disclosur Index of disclosure al party transac (in 10 transact d (in 10 ved transaction e thousand transact tion thousand ions market e Yuan) thousan limite ion Yuan) (%) price d Yuan) d or not (Y/N) Electric melting, Spot Juchao Sichuan Controlling Commo resistors, 30 March exchang Website(www.cninfo.com.cn) Changhong shareholder and dity integrated Marketi 2017; 5 1 20,358.26 20,358.26 2.82% 26,000 N e, Bank -- Notice No.: 2017-010, Electric Co., ultimate purchas circuit ng price May acceptan 1017-011, 2017-013 and Ltd. controller ed accessory, color 2017 ce 2017-031 masterbatch Other enterprise Spot Juchao control under the Commo 30 March Huayi exchang Website(www.cninfo.com.cn) same controlling dity Marketi 2017; 5 2 Compressor Compressor etc. 22,954.46 22,954.46 3.18% 60,000 N e, Bank -- Notice No.: 2017-010, shareholder and purchas ng price May Co., Ltd. acceptan 1017-011, 2017-013 and ultimate ed 2017 ce 2017-031 controller Other enterprise Bank Sichuan Juchao control under the Commo and 30 March Changhong Website(www.cninfo.com.cn) same controlling dity Plastic products Marketi commerc 2017; 5 3 Mold Plastic 32,589.07 32,589.07 4.51% 52,000 N -- Notice No.: 2017-010, shareholder and purchas etc. ng price e May Tech. Co., 1017-011, 2017-013 and ultimate ed acceptan 2017 Ltd. 2017-031 controller ce 46 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Other enterprise Bank Juchao Sichuan control under the Commo and 30 March Website(www.cninfo.com.cn) Changhong same controlling dity Door shell, Marketi commerc 2017; 5 4 15,533.97 15,533.97 2.15% 27,000 N -- Notice No.: 2017-010, Jijia Fine shareholder and purchas baseboard etc. ng price e May 1017-011, 2017-013 and Co., Ltd. ultimate ed acceptan 2017 2017-031 controller ce Other enterprise Bank Sichuan Juchao control under the Commo and 30 March Changhong Packing case, Website(www.cninfo.com.cn) same controlling dity Marketi commerc 2017; 5 5 Package printed matter 5,360.60 5,360.60 0.74% 8,000 N -- Notice No.: 2017-010, shareholder and purchas ng price e May Printing etc. 2017-011, 2017-013 and ultimate ed acceptan 2017 Co., Ltd. 2017-031 controller ce Sichuan Other enterprise Juchao Changhong control under the Commo 30 March Bank Website(www.cninfo.com.cn) Precision same controlling dity Printed board Marketi 2017; 5 6 748.78 748.78 0.10% 8,000 N acceptan -- Notice No.: 2017-010, Electronics shareholder and purchas components etc. ng price May ce 2017-011, 2017-013 and Tech. Co., ultimate ed 2017 2017-031 Ltd. controller Other enterprise Sichuan Juchao control under the Commo 30 March Changhong Spot Website(www.cninfo.com.cn) same controlling dity Power supply, Marketi 2017; 5 7 New Energy 0.71 0.71 0.00% 8,000 N exchang -- Notice No.: 2017-010, shareholder and purchas battery ng price May Technology e 2017-011, 2017-013 and ultimate ed 2017 Co., Ltd. 2017-031 controller Other enterprise Juchao control under the Commo 30 March 081 Spot Website(www.cninfo.com.cn) same controlling dity Marketi 2017; 5 8 Electronic Transformer etc. 235.55 235.55 0.03% 4,000 N exchang -- Notice No.: 2017-010, shareholder and purchas ng price May Group e 2017-011, 2017-013 and ultimate ed 2017 2017-031 controller 47 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Other enterprise Juchao Guangdong control under the Commo 30 March Spot Website(www.cninfo.com.cn) Changhong same controlling dity Foam pieces Marketi 2017; 5 9 663.79 663.79 0.09% 8,000 N exchang -- Notice No.: 2017-010, Electronics shareholder and purchas etc. ng price May e 2017-011, 2017-013 and Co., Ltd. ultimate ed 2017 2017-031 controller Sichuan Other enterprise Changhong Spot Juchao control under the Commo 30 March Intelligent exchang Website(www.cninfo.com.cn) same controlling dity Marketi 2017; 5 10 Manufacturi Hand piece 86.44 86.44 0.01% 4,000 N e, Bank -- Notice No.: 2017-010, shareholder and purchas ng price May ng acceptan 2017-011, 2017-013 and ultimate ed 2017 Technology ce 2017-031 controller Co., Ltd. Other enterprise Sichuan Spot Juchao control under the Commo 30 March Changhong Sheet metal exchang Website(www.cninfo.com.cn) same controlling dity Marketi 2017; 5 11 Xinrui parts, plastic 4,901.96 4,901.96 0.68% 7,000 N e, Bank -- Notice No.: 2017-010, shareholder and purchas ng price May Technology parts etc. acceptan 2017-011, 2017-013 and ultimate ed 2017 Co., Ltd ce 2017-031 controller Other enterprise Sichuan Juchao control under the Commo 30 March Zhiyijia Spot Website(www.cninfo.com.cn) same controlling dity Electronic Marketi 2017; 5 12 Network 0.92 0.92 0.00% 8,000 N exchang -- Notice No.: 2017-010, shareholder and purchas products ng price May Technology e 2017-011, 2017-013 and ultimate ed 2017 Co., Ltd. 2017-031 controller Other enterprise Juchao Commo 30 March Sichuan control under the Spot Website(www.cninfo.com.cn) dity Electric Marketi 2017; 5 13 Huafeng same controlling 1.40 1.40 0.00% 4,000 N exchang -- Notice No.: 2017-010, purchas appliance parts ng price May Corp. Group shareholder and e 2017-011, 2017-013 and ed 2017 ultimate 2017-031 48 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 controller Spot Other enterprise exchang Sichuan Juchao control under the Commo e, Bank 30 March Changhong Printed boards, Website(www.cninfo.com.cn) same controlling dity Marketi and 2017; 5 14 Electronic transformers, 2,403.23 2,403.23 0.33% 4,000 N -- Notice No.: 2017-010, shareholder and purchas ng price commerc May Products etc. 2017-011, 2017-013 and ultimate ed e 2017 Co., Ltd. 2017-031 controller acceptan ce Spot Other enterprise exchang Juchao Sichuan control under the Commo e, Bank 30 March Website(www.cninfo.com.cn) ilink same controlling dity Internet access Marketi and 2017; 5 15 434.57 434.57 0.06% 4,000 N -- Notice No.: 2017-010, Technology shareholder and purchas module ng price commerc May 2017-011, 2017-013 and Co., Ltd. ultimate ed e 2017 2017-031 controller acceptan ce Other enterprise Sichuan Juchao control under the Commo 30 March Changhong Spot Website(www.cninfo.com.cn) same controlling dity Digital module Marketi 2017; 5 16 Education 5.03 5.03 0.00% 4,000 N exchang -- Notice No.: 2017-010, shareholder and purchas component ng price May Technology e 2017-011, 2017-013 and ultimate ed 2017 Co., Ltd. 2017-031 controller Information Spot Juchao Sichuan Controlling 30 March Accept system services, exchang Website(www.cninfo.com.cn) Changhong shareholder and Marketi 2017; 5 17 the marketing fees, 816.50 816.50 0.94% 5,000 N e, Bank -- Notice No.: 2017-010, Electric Co., ultimate ng price May services repair fees, acceptan 2017-011, 2017-013 and Ltd. controller 2017 shared service ce 2017-031 49 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 fees Sichuan Juchao Changhong Controlling 30 March Accept Spot Website(www.cninfo.com.cn) Electronics shareholder and Marketi 2017; 5 18 the Shuttle fee 2.30 2.30 0.00% 4,000 N exchang -- Notice No.: 2017-010, Holding ultimate ng price May services e 2017-011, 2017-013 and Group Co., controller 2017 2017-031 Ltd. Other enterprise Sichuan Spot Juchao control under the 30 March Changhong Accept Transportation, exchang Website(www.cninfo.com.cn) same controlling Marketi 2017; 5 19 Minsheng the storage, loading 25,148.50 25,148.50 29.02% 55,000 N e, Bank -- Notice No.: 2017-010, shareholder and ng price May Logistics services and unloading acceptan 2017-011, 2017-013 and ultimate 2017 Co., LTD ce 2017-031 controller Sichuan Other enterprise Service Spot Juchao control under the 30 March Exp. Accept After-sales exchang Website(www.cninfo.com.cn) same controlling Marketi 2017; 5 20 Appliance the maintenance fee 7,391.89 7,391.89 8.53% 20,000 N e, Bank -- Notice No.: 2017-010, shareholder and ng price May Service services etc. acceptan 2017-011, 2017-013 and ultimate 2017 Chain Co., ce 2017-031 controller Ltd. Other enterprise Juchao Sichuan control under the 30 March Accept Spot Website(www.cninfo.com.cn) Hongxin same controlling Software usage Marketi 2017; 5 21 the 63.20 63.20 0.07% 5,000 N exchang -- Notice No.: 2017-010, Software shareholder and fee ng price May services e 2017-011, 2017-013 and Co., Ltd. ultimate 2017 2017-031 controller 50 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Other enterprise Juchao Guangdong control under the 30 March Accept Spot Website(www.cninfo.com.cn) Changhong same controlling Security service Marketi 2017; 5 22 the 30.86 30.86 0.04% 5,000 N exchang -- Notice No.: 2017-010, Electronics shareholder and charge ng price May services e 2017-011, 2017-013 and Co., Ltd. ultimate 2017 2017-031 controller Other enterprise Juchao Sichuan control under the 30 March Accept Maintenance Spot Website(www.cninfo.com.cn) Jiahong same controlling Marketi 2017; 5 23 the fee, business 23.66 23.66 0.03% 4,000 N exchang -- Notice No.: 2017-010, Industrial shareholder and ng price May services activity fee e 2017-011, 2017-013 and Co., Ltd. ultimate 2017 2017-031 controller Other enterprise Sichuan Juchao control under the 30 March Changhong Accept Spot Website(www.cninfo.com.cn) same controlling Business Marketi 2017; 5 24 Internationa the 8.31 8.31 0.01% 4,000 N exchang -- Notice No.: 2017-010, shareholder and activity fee ng price May l Hotel Co., services e 2017-011, 2017-013 and ultimate 2017 Ltd. 2017-031 controller Other enterprise Juchao CHANGHO control under the 30 March Accept Spot Website(www.cninfo.com.cn) NG(HK)TR same controlling Marketi 2017; 5 25 the Sales expense 23.75 23.75 0.03% 5,000 N exchang -- Notice No.: 2017-010, ADINGLIM shareholder and ng price May services e 2017-011, 2017-013 and ITED ultimate 2017 2017-031 controller Sichuan Other enterprise Juchao Changhong control under the 30 March Accept Spot Website(www.cninfo.com.cn) Internationa same controlling Marketi 2017; 5 26 the Plane ticket 3.13 3.13 0.00% 4,000 N exchang -- Notice No.: 2017-010, l Travel shareholder and ng price May services e 2017-011, 2017-013 and Service Co., ultimate 2017 2017-031 Ltd. controller 51 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Other enterprise Sichuan Juchao control under the 30 March Changhong Accept Property fee and Spot Website(www.cninfo.com.cn) same controlling Marketi 2017; 5 27 Property the maintenance 38.62 38.62 0.04% 4,000 N exchang -- Notice No.: 2017-010, shareholder and ng price May Service Co., services cost e 2017-011, 2017-013 and ultimate 2017 Ltd. 2017-031 controller Other enterprise Juchao Sichuan control under the 30 March Accept Laboratory Spot Website(www.cninfo.com.cn) Hongwei same controlling Marketi 2017; 5 28 the technical 20.67 20.67 0.02% 5,000 N exchang -- Notice No.: 2017-010, Technology shareholder and ng price May services service fee e 2017-011, 2017-013 and Co., Ltd. ultimate 2017 2017-031 controller Other enterprise Sichuan Juchao control under the 30 March Zhiyijia Accept Spot Website(www.cninfo.com.cn) same controlling After-sale Marketi 2017; 5 29 Network the 15.59 15.59 0.02% 5,000 N exchang -- Notice No.: 2017-010, shareholder and service ng price May Technology services e 2017-011, 2017-013 and ultimate 2017 Co., Ltd. 2017-031 controller Other enterprise Juchao Lejiayi control under the 30 March Accept Spot Website(www.cninfo.com.cn) Chain same controlling Marketi 2017; 5 30 the Advertising fees 2.26 2.26 0.00% 5,000 N exchang -- Notice No.: 2017-010, Managemen shareholder and ng price May services e 2017-011, 2017-013 and t Co., Ltd. ultimate 2017 2017-031 controller Other enterprise Sichuan Juchao control under the 30 March Changhong Accept Spot Website(www.cninfo.com.cn) same controlling Communication Marketi 2017; 5 31 Network the 0.57 0.57 0.00% 5,000 N exchang -- Notice No.: 2017-010, shareholder and expenses ng price May Technology services e 2017-011, 2017-013 and ultimate 2017 Co., Ltd. 2017-031 controller 52 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Sichuan Other enterprise Changhong Juchao control under the 30 March Intelligent Accept Spot Website(www.cninfo.com.cn) same controlling Engineering Marketi 2017; 5 32 Manufacturi the 19.66 19.66 0.02% 4,000 N exchang -- Notice No.: 2017-010, shareholder and maintenance fee ng price May ng services e 2017-011, 2017-013 and ultimate 2017 Technology 2017-031 controller Co., Ltd. Other enterprise Juchao Sichuan control under the 30 March Accept Spot Website(www.cninfo.com.cn) Changhong same controlling Plastic Marketi 2017; 5 33 the 0.18 0.18 0.00% 5,000 N exchang -- Notice No.: 2017-010, Jijia Fine shareholder and processing fee ng price May services e 2017-011, 2017-013 and Co., Ltd. ultimate 2017 2017-031 controller Spot Juchao Sichuan Controlling 30 March Accept Water, exchang Website(www.cninfo.com.cn) Changhong shareholder and Marketi 2017; 5 34 fuel and electricity and 695.05 695.05 0.10% 8,000 N e, Bank -- Notice No.: 2017-010, Electric Co., ultimate ng price May power gas fees acceptan 2017-011, 2017-013 and Ltd. controller 2017 ce 2017-031 Other enterprise Juchao Guangdong control under the Water, 30 March Accept Spot Website(www.cninfo.com.cn) Changhong same controlling electricity and Marketi 2017; 5 35 fuel and 49.88 49.88 0.01% 8,000 N exchang -- Notice No.: 2017-010, Electronics shareholder and compressed air ng price May power e 2017-011, 2017-013 and Co., Ltd. ultimate cost 2017 2017-031 controller Other enterprise Juchao Sichuan control under the 30 March Accept Spot Website(www.cninfo.com.cn) Jiahong same controlling Water and Marketi 2017; 5 36 fuel and 0.48 0.48 0.00% 4,000 N exchang -- Notice No.: 2017-010, Industrial shareholder and electricity fee ng price May power e 2017-011, 2017-013 and Co., Ltd. ultimate 2017 2017-031 controller 53 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Other enterprise Sichuan Juchao control under the 30 March Changhong Accept Spot Website(www.cninfo.com.cn) same controlling Water and Marketi 2017; 5 37 Property fuel and 1.09 1.09 0.00% 4,000 N exchang -- Notice No.: 2017-010, shareholder and electricity fee ng price May Service Co., power e 2017-011, 2017-013 and ultimate 2017 Ltd. 2017-031 controller Spot Juchao Sichuan Controlling 30 March exchang Website(www.cninfo.com.cn) Changhong shareholder and Sales of Marketi 2017; 5 38 Air-conditioner 84,180.47 84,180.47 9.88% 130,000 N e, Bank -- Notice No.: 2017-010, Electric Co., ultimate goods ng price May acceptan 2017-011, 2017-013 and Ltd. controller 2017 ce 2017-031 Sichuan Juchao Changhong Controlling 30 March Spot Website(www.cninfo.com.cn) Electronics shareholder and Sales of Marketi 2017; 5 39 Food 99.47 99.47 0.01% 8,000 N exchang -- Notice No.: 2017-010, Holding ultimate goods ng price May e 2017-011, 2017-013 and Group Co., controller 2017 2017-031 Ltd. Other enterprise Bank Juchao Sichuan control under the and 30 March Outside Website(www.cninfo.com.cn) Changhong same controlling Sales of Marketi commerc 2017; 5 40 processing 3,774.84 3,774.84 0.44% 7,000 N -- Notice No.: 2017-010, Jijia Fine shareholder and goods ng price e May materials 2017-011, 2017-013 and Co., Ltd. ultimate acceptan 2017 2017-031 controller ce Other enterprise Sichuan Juchao control under the 30 March Changhong Color Bank Website(www.cninfo.com.cn) same controlling Sales of Marketi 2017; 5 41 Mold Plastic Masterbatch, 5,503.42 5,503.42 0.65% 17,000 N acceptan -- Notice No.: 2017-010, shareholder and goods ng price May Tech. Co., plastic particle ce 2017-011, 2017-013 and ultimate 2017 Ltd. 2017-031 controller 54 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Other enterprise Spot Juchao Lejiayi control under the 30 March Refrigerator, exchang Website(www.cninfo.com.cn) Chain same controlling Sales of Marketi 2017; 5 42 washing 173.06 173.06 0.02% 8,000 N e, Bank -- Notice No.: 2017-010, Managemen shareholder and goods ng price May machine acceptan 2017-011, 2017-013 and t Co., Ltd. ultimate 2017 ce 2017-031 controller Other enterprise Juchao PT.CHANG control under the 30 March Air conditioning Spot Website(www.cninfo.com.cn) HONGELE same controlling Sales of Marketi 2017; 5 43 maintenance 0.49 0.49 0.00% 8,000 N exchang -- Notice No.: 2017-010, CTRICIND shareholder and goods ng price May spare parts e 2017-011, 2017-013 and ONESIA ultimate 2017 2017-031 controller Other enterprise Juchao CHANGHO control under the 30 March Spot Website(www.cninfo.com.cn) NG(HK)TR same controlling Sales of Refrigerator, air Marketi 2017; 5 44 24,741.31 24,741.31 2.90% 45,000 N exchang -- Notice No.: 2017-010, ADINGLIM shareholder and goods conditioner ng price May e 2017-011, 2017-013 and ITED ultimate 2017 2017-031 controller Other enterprise Juchao CHANGHO control under the 30 March Spot Website(www.cninfo.com.cn) NGELECT same controlling Sales of Marketi 2017; 5 45 Refrigerator 847.30 847.30 0.10% 8,000 N exchang -- Notice No.: 2017-010, RIC(AUST shareholder and goods ng price May e 2017-011, 2017-013 and RALIA) ultimate 2017 2017-031 controller Other enterprise Juchao Sichuan control under the 30 March Spot Website(www.cninfo.com.cn) Hongwei same controlling Sales of Food, Marketi 2017; 5 46 8.95 8.95 0.00% 8,000 N exchang -- Notice No.: 2017-010, Technology shareholder and goods Air-conditioner ng price May e 2017-011, 2017-013 and Co., Ltd. ultimate 2017 2017-031 controller 55 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Other enterprise Sichuan Spot Juchao control under the 30 March Changhong exchang Website(www.cninfo.com.cn) same controlling Sales of Refrigerator, air Marketi 2017; 5 47 Minsheng 108.76 108.76 0.01% 8,000 N e, Bank -- Notice No.: 2017-010, shareholder and goods conditioner ng price May Logistics acceptan 2017-011, 2017-013 and ultimate 2017 Co., LTD ce 2017-031 controller Sichuan Other enterprise Service Spot Juchao control under the 30 March Exp. exchang Website(www.cninfo.com.cn) same controlling Sales of Maintenance Marketi 2017; 5 48 Appliance 559.66 559.66 0.07% 8,000 N e, Bank -- Notice No.: 2017-010, shareholder and goods parts ng price May Service acceptan 2017-011, 2017-013 and ultimate 2017 Chain Co., ce 2017-031 controller Ltd. Sichuan Other enterprise Juchao Changhong control under the 30 March Spot Website(www.cninfo.com.cn) Gerun same controlling Sales of Marketi 2017; 5 49 Waste materials 759.82 759.82 0.09% 8,000 N exchang -- Notice No.: 2017-010, Renewable shareholder and goods ng price May e 2017-011, 2017-013 and Resources ultimate 2017 2017-031 Co., Ltd. controller Other enterprise Juchao Hefei control under the 30 March Bank Website(www.cninfo.com.cn) Changhong same controlling Sales of Marketi 2017; 5 50 Packing box 2.11 2.11 0.00% 8,000 N acceptan -- Notice No.: 2017-010, Industrial shareholder and goods ng price May ce 2017-011, 2017-013 and Co., Ltd. ultimate 2017 2017-031 controller Other enterprise Juchao 30 March Sichuan control under the Spot Website(www.cninfo.com.cn) Sales of Marketi 2017; 5 51 Huafeng same controlling Air-conditioner 0.26 0.26 0.00% 8,000 N exchang -- Notice No.: 2017-010, goods ng price May Corp. Group shareholder and e 2017-011, 2017-013 and 2017 ultimate 2017-031 56 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 controller Spot Other enterprise exchang Sichuan Juchao control under the Refrigerator, air e, Bank 30 March Zhiyijia Website(www.cninfo.com.cn) same controlling Sales of conditioner, Marketi and 2017; 5 52 Network 98,589.85 98,589.85 11.57% 250,000 N -- Notice No.: 2017-010, shareholder and goods washing ng price commerc May Technology 2017-011, 2017-013 and ultimate machine e 2017 Co., Ltd. 2017-031 controller acceptan ce Other enterprise Juchao Sichuan control under the 30 March Spot Website(www.cninfo.com.cn) Changhong same controlling Sales of Marketi 2017; 5 53 Food 5.97 5.97 0.00% 8,000 N exchang -- Notice No.: 2017-010, Property shareholder and goods ng price May e 2017-011, 2017-013 and Co., Ltd. ultimate 2017 2017-031 controller Other enterprise Sichuan Juchao control under the 30 March Changhong Spot Website(www.cninfo.com.cn) same controlling Sales of Marketi 2017; 5 54 Network Food 8.71 8.71 0.00% 8,000 N exchang -- Notice No.: 2017-010, shareholder and goods ng price May Technology e 2017-011, 2017-013 and ultimate 2017 Co., Ltd. 2017-031 controller Sichuan Other enterprise Juchao Changhong control under the 30 March Spot Website(www.cninfo.com.cn) Intelligent same controlling Sales of Marketi 2017; 5 55 Food 0.36 0.36 0.00% 8,000 N exchang -- Notice No.: 2017-010, Health shareholder and goods ng price May e 2017-011, 2017-013 and Technology ultimate 2017 2017-031 Co., Ltd. controller 57 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Other enterprise Sichuan Juchao control under the 30 March Changhong Spot Website(www.cninfo.com.cn) same controlling Sales of Marketi 2017; 5 56 Property Air-conditioner 2.05 2.05 0.00% 8,000 N exchang -- Notice No.: 2017-010, shareholder and goods ng price May Service Co., e 2017-011, 2017-013 and ultimate 2017 Ltd. 2017-031 controller Other enterprise Juchao Sichuan control under the 30 March Spot Website(www.cninfo.com.cn) Huanyu same controlling Sales of Marketi 2017; 5 57 Food 12.10 12.10 0.00% 8,000 N exchang -- Notice No.: 2017-010, Industrial shareholder and goods ng price May e 2017-011, 2017-013 and Co. Ltd. ultimate 2017 2017-031 controller Other enterprise Sichuan Spot Juchao control under the 30 March Changhong Sheet metal exchang Website(www.cninfo.com.cn) same controlling Sales of Marketi 2017; 5 58 Xinrui parts, plastic 1.89 1.89 0.00% 8,000 N e, Bank -- Notice No.: 2017-010, shareholder and goods ng price May Technology parts etc. acceptan 2017-011, 2017-013 and ultimate 2017 Co., Ltd ce 2017-031 controller Other enterprise Juchao control under the 30 March Spot Website(www.cninfo.com.cn) OrionPDPC same controlling Sales of Marketi 2017; 5 59 Refrigerator 961.52 961.52 0.11% 8,000 N exchang -- Notice No.: 2017-010, o.,ltd shareholder and goods ng price May e 2017-011, 2017-013 and ultimate 2017 2017-031 controller Sichuan Other enterprise Juchao Changhong control under the 30 March Spot Website(www.cninfo.com.cn) Intelligent same controlling Sales of Marketi 2017; 5 60 Food 1.12 1.12 0.00% 8,000 N exchang -- Notice No.: 2017-010, Manufacturi shareholder and goods ng price May e 2017-011, 2017-013 and ng ultimate 2017 2017-031 Technology controller 58 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Co., Ltd. Mianyang Other enterprise Juchao Technology control under the 30 March Spot Website(www.cninfo.com.cn) Town Big same controlling Sales of Marketi 2017; 5 61 Food 0.29 0.29 0.00% 8,000 N exchang -- Notice No.: 2017-010, Data shareholder and goods ng price May e 2017-011, 2017-013 and Technology ultimate 2017 2017-031 Co., Ltd. controller Other enterprise Juchao BVCH control under the 30 March Spot Website(www.cninfo.com.cn) Optronics same controlling Sales of Marketi 2017; 5 62 Food 1.28 1.28 0.00% 8,000 N exchang -- Notice No.: 2017-010, (Sichuan) shareholder and goods ng price May e 2017-011, 2017-013 and Co., Ltd. ultimate 2017 2017-031 controller Other enterprise Sichuan Juchao control under the 30 March Changhong Spot Website(www.cninfo.com.cn) same controlling Sales of Marketi 2017; 5 63 Electronic Food 9.04 9.04 0.00% 8,000 N exchang -- Notice No.: 2017-010, shareholder and goods ng price May Products e 2017-011, 2017-013 and ultimate 2017 Co., Ltd. 2017-031 controller Other enterprise Sichuan Juchao control under the 30 March Changhong Spot Website(www.cninfo.com.cn) same controlling Sales of Marketi 2017; 5 64 Group Food 1.59 1.59 0.00% 8,000 N exchang -- Notice No.: 2017-010, shareholder and goods ng price May Finance Co., e 2017-011, 2017-013 and ultimate 2017 Ltd. 2017-031 controller Sichuan Other enterprise Bank 30 March Juchao Sales of Marketi 65 Changhong control under the Air-conditioner 1.76 1.76 0.00% 8,000 N acceptan -- 2017; 5 Website(www.cninfo.com.cn) goods ng price Package same controlling ce May Notice No.: 2017-010, 59 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Printing shareholder and 2017 2017-011, 2017-013 and Co., Ltd. ultimate 2017-031 controller Other enterprise Juchao Sichuan control under the 30 March Spot Website(www.cninfo.com.cn) Changhong same controlling Sales of Air-conditioner Marketi 2017; 5 66 35.17 35.17 0.00% 8,000 N exchang -- Notice No.: 2017-010, Battery Co., shareholder and goods component ng price May e 2017-011, 2017-013 and Ltd ultimate 2017 2017-031 controller Other enterprise Sichuan Juchao control under the 30 March Changhong Spot Website(www.cninfo.com.cn) same controlling Sales of Marketi 2017; 5 67 Education Air-conditioner 1.63 1.63 0.00% 8,000 N exchang -- Notice No.: 2017-010, shareholder and goods ng price May Technology e 2017-011, 2017-013 and ultimate 2017 Co., Ltd. 2017-031 controller Other enterprise Juchao control under the 30 March 081 Spot Website(www.cninfo.com.cn) same controlling Sales of Marketi 2017; 5 68 Electronic Air-conditioner 4.46 4.46 0.00% 8,000 N exchang -- Notice No.: 2017-010, shareholder and goods ng price May Group e 2017-011, 2017-013 and ultimate 2017 2017-031 controller Other enterprise Guangyuan Juchao control under the 30 March Changhong Spot Website(www.cninfo.com.cn) same controlling Sales of Marketi 2017; 5 69 Electronic Air-conditioner 39.05 39.05 0.00% 8,000 N exchang -- Notice No.: 2017-010, shareholder and goods ng price May Technology e 2017-011, 2017-013 and ultimate 2017 Co., Ltd. 2017-031 controller Sichuan Other enterprise Spot 30 March Juchao Sales of Marketi 70 Ilink control under the Air-conditioner 19.22 19.22 0.00% 8,000 N exchang -- 2017; 5 Website(www.cninfo.com.cn) goods ng price Technology same controlling e May Notice No.: 2017-010, 60 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Co., Ltd. shareholder and 2017 2017-011, 2017-013 and ultimate 2017-031 controller Other enterprise Sichuan Juchao control under the 30 March Changhong Spot Website(www.cninfo.com.cn) same controlling Sales of Marketi 2017; 5 71 Innovation Food 0.02 0.02 0.00% 8,000 N exchang -- Notice No.: 2017-010, shareholder and goods ng price May Investment e 2017-011, 2017-013 and ultimate 2017 Co., Ltd. 2017-031 controller Other enterprise Juchao Guangyuan control under the 30 March Spot Website(www.cninfo.com.cn) Hongcheng same controlling Sales of Marketi 2017; 5 72 Food 0.10 0.10 0.00% 8,000 N exchang -- Notice No.: 2017-010, Industrial shareholder and goods ng price May e 2017-011, 2017-013 and Co., Ltd. ultimate 2017 2017-031 controller Other enterprise Sichuan Juchao control under the 30 March Changhong Spot Website(www.cninfo.com.cn) same controlling Sales of Marketi 2017; 5 73 Solar Food 0.12 0.12 0.00% 8,000 N exchang -- Notice No.: 2017-010, shareholder and goods ng price May Technology e 2017-011, 2017-013 and ultimate 2017 Co., Ltd. 2017-031 controller Other enterprise Sichuan Juchao control under the 30 March Changhong Spot Website(www.cninfo.com.cn) same controlling Sales of Marketi 2017; 5 74 Electronic Food 0.42 0.42 0.00% 8,000 N exchang -- Notice No.: 2017-010, shareholder and goods ng price May Technology e 2017-011, 2017-013 and ultimate 2017 Co., Ltd. 2017-031 controller Sichuan Other enterprise Spot 30 March Juchao Sales of Marketi 75 Hongxin control under the Food 0.62 0.62 0.00% 8,000 N exchang -- 2017; 5 Website(www.cninfo.com.cn) goods ng price Software same controlling e May Notice No.: 2017-010, 61 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Co., Ltd. shareholder and 2017 2017-011, 2017-013 and ultimate 2017-031 controller Other enterprise Juchao Sichuan control under the 30 March Spot Website(www.cninfo.com.cn) Hongcheng same controlling Sales of Marketi 2017; 5 76 Food 0.75 0.75 0.00% 8,000 N exchang -- Notice No.: 2017-010, Real Estate shareholder and goods ng price May e 2017-011, 2017-013 and Co., Ltd. ultimate 2017 2017-031 controller Other enterprise Sichuan Juchao control under the 30 March Changhong Spot Website(www.cninfo.com.cn) same controlling Sales of Air-conditioner, Marketi 2017; 5 77 New Energy 64.70 64.70 0.01% 8,000 N exchang -- Notice No.: 2017-010, shareholder and goods Food ng price May Technology e 2017-011, 2017-013 and ultimate 2017 Co., Ltd. 2017-031 controller Other enterprise Sichuan Juchao control under the 30 March Changhong Spot Website(www.cninfo.com.cn) same controlling Sales of Marketi 2017; 5 78 Electronic Food 3.23 3.23 0.00% 8,000 N exchang -- Notice No.: 2017-010, shareholder and goods ng price May System Co., e 2017-011, 2017-013 and ultimate 2017 Ltd. 2017-031 controller Sichuan Other enterprise Juchao Changhong control under the 30 March Spot Website(www.cninfo.com.cn) Precision same controlling Sales of Marketi 2017; 5 79 Food 8.86 8.86 0.00% 8,000 N exchang -- Notice No.: 2017-010, Electronics shareholder and goods ng price May e 2017-011, 2017-013 and Tech. Co., ultimate 2017 2017-031 Ltd. controller Changhong Other enterprise Spot 30 March Juchao Sales of Marketi 80 Internationa control under the Food 0.05 0.05 0.00% 15,000 N exchang -- 2017; 5 Website(www.cninfo.com.cn) goods ng price l Holdings same controlling e May Notice No.: 2017-010, 62 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 (H.K.) shareholder and 2017 2017-011, 2017-013 and Limited ultimate 2017-031 controller Other enterprise Juchao Guangdong control under the Providi 30 March Spot Website(www.cninfo.com.cn) Changhong same controlling ng fuel Water and Marketi 2017; 5 81 5.17 5.17 0.00% 8,000 N exchang -- Notice No.: 2017-010, Electronics shareholder and and electricity fee ng price May e 2017-011, 2017-013 and Co., Ltd. ultimate power 2017 2017-031 controller Other enterprise Sichuan Spot Juchao control under the Providi 30 March Changhong exchang Website(www.cninfo.com.cn) same controlling ng fuel Water and Marketi 2017; 5 82 Minsheng 1.08 1.08 0.00% 8,000 N e, Bank -- Notice No.: 2017-010, shareholder and and electricity fee ng price May Logistics acceptan 2017-011, 2017-013 and ultimate power 2017 Co., LTD ce 2017-031 controller Other enterprise Juchao Sichuan control under the Providi 30 March Spot Website(www.cninfo.com.cn) Hongwei same controlling ng fuel Water and Marketi 2017; 5 83 0.01 0.01 0.00% 8,000 N exchang -- Notice No.: 2017-010, Technology shareholder and and electricity fee ng price May e 2017-011, 2017-013 and Co., Ltd. ultimate power 2017 2017-031 controller Other enterprise Sichuan Juchao control under the Providi 30 March Changhong Bank Website(www.cninfo.com.cn) same controlling ng fuel Water and Marketi 2017; 5 84 Device 33.34 33.34 0.00% 8,000 N acceptan -- Notice No.: 2017-010, shareholder and and electricity fee ng price May Technology ce 2017-011, 2017-013 and ultimate power 2017 Co., Ltd. 2017-031 controller Sichuan Other enterprise Providi Bank 30 March Juchao Water and Marketi 85 Changhong control under the ng fuel 1.38 1.38 0.00% 8,000 N acceptan -- 2017; 5 Website(www.cninfo.com.cn) electricity fee ng price Jijia Fine same controlling and ce May Notice No.: 2017-010, 63 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Co., Ltd. shareholder and power 2017 2017-011, 2017-013 and ultimate 2017-031 controller Other enterprise Sichuan Juchao control under the Providi 30 March Changhong Bank Website(www.cninfo.com.cn) same controlling ng fuel Water and Marketi 2017; 5 86 Mold Plastic 203.04 203.04 0.02% 8,000 N acceptan -- Notice No.: 2017-010, shareholder and and electricity fee ng price May Tech. Co., ce 2017-011, 2017-013 and ultimate power 2017 Ltd. 2017-031 controller Other enterprise Juchao Hefei control under the Providi 30 March Spot Website(www.cninfo.com.cn) Changhong same controlling ng fuel Water and Marketi 2017; 5 87 0.97 0.97 0.00% 8,000 N exchang -- Notice No.: 2017-010, Industrial shareholder and and electricity fee ng price May e 2017-011, 2017-013 and Co., Ltd. ultimate power 2017 2017-031 controller Sichuan Other enterprise Juchao Changhong control under the Providi 30 March Spot Website(www.cninfo.com.cn) Precision same controlling ng fuel Water and Marketi 2017; 5 88 0.2 0.2 0.00% 8,000 N exchang -- Notice No.: 2017-010, Electronics shareholder and and electricity fee ng price May e 2017-011, 2017-013 and Tech. Co., ultimate power 2017 2017-031 Ltd. controller Sichuan Other enterprise Service Juchao control under the Providi 30 March Exp. Spot Website(www.cninfo.com.cn) same controlling ng fuel Water and Marketi 2017; 5 89 Appliance 0.23 0.23 0.00% 8,000 N exchang -- Notice No.: 2017-010, shareholder and and electricity fee ng price May Service e 2017-011, 2017-013 and ultimate power 2017 Chain Co., 2017-031 controller Ltd. 64 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Other enterprise Juchao Sichuan control under the Rent to 30 March Bank Website(www.cninfo.com.cn) Changhong same controlling the Plants, Marketi 2017; 5 90 26.07 26.07 0.35% 5,000 N acceptan -- Notice No.: 2017-010, Jijia Fine shareholder and related travelling crane ng price May ce 2017-011, 2017-013 and Co., Ltd. ultimate party 2017 2017-031 controller Other enterprise Sichuan Juchao control under the Rent to Plants, 30 March Changhong Bank Website(www.cninfo.com.cn) same controlling the apartment, Marketi 2017; 5 91 Mold Plastic 111.74 111.74 1.48% 5,000 N acceptan -- Notice No.: 2017-010, shareholder and related equipment ng price May Tech. Co., ce 2017-011, 2017-013 and ultimate party machinery 2017 Ltd. 2017-031 controller Other enterprise Sichuan Spot Juchao control under the Rent to Part of the 30 March Changhong exchang Website(www.cninfo.com.cn) same controlling the office rental, Marketi 2017; 5 92 Minsheng 52.47 52.47 0.70% 5,000 N e, Bank -- Notice No.: 2017-010, shareholder and related warehousing ng price May Logistics acceptan 2017-011, 2017-013 and ultimate party lease 2017 Co., LTD ce 2017-031 controller Sichuan Other enterprise Service Juchao control under the Rent to 30 March Exp. Spot Website(www.cninfo.com.cn) same controlling the Marketi 2017; 5 93 Appliance Apartment 10.65 10.65 0.14% 5,000 N exchang -- Notice No.: 2017-010, shareholder and related ng price May Service e 2017-011, 2017-013 and ultimate party 2017 Chain Co., 2017-031 controller Ltd. Sichuan Other enterprise Spot Juchao Rent to 30 March Changhong control under the exchang Website(www.cninfo.com.cn) the Warehousing Marketi 2017; 5 94 Xinrui same controlling 1.69 1.69 0.02% 8,000 N e, Bank -- Notice No.: 2017-010, related leasing, forklift ng price May Technology shareholder and acceptan 2017-011, 2017-013 and party 2017 Co., Ltd ultimate ce 2017-031 65 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 controller Other enterprise Juchao Hefei control under the Rent to 30 March Spot Website(www.cninfo.com.cn) Changhong same controlling the Marketi 2017; 5 95 Apartment 8.77 8.77 0.12% 5,000 N exchang -- Notice No.: 2017-010, Industrial shareholder and related ng price May e 2017-011, 2017-013 and Co., Ltd. ultimate party 2017 2017-031 controller Sichuan Other enterprise Juchao Changhong control under the Rent to 30 March Bank Website(www.cninfo.com.cn) Precision same controlling the Marketi 2017; 5 96 Apartment 1.57 1.57 0.02% 5,000 N acceptan -- Notice No.: 2017-010, Electronics shareholder and related ng price May ce 2017-011, 2017-013 and Tech. Co., ultimate party 2017 2017-031 Ltd. controller Other enterprise Juchao BVCH control under the Rent to 30 March Spot Website(www.cninfo.com.cn) Optronics same controlling the Marketi 2017; 5 97 Freight elevator 5.25 5.25 0.07% 5,000 N exchang -- Notice No.: 2017-010, (Sichuan) shareholder and related ng price May e 2017-011, 2017-013 and Co., Ltd. ultimate party 2017 2017-031 controller Other enterprise Juchao Guangdong control under the Rent to 30 March Spot Website(www.cninfo.com.cn) Changhong same controlling the Part of the Marketi 2017; 5 98 5.96 5.96 0.08% 5,000 N exchang -- Notice No.: 2017-010, Electronics shareholder and related office rental ng price May e 2017-011, 2017-013 and Co., Ltd. ultimate party 2017 2017-031 controller Sichuan Other enterprise Rent to Spot 30 March Juchao Marketi 99 Changhong control under the the Plant 46.35 46.35 0.62% 5,000 N exchang -- 2017; 5 Website(www.cninfo.com.cn) ng price Device same controlling related e May Notice No.: 2017-010, 66 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Technology shareholder and party 2017 2017-011, 2017-013 and Co., Ltd. ultimate 2017-031 controller Other enterprise Juchao Sichuan control under the Rent to 30 March Spot Website(www.cninfo.com.cn) Hongwei same controlling the Marketi 2017; 5 100 Plant 3.52 3.52 0.05% 5,000 N exchang -- Notice No.: 2017-010, Technology shareholder and related ng price May e 2017-011, 2017-013 and Co., Ltd. ultimate party 2017 2017-031 controller Sichuan Rent Juchao Changhong Controlling 30 March from Spot Website(www.cninfo.com.cn) Electronics shareholder and Marketi 2017; 5 101 the Shops 3.66 3.66 0.05% 4,000 N exchang -- Notice No.: 2017-010, Holding ultimate ng price May related e 2017-011, 2017-013 and Group Co., controller 2017 party 2017-031 Ltd. Other enterprise Sichuan Rent Juchao control under the 30 March Changhong from Spot Website(www.cninfo.com.cn) same controlling Marketi 2017; 5 102 Property the Plant and office 92.15 92.15 1.22% 4,000 N exchang -- Notice No.: 2017-010, shareholder and ng price May Service Co., related e 2017-011, 2017-013 and ultimate 2017 Ltd. party 2017-031 controller Other enterprise Rent Juchao Guangdong control under the 30 March from Spot Website(www.cninfo.com.cn) Changhong same controlling The staff Marketi 2017; 5 103 the 3.57 3.57 0.05% 5,000 N exchang -- Notice No.: 2017-010, Electronics shareholder and dormitory ng price May related e 2017-011, 2017-013 and Co., Ltd. ultimate 2017 party 2017-031 controller Chengdu Other enterprise Rent Spot 30 March Juchao Marketi 104 Changhong control under the from Office 16.48 16.48 0.22% 5,000 N exchang -- 2017; Website(www.cninfo.com.cn) ng price Electronic same controlling the e 5 May Notice No.: 2017-010, 67 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Technology shareholder and related 2017 2017-011, 2017-013 and Co., Ltd. ultimate party 2017-031 controller Rent Spot Juchao Sichuan Controlling 30 March from exchang Website(www.cninfo.com.cn) Changhong shareholder and Marketi 2017; 5 105 the Plant and office 59.45 59.45 0.79% 5,000 N e, Bank -- Notice No.: 2017-010, Electric Co., ultimate ng price May related acceptan 2017-011, 2017-013 and Ltd. controller 2017 party ce 2017-031 Spot Juchao Sichuan Controlling Purchas 30 March exchang Website(www.cninfo.com.cn) Changhong shareholder and ing Information Marketi 2017; 5 106 2.50 2.50 0.02% 5,000 N e, Bank -- Notice No.: 2017-010, Electric Co., ultimate fixed system ng price May acceptan 2017-011, 2017-013 and Ltd. controller assets 2017 ce 2017-031 Sichuan Other enterprise Changhong Spot Juchao control under the Purchas 30 March Intelligent exchang Website(www.cninfo.com.cn) same controlling ing Reform of Marketi 2017; 5 107 Manufacturi 1,362.92 1,362.92 10.51% 4,000 N e, Bank -- Notice No.: 2017-010, shareholder and fixed production line ng price May ng acceptan 2017-011, 2017-013 and ultimate assets 2017 Technology ce 2017-031 controller Co., Ltd. Other enterprise Juchao Sichuan control under the Purchas 30 March Spot Website(www.cninfo.com.cn) Hongxin same controlling ing Information Marketi 2017; 5 108 189.55 189.55 1.46% 5,000 N exchang -- Notice No.: 2017-010, Software shareholder and fixed system etc. ng price May e 2017-011, 2017-013 and Co., Ltd. ultimate assets 2017 2017-031 controller Sichuan Other enterprise Purchas 30 March Juchao Spot Hongcheng control under the ing Plant Marketi 2017; 5 Website(www.cninfo.com.cn) 109 368.89 368.89 2.84% 4,000 N exchang -- Constructio same controlling fixed construction ng price May Notice No.: 2017-010, e n shareholder and assets 2017 2017-011, 2017-013 and 68 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Engineering ultimate 2017-031 Co., Ltd. controller Other enterprise Juchao Sichuan control under the Purchas 30 March Spot Website(www.cninfo.com.cn) Hongcheng same controlling ing Plant Marketi 2017; 5 110 50.94 50.94 0.39% 4,000 N exchang -- Notice No.: 2017-010, Real Estate shareholder and fixed construction ng price May e 2017-011, 2017-013 and Co., Ltd. ultimate assets 2017 2017-031 controller Total -- - 363,840.31 - - - -- -- -- -- Detail of sales return with major amount involved -- 1. It is estimated that the related transaction amount resulted by purchasing goods (including door shell and plastic products etc.) and accepting fuel and power from Sichuan Changhong and its subsidiary by the Company for year of 2017 was RMB 1250 million at most (tax-excluded), actually RMB 784,042,600 occurred in reporting period. 2. It is estimated that the related transaction amount resulted by purchasing goods (including compressor purchased etc.) from Huayi Compressor and its subsidiary by the Company for year of 2017 was RMB 600 million at most (tax-excluded), actually RMB 229,544,600 occurred in reporting period. 3. It is estimated that the related transaction amount resulted by purchasing or selling equipment, software, maintenance and spare parts and molds etc. from Sichuan Changhong and its subsidiary by the Company for year of 2017 was RMB 50 million at most (tax-excluded), actually RMB Report the actual implementation of the daily related transactions which 1,920,500 occurred in reporting period were projected about their total amount by types during the reporting 4. It is estimated that the related transaction amount resulted by purchasing goods from and providing fuel and power to Sichuan Changhong and period (if applicable) its subsidiary by the Company for year of 2017 was RMB 4720 million at most (tax-excluded), actually RMB 2,198,890,100 occurred in reporting period 5. It is estimated that the related transaction amount resulted by purchasing compressed air, accepting energy, power and service from Huayi Compressor and its subsidiary by the Company for year of 2017 was RMB 650,000 at most (tax-excluded), actually RMB 0 occurred in reporting period 6. It is estimated that the related transaction amount resulted by leasing business from Sichuan Changhong and its subsidiary by the Company for year of 2017 was RMB 50 million at most (tax-excluded), actually RMB 3,518,500 occurred in reporting period 7. It is estimated that the related transaction amount from domestic finished goods logistic business outsourcing and transportation, storage, loading and unloading to Sichuan Changhong Minsheng Logistic Co., Ltd. by the Company for year of 2017 was RMB 550 million at most (tax-excluded), 69 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 actually RMB 251,485,000 occurred in reporting period 8. It is estimated that the related transaction amount from after sales service of domestic goods outsourcing to Sichuan Service Exp. Appliance Service Chain Co., Ltd. by the Company for year of 2017 was RMB 200 million at most (tax-excluded), actually RMB 73,918,900 occurred in reporting period. 9. It is estimated that the related transaction amount resulted by accepting other service and labor service etc. or providing other service and labor service etc. to Sichuan Changhong and its subsidiary by the Company for year of 2017 was RMB 50 million at most (tax-excluded), actually RMB 9,735,800 occurred in reporting period 10. It is estimated that the related transaction amount resulted by selling goods from Sichuan Changhong Electronics Holding Group and its subsidiary by the Company for year of 2017 was RMB 80 million at most (tax-excluded), actually RMB 8,939,500 occurred in reporting period. 11. It is estimated that the related transaction amount resulted by purchasing goods and receiving labor services, fuel power, leasing and purchasing equipment etc. from Sichuan Changhong Electronics Group and its subsidiary by the Company for year of 2017 was RMB 110 million at most (tax-excluded), actually RMB 76,407,600 occurred in reporting period. Reasons for major differences between trading price and market Not applicable reference price 70 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 (2) Related transactions with Changhong Finance Company The resolution of the 18th meeting of the 8th Board of Directors and the 1st Extraordinary Shareholders' General Meeting of 2016 that the company held on March 18, 2016, April 16, 2016 approved and agreed the company to continue carry out the financial service cooperation with Sichuan Changhong Group Finance Co., Ltd. (hereinafter referred to as ―Changhong Finance Company‖) and sign a triennial Financial Service Agreement. In accordance with the agreement, Changhong Finance Company shall provide a series of financial services such as deposit and loan in its business scope according to the requirements of the Company and its subsidiaries. The related transactions between the company and its subsidiaries and Changhong Finance Company from the beginning of the year to the end of the reporting period are as follows: As of June 30, 2017, the Company and its subsidiaries have carried out deposit, opening of bills and notes discounted businesses with Changhong Finance Company. The Company and its subsidiaries had balances of deposits of RMB 1,905,236,221.16 in Changhong Finance Company, accounting for 29.05% of the balance of deposits absorbed by Changhong Finance Company, which was less than 30%, the balance of notes was RMB 1,179,397,608.68 and the notes discounted balance was RMB1,315,380,817.24. Details are as follows: In RMB/CNY Interest and Balance at Item Increase in the year Decrease in the year Ending balance commission charge year-begin received or paid I. Savings in Changhong Group 1,908,842,163.20 10,826,995,162.70 10,830,601,104.74 1,905,236,221.16 15,976,164.79 Finance Company II. Borrowings from Changhong - Group Finance Company 1.Short-term loans - - - - - 2.Long-term loans - - - - - III. Other financial - business 1.notes drawing 544,374,441.19 1,238,581,673.56 603,558,506.07 1,179,397,608.68 283,104.31 2.notes discounted 565,252,574.29 1,231,248,889.55 481,120,646.60 1,315,380,817.24 11,944,312.93 71 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 According to the regulation of Information Disclosure Business Memorandum No. 2 - Transactions and Related Transactions of the Shenzhen Stock Exchange, the company issued the Risk Continuous Assessment Report About Sichuan Changhong Group Finance Co., Ltd. for the deposit, loan and other financial services that the company carried out with Changhong Finance Company during the reporting period, and disclosed at www.cninfo.com.cn on August 10, 2017. 2. Related transactions by assets acquisition and sold □ Applicable √ Not applicable There are no related transactions by assets acquisition and sold in the period 3. Material related transaction of jointly foreign investment □ Applicable √ Not applicable The Company has no material related transaction of jointly foreign investment occurred in reporting period-end. 4. Connect of related liability and debt √ Applicable □ Not applicable Whether has non-operational contact of related liability and debts or not □ Yes √No No non-operational contact of related liability or debts in Period 5. Other related transactions □ Applicable √ Not applicable Nil XIII. Non-business capital occupying by controlling shareholders and its related parties □ Applicable √ Not applicable No non-business capital occupied by controlling shareholders and its related parties in Period. XIV. Significant contract and implementations 1. Entrust, contract and leasing (1) Entrust □ Applicable √ Not applicable No entrust in Period. 72 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 (2) Contract □ Applicable √ Not applicable No contract in Period. (3) Leasing √ Applicable □ Not applicable Operational leasing of the Company please found more details in ―investment real estate‖, ―fixed assets‖, ―Lease of related party‖ and ―Rent of related party‖ in Note of Financial Statement. Gains/losses to the Company from projects that reached over 10% in total profit of the Company in reporting period □ Applicable √ Not applicable No gains or losses to the Company from projects that reached over 10% in total profit of the Company in reporting period. 2. Material guarantee √ Applicable □ Not applicable (1) Guarantee During the reporting period, the guarantees that the company provides for its wholly-owned and holding subsidiaries are for the loans generated by supporting their production and operation, the guaranty type is assurance; the guarantees that the company and subsidiaries provide for the distributors are to provide joint liability guarantees for the high quality distributors conforming to certain conditions within the line of credit of designated banks, the E-bank acceptance bills opened under this line of credit are all used for the distributors to pay the purchase payment for goods to the Company and subsidiaries, aiming to promote the company’s channel business development, strengthen the good cooperative relationship between the company and the downstream distributors, and effectively stimulate the company and its subsidiaries’ sales growth. Up to June 30, 2017, the company has granted credit to the guarantees of some wholly-owned and holding subsidiaries, in addition to the wholly-owned subsidiary Changhong Air-conditioner, other subsidiaries have actual guarantee; meanwhile, the company and its subsidiaries have granted credit to the guarantees of some high quality distributors, the balance of guarantees is within the line of credit. The external guarantees of the Company and subsidiaries are as follows: In 10 thousand Yuan Particulars about the external guarantee of the Company (Barring the guarantee for subsidiaries) Name of the Related Announcement Guarantee Actual date of Actual Guarant Complete Guarantee Guarantee type Company disclosure date limit happening (Date of guarantee ee term implement for related 73 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 guaranteed signing agreement) limit ation or party not Notice No.: 2015-038,No.: 2015-040 and No.: 2015-064 on 29 August 2015 and 23 Dealer of Hefei Joint liability One December 2015 20,000 29 Sept. 2016 1,229.81 N N Meiling Co., Ltd. guaranty year Notice No.: 2016-068, 2016-072, 2016-077 on 26 Nov. 2016 and 14 Dec.: Notice No.: 2015-038,No.: 2015-040 and No.: 2015-064 on 29 Dealer of Sichuan August 2015 and 23 Changhong Joint liability One December 2015 20,000 14 Oct. 2016 583.04 N N Air-conditioner guaranty year Notice No.: 2016-068, Co., Ltd. 2016-072, 2016-077 on 26 Nov. 2016 and 14 Dec. Total actual occurred external Total approving external guarantee in report 0 guarantee in report period 1,812.85 period (A1) (A2) Total actual balance of Total approved external guarantee at the end 40,000 external guarantee at the end 533.16 of report period ( A3) of report period (A4) Guarantee between the Company and the subsidiaries Complete Name of the Actual date of Actual Guarantee Related Announcement Guarantee Guarant implement Company happening (Date of guarantee Guarantee type for related disclosure date limit ee term ation or guaranteed signing agreement) limit party not Notice No.: 2015-003, 55,000 17,000 Joint liability One 2015-007, 2015-015 on 30 Dec. 2015 Y N (note 2) guaranty year 26 Mar. 2015 and 18 Apr. Joint liability One Notice No.: 2016-027, 5 Aug. 2016 5,000 N N guaranty year 2016-031, 2016-046 on 56,500 Zhongshan Joint liability One Changhong 25 Mar. 2016 and 5 May 28 Oct. 2016 5,000 N N guaranty year Electric Co., LTD Joint liability One 24 Feb. 2017 6,000 N N 30 March 2017; 5 May guaranty year 2017 ; Notice No.: 70,000 Joint liability One 2017-010, 2017-014, 22 Jan. 2017 5,500 N N guaranty year 2017-031 1 Mar. 2017 20,000 Joint liability One N N 74 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 guaranty year Joint liability One 23 Jun. 2017 10,000 N N guaranty year Joint liability One Notice No.: 2016-027, 5 May 2016 4,500 N N guaranty year 2016-031, 2016-046 on 8,500 Guangdong Joint liability One 25 Mar. 2016 and 5 May 1 Sept. 2016 2,000 N N Changhong Ridian guaranty year Technology Co., 30 March 2017; 5 May Ltd. 2017; Notice No.: Joint liability One 10,500 13 Jun. 2017 2,000 N N 2017-010, 2017-014, guaranty year 2017-031 Zhongke Meiling 30 March 2017; 5 May Joint liability One 16 Feb. 2017 2,000 N N Cryogenic 2017; Notice No.: guaranty year 6,000 Technology Co., 2017-010, 2017-014, Joint liability One 23 Jun. 2017 1,000 N N Ltd. 2017-031 guaranty year Sichuan 30 March 2017; 5 May Changhong 2017; Notice No.: 30,000 - - - - - - Air-conditioner 2017-010, 2017-014, Co., Ltd. 2017-031 Total amount of actual Total amount of approving guarantee for occurred guarantee for 116,500 63,000 subsidiaries in report period (B1) subsidiaries in report period (B2) Total balance of actual Total amount of approved guarantee for guarantee for subsidiaries at subsidiaries at the end of reporting period 181,500 63,000 the end of reporting period (B3) (B4) Guarantee of the subsidiaries for the subsidiaries Complete Name of the Actual date of Actual Guarantee Related Announcement Guarantee Guarant implement Company happening (Date of guarantee Guarantee type for related disclosure date limit ee term ation or guaranteed signing agreement) limit party not -- -- -- -- -- -- -- -- -- Total amount of actual Total amount of approving guarantee for occurred guarantee for -- -- subsidiaries in report period (C1) subsidiaries in report period (C2) Total balance of actual Total amount of approved guarantee for guarantee for subsidiaries at subsidiaries at the end of reporting period -- -- the end of reporting period (C3) (C4) 75 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Total amount of guarantee of the Company( total of three abovementioned guarantee) Total amount of actual Total amount of approving guarantee in report 116,500 occurred guarantee in report 64,812.85 period (A1+B1+C1) period (A2+B2+C2) Total balance of actual Total amount of approved guarantee at the 221,500 guarantee at the end of report 63,533.16 end of report period (A3+B3+C3) period (A4+B4+C4) Ratio of actual guarantee (A4+B4+C4) in net assets of the Company 12.41% Including: Amount of guarantee for shareholders, actual controller and its related parties(D) 0 The debts guarantee amount provided for the guaranteed parties whose 51,500 assets-liability ratio exceed 70% directly or indirectly(E) Proportion of total amount of guarantee in net assets of the Company exceed 0 50%(F) Total amount of the aforesaid three guarantees(D+E+F) 51,500 Explanations on possibly bearing joint and several liquidating responsibilities for N/A undue guarantees (if applicable) Explanations on external guarantee against regulated procedures (if applicable) N/A The above guarantees are all wholly-owned and holding subsidiaries of the Company. Production and operation of these wholly-owned and holding subsidiaries was normal with no overdue unpaid loans and guarantee risk is controllable. During the reporting period, the highest level of security the Company provided amounted to 1165 million Yuan by the approval, the actual amount of guarantee is 630 million Yuan. The highest level of security the Company and subsidiaries provided outside amounted to 400 million Yuan by the approval, the actual amount of guarantee is 18.1285 million Yuan. At the end of the reporting period, the practical guarantee balance amounted to 635.3316 million Yuan, accounting for the Company’s latest net assets ratio of 12.41%. Explanation on guarantee with composite way: Nil (2) Guarantee outside against the regulation □Applicable √Not applicable No guarantee outside against the regulation in Period. 4. Other material contracts √Applicable □Not applicable (1)On 21 March 2017, the Company signed the Strategic Cooperation Framework Agreement (hereinafter referred to as Cooperation Agreement) with Italy Candy Hoover Group S.r.l. and Candy S.p.A.(together named as Candy Group). Both parties followed the principles of strategic 76 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 win-win and giving full play to the synergistic effects of products and resources, and planned to establish strategic partnership in refrigerator (freezer), washing machine business areas by friendly negotiation, expand market together, promote brands, and maximize the commercial value and social value. See details on ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that the company disclosed in the form of announcement (Announcement No. 2017-007) on March 21, 2017. (2)The resolution of the 29th meeting of the company’s 8th Board of Directors approved and agreed the subsidiary Hefei Meiling Nonferrous Metal Products Co., Ltd. (hereinafter referred to as ―Meiling Nonferrous Metal‖) to cooperate with Hefei Vanke Real Estate Co., Ltd. (hereinafter referred to as ―Hefei Vanke Real Estate‖) for a land parcel (land area of 34.68 acres, land status is industrial land, land certificate No. is DGY2014 No.4119) which is located at Liaoyuan Road East, Feidong County, Hefei City and held by Meiling Nonferrous Metal, and both parties shall sign the Project Cooperation Contract for the Land of Feidong County Meiling Nonferrous Metal Company. Meiling Nonferrous Metal shall invest this industrial land as capital and Hefei Vanke Real Estate shall invest in cash to establish a project company, the ratio of investments of both parties are respectively 99% and 1%, once the project company obtains the approval (no objection in the publicity period ) for the upgrading and reconstruction of this project from Hefei Feidong Land Management Committee and signs the supplemental agreement about state-owned land transfer contract with Feidong Land and Resources Bureau, Meiling Nonferrous Metal shall transfer 99% stock rights of the project company to Hefei Vanke Real Estate, and the transfer price is about RMB 48.65 million. See details on ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that the company disclosed in the form of announcement (Announcement No. 2017-010, No.2017-018) on March 30, 2017. XV. Explanation on other significant events 1. Fulfill the precise social responsibility for poverty alleviation The Company has no precise social responsibility for poverty alleviation in the period and has no follow-up plan either 2. Major environment protection The listed Company and its subsidiary whether belongs to the key sewage units released from environmental protection department: Nil XVI. Explanation on other significant events √ Applicable □ Not applicable (i) On February 27, 2017, the company received a written notice from the controlling shareholder Sichuan Changhong Electric Co., Ltd. (hereinafter referred to as ―Sichuan 77 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Changhong‖), Sichuan Changhong is intended to take part of A share of the Company and the its fruits (including capital reserve into equity, stock dividend, bonus shares, dividends, etc.) as the subject for non-public offering of exchangeable bonds. See details on ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that the company disclosed in the form of announcement (Announcement No. 2017-004) on February 28, 2017. (ii) The resolution of the 29th meeting of the company’s 8th Board of Directors and the 2016 Annual General Meeting of Shareholders approved and agreed the subsidiaries to carry out the forward exchange fund transaction business from July 1, 2017 to June 30, 2018, the business transaction balance should not exceed USD 550 million, the single business delivery period should be no longer than 1 year. See details on ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that the company disclosed in the form of announcement (Announcement No. 2017-010, No. 2017-017, No. 2017-031) on March 30, 2017 and May 5, 2017. (iii) The resolution of the 29th meeting of the company’s 8th Board of Directors approved and agreed the company to apply for bank note pool special credit line of maximum RMB 300 million to China Merchants Bank Co., Ltd. Hefei Branch, the credit time limit was one year, and the credit variety was mainly used in bank note pool special business by adopting endorsement for bill pledge. See details on ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that the company disclosed in the form of announcement (Announcement No. 2017-010, No. 2017-019) on March 30, 2017. (iv) On March 28 and May 4, 2017, the resolution of the 29th meeting of the company’s 8th Board of Directors, the 15th meeting of the 8th Board of Supervisors and the 2016 Annual General Meeting of Shareholders approved the Company’s 2016 Annual Profit Allocation Plan, at the same time, the company’s independent directors made independent recognition opinions on the plan, considering the interests of shareholders and company's long-term development needs, agreed the company to take the total capital of 1,044,597,881 shares up to December 31, 2016 as the base and distribute cash dividend of RMB 0.6 (including tax) per 10 shares to all shareholders, totally distribute cash dividend of RMB 62,675,872.86 (including tax, cash bonus accounts for 29.06% of the profits available for distribution that the parent company achieves in the current year). After the distribution, the total share capital of the company remained unchanged, the remaining accumulated undistributed profit of the parent company was RMB 893,663,321.15, and the remaining undistributed profit was carried forward to the afterwards year for distribution. On May 27, 2017, the company disclosed the 2016 annual profit distribution plan implementation announcement, implemented the above-mentioned profit distribution plan. See details on ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that the company disclosed in the form of announcement (Announcement No. 2017-010, No. 2017-031, No.2017-033) on March 30, May 4, and May 27, 2017. 78 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 (v) During the reporting period, the company received the Notice of Acceptance of Registration (ZSXZ No. [2017]SCP212) issued by National Association of Financial Market Institutional Investors (hereinafter referred to as the ―Investor Association‖), the Investor Association accepted the company’s registration for super short-term financing bond. See details on ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that the company disclosed in the form of announcement (Announcement No. 2016-068, No. 2016-073, No. 2016-077, No. 2017-046) on November 26, 2016, December 14, 2016, and July 13, 2017. (vi) On May 25, 2017, the company received the Letter About Increasing the Holding of Circulating Shares of Meiling from the controlling shareholder Sichuan Changhong Electric Co., Ltd. (hereinafter referred to as ―Sichuan Changhong‖), Sichuan Changhong and its persons acting in concert planed to increase the holding of the Company’s issued circulating shares through secondary market, the ratio of increased holding of shares didn’t exceed 1% of the Company’s general capital. See details on ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that the company disclosed in the form of announcement (Announcement No. 2017-032) on May 26, 2017. During the reporting period, Sichuan Changhong and its persons acting in concert Changhong (Hong Kong) Trading Co., Ltd. Have directly and indirectly increased the holding of the Company’s circulating B-shares of 2,299,574 shares through the secondary market, accounting for 0.22% of the Company’s general capital. As of June 30, 2017, Changhong (Hong Kong) Trading Co., Ltd. totally held the Company’s B-shares of 27,465,397 shares, accounting for 2.63% of the Company’s general capital. XVII. Major event of the subsidiary √ Applicable □ Not applicable (i) The resolution of the 28th meeting of the company’s 8th Board of Directors approved and agreed the company’s subsidiary Jiangxi Meiling Electric Appliance Co., Ltd. (Hereinafter referred to as ―Jiangxi Meiling‖) to invest RMB206.60 million to build one million environmental and energy saving refrigerator intelligent production line project. At the same time, in order to ensure the smooth implementation of this investment and construction projects, agreed the company to increase capital of RMB 200 million to Jiangxi Meiling for the project investment. See details on ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that the company disclosed in the form of announcement (Announcement No. 2017-006) on March 14, 2017. (ii) The resolution of the 28th meeting of the company’s 8th Board of Directors approved and agreed the company’s subsidiary Zhongshan Changhong Electric Co., Ltd. (Hereinafter referred to as ―Zhongshan Changhong‖) to jointly establish Zhongshan Hongyou Heating and Ventilation Equipment Co., Ltd. (Tentative name, and ultimately subject to the name approved by the 79 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 industrial and commercial bureau) with Zhuhai Samyou Environmental Technology Co., Ltd. (Hereinafter referred to as ―Samyou Environmental‖) that has superior resources of R & D, technology, channels and overseas customers in the industry, with registered capital of RMB 40 million, of which Zhongshan Changhong invested RMB 24 million of its owned funds, while Samyou Environmental invested RMB 16 million of its owned funds. See details on ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that the company disclosed in the form of announcement (Announcement No. 2017-006) on March 14, 2017. (iii) The resolution of the 29th meeting of the company’s 8th Board of Directors approved and agreed the company to co-invest and establish Meiling Candy Washing Machine Co., Ltd. with Candy Hoover Group S.r.l. (Hereinafter referred to as ―Candy Group‖) with registered capital of RMB150 million, of which the company invested RMB 90 million in cash and Candy Group invested RMB 60 million in cash. See details on ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that the company disclosed in the form of announcement (Announcement No. 2017-010) on March 30, 2017. 80 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Section VI. Changes in Shares and Particulars about Shareholders I. Changes in Share Capital (I) Changes in Share Capital In Share Before the Change Increase/Decrease in the Change (+, -) After the Change Bon Capitaliz New Proporti us ation of Proporti Amount shares Others Subtotal Amount on shar public on issued es reserve I. Restricted shares 290,301,746 27.79% 0 0 0 155,625 155,625 290,457,371 27.81% 1. State-owned shares 0 0.00% 0 0 0 0 0 0 0.00% 2. State-owned legal 70,793,625 6.78% 0 0 0 0 0 70,793,625 6.78% person’s shares 3. Other domestic shares 218,508,272 20.92% 0 0 0 155,625 155,625 218,663,897 20.94% Including: Domestic legal 215,820,073 20.66% 0 0 0 -122,958 -122,958 215,697,115 20.65% person’s shares Domestic natural person’s 2,688,199 0.26% 0 0 0 278,583 278,583 2,966,782 0.29% shares 4. Foreign shares 999,849 0.09% 0 0 0 0 0 999,849 0.09% Including: Foreign legal 0 0.00% 0 0 0 0 0 0 0.00% person’s shares Foreign natural person’s 999,849 0.09% 0 0 0 0 0 999,849 0.09% shares II. Unrestricted shares 754,296,135 72.21% 0 0 0 -155,625 -155,625 754,140,510 72.19% 1. RMB Ordinary shares 592,431,984 56.71% 0 0 0 -155,625 -155,625 592,276,359 56.69% 2. Domestically listed 161,864,151 15.50% 0 0 0 0 0 161,864,151 15.50% foreign shares 3. Overseas listed foreign 0 0.00% 0 0 0 0 0 0 0.00% shares 4. Others 0 0.00% 0 0 0 0 0 0 0.00% 100.00 III. Total shares 1,044,597,881 0 0 0 0 0 1,044,597,881 100% % 1. Reasons for share changed √ Applicable □ Not applicable (1) In reporting period, the new director of the 8th BOD Mr. Teng Guangsheng holds 117,600 81 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 shares of the Company, and the shares are lock for trading in relevant regulations since he serves director of the Company in reporting period. (2) In reporting period, former staff supervisor Mr. Shang Wen leaves his position without six months, the 269,700 shares of the Company hold by Mr. Shang will not be transfer in 6 months. 2. Approval of share changed □ Applicable √ Not applicable 3. Ownership transfer of share changed √ Applicable □ Not applicable In reporting period, among the restricted shares, the 122,958 shares held by former Tangshan Dongkuang Hardware Wholesale Company are transfer to Zhang Yong. 4. Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common shareholders of Company in latest year and period □ Applicable √ Not applicable 5. Other information necessary to disclose for the Company or need to disclosed under requirement from security regulators □ Applicable √ Not applicable (II) Changes of restricted shares √ Applicable □ Not applicable In Share Restricted Shares Opening Shares Ending Increased Restricted Shareholders shares released in shares Date for released In reasons restricted Period restricted the Period On February 28, 2017, the staff who no longer served as employee supervisor of the Company for personal reasons cannot transfer the Company’s stock within 6 months after Share lockup in leaving his post, see details on ―III The Shang Wen 202,275 - 67,425 269,700 senior commitments that the company’s actual executives controller, shareholders, related parties, acquirers and the company have fulfilled during the reporting period and or have not yet fulfilled up to the end of the reporting 82 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 period‖ of ―Section V Important Matters‖ if the stock held by this staff has other restrictions. As the directors of the company, 25% of the Company’s stock held by them can be lifted the restrictions each year, at the same time, see details on ―III The commitments that the Share lockup in company’s actual controller, shareholders, Teng - - 88,200 88,200 senior related parties, acquirers and the company Guangsheng executives have fulfilled during the reporting period and or have not yet fulfilled up to the end of the reporting period‖ of ―Section V Important Matters‖ if the stock held by them has other restrictions. Tangshan Transfer Dongkuang restricted shares Hardware 122,958 122,958 - - 9 May 2017 to natural person Wholesale Zhang Yong Company Transfer the restricted shares of Tangshan Dongkuang Hardware Wholesale Zhang Yong - - 122,958 122,958 After relevant restriction procedures done Company, restricted for trading due to the legal commitment of shares reform Total 325,233 122,958 278,583 480,858 -- -- II. Security offering and listing □ Applicable √ Not applicable III. Amount of shareholders of the Company and particulars about shares holding In share Total preference shareholders Total common shareholders in reporting 66,201 with voting rights recovered at 0 period-end end of reporting period (if 83 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 applicable) Particulars about shares held above 5% by common shareholders or top 10 common shares holding Number of share Total common Amount of Amount of Proporti pledged/froze Nature of on of shareholders at Changes in restricted un-restricted n Full name of Shareholders shareholder shares the end of report report period common shares common shares held State period held held Amo of unt share Sichuan Changhong Electric Co., State-owned 22.47% 234,705,968 0 69,877,638 164,828,330 -- -- Ltd. legal person Hefei Industry Investment Holding State-owned 4.58% 47,823,401 0 0 47,823,401 -- -- (Group) Co., Ltd. legal person Changhong (Hong Kong) Trading Foreign legal 2.63% 27,465,397 2,299,574 0 27,465,397 -- -- Company Limited(note 1) person Ping An Annuity Insurance Domestic non Company of China, Ltd. – Ping An state-owned 2.26% 23,613,595 0 23,613,595 0 -- -- Pension Ruifu private placement corporate No.1 Assets Management Products Golden Ergle- SPD-U Trust-U Trust Domestic non JinYue No.4 Collected Asset Trust state-owned 2.26% 23,613,595 0 23,613,595 0 -- -- Plan corporate Foreign CAO SHENGCHUN 1.32% 13,823,183 280,976 0 13,823,183 -- -- natural person Domestic non Ping An UOB-Ping An state-owned 1.20% 12,522,361 0 12,522,361 0 -- -- Bank-Guohai Securities Co., Ltd. corporate Ping An Bank – Ping An UOB Domestic non Dingtai Flexible Mix Stock state-owned 1.20% 12,522,361 0 12,522,361 0 -- -- Investment Fund corporate Caitong Fund- Ningbo Domestic non Bank-Haitong Xingtai (Anhui) state-owned 1.03% 10,733,452 0 10,733,452 0 -- -- Emerging Industry Investment Fund corporate (Limited Partnership) Domestic non National Social Security Funds-504 state-owned 0.94% 9,838,998 0 9,838,998 0 -- -- corporate Domestic non Harvest Fund- Ping An Bank- state-owned 0.94% 9,838,998 0 9,838,998 0 -- -- Huaxia Asset Management Co., Ltd. corporate 84 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Strategy investors or general legal person becomes top 10 shareholders due to rights issued (if Not applicable applicable) Among the above shareholders, Changhong (Hong Kong) Trade Co., Ltd. is the wholly-owned subsidiary of Sichuan Changhong Electronic Co., Ltd.; there existed no associated relationship or belong to the concerted actors as specified in the Measures for the Administration of Information Disclosure of Shareholder Equity Changes of Listed Companies among Sichuan Changhong Electronic Co., Ltd., Changhong (Hong Kong) Trade Co., Ltd. and other top 8 shareholders; and top ten shareholders with unrestricted subscription; " Ping An UOB-Ping An Bank-Guohai Securities Co., Ltd. " and " Ping An Bank – Ping An Explanation on associated relationship among the UOB Dingtai Flexible Mix Stock Investment Fund " have subscribed the products managed aforesaid shareholders by Ping An Dahua Fund Management Co., Ltd. in the Company's non-public offering of shares in 2016; "―National Social Security Funds-504 ‖和―Harvest Fund- Ping An Bank- Huaxia Asset Management Co., Ltd. ‖ have subscribed the products managed by Harvest Fund Management Co., Ltd. in the Company's non-public offering of shares in 2016. The company neither knows whether there is any association among other shareholders, nor knows whether other shareholders belong to the persons acting in concert that is stipulated in the ―Administrative Measures on Information Disclosure of Changes in Shareholding of Listed Companies‖. Particular about top ten common shareholders with un-restrict shares held Amount of unrestricted common shares Type of shares Shareholders’ name held at end of Period Type Amount Sichuan Changhong Electric Co., Ltd. 164,828,330 RMB ordinary shares 164,828,330 Hefei Industry Investment Holding (Group) Co., 47,823,401 RMB ordinary shares 47,823,401 Ltd. Changhong (Hong Kong) Trading Company Domestically listed foreign 27,465,397 27,465,397 Limited shares Domestically listed foreign CAO SHENGCHUN 13,823,183 13,823,183 shares Domestically listed foreign NORGES BANK 4,546,432 4,546,432 shares China Securities Finance Corporation Limited 4,362,500 RMB ordinary shares 4,362,500 ICBC- Dongfanghong New Dynamic Flexible 4,180,694 RMB ordinary shares 4,180,694 Mixed Investment Funds Domestically listed foreign Long Qinfang 3,352,737 3,352,737 shares CMB- Dongfanghong JD Big Data Flexible Mixed 3,248,586 RMB ordinary shares 3,248,586 Investment Fund China Industrial International Trust Limited – 2,924,398 RMB ordinary shares 2,924,398 Xingxiang Progress No.1 Securities Capital Trust 85 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Plan Among the above shareholders, Changhong (Hong Kong) Trade Co., Ltd. is the wholly-owned subsidiary of Sichuan Changhong Electronic Co., Ltd.; there existed no associated relationship or belong to the concerted actors as specified in the Measures for the Administration of Expiation on associated relationship or consistent Information Disclosure of Shareholder Equity Changes of Listed Companies among Sichuan actors within the top 10 un-restrict shareholders and Changhong Electronic Co., Ltd., Changhong (Hong Kong) and other top 8 shareholders; and between top 10 un-restrict shareholders and top 10 top ten shareholders with unrestricted subscription; as the Company has not known whether shareholders there exists any business relationship among the other shareholders with unrestricted subscription or they belong to the concerted actors as specified in the Measures for the Administration of Information Disclosure of Shareholder Equity Changes of Listed Companies. Explanation on top ten common shareholders Not applicable involving margin business (if applicable) Note 1: At end of the reporting period, the person acting in concert with controlling shareholder Sichuan Changhong-- Changhong (Hong Kong) Trading Company Limited, holds B-stock of the Company as 27,465,397 shares, among which, 387,600 shares are held through Philip Securities (H.K.) Co., Ltd. Note 2: In the above table, "the shareholding situation of the shareholders hold more than 5% of shares or the top ten shareholders" is subject to the data on stock transfer books provided by China Securities Depository and Clearing Corporation Limited Shenzhen Branch, during the reporting period, 7 issuing objects including Sichuan Changhong Electric Co., Ltd. , Ping An Dahua Fund Management Co., Ltd., Golden Eagle Fund Management Co., Ltd., Harvest Fund Management Co., Ltd., Ping An Endowment Insurance Co., Ltd., Rongtong Fund Management Co., Ltd., and Caitong Fund Management Co., Ltd. have subscribed the company’s non-public offering of shares in 2016, and these shares are all restricted shares. For the number of subscribed shares of the above-mentioned 7 issuing objects and the allocated products of other 6 issuing objects except for Sichuan Changhong, see details on the ―Issuing report and listing announcement summary on the non-public offering of shares of Hefei Meiling Co., Ltd.‖ (Announcement No. 2016-057) which the company has disclosed on the designated information disclosure media "Securities Times", "China Securities Journal", "Hong Kong Commercial Daily" and www.cninfo.com.cn on October 13, 2016. Whether the top ten ordinary shareholders of the company and the top 10 ordinary shareholders of unrestricted conditions have made the repurchase transactions as agreed during the reporting period. □Yes √No The top ten ordinary shareholders of the company and the top 10 ordinary shareholders of unrestricted conditions have not made the repurchase transactions as agreed during the reporting 86 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 period. IV. Changes of controlling shareholder or actual controller Changes of controlling shareholder in reporting period □ Applicable √ Not applicable No change of controlling shareholder in reporting period. Changes of actual controller in reporting period □ Applicable √ Not applicable No changes of actual controller in reporting period. 87 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Section VII. Preferred Stock □ Applicable √ Not applicable The Company had no preferred stock in the reporting period. 88 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Section VIII. Particular about Directors, Supervisors and Senior Executives I. Changes of shares held by directors, supervisors and senior executive □ Applicable √ Not applicable Shares held by directors, supervisors and senior executive of the Company had no changes, more details can be seen in Annual Report 2016. II. Changes of directors, supervisors and senior executive √ Applicable □ Not applicable Name Position Type Date Reasons He did not serves as staff supervisor of the Company for Shang Wen Staff supervisor Office leaving 28 Feb. 2017 personal reasons Being election by democratic election on employees Deng Li Supervisor Election 28 Feb. 2017 congress, Mr. Deng Li agreed to elected as staff supervisor of 8th supervisory committee of the Company Resigned the posts of deputy president of 8th BOD of the Company, director, member of strategy committee and Xu Bangjun Deputy president Office leaving 24 Apr. 2017 member of remuneration and appraisal committee due to personal career moves Mr. Teng Guangsheng was elected as non-independent Teng Director Election 4 May 2017 director of the Company by resolution approved by AGM Guangsheng of 2016 Resigned the posts of president of 8th BOD of the Company, director, director member of strategy Liu Tibin President Office leaving 17 Jul. 2017 committee and member of nomination committee of the Board due to personal career moves Mr. Li Wei was elected as president of 8th BOD of the rd Li Wei President Election 21 Jul. 2017 Company by resolution approved in 33 session of 8th BOD He resigned from Chairman of the Company for personal Li Wei Chairman Office leaving 21 Jul. 2017 work changed Mr. Wu Dinggang was appointed as chairman of the Wu Dinggang Chairman Appointment 21 Jul. 2017 Company by resolution approved 33rd session of 8th BOD In addition, the introduction about changing the term of office of the company’s ninth session 89 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 of the Board of Directors and the Board of Supervisors: The resolution of the 34th meeting of the 8th session of the Board of Directors that the company held on August 9, 2017 approved the Proposal on the Election of Non-Independent Directors of the 9th Session of the Board of Directors of the Company and the Proposal on the Election of Independent Directors of the 9th Session of the Board of Directors of the Company, according to the voting of the directors participated in the meeting, agreed to nominate Mr. Li Wei, Mr. Wu Dinggang, Mr. Kou Huameng, Mr. Shi Qiang, Mr. Yong Fengshan and Mr. Teng Guangsheng as the candidates for the non-independent directors of the 9th Board of Directors of the company; and agreed to nominate Mr. Gan Shengdao, Mr. Ren Jia, and Mr. Lu Yingjin as the candidates for the independent directors of the 9th Board of Directors of the company. On the same day, the resolution of the 18th meeting of the 8th Board of Supervisors of the company approved the Proposal on the Election of the 9th Board of Supervisors of the Company, according to the voting of the supervisors participated in the meeting, agreed to nominate Mr. Shao Min, Miss. Huang Hong, Mr. He Xintan as the candidates for the 9th Board of Supervisors. 90 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Section IX Corporate Bond Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on the date when semi-annual report approved for released or fail to cash in full on due: Nil 91 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Section X. Financial Report I. Audit reports Whether the semi-annual report was audited or not □ Yes √ No The semi-annual report was not audited. II. Financial statements Units in Notes of Financial Statements is RMB 1. Consolidated Balance Sheet Prepared by Hefei Meiling Co., Ltd. 2017-6-30 In RMB Item Closing balance Opening balance Current assets: Monetary funds 4,918,185,647.77 4,058,869,234.63 Settlement provisions Capital lent Financial liability measured by fair value and with variation 10,813,272.50 12,060,213.30 reckoned into current gains/losses Derivative financial liability Notes receivable 2,511,715,429.41 1,421,429,723.73 Accounts receivable 2,048,332,541.11 1,118,960,552.49 Accounts paid in advance 289,836,060.91 134,706,488.38 Insurance receivable Reinsurance receivables Contract reserve of reinsurance receivable Interest receivable 3,229,356.48 2,645,494.32 Dividend receivable Other receivables 68,537,511.44 39,553,919.44 Purchase restituted finance asset 92 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Inventories 2,582,538,614.47 1,974,526,734.86 Divided into assets held for sale Non-current asset due within 46,133,664.00 12,625,340.00 one year Other current assets 1,867,683,272.03 1,454,346,297.42 Total current assets 14,347,005,370.12 10,229,723,998.57 Non-current assets: Loans and payments on behalf Finance asset available for 31,000,000.00 17,000,000.00 sales Held-to-maturity investment Long-term account receivable Long-term equity investment 90,247,745.70 81,643,631.37 Investment property 12,871,340.33 13,275,631.40 Fixed assets 1,214,541,611.12 1,204,093,169.72 Construction in progress 148,626,411.17 107,037,409.95 Engineering material Disposal of fixed asset 75,846,390.89 75,788,138.47 Productive biological asset Oil and gas asset Intangible assets 605,320,595.90 613,969,271.63 Expense on Research and 73,961,222.33 45,023,750.60 Development Goodwill Long-term expenses to be 2,583,106.23 1,132,075.48 apportioned Deferred income tax asset 87,505,957.53 84,264,603.65 Other non-current asset - 34,615,630.00 Total non-current asset 2,342,504,381.20 2,277,843,312.27 Total assets 16,689,509,751.32 12,507,567,310.84 Current liabilities: Short-term loans 1,432,622,701.07 288,343,724.73 Loan from central bank Absorbing deposit and interbank deposit 93 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Capital borrowed Financial liability measured by fair value and with variation 9,671,394.08 559,249.58 reckoned into current gains/losses Derivative financial liability Notes payable 4,573,857,981.57 2,635,051,740.30 Accounts payable 3,168,053,679.32 2,331,899,310.82 Accounts received in 472,573,801.58 390,935,440.46 advance Selling financial asset of repurchase Commission charge and commission payable Wage payable 103,531,061.56 189,592,039.00 Taxes payable 85,377,009.73 59,849,032.13 Interest payable 708,602.61 1,617,352.01 Dividend payable 16,972,722.88 2,545,801.23 Other accounts payable 812,770,528.06 622,580,323.43 Reinsurance payables Insurance contract reserve Security trading of agency Security sales of agency Divided into liability held for sale Non-current liabilities due 59,718,504.77 272,202,590.10 within 1 year Other current liabilities Total current liabilities 10,735,857,987.23 6,795,176,603.79 Non-current liabilities: Long-term loans 253,460,000.00 38,908,788.00 Bonds payable Including: preferred stock Perpetual capital securities Long-term account payable Long-term wages payable 28,061,416.36 29,696,403.85 Special accounts payable 980,000.00 1,400,000.00 94 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Projected liabilities 328,801,716.59 331,575,430.79 Deferred income 122,713,001.14 142,919,562.49 Deferred income tax 1,503,490.88 1,809,032.00 liabilities Other non-current liabilities Total non-current liabilities 735,519,624.97 546,309,217.13 Total liabilities 11,471,377,612.20 7,341,485,820.92 Owner’s equity: Share capital 1,044,597,881.00 1,044,597,881.00 Other equity instrument Including: preferred stock Perpetual capital securities Capital public reserve 2,685,313,862.77 2,687,961,060.65 Less: Inventory shares Other comprehensive income 938,467.33 3,474,546.95 Reasonable reserve Surplus public reserve 391,029,420.33 391,029,420.33 Provision of general risk Retained profit 997,496,549.90 968,097,382.98 Total owner’s equity attributable 5,119,376,181.33 5,095,160,291.91 to parent company Minority interests 98,755,957.79 70,921,198.01 Total owner’s equity 5,218,132,139.12 5,166,081,489.92 Total liabilities and owner’s 16,689,509,751.32 12,507,567,310.84 equity Legal Representative: Li Wei Person in charge of accounting works: Zhang Xiaolong Person in charge of accounting institute: Luo Bo 2. Balance Sheet of Parent Company In RMB Item Closing balance Opening balance Current assets: Monetary funds 3,070,514,216.48 3,071,362,771.31 Financial liability measured 10,023,272.50 12,060,213.30 by fair value and with variation 95 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 reckoned into current gains/losses Derivative financial liability Notes receivable 1,597,881,819.77 1,053,598,721.93 Accounts receivable 1,755,138,033.66 1,006,701,894.37 Account paid in advance 399,362,495.77 106,947,474.25 Interest receivable Dividends receivable Other receivables 59,549,479.60 26,742,423.95 Inventories 1,108,770,017.32 1,017,090,374.81 Divided into assets held for sale Non-current assets maturing within one year Other current assets 1,420,969,339.84 1,427,283,451.40 Total current assets 9,422,208,674.94 7,721,787,325.32 Non-current assets: Available-for-sale financial 31,000,000.00 17,000,000.00 assets Held-to-maturity investments Long-term receivables Long-term equity 1,025,915,752.87 992,282,289.21 investments Investment property 11,095,070.97 11,332,015.32 Fixed assets 837,773,087.41 861,163,999.99 Construction in progress 38,386,238.77 19,478,121.20 Project materials Disposal of fixed assets 43,553,207.13 43,494,954.71 Productive biological assets Oil and natural gas assets Intangible assets 433,737,939.25 430,435,091.82 Research and development 3,480,624.34 12,797,092.26 costs Goodwill Long-term deferred expenses Deferred income tax assets 69,726,484.23 69,138,686.26 Other non-current assets 96 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Total non-current assets 2,494,668,404.97 2,457,122,250.77 Total assets 11,916,877,079.91 10,178,909,576.09 Current liabilities: Short-term borrowings 1,350,912,701.07 261,843,724.73 Financial liability measured by fair value and with variation 8,890,194.08 - reckoned into current gains/losses Derivative financial liability Notes payable 2,537,674,948.81 1,734,774,950.13 Accounts payable 1,503,983,245.29 1,521,019,717.86 Accounts received in 95,120,111.63 104,205,506.34 advance Wage payable 20,368,144.07 57,714,577.87 Taxes payable 19,598,494.87 25,677,906.64 Interest payable 708,602.61 1,617,352.01 Dividend payable 16,972,722.88 2,545,801.23 Other accounts payable 560,457,483.66 634,561,307.52 Divided into liability held for sale Non-current liabilities due 8,384,965.56 257,750,238.18 within 1 year Other current liabilities Total current liabilities 6,123,071,614.53 4,601,711,082.51 Non-current liabilities: Long-term loans 253,460,000.00 4,751,000.00 Bonds payable Including: preferred stock Perpetual capital securities Long-term account payable Long-term wages payable 28,061,416.36 29,696,403.85 Special accounts payable Projected liabilities 328,801,716.59 331,575,430.79 Deferred income 60,750,408.61 64,601,290.18 Deferred income tax 1,503,490.88 1,809,032.00 liabilities Other non-current liabilities 97 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Total non-current liabilities 672,577,032.44 432,433,156.82 Total liabilities 6,795,648,646.97 5,034,144,239.33 Owners’ equity: Share capita 1,044,597,881.00 1,044,597,881.00 Other equity instrument Including: preferred stock Perpetual capital securities Capital public reserve 2,753,017,007.10 2,753,017,007.10 Less: Inventory shares Other comprehensive income Reasonable reserve Surplus reserve 390,811,254.65 390,811,254.65 Retained profit 932,802,290.19 956,339,194.01 Total owner’s equity 5,121,228,432.94 5,144,765,336.76 Total liabilities and owner’s 11,916,877,079.91 10,178,909,576.09 equity Legal Representative: Li Wei Person in charge of accounting works: Zhang Xiaolong Person in charge of accounting institute: Luo Bo 3. Consolidated Profit Statement In RMB Item Current Period Last Period I. Total operating income 8,517,794,193.10 6,866,631,262.68 Including: Operating income 8,517,794,193.10 6,866,631,262.68 Interest income Insurance gained Commission charge and commission income II. Total operating cost 8,436,805,983.05 6,760,418,778.86 Including: Operating cost 6,996,226,048.85 5,432,461,687.10 Interest expense Commission charge and commission expense Cash surrender value 98 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Net amount of expense of compensation Net amount of withdrawal of insurance contract reserve Bonus expense of guarantee slip Reinsurance expense Operating tax and extras 65,836,020.31 79,457,581.26 Sales expenses 1,140,172,032.08 1,075,647,750.60 Administration expenses 222,533,091.74 175,964,420.95 Financial expenses -33,454,482.67 -39,699,342.16 Losses of devaluation of asset 45,493,272.74 36,586,681.11 Add: Changing income of fair -10,359,085.30 -1,278,570.21 value(Loss is listed with ―-‖) Investment income (Loss is 23,593,349.66 4,153,090.95 listed with ―-‖) Including: Investment income on affiliated company and joint -3,226,328.17 -833,210.42 venture Exchange income (Loss is listed with ―-‖) Other income 1,275,937.62 - III. Operating profit (Loss is 95,498,412.03 109,087,004.56 listed with ―-‖) Add: Non-operating income 23,491,147.85 21,471,702.44 Including: Disposal gains 261,776.49 330,833.76 of non-current asset Less: Non-operating expense 11,455,300.63 1,818,874.18 Including: Disposal loss 11,359,875.16 1,545,129.64 of non-current asset IV. Total Profit (Loss is listed 107,534,259.25 128,739,832.82 with ―-‖) Less: Income tax expense 9,439,557.86 18,816,185.98 V. Net profit (Net loss is listed with 98,094,701.39 109,923,646.84 ―-‖) Net profit attributable to 92,075,039.77 109,992,701.28 owner’s of parent company 99 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Minority shareholders’ gains 6,019,661.62 -69,054.44 and losses VI. Net after-tax of other -3,352,515.41 2,484,848.72 comprehensive income Net after-tax of other comprehensive income attributable -2,536,079.62 1,814,457.07 to owners of parent company (I) Other comprehensive income items which will not be reclassified subsequently to profit of loss 1. Changes as a result of re-measurement of net defined benefit plan liability or asset 2. Share of the other comprehensive income of the investee accounted for using equity method which will not be reclassified subsequently to profit and loss (II) Other comprehensive income items which will be -2,536,079.62 1,814,457.07 reclassified subsequently to profit or loss 1. Share of the other comprehensive income of the investee accounted for using equity method which will be reclassified subsequently to profit or loss 2. Gains or losses arising from changes in fair value of available-for-sale financial assets 3. Gains or losses arising from reclassification of held-to-maturity investment as available-for-sale financial assets 4. The effect hedging portion of gains or losses arising from cash flow hedging instruments 5. Translation -2,536,079.62 1,814,457.07 differences arising on translation of 100 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 foreign currency financial statements 6. Other Net after-tax of other -816,435.79 670,391.65 comprehensive income attributable to minority shareholders VII. Total comprehensive income 94,742,185.98 112,408,495.56 Total comprehensive income attributable to owners of parent 89,538,960.15 111,807,158.35 Company Total comprehensive income attributable to minority 5,203,225.83 601,337.21 shareholders VIII. Earnings per share: (i) Basic earnings per share 0.0881 0.1440 (ii) Diluted earnings per share 0.0881 0.1440 Legal Representative: Li Wei Person in charge of accounting works: Zhang Xiaolong Person in charge of accounting institute: Luo Bo 4. Profit Statement of Parent Company In RMB Item Current Period Last Period I. Operating income 4,129,608,352.50 3,770,773,163.93 Less: Operating cost 3,775,369,456.26 3,160,132,227.01 Operating tax and extras 27,722,529.70 38,748,885.70 Sales expenses 231,438,219.07 421,077,853.44 Administration 109,065,216.23 77,408,287.96 expenses Financial expenses -37,206,339.33 -31,518,036.32 Losses of devaluation of 4,856,561.37 9,159,976.91 asset Add: Changing income of -10,927,134.88 -1,278,570.21 fair value(Loss is listed with ―-‖) Investment income (Loss 29,730,083.95 82,892,597.34 is listed with ―-‖) Including: Investment 3,105,463.66 2,644,982.57 101 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 income on affiliated company and joint venture Other income II. Operating profit (Loss is 37,165,658.27 177,377,996.36 listed with ―-‖) Add: Non-operating income 7,418,718.98 14,372,303.76 Including: Disposal - 269,387.27 gains of non-current asset Less: Non-operating expense 1,447,901.85 1,216,566.48 Including: Disposal loss 1,443,561.25 1,150,366.91 of non-current asset III. Total Profit (Loss is listed 43,136,475.40 190,533,733.64 with ―-‖) Less: Income tax expense 3,997,506.37 14,915,129.58 IV. Net profit (Net loss is listed 39,138,969.03 175,618,604.06 with ―-‖) V. Net after-tax of other comprehensive income (I) Other comprehensive income items which will not be reclassified subsequently to profit of loss 1. Changes as a result of re-measurement of net defined benefit plan liability or asset 2. Share of the other comprehensive income of the investee accounted for using equity method which will not be reclassified subsequently to profit and loss (II) Other comprehensive income items which will be reclassified subsequently to profit or loss 1. Share of the other comprehensive income of the investee accounted for using equity method which will be reclassified subsequently to profit or loss 102 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 2. Gains or losses arising from changes in fair value of available-for-sale financial assets 3. Gains or losses arising from reclassification of held-to-maturity investment as available-for-sale financial assets 4. The effect hedging portion of gains or losses arising from cash flow hedging instruments 5. Translation differences arising on translation of foreign currency financial statements 6. Other VI. Total comprehensive income 39,138,969.03 175,618,604.06 VII. Earnings per share: (i) Basic earnings per share 0.0375 0.2299 (ii) Diluted earnings per 0.0375 0.2299 share Legal Representative: Li Wei Person in charge of accounting works: Zhang Xiaolong Person in charge of accounting institute: Luo Bo 5. Consolidated Cash Flow Statement In RMB Item Current Period Last Period I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor 6,755,539,540.78 6,122,120,567.44 services Net increase of customer deposit and interbank deposit Net increase of loan from central bank Net increase of capital borrowed from other financial 103 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 institution Cash received from original insurance contract fee Net cash received from reinsurance business Net increase of insured savings and investment Net increase of amount from disposal financial assets that measured by fair value and with variation reckoned into current gains/losses Cash received from interest, commission charge and commission Net increase of capital borrowed Net increase of returned business capital Write-back of tax received 205,339,020.51 183,108,861.55 Other cash received 16,569,072.09 19,615,271.12 concerning operating activities Subtotal of cash inflow arising 6,977,447,633.38 6,324,844,700.11 from operating activities Cash paid for purchasing commodities and receiving labor 5,258,471,672.84 4,321,939,929.71 service Net increase of customer loans and advances Net increase of deposits in central bank and interbank Cash paid for original insurance contract compensation Cash paid for interest, commission charge and commission Cash paid for bonus of guarantee slip Cash paid to/for staff and 704,133,083.60 644,386,641.53 workers 104 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Taxes paid 210,338,863.27 168,259,449.49 Other cash paid concerning 320,273,315.76 318,569,174.49 operating activities Subtotal of cash outflow arising 6,493,216,935.47 5,453,155,195.22 from operating activities Net cash flows arising from 484,230,697.91 871,689,504.89 operating activities II. Cash flows arising from investing activities: Cash received from 1,457,000,000.00 500,000,000.00 recovering investment Cash received from 27,800,453.69 4,986,301.37 investment income Net cash received from disposal of fixed, intangible and 2,614,755.73 330,776.45 other long-term assets Net cash received from disposal of subsidiaries and other units Other cash received 41,477,206.87 36,389,716.67 concerning investing activities Subtotal of cash inflow from 1,528,892,416.29 541,706,794.49 investing activities Cash paid for purchasing fixed, intangible and other 239,785,175.33 65,945,234.00 long-term assets Cash paid for investment 1,853,000,021.00 100,883,860.00 Net increase of mortgaged loans Net cash received from subsidiaries and other units obtained Other cash paid concerning 998,270.61 - investing activities Subtotal of cash outflow from 2,093,783,466.94 166,829,094.00 investing activities Net cash flows arising from -564,891,050.65 374,877,700.49 investing activities III. Cash flows arising from 105 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 financing activities: Cash received from 20,000,000.00 23,145,352.69 absorbing investment Including: Cash received from absorbing minority shareholders’ investment by subsidiaries Cash received from loans 1,685,653,798.22 797,486,045.88 Cash received from issuing bonds Other cash received - 3,451.80 concerning financing activities Subtotal of cash inflow from 1,705,653,798.22 820,634,850.37 financing activities Cash paid for settling debts 737,057,083.32 88,241,810.84 Cash paid for dividend and profit distributing or interest 57,193,407.84 49,368,745.83 paying Including: Dividend and profit of minority shareholder paid by subsidiaries Other cash paid concerning 151,611.24 98,192.48 financing activities Subtotal of cash outflow from 794,402,102.40 137,708,749.15 financing activities Net cash flows arising from 911,251,695.82 682,926,101.22 financing activities IV. Influence on cash and cash equivalents due to fluctuation in -7,231,244.45 12,229,868.87 exchange rate V. Net increase of cash and cash 823,360,098.63 1,941,723,175.47 equivalents Add: Balance of cash and cash equivalents at the period 3,986,098,419.76 2,121,161,238.01 -begin VI. Balance of cash and cash 4,809,458,518.39 4,062,884,413.48 equivalents at the period -end Legal Representative: Li Wei Person in charge of accounting works: Zhang Xiaolong Person in charge of accounting institute: Luo Bo 106 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 6. Cash Flow Statement of Parent Company In RMB Item Current Period Last Period I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor 2,847,697,427.41 3,257,292,398.00 services Write-back of tax received 97,733,874.40 90,212,886.14 Other cash received concerning 13,343,872.91 11,964,243.27 operating activities Subtotal of cash inflow arising from 2,958,775,174.72 3,359,469,527.41 operating activities Cash paid for purchasing commodities and receiving labor 3,270,599,036.24 2,456,420,547.09 service Cash paid to/for staff and workers 292,673,473.80 257,679,481.30 Taxes paid 39,983,393.59 58,375,692.51 Other cash paid concerning 111,308,401.29 135,616,094.86 operating activities Subtotal of cash outflow arising from 3,714,564,304.92 2,908,091,815.76 operating activities Net cash flows arising from operating -755,789,130.20 451,377,711.65 activities II. Cash flows arising from investing activities: Cash received from recovering 1,430,000,000.00 500,000,000.00 investment Cash received from investment 27,605,396.15 80,247,614.77 income Net cash received from disposal of fixed, intangible and other long-term 566,647.40 240,112.02 assets Net cash received from disposal of subsidiaries and other units Other cash received concerning 41,875,620.90 28,290,477.04 investing activities Subtotal of cash inflow from investing 1,500,047,664.45 608,778,203.83 107 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 activities Cash paid for purchasing fixed, 190,548,277.28 37,238,789.69 intangible and other long-term assets Cash paid for investment 1,494,528,000.00 171,250,000.00 Net cash received from subsidiaries and other units Other cash paid concerning 998,270.61 63,665,205.65 investing activities Subtotal of cash outflow from investing 1,686,074,547.89 272,153,995.34 activities Net cash flows arising from investing -186,026,883.44 336,624,208.49 activities III. Cash flows arising from financing activities: Cash received from absorbing investment Cash received from loans 1,633,110,198.22 794,126,025.52 Cash received from issuing bonds Other cash received concerning 142,854,592.22 217,115,708.21 financing activities Subtotal of cash inflow from financing 1,775,964,790.44 1,011,241,733.73 activities Cash paid for settling debts 737,057,083.32 60,135,614.84 Cash paid for dividend and profit 56,234,951.49 48,236,007.73 distributing or interest paying Other cash paid concerning 35,096,664.55 56,057,512.35 financing activities Subtotal of cash outflow from 828,388,699.36 164,429,134.92 financing activities Net cash flows arising from financing 947,576,091.08 846,812,598.81 activities IV. Influence on cash and cash equivalents due to fluctuation in -4,752,741.88 11,423,170.75 exchange rate V. Net increase of cash and cash 1,007,335.56 1,646,237,689.70 equivalents Add: Balance of cash and cash 3,067,671,385.08 1,654,499,494.28 equivalents at the period -begin 108 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 VI. Balance of cash and cash 3,068,678,720.64 3,300,737,183.98 equivalents at the period -end Legal Representative: Li Wei Person in charge of accounting works: Zhang Xiaolong Person in charge of accounting institute: Luo Bo 109 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 7. Statement of Changes in Owners’ Equity (Consolidated) This Period In RMB This Period Owners’ equity attributable to parent company Other equity instrument Reas Item Less: Provisio Minority Total owners’ Perpetu Other onabl Invento Surplus n of Retained interests equity Share capital Preferr al Capital reserve comprehensive e ry reserve general profit ed capital Other income reser shares risk stock securiti ve es I. Balance at the end 1,044,597,881.00 2,687,961,060.65 3,474,546.95 391,029,420.33 968,097,382.98 70,921,198.01 5,166,081,489.92 of the last year Add: Changes of accounting policy Error correction of the last period Enterpr ise combine under the same control Other II. Balance at the beginning of this 1,044,597,881.00 2,687,961,060.65 3,474,546.95 391,029,420.33 968,097,382.98 70,921,198.01 5,166,081,489.92 year III. Increase/ Decrease in this year -2,647,197.88 -2,536,079.62 29,399,166.92 27,834,759.78 52,050,649.20 (Decrease is listed 110 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 with ―-‖) (i) Total comprehensive -2,536,079.62 92,075,039.77 5,203,225.83 94,742,185.98 income (ii) Owners’ devoted and -2,647,197.88 22,631,533.95 19,984,336.07 decreased capital 1.Common shares invested by 37,361.22 37,361.22 shareholders 2. Capital invested by holders of other equity instruments 3. Amount reckoned into owners equity with share-based payment 4. Other -2,647,197.88 22,594,172.73 19,946,974.85 (III) Profit -62,675,872.85 -62,675,872.85 distribution 1. Withdrawal of surplus reserves 2. Withdrawal of general risk provisions 3. Distribution for owners (or -62,675,872.85 -62,675,872.85 shareholders) 4. Other 111 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 (IV) Carrying forward internal owners’ equity 1. Capital reserves conversed to capital (share capital) 2. Surplus reserves conversed to capital (share capital) 3. Remedying loss with surplus reserve 4. Other (V) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period (VI) Others IV. Balance at the end of the report 1,044,597,881.00 2,685,313,862.77 938,467.33 391,029,420.33 997,496,549.90 98,755,957.79 5,218,132,139.12 period Last Year In RMB Last Period Owners’ equity attributable to the parent Company Item Other Less: Reas Provisi Other Minority Total owners’ equity instrument Invento onabl on of Share capital Capital reserve comprehensiv Surplus reserve Retained profit interests equity Preferre Perpetu Othe ry e general e income d stock al r shares reser risk 112 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 capital ve securiti es I. Balance at the end 763,739,205.00 1,529,183,876.13 -2,280,500.61 367,066,994.18 817,667,480.44 36,291,435.86 3,511,668,491.00 of the last year Add: Changes of accounting policy Error correction of the last period Enterp rise combine under the same control Other II. Balance at the beginning of this 763,739,205.00 1,529,183,876.13 -2,280,500.61 367,066,994.18 817,667,480.44 36,291,435.86 3,511,668,491.00 year III. Increase/ Decrease in this 280,858,676.00 1,158,777,184.52 5,755,047.56 23,962,426.15 150,429,902.54 34,629,762.15 1,654,412,998.92 year (Decrease is listed with ―-‖) (i) Total comprehensive 5,755,047.56 220,216,680.96 1,996,589.61 227,968,318.13 income (ii) Owners’ devoted and 280,858,676.00 1,158,777,184.52 32,984,351.87 1,472,620,212.39 decreased capital 1.Common shares invested by 280,858,676.00 1,259,874,046.76 27,867,909.83 1,568,600,632.59 shareholders 2. Capital invested 113 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 by holders of other equity instruments 3. Amount reckoned into owners equity with share-based payment -101,096,862.24 4. Other 5,116,442.04 -95,980,420.20 (III) Profit 23,962,426.15 -69,786,778.42 -351,179.33 -46,175,531.60 distribution 1. Withdrawal of 23,962,426.15 -23,962,426.15 - surplus reserves 2. Withdrawal of general risk provisions 3. Distribution for owners (or -45,824,352.27 -351,179.33 -46,175,531.60 shareholders) 4. Other (IV) Carrying forward internal owners’ equity 1. Capital reserves conversed to capital (share capital) 2. Surplus reserves conversed to capital (share capital) 3. Remedying loss with surplus reserve 4. Other 114 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 (V) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period (VI) Others IV. Balance at the end of the report 1,044,597,881.00 2,687,961,060.65 3,474,546.95 391,029,420.33 968,097,382.98 70,921,198.01 5,166,081,489.92 period Legal Representative: Li Wei Person in charge of accounting works: Zhang Xiaolong Person in charge of accounting institute: Luo Bo 8. Statement of Changes in Owners’ Equity (Parent Company) This Period In RMB This Period Other equity instrument Other Item Less: comprehen Reasonabl Total owners’ Share capital Perpetual Capital reserve Inventory Surplus reserve Retained profit Preferred sive e reserve equity capital Other shares stock income securities I. Balance at the end of the 1,044,597,881.00 2,753,017,007.10 390,811,254.65 956,339,194.01 5,144,765,336.76 last year Add: Changes of accounting policy Error correction of the last period 115 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Other II. Balance at the beginning 1,044,597,881.00 2,753,017,007.10 390,811,254.65 956,339,194.01 5,144,765,336.76 of this year III. Increase/ Decrease in this year (Decrease is listed -23,536,903.82 -23,536,903.82 with ―-‖) (i) Total comprehensive 39,138,969.03 39,138,969.03 income (ii) Owners’ devoted and decreased capital 1.Common shares invested by shareholders 2. Capital invested by holders of other equity instruments 3. Amount reckoned into owners equity with share-based payment 4. Other (III) Profit distribution -62,675,872.85 -62,675,872.85 1. Withdrawal of surplus reserves 2. Distribution for owners -62,675,872.85 -62,675,872.85 (or shareholders) 3. Other (IV) Carrying forward internal owners’ equity 1. Capital reserves conversed to capital (share capital) 116 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 2. Surplus reserves conversed to capital (share capital) 3. Remedying loss with surplus reserve 4. Other (V) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period (VI) Others IV. Balance at the end of the 1,044,597,881.00 2,753,017,007.10 390,811,254.65 932,802,290.19 5,121,228,432.94 report period Last year In RMB Last period Other equity instrument Less: Other Item Perpetu Invento comprehen Reasonabl Total owners’ Share capital Preferr al Capital reserve Surplus reserve Retained profit ry sive e reserve equity ed capital Other shares income stock securiti es I. Balance at the end of the last 763,739,205.00 1,497,987,446.59 366,848,828.50 786,501,710.90 3,415,077,190.99 year Add: Changes of accounting policy Error correction of the last period Other 117 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 II. Balance at the beginning of this 763,739,205.00 1,497,987,446.59 366,848,828.50 786,501,710.90 3,415,077,190.99 year III. Increase/ Decrease in this year 280,858,676.00 1,255,029,560.51 23,962,426.15 169,837,483.11 1,729,688,145.77 (Decrease is listed with ―-‖) (i) Total comprehensive income 239,624,261.53 239,624,261.53 (ii) Owners’ devoted and 280,858,676.00 1,259,877,498.56 1,540,736,174.56 decreased capital 1.Common shares invested by 280,858,676.00 1,259,874,046.76 1,540,732,722.76 shareholders 2. Capital invested by holders of other equity instruments 3. Amount reckoned into owners equity with share-based payment 4. Other 3,451.80 3,451.80 (III) Profit distribution 23,962,426.15 -69,786,778.42 -45,824,352.27 1. Withdrawal of surplus reserves 23,962,426.15 -23,962,426.15 2. Distribution for owners (or -45,824,352.27 -45,824,352.27 shareholders) 3. Other (IV) Carrying forward internal owners’ equity 1. Capital reserves conversed to capital (share capital) 2. Surplus reserves conversed to capital (share capital) 3. Remedying loss with surplus reserve 4. Other (V) Reasonable reserve 118 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 1. Withdrawal in the report period 2. Usage in the report period (VI) Others -4,847,938.05 -4,847,938.05 IV. Balance at the end of the report 1,044,597,881.00 2,753,017,007.10 390,811,254.65 956,339,194.01 5,144,765,336.76 period Legal Representative: Li Wei Person in charge of accounting works: Zhang Xiaolong Person in charge of accounting institute: Luo Bo 119 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) I. Company profile Hefei Meiling Co., Ltd (hereinafter referred to as ―the Company‖) is an incorporated Company established and reorganized by Hefei Meiling Refrigerator General Factory and approved on June 12 th 1992 through [WanTiGaiHanZi (1992) No.039] issued by original Mechanism Reform Committee of Anhui Province. On August 30th 1993, through Anhui Provincial Government [Wanzhengmi (1993) No.166] and re-examination of China Securities Regulatory Commission, the Company made first public issue for 30 million A shares and the Company was listed on Oct. 18th, 1993 in Shenzhen Stock Exchange. On August 13th, 1996, the Company was approved to issue 100 million B shares to investors abroad through [ZhengWeiFa (1996) No.26] issued by China Securities Regulatory Commission. The Company went public in Shenzhen Stock Exchange on August 28th, 1996. State-owned Assets Supervision & Administration Commission of the State Council approved such transfers with Document Guozi Chanquan No.253 in 2007 Reply on Matters of Hefei Meiling Group Holdings Company Limited Transferring Partial State-owned Ownership, Hefei Meiling Group Holdings Company Limited (hereinafter abbreviated as Meiling Group) transferred its holding 37,852,683 shares in 82,852,683 state-owned shares of the Company to Sichuan Changhong Electronic Group Co., Ltd (hereinafter abbreviated as Changhong Group), other 45,000,000 shares to Sichuan Changhong Electric Co. Ltd (hereinafter abbreviated as Sichuan Changhong). On Aug 15, 2007, the above ownerships were transferred and Cleaning Corporation Limited. On 27 August 2007, State-owned Assets Supervision & Administration Commission of Anhui Provincial Government replied with Document [WGZCQH (2007) No.309] Reply on ―Related Matters of Share Merger Reform of Meiling Co., Ltd.‖, agreed the Company’s ownership split reform plan. The Company made consideration that non-tradable share holders deliver 1.5 shares to A share holders per 10 shares, and original Meiling Group made prepayment 3,360,329 shares for some non-tradable share holders as consideration for split reform plan. On 29 May 2008, concerning 34,359,384 state-owned shares (including 3,360,329 shares paid for other non-tradable shareholders by original Meiling Group in share reform) held by original Meiling Group, the ―Notice of Freely Transfer of Meiling Electrics Equity held by Meiling Group‖[HGZCQ(2008) No. 59] issued from State-owned Assets Supervision & Administration Commission of Hefei Municipal, agrees to transfer the above said shares to Hefei Xingtai Holding Group Co., Ltd.(―Xingtai Holding Co.,‖) for free. On 7 August 2008, the ―Reply of Transfer Freely of Part of the Shares of Hefei Meiling Co., Ltd. held by State-owned shareholders‖ [GZCQ (2007) No. 750] issued by SASAC, agrees the above said transferring. On October 29, 2008, Changhong Group Company signed Agreement on Equity Transfer of Hefei Meiling Co., Ltd with Sichuan Changhong, in which 32,078,846 tradable A-shares with conditional subscription of the Company (accounting for 7.76% in total shares) held by Changhong Group Company. On 23 December 2008, ―Reply of Transfer Freely of Part of the Shares of Hefei Meiling Co., Ltd. held by State-owned shareholders‖ [GZCQ (2008) No. 1413] issued by SASAC agrees the above 120 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) said share transferring. On 24 December 2010, being deliberated and approved in 32nd Meeting of 6th Session of the Board and 2nd Extraordinary Shareholders’ General Meeting of 2010 as well as approval of document [ZJXP(2010) No. 1715] from CSRC, totally 116,731,500 RMB ordinary shares (A stock) were offering privately to target investors with issue price of RMB 10.28/share. Capital collecting amounting to RMB 1,199,999,820 after issuing expenses RMB 22,045,500 deducted, net capital collected amounting to RMB 1,177,954,320, and paid-in capital(share capital) increased RMB 116,731,500 with capital reserve (share premium) RMB 1,061,106,088.5 increased. The increasing capital has been verified by Capital Verification Report No.:[XYZH2010CDA6021]issued from Shinwing CPA Co., Ltd. On 20 June 2011, the general meeting of the Company considered and approved the 2010 profit distribution plan, namely to distribute cash dividends of RMB0.5 (tax included) plus two shares for every ten shares held by shareholders to all shareholders, based on the total share capital of 530,374,449 shares as of 31 December 2010. The total share capital of the Company upon profit distribution increased to 636,449,338 shares. The capital increase was verified by Anhui Huashen Zhengda Accounting Firm with the verification report WHSZDKYZ (2011) No.141. On 26 June 2012, the general meeting of the Company considered and approved the 2011 profit distribution and capitalization of capital reserve plan, namely to distribute cash dividends of RMB0.5 (tax included) plus two shares for every ten shares to all shareholders capitalized from capital reserve, based on the total share capital of 636,449,338 shares as of 31 December 2011. The total share capital of the Company upon implementation of capitalization of capital reserve increased to 763,739,205 shares from 636,449,338 shares, and was verified by Anhui Anlian Xinda Accounting Firm with the verification report WALXDYZ (2012) No.093. On November 18, 2015, considered and approved by the 12th meeting of the 8th Board of Directors of the company and the first extraordinary general meeting in 2016, and approved by the document of China Securities Regulatory Commission [CSRC License No. (2016) 1396] ―Reply to the approval of non-public offering of shares of Hefei Meiling Co., Ltd.‖, the company has actually raised funds of 1,569,999,998.84 Yuan by non-public offering of no more than 334,042,553 new shares at face value of RMB 1 Yuan per share and with issue price no less than RMB4.70 per share, after deducting the issue costs of 29,267,276.08 Yuan , the net amount of raised funds is 1,540,732,722.76 Yuan , the increased paid-in capital (share capital) of RMB 280,858,676.00 Yuan , increased capital reserve (share premium) of 1,259,874,046.76 Yuan. This capital increase has been verified by No. [XYZH2016CDA40272]capital verification report of ShineWing Certified Public Accountants special general partnership. Ended as 30 June 2017, total share capital of the Company amounting to 1,044,597,881shares with ordinary shares in full. Among which, 881,733,881 shares of A-share accounting 84.41% in total shares while B-share with 162,864,000 shares accounting 15.59% in total shares. Detail share capital as: Type of stock Quantity Proportion 121 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) (I) Restricted shares 290,457,371 27.81% 1. State-owned shares 2. State-owned legal person’s shares 70,793,625 6.78% 3. Other domestic shares 218,663,897 20.94% Including: Domestic legal person’s shares 215,697,115 20.65% Domestic natural person’s shares 2,966,782 0.29% 4. Foreign shares 999,849 0.09% (II) Unrestricted shares 754,140,510 72.19% 1. RMB Ordinary shares 592,276,359 56.69% 2. Domestically listed foreign shares 161,864,151 15.50% 3. Overseas listed foreign shares 4. Others Total shares 1,044,597,881 100.00% The Company belongs to the manufacture of light industry, and engaged in the production and sale of refrigerator, freezer and air-conditioner. Unified social credit code of the Company: 9134000014918555XK; Address: No.2163, Lianhua Road, Economy and Technology Development Zone, Hefei City; Legal Representative: Li Wei; register capital(paid-in capital): RMB 1,044,597,881; type of company: limited liability company(joint venture and listed of Taiwan, Hong Kong and Macau) Business Scope: Manufacture of cooling apparatus, air-conditioner, washing machine, injection plastic machine of computer controlling, computer heater, plastic products, packaging products and decorations. Business of self-produced products, technology export and import-export of the raw&auxiliary materials, machinery equipment, instrument and technology; department sales and transportation II. Scope of consolidated financial statement The Company’s consolidated financial statement included 50 subsidiaries including Sichuan Changhong Air-Conditioner Company Limited, Zhongshan Changhong Electric Company Limited and Zhongke Meiling Cryognic Technology Company Limited, etc. As compared to previous year, Subsidiary Meiling Candy Washing Machine Company Limited, Zhongshan Hongling Trade Company Limited and Guangzhou Changhong Trade Company Limited were newly included due to direct investment in this period; Subsidiary Xi’an Meizhilai Appliances Marketing Company Limited was excluded due to liquidation. More detail can be seen in ―VII-Changes of consolidated scope‖ and ―VIII-Rights and interest in other subjects‖ in the Note. III. Basis for preparation of financial statement 1. Basis for preparation The financial statements of the Company were prepared in accordance with the actual transactions and proceedings, and relevant regulation of Accounting Standards for Enterprise released by the Ministry of Finance, and was on the basis of sustainable operation, and the accounting policy and estimation stated in the 122 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) ―IV-Significant Accounting Policy and Accounting Estimation‖. 2. Continuous operation The Company recently has a history of profitability operation and has financial resources supporting, and prepared the financial statement on basis of going concern is reasonable. IV. Significant Accounting Policy and Accounting Estimation 1. Statement on observation of accounting standards for enterprise The financial statement prepared by the Company applies with the requirements of Accounting Standard for Enterprise, and reflects the financial condition, operational achievements and cash flow of the Company effectively and completely. 2. Accounting period The accounting period of the Company is the calendar date from 1 January to 31 December. 3. Standard currency for accounting The Company takes RMB as the standard currency for accounting. 4. Accountant arrangement method of business combination under common control and not under common control As acquirer, the Company measures the assets and liabilities acquired through business combination under common control at their carrying values as reflected in the consolidated financial statement of the ultimate controller as of the combination date. Capital reserve shall be adjusted in respect of any difference between carrying value of the net assets acquired and carrying value of the combination consideration paid. In case that capital reserve is insufficient to offset, the Company would adjust retained earnings. The acquiree’s net identifiable assets, liabilities or contingent liabilities acquired through business combination not under common control shall be measured at fair value as of the acquisition date. The cost of combination represents the fair value of the cash or non-cash assets paid, liabilities issued or committed and equity securities issued by the Company as at the date of combination in consideration for acquiring the controlling power in the acquiree, together with the sum of any directly related expenses occurred during business combination(in case of such business combination as gradually realized through various transactions, the combination cost refers to the sum of each cost of respective separate transaction). Where the cost of the combination exceeds the acquirer’s interest in the fair value of the acquirer’s identifiable net assets acquired, the difference is recognized as goodwill; where the cost of combination is lower than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the Company shall firstly make further review on the fair values of the net identifiable assets, liabilities or contingent liabilities acquired as well as the fair value of the non-cash assets portion of combination consideration or the equity securities issued by the Company. In case that the Company finds the cost of combination is still lower than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets after such further review, the difference is recognized in non-operating income for the current period when combination occurs. 123 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) 5. Measures on Preparation of Consolidated Financial Statements The Company shall put all the subsidiaries controlled and main body structured into consolidated financial statements. Any difference arising from the inconformity of accounting year or accounting policies between the subsidiaries and the Company shall be adjusted in the consolidated financial statements. All the material inter-company transactions, non-extraordinary items and unrealized profit within the combination scope are written-off when preparing consolidated financial statement. Owners’ equity of subsidiary not attributable to parent company and current net gains and losses, other comprehensive income and total comprehensive income attributable to minority shareholders are recognized as non-controlling interests, minority interests, other comprehensive income attributable to minority shareholders and total comprehensive income attributable to minority shareholders in consolidated financial statement respectively. As for subsidiary acquired through business combination under common control, its operating results and cash flow will be included in consolidated financial statement since the beginning of the period when combination occurs. When preparing comparative consolidated financial statement, the relevant items in previous year’s financial statement shall be adjusted as if the reporting entity formed upon combination has been existing since the ultimate controller commenced relevant control. As for equity interests of the investee under common control acquired through various transactions which eventually formed business combination, the Company shall supplement disclosure of the accounting treatment in consolidated financial statement in the reporting period when controlling power is obtained. For example, as for equity interests of the investee under common control acquired through various transactions which eventually formed business combination, adjustments shall be made as if the current status had been existing when the ultimate controller commenced control in connection of preparing consolidated financial statement; in connection with preparing comparative statement, the Company shall consolidate the relevant assets and liabilities of the acquiree into the Company’s comparative consolidated financial statement to the extent not earlier than the timing when the Company and the acquiree are all under control of the ultimate controller, and the net assets increased due to combination shall be used to adjust relevant items under owners’ equity in comparative statement. In order to prevent double computation of the value of the acquiree’s net assets, the relevant profits and losses, other comprehensive income and change of other net assets recognized during the period from the date when the Company acquires original equity interests and the date when the Company and the acquiree are all under ultimate control of the same party (whichever is later) to the date of combination in respect of the long-term equity investment held by the Company before satisfaction of combination shall be utilized to offset the beginning retained earnings and current gains and losses in the period as the comparative financial statement involves, respectively. As for subsidiary acquired through business combination not under common control, its operating results and cash flow will be included in consolidated financial statement since the Company obtains controlling power. When preparing consolidated financial statement, the Company shall adjust the subsidiary’s financial statement based on the fair value of the various identifiable assets, liabilities or 124 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) contingent liabilities recognized as of the acquisition date. As for equity interests of the investee not under common control acquired through various transactions which eventually formed business combination, the Company shall supplement disclosure of the accounting treatment in consolidated financial statement in the reporting period when controlling power is obtained. For example, as for equity interests of the investee not under common control acquired through various transactions which eventually formed business combination, when preparing consolidated financial statement, the Company would re-measure the equity interests held in the acquiree before acquisition date at their fair value as of the acquisition date, and any difference between the fair value and carrying value is included in current investment income. in case that the equity interests in acquiree held by the Company before the relevant acquisition date involves other comprehensive income at equity method and change of other owners’ equity (other than net gains and losses, other comprehensive income and profit distribution), then the equity interests would transfer to investment gains and losses for the period which the acquisition date falls upon. The other comprehensive income arising from change of the net liabilities or net assets under established benefit scheme as acquiree’s re-measured such scheme is excluded. The transaction with non-controlling interest to dispose long-term equity investment in a subsidiary without losing control rights over the subsidiary, the difference between the proceeds from disposal of interests and the decrease of the shared net assets of the subsidiary is adjusted to capital premium (share premium). In case capital reserve is not sufficient to offset the difference, retained earnings will be adjusted. As for disposal of part equity investment which leads to losing control over the investee, the Company would re-measure the remaining equity interests at their fair value as of the date when the Company loses control over the investee when preparing consolidated financial statement. The sum of consideration received from disposal of equity interest and fair value of the remaining equity interest, less the net assets of the original subsidiary attributable to the Company calculated based on the original shareholding proportion since the acquisition date or the date then consolidation commences, is included in investment gains and losses for the period when control is lost, meanwhile to offset goodwill. Other comprehensive income related to equity interest investment in original subsidiaries is transferred into current investment gains and losses upon lost of control. If the disposal of the equity investment of a subsidiary is realized through multiple transactions until loss of control and is a package deal, the accounting treatment of these transactions should be dealt with as one transaction of disposal of the subsidiary until loss of control. However, before the Company loses total control of the subsidiary, the differences between the actual disposal price and the share of the net assets of the subsidiary disposed of in every transaction should be recognized as other comprehensive income in the consolidated financial statements, and transferred to profit or loss when losing control. 6. Accounting treatment for joint venture arrangement and joint controlled entity The joint venture arrangement of the Company consists of joint controlled entity and joint venture. As for jointly controlled entity, the Company determines the assets held and liabilities assumed separately as a party to the jointly controlled entity, recognizes such assets and liabilities according to its proportion, and 125 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) recognizes relevant income and expense separately under relevant agreement or according to its proportion. As for asset transaction relating to purchase and sales with the jointly controlled entity which does not constitute business activity, part of the gains and losses arising from such transaction attributable to other participators of the jointly controlled entity is only recognized. 7. Cash and cash equivalents Cash in the cash flow statement comprises the Group’s cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents are short-term, highly liquid investments held by the Group, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, including but not limited to the followings which meet the aforesaid conditions: debt investment matured within three months upon the acquisition date, bank time deposit which can be early withdrew by serving a notice and transferrable deposit receipt, etc. for time deposit which cannot be used for payment at any time, it would be note recognized as cash; while if can be used for such purpose, it would be recognized as cash. Guarantee deposit over three months in other monetary capital shall not be recognized as cash equivalents, and those less than three months are recognized as cash equivalents. 8. Foreign currency business and foreign currency financial statement conversion (1) Foreign currency business As for the foreign currency business, the Company converts the foreign currency amount into RMB amount pursuant to the spot exchange rate as of the business day. As at the balance sheet date, monetary items expressed by foreign currency are converted into RMB pursuant to the spot exchange rate as of the balance sheet date. The conversion difference occurred is recorded into prevailing gains and losses, other than the disclosure which is made according to capitalization rules for the exchange difference occurred from the special foreign currency borrowings borrowed for constructing and producing the assets satisfying condition of capitalization. As for the foreign currency non-monetary items measured by fair value, the amount is then converted into RMB according to the spot exchange rate as of the confirmation day for fair value. And the conversion difference occurred during the procedure is recorded into prevailing gains and losses directly as change of fair value. As for the foreign currency non-monetary items measured by historical cost, conversion is made with the spot exchange rate as of the business day, with no change in RMB amount. (2) Conversion of foreign currency financial statement Spot exchange rate as of the balance sheet date is adopted for conversion of assets and liabilities in foreign currency balance sheet; as for the items in statement of owners’ equity except for ―Undistributed profit‖, conversion is made pursuant to the spot exchange rate of business day; income and expense items in income statement then are also converted pursuant to the spot exchange rate of transaction day. Difference arising from the aforementioned conversions shall be listed separately in items of owners’ equity. Spot exchange rate as of the occurrence date of cash flow is adopted for conversion of foreign currency cash flow. The amount of cash affected by exchange rate movement shall be listed separately in cash flow statement. 126 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) 9. Financial assets and financial liabilities (1) Financial assets 1) Classification of financial assets In consideration of investment targets and economic essence, the Company groups the financial assets owned by it as four categories, namely financial assets measured by fair value and whose movement is recorded into prevailing gains and losses, held-to-maturity investment, loans and accounts receivables, as well as financial assets available-for-sale. Financial assets measured by fair value and whose movement is recorded into prevailing gains and losses represent the financial assets which are held mainly for disposal in a short time and listed as tradable financial assets in the balance sheet. Held-to-maturity investment represents the non-derivative financial assets which has fixed maturity day, fixed or available-for-confirmation recovered amount and for which the management has definite intention and ability to hold till maturity. Loans and accounts receivables represent the non-derivative financial assets which have no quotation in an active market and fixed or available-for-confirmation recovered amount. Financial assets available-for-sale included the non-derivative financial assets available-for-sale and the financial assets which have not been grouped as others at the initial confirmation. 2) Recognition and measurement for financial assts Financial assets, while become part of the contract of financial instrument in the Company, recognized in balance sheet by fair value. For the financial assets which are measured by fair value and whose fair value change is recorded into prevailing gains and losses, the relevant transaction expense arising from acquisition is recorded into prevailing gains and losses directly, while the relevant transaction expense of other financial assets is recorded into initial recognition amount. Financial assets which are measured by fair value and whose fair value change is recorded into prevailing gains and losses, together with financial assets available-for-sale, would have follow-up measurement according to fair value; effective interest method is adopted for loans and accounts receivables and held-to-maturity investment which are shown in amortized cost. Fair value change of financial assets which are measured by fair value and whose fair value change is recorded into prevailing gains and losses is recorded into gains and losses of fair value change; interests or cash dividend acquired from holding assets are recognized as investment income; when disposing such assets, the difference between their fair value and initial accounting amount is recognized as investment gains and losses. Meanwhile, gains and losses of fair value shall be adjusted. Except impairment losses and exchange gains/loss from financial assets with foreign currency, variation of the fair value for financial assets available for sale should reckon into shareholders’ equity. The variation of fair value accumulative reckon into equity previously should transfer into current gains/losses while 127 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) recognition of this financial asset terminated. For the interest during period of holding for instrument investment of liability available for sale based on real interest rate, and cash dividend related with instrument investment of equity available for sale that announced by invested enterprises should reckon into current gains/losses as investment incomes. 3) Impairment of financial assets Except for the financial assets which are measured by fair value and whose fair value change is recorded into prevailing gains and losses, the Company will make check in the carrying value of other financial assets as at the balance sheet date. If there is objective evidence proving impairment of certain financial assets, the Company then makes provision for impairment. When the financial assets calculated by amortized cost decrease in value, count and draw the provision for impairment according to the balance between present value and book value of predicted future cash flows (Excluding future credit losses that haven’t occurred yet.). If there is any objective evidence to indicate that the financial assets has recovered and is objectively connected with matters occurred after confirming the losses, the formerly confirmed impairment losses will be reversed and reckoned in current profits and losses. When the fair value of financial assets available for sale goes down substantially or non- transiently, the accumulating losses previously and directly reckoned in shareholder's equity and formed due to shrinkage of fair value will be transferred and reckoned in impairment losses. As for the debt instrument investment available for sale with confirmed impairment losses, if its fair value rises after and it is objectively connected with matters occurred after confirming the primary impairment losses, the formerly confirmed impairment losses will be reversed and reckoned in current profits and losses. And the debt instrument investment available for sale with confirmed impairment losses shall be directly reckoned in stockholder's equity if its fair value rises after. 4) Transfer of financial assets The financial assets meet one of following requirements will be terminated recognition: ① The contract rights of collecting cash flow of the financial assets is terminated; ②The financial assets has already been transferred, and the Company has transferred almost all risks and remunerations of financial assets ownership to the transferee; ③The financial assets has been transferred, even though the Company has neither transferred nor kept almost all risks and remunerations of financial assets ownership, the Company has given up controlling the financial assets. If the enterprise has neither transferred or kept almost all risks and remunerations of financial assets ownership, nor given up controlling the financial assets, then confirm the relevant financial assets according to how it continues to involve into the transferred financial assets and confirm the relevant liabilities accordingly. The degree of keeping involving into the transferred financial assets refers to the risk level with which the fluctuation of this financial asset value makes the enterprise face. If the entire transfer of financial assets satisfies the demand for derecognition, reckon the balance between the book value of the transferred financial assets and the sum of consideration received from 128 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) transfer and fluctuation accumulated amount of fair value formerly reckoned in other consolidated income in the current profits and losses. If part transfer of financial assets satisfies the demand for derecognition, apportion the integral book value of the transferred financial assets between the derecognized parts and the parts not yet derecognized according to each relative fair value, and reckon the balance between the sum of consideration received from transfer and fluctuation accumulated amount of fair value formerly reckoned in other consolidated income that should be apportioned to the derecognized parts and the apportioned aforementioned carrying amounts in the current profits and losses. (2) Financial liabilities When making the initial recognition for financial liabilities, the Company classifies the financial liabilities into ones which are measured by fair value and whose change is recorded into prevailing gains and losses, and other financial liabilities. Financial liabilities which are measured by fair value and whose change is recorded into prevailing gains and losses include tradable financial liabilities and financial liabilities which are measured by fair value and whose change is recorded into prevailing gains and losses at the initial recognition day. Follow-up measurements are made by fair value. Recorded into prevailing gains and losses are the gains or losses formed through fair value change and dividend and interest expenditure regarding to the financial liabilities. As for other financial liabilities, effective interest rate method is adopted and follow-up measurement is made according to amortized cost. 1) Method for recognition of fair value of financial assets and liabilities For those financial instruments existing in active markets, market quotation in the active market is used to confirm their fair values. In active market, the Company takes the present bid price of already-held financial assets or plan-to-undertake financial liabilities as the fair values of relevant assets and liabilities; the Company takes the present offer price of plan-to-buy financial assets and –already-undertaken liabilities as the fair values of relevant assets and liabilities. In the situation that there are no present bid and offer price for financial assets and liabilities, while there is no material change in economic environment after the latest business day, then fair value of the financial assets and liabilities is to confirm pursuant to the latest business market quotation. Fair value of the financial instruments which have no active market is confirmed by adoption of estimation technology. Estimation technology includes reference to the price applied by parties which know well situation and are willing to make deals in the latest market business, reference to the current fair value of other financial assets which are the same in principle, reference to discounted cash flow method and option pricing model. 10. Bad debt provision for accounts receivable Allowance method is adopted for the bad debt losses which are likely to happen. And conducting 129 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) impairment test independently or by combination at period-end, withdrawn bad debt provision and then recorded into current gains and losses. As for the accounts receivable which are not able to call back through definite evidence, they shall be treated as bad debt losses after approval of the Group according to regulated procedures to offset withdrawn bad debt provision. The following situation as standards for confirmation of bad debt losses of accounts receivable: revoke, bankruptcy, insolvency, serious insufficiency of cash flow of its debit units, or the debit units have to stop production due to serious natural disaster and are not able to settle the debts or in predicted time, or other definite evidence showing that the debt is not available to call back or the possibility of calling back is tiny. Account receivables were divided as follow categories at period-end, which was performed impairment test in way of individual or group, and withdrawal bad debt provision: (1) Account receivable with single significant amount: If totally amount takes over 80% of the total for over 5% occupied, than 5% of single amount Determine basis or amount in total amounts recognized as single significant amount; if totally amount takes less than standards for single 80% of the total for over 5% occupied, than lower recognition standards till qualified 80% in significant amount total Method of bad debt provision accrual for account Withdrawal bad debt provision according to difference between the current value of future receivable with single major cash flow and book values; if there has no impairment been found in individual test, amount withdrawal bad debt provision while testing by group (2) Account receivable withdrawal bad debt provision based on combination: Basis for combination recognized Combination 1 Account receivable except combination 2 Employee reserve fund, foreign investment amount, contact with related party, export tax refund Combination 2 receivable, account receivable with L/C or insurance, government subsidy etc. Methods on withdrawal of bad debt provision based on combination Combination 1 Withdrawal bad debt provision by proportion in different age group Combination 2 Risks are under control without bad debt provision accrual In combination 1, withdrawal proportion of bad debt provision for account receivable based on age analysis: Withdrawal proportion of account receivable Withdrawal proportion of other account Age (%) receivable (%) Within 1 year (1 year 5 5 included) 1-2years 15 15 2-3 years 35 35 3-4 years 55 55 4-5 years 85 85 Over 5 years 100 100 (3) Account receivable with single minor amount but withdrawal single item bad debt provision: Reasons for withdrawal single Account with minor amount but have significant inflow risk on predicted future cash flow item bad debt provision 130 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Withdrawal method for bad Impairment test on the current value of predicted future cash flow, bad debt provision debt provision withdrawal. 11. Inventories Inventories of the Company principally include raw materials, stock goods; work in process, self-made semi-finished product, materials consigned to precede, low-value consumption goods, goods in transit, goods in process and mould etc. Perpetual inventory system is applicable to inventories. For daily calculation, standard price is adopted for raw materials, low-value consumption goods and stock goods. Switch-back cost of the current month is adjusted by distribution price difference at the end of the month, the dispatched goods will share the cost differences of inventory while in settlement the business income; and low-value consumption goods is carried forward at once when being applied for use; the mould expenses will evenly deferred share based on balance at period-begin plus increase amount in this period divided by 12 months. Inventory at period-end is valued by the Lower-of-value between the cost and net realizable value. For those individual stock, suffering damage, totally or partly out of fashion or has lower sales price than cost, predicted recoverable parts in cost, and withdrawal provision of inventory depreciation single. For those raw materials, stock commodities and goods in transit, withdrawal provision of inventory depreciation by follow methods: (1) Determined the net realizable value of raw materials on the higher amount between the final prices of estimated sale-price deducted cost (about to happen till products finished), estimated sales expense and relevant taxes, and the fair value of external disposal. (2) Withdrawal obsolete provision for commodity stocks and goods in transit by the follow proportion: (1) Refrigerator, freezer and washing machine Withdrawal proportion for obsolete Grade Stock duration provision Within 3 months 0% 4-6 months 5% 7-12 months 15% Grade-A 1-2 years 25% 2-3 years 40% Over 3 years 100% Qualified 40% Grade-B 50% Grade-C 60% Unqualified 60% Disposal 65% Sample machine 30% Special user type that exceed the order quantity 50% (2) Air-conditioner 131 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Withdrawal proportion for obsolete Location level provision Repair 50% Awaiting repair 70% Store return 70% De-stocking 70% Overstock 100% With respect to the inventories and delivered goods which are not vested to the above classification, their realizable net value will be calculated by the Company based on the estimated selling price of the inventories less estimated selling expense and related taxes. The Company re-checks the above mentioned proportion at every end of the year. Calculated the net realizable value by difference between the estimated sale price less the estimated sales expense and relevant taxation; after comparison with the book value of commodity stocks and goods in transit, determined whether adjusted the proportion or not. Mould expense will amortize in installment in usual times. Once the use-life of mould is terminated, and then transfers its remaining cost into gains/losses, no withdrawal of obsolete provision at period-end. 12. Long-term equity investment Long-term equity investment of the Company is mainly about investment in subsidiary, investment in associates and investment in joint-ventures. For long-term equity investments acquired through business combination under common control, the initial investment cost shall be the acquirer’s share of the carrying amount of net assets of the acquiree as of the combination date as reflected in the consolidated financial statement of the ultimate controller. If the carrying amount of net assets of the acquiree as of the combination date is negative, the investment cost of long-term equity investment shall be zero. For long-term equity investment acquired through business combination not under common control, the initial investment cost shall be the combination cost. Excluding the long-term equity investment acquired through business combination, there is also a king of long-term equity investment acquired through cash payment, for which the actual payment for the purchase shall be investment cost; If Long-term equity investments are acquired by issuing equity securities, fair value of issuing equity investment shall be investment cost; for Long-term equity investments which are invested by investors, the agreed price in investment contract or agreement shall be investment cost; and for long-term equity investment which is acquired through debt reorganization and non-monetary assets exchange, regulations of relevant accounting standards shall be referred to for confirming investment cost. The Company adopts cost method for investment in subsidiaries, makes calculation for investments in joint-ventures and associates by equity method. When calculated by cost method, long-term equity investment is priced according to its investment 132 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) cost, and cost of the investment is adjusted when making additional investment or writing off investment; When calculated by equity method, current investment gains and losses represent the proportion of the net gains and losses realized by the invested unit in current year attributable to or undertaken by the investor. When the Company is believed to enjoy proportion of net gains and losses of invested unit, gains and losses attributable to the Company according to its shareholding ratio is to computer out according to the accounting policy and accounting period of the Company, on the basis of the fair value of various recognizable assets of the invested unit as at the date of obtaining of the investment, after offset of gains and losses arising from internal transactions with associates and joint-ventures, and finally to make confirmation after adjustment of net profit of the invested unit. Confirmation on gains and losses from the long-term equity investment in associates and joint-ventures held by the Company prior to the first execution day, could only stand up with the precedent condition that debit balance of equity investment straightly amortized according to its original remaining term has already been deducted, if the aforementioned balance relating to the investment do exist. In case that investor loses joint control or significant influence over investee due to disposal of part equity interest investment, the remaining equity interest shall be calculated according to Enterprise Accounting Principles No.22-Recognition and Measurement of Financial Instrument. Difference between the fair value of the remaining equity interest as of the date when lose of joint control or significant influence and the carrying value is included in current gains and losses. Other comprehensive income recognized in respect of the original equity interest investment under equity method should be treated according to the same basis which the investee adopts to directly dispose the relevant assets or liabilities when ceasing adoption of equity method calculation; and also switches to cost method for calculating the long-term equity investments which entitles the Company to have conduct control over the invested units due to its additional investments; and switches to equity method for calculating the long-term equity investments which entitles the Company to conduct common control or significant influence, while no control over the invested units due to its additional investments, or the long-term equity investments which entitles the Company with no control over the invested units any longer while with common control or significant influence. When disposing long-term equity investment, the balance between its carrying value and effective price for obtaining shall be recorded into current investment income. When disposing long-term equity investment which is calculated by equity method, the proportion originally recorded in owners’ equity shall be transferred to current investment income according to relevant ratio, except for that other movements of owners’ equity excluding net gains and losses of the invested units shall be recorded into owners’ equity. 13. Investment real estate The investment real estate of the Company includes leased houses and buildings, and is accounted value by its cost. Cost of purchased-in investment real estate consists of payment for purchase, relevant taxes and other expenditure which is attributable to the assets directly; while cost of self-built investment 133 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) real estate is formed with all necessary expenditures occurred before construction completion of the assets arriving at the estimated utilization state. Consequent measurement of investment estate shall be measured by cost method. Depreciation is provided with average service life method pursuant to the predicted service life and net rate of salvage value. The predicted service life and net rate of salvage value and annual depreciation are listed as follows: Predicted rate of salvage Depreciation rate per Type Depreciation term value annum Houses and buildings 30-40 years 4%-5% 2.375%-3.20% When investment real estate turns to be used by holders, it shall switch to fixed assets or intangible assets commencing from the date of such turning. And when self-used real estate turns to be leased out for rental or additional capital, the fixed assets or intangible assets shall switch to investment real estate commencing from the date of such turning. In situation of switch, the carrying value before the switch shall be deemed as the credit value after the switch. When investment is disposed, or out of utilization forever and no economic benefit would be predicted to obtain through the disposal, the Company shall terminate recognition of such investment real estate. The amount of income from disposal, transfer, discarding as scrap or damage of investment real estate after deducting the asset’ s carrying value and relevant taxation shall be written into current gains and losses. 14. Fixed assets Fixed assets of the Company represent the tangible assets and assets package: held by the Company for purpose of producing commodities, providing labor service, leasing or operational management, service life exceeds one year, and unit price exceeds RMB 2,000, including four categories of houses and buildings, machinery equipments, transportation equipments and other equipments. Their credit value is determined on the basis of the cost taken for obtaining them. Of which, cost of purchased-in fixed assets include bidding price and import duty and relevant taxes, and other expenditure which occurs before the fixed assets arrive at the state of predicted utilization and which could be directly attributable to the assets; while cost of self-built fixed asset is formed with all necessary expenditures occurred before construction completion of the assets arriving at the estimated utilization state; credit value of the fixed assets injected by investors is determined based on the agreed value of investment contracts or agreements, while as for the agreed value of investment contracts or agreements which is not fair, it shall take its fair value as credit value; and for fixed assets which are leased in through finance leasing, credit value is the lower of fair value of leased assets and present value of minimized leasing payment as at the commencing date of leasing. Consequent expenditure related to fixed assets consists of expenditures for repair and update reform. For those meeting requirements for reorganization of fixed assets, they would be accounted as fixed asset cost; and for the part which is replaced, reorganization of its carrying value shall cease; for those not meeting requirements for reorganization of fixed assets, they shall be accounted in current gains and losses 134 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) as long as they occur. When fixed asset is disposed, or no economic benefit would be predicted to obtain through utilization or disposal of the asset, the Company shall terminate reorganization of such fixed asset. The amount of income from disposal, transfer, discarding as scrap or damage of fixed asset after deducting the asset’ s carrying value and relevant taxation shall be written into current gains and losses. The Company withdraws depreciation for all fixed assets except for those which have been fully depreciated while continuing to use. It adopts average service life method for withdrawing depreciation which is treated respectively as cost or current expense of relevant assets according to purpose of use. The depreciation term, predicted rate of salvage value and depreciation rate applied to fixed assets of the Company are as follows: Predicted rate of salvage Depreciation rate per No. Type Depreciation term value annum 1 Houses and buildings 30-40 years 4%-5% 2.375%-3.20% 2 Machinery equipments 10-14 years 4%-5% 6.786%-9.60% 3 Transport equipment 5-12 years 4%-5% 7.92%-19.20% 4 Other equipments 8-12 years 4%-5% 7.92%-12.00% The Company makes re-examination on predicted service life, predicted rate of salvage value and depreciation method at each year-end. Any change will be treated as accounting estimation change. 15. Construction in process Construction in process is measured with effective cost. Self-operated constructions projects are measured with direct materials, direct salaries and direct construction expense; construction projects undertaken by external are measured with the engineering payment payable; and engineering cost (income abatement) of equipment-installation projects is confirmed with consideration of value of the equipments, installation fee, and expenditure arising from trial operation of the projects. Borrowing expense and exchange gains and losses which should be capitalized are also included in cost of construction in process. 16. Borrowing expense Borrowing expenses include interest expense, amortization of discount or premium, auxiliary expenses and exchange difference due to borrowing in foreign currency. The borrowing expense which could be directly attributable to purchase or production of assets satisfying capitalization condition, starts capitalization when capital expenditure and borrowing expense occur and when necessary purchase or production conducted for promoting assets to reach the predicted available-for-use or available-for-sale state; and capitalization shall cease when purchased or produced assets satisfying capitalization condition have reached the predicted available-for-use or available-for-sale state. Other borrowing expense is recognized as expense during the occurrence period. Capitalization shall be exercised for interest expense actually occurred from special borrowings in current period after deduction of the interest income arising from unutilized borrowing capital which is saved in banks or deduction of investment income obtained from temporary investment; For reorganization of capitalized amount of common borrowing, it equals to the weighted average of the 135 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) assets whose accumulated expense or capital disburse is more than common borrowing times capitalization rate of occupied common borrowing. Capitalization rate is determined according to weighted average interest rate of common borrowing. Assets satisfying capitalization principle generally refer to fixed assets, investment real estate and inventories which can only arrive at predicted available-for-use and available-for-sale state after quite a long time (generally over one year) in purchase or production activities. If abnormal interruption happens during purchase or production of assets satisfying capitalization principle and the interruption lasts over 3 months, the capitalization for the borrowing expense shall pause until the purchase or production restarts. 17. Intangible assets The Company holds intangible assets including land use right, trademark, patent technology and non-patent technology. Intangible assets are measured according to the effective costs paid for obtaining the assets. For those intangible assets purchased in by the Company, their effective cost consist of actual payment and relevant other expenditure; for the intangible assets input by investors, effective cost is determined according to the value agreed in investment contracts and agreements, while if the agreed value is not fair, then effective value is confirmed according to fair value. Land use right is averagely amortized according to its transfer term commencing from the sate of transfer; trademark use-rights averagely amortized by 10 years; patent technology, non-patent technology and other intangible assets is averagely amortized according to the shortest of their predicted service life, beneficial term concluded by contract and effective term regulated by laws. Amortization amount is recorded in assets cost and current gains and losses relevant to beneficial objectives. Re-examination on predicted service life and amortization method of the intangible assets which have limited service life shall be conducted at the end of each year. If changed, it would be treated as change of accounting estimation. Re-examination on predicted service life of intangible assets which have uncertain service life shall be conducted. For any evidence proving that service life of intangible assets is limited, then the service life shall be estimated and the Company shall make amortization within the predicted service life period. 18. Research and development As for expenditure for research and development, the Company classifies it into expenditure on research phase and development phase, based on nature of the expenditure and that whether the final intangible assets formed by research & development is of great uncertainty. Expenditure arising during research should be recorded in current gains and losses upon occurrence; expenditure arising during development is confirmed as intangible assets when satisfying the following conditions: (1) Completions of the intangible assets make it available for application or sell in technology; (2) Equipped with plan to complete the intangible asset and apply or sell it; 136 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) (3) There is market for products produced with this intangible assets or the intangible asset itself; (4) Have sufficient technology, financial resource and other resources to support development of the intangible assets, and have ability to apply or sell the assets; (5) Expenditure attributable to development of the intangible assets could be reliable measured. Expenditure arising during development not satisfying the above conditions shall be recorded in current gains and losses upon occurrence. Development expenditure which had been recorded in gains and losses in previous period would not be recognized as assets in later period. Expenditure arising during development phase which has been starting capitalization is listed in balance sheet as development expenditure, and transferred to intangible assets since the project reaches at predicted utilization state. 19. Impairment of non-financial long-term assets As at each balance sheet date, the Company has inspection on long-term equity investment, fixed assets, construction in process and intangible assets with limited service life. When the following indications appear, assets may be impaired, and the Company would have impairment test. As for goodwill and intangible assets which have uncertain service life, no matter there is impairment or not, impairment test shall be conducted at the end of every year. If it is hard to make test on recoverable amount of single asset, test is expected to make on the basis of the assets group or assets group portfolio where such asset belongs to. After impairment test, if the carrying value exceeds the recoverable amount of the asset, the balance is recognized as impairment loss. As long as impairment loss of the aforementioned assets is recognized, it couldn’t be switched back in later accounting periods. Recoverable amount of assets refers to the higher of fair value of assets net disposal expense and present value of predicted cash flow of the asset. Indications for impairment are as follows: (1) Market value of asset drops a lot in current period, the drop scope is obviously greater than the predicted drop due to move-on of times or normal utilization; (2) Economy, technology or law environment where enterprise operates or market where asset is located will have significant change in current or recent periods, which brings negative influence to enterprise; (3) Market interest rate or returning rate of other market investments have risen in current period, which brings influence in calculating discount rate of present value of predicted future cash flow of assets, which leads to a great drop in recoverable amount of such assets; (4) Evidence proving that asset is obsolete and out of time or its entity has been damaged; (5) Asset has been or will be keep aside, terminating utilization or disposed advance; (6) Internal report of enterprise shows that economic performance of asset has been or will be lower than prediction, such as that net cash flow created by asset or operation profit (or loss) realized by asset is 137 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) greatly lower (or higher) than the predicted amount; (7) Other indications showing possible impairment of assets. 20. Goodwill Goodwill represents balance between equity investment cost or business combination cost under no common control exceeding the attributable part or fair value of recognizable net assets of party invested or purchased (obtained through business combination) as of acquisition day or purchase day. Goodwill relating to subsidiaries is separately listed in consolidated financial statement. And goodwill relating to associates and joint-ventures is included in carrying value of long-term equity investment. 21. Long-term deferred expenses Long-term deferred expenses of the Company refer to the expense which has been paid out while should be amortized from the current period and periods thereafter, with amortization term over 1 year (excluding 1 year). Such expense is averagely amortized during the beneficial period. If such long-term deferred expense could not bring benefit to following accounting periods, the unamortized value of the item shall be fully transferred to current gains and losses. 22. Staff remuneration Employee benefits mainly include all kinds of remuneration incurred in exchange for services rendered by employees or compensation to the termination of employment relationship such as short-term wages, post-employment benefits, compensation for the termination of employment relationship and other long-term employee welfare. Short-term remuneration includes: staff salary, bonus, allowances and subsidies, staff benefits, social insurances like medical insurance, work-related injury insurance and maternity insurance, housing fund, labor union funds and staff education funds, short-term paid absence of duty, short-term profit sharing scheme, and non-monetary benefits as well as other short-term remuneration. During the accounting period when staff provides services, the short-term remuneration actually occurred is recognized as liabilities and shall be included in current gains and losses or related asset costs according to the beneficial items. Retirement benefits mainly consist of basic pension insurance, unemployment insurance and early-retirement benefits, etc. retirement benefit scheme represents the agreement reached by the Company and its employees in respect of retirement benefits, or the rules or regulations established by the Company for providing retirement benefits to employees. In particular, defined contribution plan means a retirement benefit plan, pursuant to which, the Company makes fixed contribution to independent fund, upon which, and it is not obliged to make further payment. Defined benefit plan refers to retirement benefit scheme other than defined contribution plan. The early retirement policy for staff and workers of the Company is the compensation for encouraging staff and workers to accept the reduction voluntarily. The employees make applications 138 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) voluntarily, the two parties sign the compensation agreement after approved by the Company and calculate the compensation amount according to the compensation standard passed by the staff representative conference, and the Company confirms it as dismiss welfare and reckons it in current profits and losses. As the Company promises to adjust the treatment for early retiring staff and workers with the increase of social basic cost of living allowances, the discount elements will not be considered for calculating the dismiss welfare. 23. Estimated liabilities If the business in connection with such contingencies as a security involving a foreign party, commercial acceptance bill discount, pending litigation or arbitration, product quality assurance, etc. meets all of the following conditions, the Company will confirm the aforesaid as liabilities: the obligation is an existing obligation of the Company; performance of the obligation is likely to cause economic benefits to flow out of the enterprise; the amount of the obligation is reliably measurable. 24. Principle of recognition of revenue and measurement method The Company’s sales revenue is mainly comprised of revenue from sale of goods, labor providing income and revenue from assignment of asset use rights. The principle of recognition of such revenue is as follows: (1) Revenue from the sale of goods shall be recognized when the Company has transferred to the buyer the significant risks and rewards of ownership of the goods; the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; the amount of revenue can be measured reliably; it is probable that the associated economic benefits will flow into the Company; The export business is recognized when the packing list is received; and the associated costs incurred or to be incurred can be measured reliably. Air-conditioner OEM/ODM will recognize revenue while notes issued after commodity transferring to the shipping space that appointed by the client. (2) The Company confirms the realization of service income when the gross income and total cost of labor service cab be unfailingly calculated, the economic benefits related to labor service are likely to flow into the Group, and the progress of labor service can be confirmed reliably. On balance sheet date, with regard to those with results provided for labor service transactions can be estimated reliably, confirm the relevant service income according to percentage of completion method and determine the percentage-of-completion method by the proportion of the occurred cost in the estimated total cost; as for those with results provided for labor service transactions can’t be estimated reliably and with occurred labor cost predicted to be able to get compensation, confirm to provide service income according to labor cost amount occurred and capable of getting compensation, and carry over the occurred labor costs; for those with results provided for labor service transactions can’t be estimated reliably and with occurred labor cost predicted to be not able to get compensation, reckon the occurred labor cost in the current profits and losses, but not confirm to provide service income. 139 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) (3) The economy benefit of use-right of transfer assets probably wills inflow to the Company, if the income can be measure accountability, than use-right income of transfer assets recognized. 25. Government subsidies Government subsidy at the Company be able to meet its attached conditions, and can be confirmed when received. Government grants for monetary assets, in accordance with the measurement of the amount actually received, according to a fixed quota for the allocation of the grant criteria, in accordance with the amount of accounts receivable measurement; government subsidies for non-monetary assets, in accordance with the fair value, fair value should not reliably achieved, in accordance with the notional amount (RMB 1.00) measurement. Asset-related government grants recognized as deferred income, and average life of related assets included in the current profit and loss distribution. With the proceeds of the relevant government subsidies to compensate for the period after the relevant costs or losses recognized as deferred income and, while recognizing the associated costs included in current period profit and loss; for compensation related costs that have occurred or loss, directly gains and losses included in the current period. Government subsidies related to the daily activities of the enterprise shall be included in other income or offset the relevant costs in accordance with the essence of the economic business. Government subsidies not related to the daily activities of the enterprise shall be included in the non-operating income and expenditure. 26. Deferred Income Tax Assets and Deferred Income Tax Liabilities A deferred tax asset and deferred tax liability shall be determined by a difference (temporary difference) between the carrying amount of an asset or liability and its tax base. The deferred tax asset shall be recognized for the carry forward of unused deductible losses that it is probable that future taxable profits will be available against which the deductible losses can be utilized. For temporary difference arising from initial recognition of goodwill, no corresponding deferred income tax liabilities will be recognized. For temporary difference arising from initial recognition of assets and liabilities occurred in the transaction related to non business combination which neither affect accounting profit nor assessable income (or deductable losses), no corresponding deferred income tax assets and deferred income tax liabilities will be recognized. As of the balance sheet date, deferred income tax assets and deferred income tax liabilities are measured at the effective tax rate applicable to the period when recovery of assets or settlement of liabilities occur. The Company recognizes deferred income tax assets to the extent of future assessable income tax which is likely to be obtained to offset deductable temporary difference, deductable losses and tax credits. 27. Lease The Company categorizes the lease into the financial lease and the operating lease. The financial lease is the lease in which all risks and returns related to the ownership of assets are 140 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) transferred in substance. The Company as a lease holder, on the date of lease, the financial lease is recognized as the fixed asset at lower cost of fair value of the rental asset and the NPV of minimum payment of leasing. The minimum payment of leasing is recognized as long-term payable and the difference is accounted into unrecognized financing expense. The operating lease is the lease apart from the financial lease. The Company, as a lease holder, accounts the rents into current period by straight line method during the term of the lease. The Company, as a leaser, accounts the rental income into current period by straight line method during the term of the lease. 28. Income tax accounting The Company accounted the income tax in a method of debit in balance sheet. The income tax expenses include income tax in the current year and deferred income tax. The income tax associated with the events and transactions directly included in the owners’ equity shall be included in the owners’ equity; and the deferred income tax derived from business combination shall be included in the carrying amount of goodwill, except for that above, the income tax expense shall be included in the profit or loss in the current period. The income tax expense in the current year refers to the tax payable, which is calculated according to the tax laws on the events and transactions incurred in the current period. The deferred income tax refers to the difference between the carrying amount and the deferred tax assets and deferred tax liabilities at the year-end recognized in the method of debit in the balance sheet. 29. Segment information Business segment was the major reporting form of the Company, which divided into 5 parts: air-conditioner, refrigerator and freezer, marketing, Small household appliances and others. The transfer price among the segments will recognize based on the market price, common costs will allocated by income proportion between segments except for the parts that without reasonable allocation. 30. Explanation on significant accounting estimation The management of the Company needs to apply estimation and assumption when preparing financial statement which will affect the application of accounting policy and amounts of assets, liabilities, income and expense. The actual condition may differ from the estimation. Constant evaluation is conducted by the management in respect of the key assumption involved in the estimation and judgment of uncertainties. Effect resulting from change of accounting estimation is recognized in the period the change occurs and future periods. The following accounting estimation and key assumption may result in material adjustment to the book value of assets and liabilities in future period. (1) Inventory impairment provision The Company provides impairment provision according to the type of finished products and goods 141 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) delivered under fixed proportion, and estimates the realizable net value of inventories by reference to the projected selling price of similar inventories less sales expenses and related taxes on a regular basis, so as to evaluate the rationality of the provision proportion. If the actual selling price or expense differs from the previous estimation, the management will make corresponding adjustment to the proportion. The estimation results based on existing experiences may differ from the latter actual results, which may result in adjustment to the book value of inventories in the balance sheet and affect over the gains and losses of the period when the estimation changes. (2) Accounting estimation on long-term assets impairment provision The Company makes impairment test on fixed assets such as buildings, machine and equipments which have impairment indication and long-term assets such as goodwill as at the balance sheet date. The recoverable amount of relevant assets and assets group shall be the present value of the projected future cash flow which shall be calculated with accounting estimation. If the management amends the gross profit margin and discount rate adopted in calculation of future cash flow of assets and assets group and the amended gross profit margin is lower than the currently adopted one or the amended discount rate is higher than the currently adopted one, the Company needs to increase provision of impairment provision. If the actual gross profit margin is higher (or the discount rate is lower) than the estimation of management, the Company cannot transfer back the long term assets impairment provision provided already. (3) Accounting estimation on realization of deferred income tax assets Estimation on deferred income tax assets needs estimation on the taxable income and applicable tax rate for each future year. Realization of deferred income tax assets depends on whether a company is able to obtain sufficient taxable income in future. Change of future tax rate and switch back of temporary difference could affect the balance of income tax expense (gains) and deferred income tax. Change of the aforesaid estimation may result in material adjustment to deferred income tax. (4) Usable term and residual value rate of fixed assets and intangible assets The Company, at least at the end of each accounting year, reviews the projected usable life and residual value rate of fixed assets and intangible assets. The projected usable life and residual value rate are determined by the management based on the historical experiences of similar assets by reference to the estimation generally used by the same industry with consideration on projected technical upgrade. If material change occurs to previous estimation, the Company shall accordingly adjust the depreciation expenses and amortization expenses for future period. (5) Projected liabilities arising from product quality guarantee The Company commits to repair the major spare parts of refrigerators sold through go-to-countryside promotion activity for free for ten years. As to the maintenance expenses that may be increased arising from such commitment, the Company has provided projected liabilities. 142 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Taking into account the various uncertainties during the ten years, the Company considers no discount factor of such projected liabilities. Instead, the Company reviews the parameters (probability, proportion, maintenance expense per single set) based on the actual occurrence of maintenance expenses as of each balance sheet date. If obvious change is found, the Company will adjust the projected liabilities according to the latest parameters so as to reflect the best estimation. 31. Other comprehensive income Other comprehensive income represents various gains and losses not recognized in current gains and losses according to other accounting rules. Other comprehensive income items shall be reported in the following two classes under other relevant accounting rules: (1) Other comprehensive income items that cannot be reclassified into gains and losses in future accounting periods, mainly including changes arising from re-measurement of net liabilities or net assets under defined benefit plan and interest in investee’s other comprehensive income which are measured under equity method and which cannot be reclassified into gains and losses in future accounting periods; (2) Other comprehensive income items that will be reclassified into gains and losses in future accounting periods upon satisfaction of required conditions, mainly including interest in investee’s other comprehensive income which are measured under equity method and which will be reclassified into gains and losses in future accounting periods upon satisfaction of required conditions, gains or losses arising from change of fair value of available-for-sale financial assets, gains or losses arising from reclassification of held-to-maturity investment into available-for-sale financial assets, gains or losses occurred by cash flow hedging instruments attributable to effective hedge, foreign currency financial statement translation difference, etc. 32. Change of significant accounting policies and accounting estimates (1) Change of significant accounting policies The Company had no change of significant accounting policies in the period. (2) Change of significant accounting estimates The Company had no change of significant accounting estimates in the period. V. Taxation (I) Major taxes (expenses) and tax (expense) rates Tax(expenses) Tax base Tax rate VAT Income from sales of goods and from processing 17%、13%、6%、5% Urban maintenance and Turnover tax 5% or 7% construction tax Education surcharge Turnover tax 3% Local education surcharge Turnover tax 2% 143 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Tax(expenses) Tax base Tax rate Corporate income tax Taxable income 15% or 25% Original Book value of house property×(1-30%)or House Property Tax 1.2% or 12% annual rent income Land use tax Actual land area used RMB 2.5/M2 to RMB 15/M2 2. Preferential tax and approval documents The Company and its subsidiary Zhongke Meiling Cryogenics Technology Limited Company were recognized as second Hi-Tech Enterprise for year of 2014 in Anhui Province with term of three years. Therefore, the Company and its subsidiary Zhongke Meiling Cryogenics Technology Limited Company enjoys 15% rate for the income tax for State Hi-Tech Enterprise. On 22 January 2015, being recognized by ―Name Lists of First Hi-Tech Enterprise for year of 2014 in Anhui Province‖[WGQR(2014) No. 37] from Anhui Science & Technology Department, the Company and Zhongke Meiling Cryogenics Technology Limited Company continuous to enjoy 15% rate for the income tax for State Hi-Tech Enterprise for three years term. Subsidiary Zhongshan Changhong Electric Co., LTD. was recognized as First Hi-Tech Enterprise for year of 2008 in Guangdong Province with 15% rate for the income tax for State Hi-Tech Enterprise enjoys for term of three years. On 10 October 2014, being recognized by ―Name Lists of Second Hi-Tech Enterprise for year of 2014 in Guangdong Province‖[YKGS(2014) No.15] from Guangdong Science & Technology Department, Zhongshan Changhong Appliance Co., Ltd. continuous to enjoy 15% rate for the income tax for State Hi-Tech Enterprise for three years term. The subsidiary Sichuan Changhong Air Conditioning Co., Ltd. has passed the review for high-tech enterprise certification on December 8, 2016, which is valid for three years. After passing the filing and auditing of tax bureau, the company will only pay the corporate income tax by 15% of the tax rate. Subsidiary Mianyang Meiling Software Technology Co., Ltd. pass the software enterprise certificate on 27 June 2014, and obtained the Software Enterprise Certification [Chuan No.:R-2014-0072]. Calculating the promotion period since the year of profit-making, the 1st year to 2nd year, the income tax shall be exempted, levy income tax based on half of the statutory rates from the 3rd year to 5th year, and enjoy the preferential till expired. Subsidiary Mianyang Meiling Software Technology Co., Ltd. pass the software enterprise certificate on 27 June 2014, and obtained the Software Enterprise Certification [Chuan No.:R-2014-0072]. Calculating the promotion period since the year of profit-making, the 1st year to 2nd year, the income tax shall be exempted, levy income tax based on half of the statutory rates from the 3rd year to 5th year, and enjoy the preferential till expired. Subsidiary Guangdong Changhong Ridian Technology Co., Ltd. obtained a High-Tech Enterprise certificates on 9 December 2016 with three-year valid, and the enterprise enjoys 15% favorable income 144 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) tax for the national high-tech enterprise VI. Notes to the major items in the consolidated financial statements With respect to the financial statements figures disclosed below, unless otherwise specified, ―year-beginning‖ refers to Jan. 1, 2017, ―period-end‖ refers to June 30, 2017, ―the period‖ refers to Jan. 1 to June 30, 2017, ―the last period‖ refers to Jan. 1 to June 30, 2016, the currency is RMB. 1. Monetary fund Item Balance at period-end Balance at year-begin Cash 83,233.09 94,415.53 Bank deposit 4,349,072,332.23 3,827,367,022.13 Other Monetary fund 569,030,082.45 231,407,796.97 Total 4,918,185,647.77 4,058,869,234.63 Including: total amount deposited in overseas 11,786,986.88 19,067,202.50 Other monetary fund: Item Amount at period-end Deposits 528,902,400.86 Account of foreign currency for verification 34,005,529.84 Union Pay online 4,456,393.66 Taobao account 1,665,758.09 Total 569,030,082.45 Among the other monetary fund, the cash deposit (with over three months restiction) and account of third payment platform are not considered as the cash and cash equivalent, which amounting to 108,727,129.38 Yuan in total. According to the national policies relating to foreign exchange management, all goods payment denominated in foreign currency should be transferred to reviewing accounts which may not be used temporarily. Upon approval of such review, those payments may be transferred to general accounts. Due to the relatively short time for reviewing foreign exchange, balance of the reviewing accounts is not limited on utilization. 2. Financial assets measured at fair value and whose changes are recorded in the profits and losses of the current period Item Balance at period-end Balance at year-begin Derivative financial assets 10,813,272.50 12,060,213.30 Derivative financial assets refer to the RMB forward exchange fund in the period. 3. Notes receivable (1) Category of notes receivable 145 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Item Balance at period-end Balance at year-begin Bank acceptance bill 2,314,320,720.47 1,096,452,069.60 Commercial acceptance bill 197,394,708.94 324,977,654.13 Total 2,511,715,429.41 1,421,429,723.73 (2) Notes receivable mortgaged by end of the year Item Amount mortgaged by end of the period Bankacceptance 586,118,629.32 Note: in order to improve the utilization rate of notes, the Company pledged to banks those notes that haven’t expired yet in exchange for issuance of banking acceptance drafts. (3) Note receivables endorsement or discount at year-end and are not expired on balance sheet date No termination Termination confirmation Item confirmation amount at amount at period-end period-end Bank acceptance bill 2,235,142,755.76 Commercial acceptance bill 242,420,369.40 Total 2,477,563,125.16 (4) Notes transfer to account receivable due to the failure implementation from drawer at year-end: Nil 4 Accounts receivable (1) Account receivable by category Amount at period-end Category Book balance Bad debt provision Book value Percent Percent Amount Amount age age Significant account receivable and withdrawal bad debt provision single Account receivable withdrawal bad debt provision by combination Combination 1 1,425,699,322.29 66.91% 73,041,490.89 5.12% 1,352,657,831.40 Combination 2 690,888,200.94 32.42% - - 690,888,200.94 Subtotal of combination 2,116,587,523.23 99.33% 73,041,490.89 3.45% 2,043,546,032.34 Account receivable with single minor amount 14,236,410.51 0.67% 9,449,901.74 66.38% 4,786,508.77 but withdrawal bad debt provision singly Total 2,130,823,933.74 100.00% 82,491,392.63 3.87% 2,048,332,541.11 (Continued) Amount at year-begin Category Book balance Bad debt provision Book value 146 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Percent Percent Amount Amount age age Significant account receivable and withdrawal bad debt provision single Account receivable withdrawal bad debt provision by combination Combination 1 834,543,507.58 71.22% 43,843,529.45 5.25% 790,699,978.13 Combination 2 323,321,432.79 27.59% 0.00% 323,321,432.79 Subtotal of combination 1,157,864,940.37 98.81% 43,843,529.45 3.79% 1,114,021,410.92 Account receivable with single minor amount 13,898,468.17 1.19% 8,959,326.60 64.46% 4,939,141.57 but withdrawal bad debt provision singly Total 1,171,763,408.54 100.00% 52,802,856.05 4.51% 1,118,960,552.49 1) No account receivable with single major amount but withdrawal bad debt provision singly at period-end. 2) Account receivable with withdrawal bad debt provision for combination 1 by aging account Balance at period-end Age Account receivable Bad debt provision Provision proportion Within 1 year 1,415,374,510.68 70,768,725.53 5.00% 1-2 years 7,781,228.46 1,167,184.27 15.00% 2-3 years 2,003,415.01 701,195.25 35.00% 3-4 years 250,015.02 137,508.26 55.00% 4-5 years 155,170.28 131,894.74 85.00% Over 5 years 134,982.84 134,982.84 100.00% Total 1,425,699,322.29 73,041,490.89 3) Account receivable with no withdrawal bad debt provision for combination 2 Combination Book balance Account connect with related parties 574,882,713.94 Letter of Credit 116,005,487.00 Total 690,888,200.94 4) Account receivable with single minor amount but withdrawal bad debt provision singly, refers to the minor single receivables, and withdrawal bad debt provision by combination shows no risk characteristic of the receivables, 11 clients involved. (2) Bad debt reserve provided for, reversed (or recovered) during this period New accrual bad debts in the period amounting to RMB 29,688,536.58, no trade receivables written-off in previous year were recovered. (3) No account receivable actually written-off in the period. 147 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) (4) In the period, top five receivables collected by arrears party amounting to RMB 857,662,386.81 in total, accounted for 40.25% of the receivables at balance of the period-end, the bad debt provision accrual correspondingly amounting to RMB 16,602,557.02 at period-end balance. 5. Accounts paid in advance (1) Age of account paid in advance Amount at period-end Amount at year-begin Item Amount Percentage Amount Percentage Within 1 year 286,492,615.39 98.85% 131,113,656.82 97.33% 1-2 years 2,764,333.17 0.95% 2,983,725.64 2.22% 2-3 years 186,787.65 0.06% 487,258.38 0.36% Over 3 years 392,324.70 0.14% 121,847.54 0.09% Total 289,836,060.91 100.00% 134,706,488.38 100.00% (2) Top 5 of account paid in advance in balance at period-end amounting to RMB 201,885,181.30, accounted for 69.65% of the account. 6. Interest receivable Item Balance at period-end Balance at year-begin Deposit interest receivable 3,229,356.48 2,645,494.32 7. Other accounts receivable (1) Category of other account receivable Amount at period-end Category Book balance Bad debt provision Bookvalue Percent Amount Percentage Amount age Significant other account receivable and withdrawal bad debt provision single Other account receivable withdrawal bad debt provision by combination Combination 1 11,062,149.18 15.54% 2,360,977.37 21.34% 8,701,171.81 Combination 2 59,836,339.63 84.08% - - 59,836,339.63 Subtotal of combination 70,898,488.81 99.62% 2,360,977.37 3.33% 68,537,511.44 Other account receivable with single minor 100.00 267,932.63 0.38% 267,932.63 - amount but withdrawal bad debt provision singly % Total 71,166,421.44 100.00% 2,628,910.00 3.69% 68,537,511.44 (Continued) Amount at year-begin Category Book balance Bad debt provision Bookvalue Percent Percent Amount Amount age age Significant other account receivable and 148 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Amount at year-begin Category Book balance Bad debt provision Bookvalue Percent Percent Amount Amount age age withdrawal bad debt provision single Other account receivable withdrawal bad debt provision by combination Combination 1 8,798,418.31 20.99% 2,091,596.95 23.77% 6,706,821.36 Combination 2 32,347,098.08 77.18% 32,347,098.08 Subtotal of combination 41,145,516.39 98.17% 2,091,596.95 5.08% 39,053,919.44 Other account receivable with single minor 767,932.63 1.83% 267,932.63 34.89% 500,000.00 amount but withdrawal bad debt provision singly 100.00 Total 41,913,449.02 2,359,529.58 5.63% 39,553,919.44 % 1) No significant other account receivable and no withdrawal bad debt provision single at period-end. 2) Other account receivable with withdrawal bad debt provision for combination 1 by aging account Balance at period-end Age Account receivable Bad debt provision Provision proportion Within 1 year 7,661,808.58 383,090.43 5.00% 1-2 years 706,540.60 105,981.09 15.00% 2-3 years 969,067.92 339,173.77 35.00% 3-4 years 180,000.00 99,000.00 55.00% 4-5 years 740,000.00 629,000.00 85.00% Over 5 years 804,732.08 804,732.08 100.00% Total 11,062,149.18 2,360,977.37 3) Other account receivable with no withdrawal bad debt provision for combination 2 Combination Book balance Contact with related party 200,000.00 Employee’s reserve loans 29,892,444.67 Export rebate 29,743,894.96 Total 59,836,339.63 4) The other account receivable with major amount at period-end and accrual for bad debt provision single refers to the receivable amount of 267,932.63 Yuan from Guangdong Xiongfeng Electric Co., Ltd. (2) Reversal (or withdraw) of reserve for bad debts in the period New accrual bad debts in the year amounting to RMB 269,380.42, no trade receivables written-off in previous year were recovered. 149 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) (3) No actual verification of other receivables in the period. (4) Classification of other accounts receivable according to the nature of account Nature Book balance at period-end Book balance at year-begin Employee’s reserve loans 29,892,444.67 18,784,317.17 Non-consolidated related party 200,000.00 12,870,014.08 Deposit 7,990,509.82 8,062,507.62 Advance money temporary 267,932.63 1,413,879.45 Export rebate 29,743,894.96 159,982.87 Other 3,071,639.36 622,747.83 Total 71,166,421.44 41,913,449.02 (5) Top 5 other receivables collected by arrears party at balance of period-end: Bad Balance Proportion in total Balance at at period-end Name Nature ofaccount Bookage other receivables at period-end of debt period-end provision State Administration of Taxation of Hefei Economic Within 1 Export rebate 29,358,965.71 41.25% & Technological year Development Zone Employees Within 1 Fei Ming 4,293,600.00 6.03% deposit year Within 1 Nanjing Customs of PRC Cash deposit 1,775,972.11 2.50% 88,798.61 year Employees Within 1 Li Miao 1,090,329.05 1.53% deposit year Beijing Tongzhou New Rural Guarantee Within 1 1,000,000.00 1.41% 50,000.00 Construction Service Center money year Total 37,518,866.87 52.72% 138,798.61 (6) No other account receivable involved government subsidies at period-end. (7) No other receivables terminated reorganization due to the transfer of financial assets at period-end. (8) No assets and liability transfer other receivables and continues to involve at period-end. 8. Inventories (1) Classification of inventories Amount at period- end Item Bookbalance Impairment provision Book value Rawmaterials 322,314,685.16 2,144,408.97 320,170,276.19 Stockcommodities 1,825,782,218.57 79,589,804.12 1,746,192,414.45 Low value consumable articles 12,545,529.30 - 12,545,529.30 Goodsin transit 426,481,411.06 8,326,761.05 418,154,650.01 150 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Amount at period- end Item Bookbalance Impairment provision Book value Goods-in-process 41,023,888.17 - 41,023,888.17 Deferred expense for moulds 44,451,856.35 - 44,451,856.35 Total 2,672,599,588.61 90,060,974.14 2,582,538,614.47 (Continues) Amount at year- begin Item Bookbalance Impairment provision Book value Rawmaterials 239,470,144.24 2,133,956.27 237,336,187.97 Stockcommodities 1,477,211,122.85 71,224,130.62 1,405,986,992.23 Low value consumable articles 11,908,736.75 - 11,908,736.75 Goodsin transit 245,587,568.44 2,700,789.83 242,886,778.61 Goods-in-process 31,950,329.21 - 31,950,329.21 Deferred expense for moulds 44,457,710.09 - 44,457,710.09 Total 2,050,585,611.58 76,058,876.72 1,974,526,734.86 (2) Inventory falling price reserves Amount at Amount at Increased in the Decreased in the period Item period-end year-begin period Switch-back Other switch-out Raw materials 2,133,956.27 10,447.01 2,144,403.28 Stock 71,224,130.62 9,586,178.63 1,220,499.44 79,589,809.81 commodities Goods in 2,700,789.83 5,795,290.81 169,319.59 8,326,761.05 transit Total 76,058,876.72 15,391,916.45 1,389,819.03 90,060,974.14 (3) Provision for inventories Reasons for the Item Specific basis for determining of net realizable value Switch-back or conversion in the period Cost is higher than net realizable value (The processed products are Raw materials decline) Stock Cost is higher than net realizable value (The market price at period-end fell) commodities Cost is higher than net realizable value (The market price at period-end Goods in transit fell) Cost is higher than net realizable value (The processed products are Goods in process decline) 151 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) 9. Non-current assets due within one year Balance at Nature Item Balance atperiod-end year-begin Time deposits due within one 46,133,664.00 12,625,340.00 Reclassification of time deposit year Note: This project is the three-year term fixed deposit that the subsidiary Zhongshan Changhong has deposited at Guangdong Development Bank Zhongshan Branch for getting the bank’s long-term loan. The deposit amount is US $ 6,810,000.00 dollars, will expire in 2017 and reclassify to this project. 10. Other current assets Item Balance atperiod-end Balance at year-begin Nature Financial products 1,767,200,000.00 1,385,200,000.00 Bank financial products Value-added tax to be Reclassify of value-added 86,050,824.57 56,525,274.99 deducted tax to be deducted Advance payment of income Reclassify of advance 11,124,666.91 12,357,316.25 tax payment of income tax Re-classify the prepaid Advance payment of taxes 3,307,780.55 263,706.18 construction tax and and surcharges education surcharge Total 1,867,683,272.03 1,454,346,297.42 11. Finance asset available for sales (1) Finance asset available for sales Balance atperiod-end Balance at year-begin Item Impairm Impairme Bookbalance ent Book value Bookbalance nt Book value provision provision Equity instrument available for 31,000,000.00 31,000,000.00 17,000,000.00 17,000,000.00 sales Including: measured by cost 31,000,000.00 31,000,000.00 17,000,000.00 17,000,000.00 Total 31,000,000.00 31,000,000.00 17,000,000.00 17,000,000.00 (2) Finance asset available for sales measured by cost at period-end Holding Cash Decrease Increase in proportion dividend Invested Unit Year-begin in the Period-end the period in invested for the period unit period Huishang Bank Co., Ltd. 5,000,000.00 5,000,000.00 0.0972% - Sichuan Hongyun New it 14,000,000.0 12,000,000.00 26,000,000.00 16.00% Investment Fund 0 14,000,000.0 Total 17,000,000.00 31,000,000.00 - 0 (3) No impairment reserve of finance asset available for sales at period-end. 152 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) 12. Long-term equity investment Change in the period Impairmen Balance at Investment Other Other Provisio Balance at t reserve Invested Unit Disin Declaration of year-begin Additional profit and loss comprehen changes n for period-end balance at vestm cash dividends Other investment confirmed by sive income of impair period-end ent or profits equity method adjustment equity ment Associated companies 1. ChanghongRuba 29,314,674.36 720,850.57 -921,916.41 29,113,608.52 Electric Company(Private)Ltd. 2. Hefei Xingmei Assets Management 12,394,800.39 -512,602.26 11,882,198.13 Co., Ltd. 3. Sichuan Zhiyijia Network Technology 9,380,373.67 -2,236,489.97 7,143,883.70 Co., Ltd. 4. Hengyuan Dineng Rebao Technology 22,771,065.45 -41,337.05 22,729,728.40 Company Limited 5. Sichuan Tianyou Guigu Technology 7,782,717.50 971,714.68 8,754,432.18 Co., Ltd. 6. Chengdu Guigu Environment 12,500,000.00 -1,876,105.23 10,623,894.77 Technology Co., Ltd. Total 81,643,631.37 12,500,000.00 -2,973,969.26 -921,916.41 90,247,745.70 Note: Chengdu Guigu Environment Technology Co., Ltd. established on 22 May 2013, and according to the equity transfer agreement and supplementary agreement signed between the Sichuan Changhong Air-conditioner Co., Ltd. and Sichuan Tianyou Guigu Technology Co., Ltd. dated 31 December 2016, the 25% equity of Chengdu Guigu Environment Technology Co., Ltd. are acquired by the Company with 12.5 million Yuan contributed on 31 March 2017 153 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) 13. Investment properties (1) Investment properties measured at costs Houses and Item Land use rights Total buildings I. Original book value 1.Balance at year-begin 23,142,172.83 916,691.38 24,058,864.21 2.Increased in the period 3.Decreased in the period 4.Balance at period-end 23,142,172.83 916,691.38 24,058,864.21 II. Accumulated depreciation and accumulated amortization 1.Balance at year-begin 10,328,434.76 454,798.05 10,783,232.81 2.Increased in the period 385,106.79 19,184.28 404,291.07 (1) provision or amortization 385,106.79 19,184.28 404,291.07 3.Decreased in the period 4.Balance at period-end 10,713,541.55 473,982.33 11,187,523.88 III. Provision for impairment IV. Book value 1.Book value at period-end 12,428,631.28 442,709.05 12,871,340.33 2.Book value at year-begin 12,813,738.07 461,893.33 13,275,631.40 (2) No investment real estate measured by fair value at period-end. (3) No particular about mortgage of investment property at period-end. (4) No investment real estate having not completed the property right certificate at period-end. 14. Fixed assets (1) Details of fixed assets Houses and Mechanical Transport Others Item Total buildings equipment equipment equipment I. Originalbookvalue 2,087,508,116.1 1.Balance atyear-begin 904,218,907.77 985,418,849.90 24,269,870.93 173,600,487.55 5 2.Increased inthe period 11,505,120.83 65,881,249.60 2,414,923.37 14,454,768.32 94,256,062.12 (1)Purchase 1,017,777.70 23,488,521.06 1,752,055.74 4,005,376.97 30,263,731.47 (2) Construction in progress 10,487,343.13 42,392,728.54 662,867.63 10,449,391.35 63,992,330.65 transfer-in (3) Inventorytransfer-in - (4) Increase in exchange rate - fluctuation 3.Decreasedin theperiod 2,311,532.81 53,784,188.91 1,035,550.14 22,819,027.46 79,950,299.32 (1)disposeorretirement 2,311,532.81 46,099,647.91 1,035,550.14 22,819,027.46 72,265,758.32 (2) Construction in progress - 7,684,541.00 - - 7,684,541.00 154 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Houses and Mechanical Transport Others Item Total buildings equipment equipment equipment transfer-in (3)otherdecrease - - - - - 2,101,813,878.9 4.Balance atperiod-end 913,412,495.79 997,515,910.59 25,649,244.16 165,236,228.41 5 II. Accumulated - depreciation 1.Balance atyear-begin 181,544,269.20 605,064,394.99 15,989,039.94 79,008,738.98 881,606,443.11 2.Increased inthe period 14,967,319.56 40,878,868.73 893,212.38 7,814,416.44 64,553,817.11 (1)provision 14,967,319.56 40,878,868.73 893,212.38 7,814,416.44 64,553,817.11 3.Decreasedin theperiod 417,225.55 40,937,661.52 990,798.74 18,350,809.90 60,696,495.71 (1)disposeorretirement 417,225.55 39,381,369.90 990,798.74 18,350,809.90 59,140,204.09 (2) Construction in progress - 1,556,291.62 - - 1,556,291.62 transfer-in (3)otherdecrease - - - - - 4.Balance atperiod-end 196,094,363.21 605,005,602.20 15,891,453.58 68,472,345.52 885,463,764.51 III. Provision for - impairment 1.Balance atyear-begin - 1,601,411.95 7,403.67 199,687.70 1,808,503.32 2.Increased inthe period - 3.Decreasedin theperiod - (1)disposeorretirement - 4.Balance atperiod-end - 1,601,411.95 7,403.67 199,687.70 1,808,503.32 IV Book value - 1,214,541,611.1 1.Bookvalue at period-end 717,318,132.58 390,908,896.44 9,750,386.91 96,564,195.19 2 1,204,093,169.7 2.Bookvalue atyear-begin 722,674,638.57 378,753,042.96 8,273,427.32 94,392,060.87 2 The new fixed assets in the period mainly due to the transfer-in of construction in progress, and disposal of fixed assets in the period makes the decrease of fixed assets (2) No fixed assets temporary idle at period-end. (3) No fixed assets for collateral at period-end. (4) No fixed assets leased through operating lease at period-end. (5) No fixed assets leased through operating lease at period-end. Accumulated Depreciation Items Original book value Net book value depreciation provision Mechanical 1,750,124.70 212,108.29 - 1,538,016.41 equipment Transport equipment 197,640.00 187,758.00 - 9,882.00 Building construction 32,626,483.29 7,399,519.29 - 25,226,964.00 Others equipment 15,214,412.00 2,097,531.77 - 13,116,880.23 155 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Total 49,788,659.99 9,896,917.35 - 39,891,742.64 (6) Fixed assets without property certificate Reason of not complete the Item Book value property certificate II canteen of living area 25,910,795.15 In procedure 6# building for cadremen 8,930,447.86 In procedure 7# building for cadremen 8,215,215.45 In procedure 4# makeshift shelter (dormitory building transfer to capital) 6,651,069.97 In procedure 3# makeshift shelter 5,689,907.18 In procedure 8# makeshift shelter 5,178,824.74 In procedure 5# makeshift shelter 5,140,247.60 In procedure Canteen 2,716,313.94 In procedure Total 68,432,821.89 (7) No fixed assets ready for sale at period-end. 15. Construction in progress (1) Details of construction in progress Amount at period-end Amount at year-begin Imp I air m men pa t ir Item pro m Book balance visio Book value Book balance en Book value n t pr ov isi on Relocation and capacity expansion 83,304,597.68 83,304,597.68 60,889,270.95 60,889,270.95 project of Zhongke Meiling Construction of intelligent manufacturing 23,126,522.82 23,126,522.82 12,785,053.55 12,785,053.55 Leasing project in college 7,072,430.40 7,072,430.40 5,631,371.46 5,631,371.46 Reform of the box shell molding in 4,654,700.80 4,654,700.80 Jiangxi Equipments pending for installation 4,278,102.62 4,278,102.62 3,490,730.72 3,490,730.72 Production reform of J line big 3,190,119.66 3,190,119.66 refrigeration 28 station box foam line 3,072,649.63 3,072,649.63 Jiangmei door foam line 2,256,410.28 2,256,410.28 Door shell molding extruder of Jiangxi 1,897,435.90 1,897,435.90 Meiling Reform of line R290 1,769,230.77 1,769,230.77 4,031,885.46 4,031,885.46 Upgrading and reform of the production line of intelligent refrigerator of 1,496,635.61 1,496,635.61 11,190,008.45 11,190,008.45 Mianyang Meiling 156 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Amount at period-end Amount at year-begin Imp I air m men pa t ir Item pro m Book balance visio Book value Book balance en Book value n t pr ov isi on Construction of the lab test center 1,051,340.78 1,051,340.78 building and experiment ability Squeeze board line of Jiangxi Meiling 979,843.89 979,843.89 593,777.99 593,777.99 Cold perfusion system of Jiangxi Meiling 773,504.23 773,504.23 Liner punch line of Jiangxi Meiling 721,794.87 721,794.87 Domestic web depart. Of Jiangxi Meiling 589,743.59 589,743.59 Central air conditioning relocation and - 1,124,429.99 1,124,429.99 Capacity Upgrading Project KA line - 792,136.75 792,136.75 2nd phase construction of the fitting life - 165,000.00 165,000.00 zone in new industrial park of Meiling Comprehensive promotion of non shrink - 87,220.00 87,220.00 tube expander Other miscellaneousitems 8,391,347.64 8,391,347.64 6,256,524.63 6,256,524.63 Total 148,626,411.17 - 148,626,411.17 107,037,409.95 - 107,037,409.95 (2) Changes in significant construction in progress Transfer to Book Increase fixed assets Other Book balance Projects balance at during the Source offunds in the decrease at period-end year-begin period period Relocation and capacity expansion project of 60,889,270.95 22,453,788.27 38,461.54 - 83,304,597.68 Self-raised Zhongke Meiling Intelligentmanufacturingproject 12,785,053.55 17,751,938.34 7,410,469.07 - 23,126,522.82 Raisefunds Upgrading and reform of the production line of 11,190,008.45 22,846,920.68 32,540,293.52 - 1,496,635.61 Self-raised intelligent refrigerator of Mianyang Meiling (Continued) Accumulated including: Interest Proportion of amount of interest capitaliza Budget (in 10 project Progres Projects interest capitalized tion rate thousand Yuan) investment in s capitalizatio amount of the of the budget n period period Relocation and capacity expansion project of 16,512.00 96.00% 96.00% Zhongke Meiling Intelligentmanufacturingproject 26,128.00 13.81% 23.00% 157 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Upgrading and reform of the production line of intelligent 4,792.00 71.03% 90.00% refrigeratorofMianyangMeiling (3) No depreciation reserves for construction in process at year-end. 16. Disposal of fixed assets Amount at Amount at Reasons for disposal Item period-end year-begin transferred Relocation for land Relevant assets disposal for reserved lands 75,846,390.89 75,788,138.47 reserve Pursuant to the urban planning requirements of the People’s Government of Hefei city, Hefei Land Reserve Center plans to purchase and store the land use right of an integrated economic development zone of the Company located at Longgang of Hefei with an area of 103,978.9 sq.m. (Approximately 155.9684 mu, Land Use Right Certificate No.: Dong Guo Yong (2004) Zi No. 0200, the stated use of the land is for industrial purpose). The estimated consideration for purchasing and storage is RMB74.48 million. The land is mainly used for the Company’s warehouse, product finishing workshop and the factory of Zhongke Meiling. Pursuant to the purchasing and storage requirements of land use right, the land will be purchased and stored with vacant possession. In April 2013, the Company completed the relocation of occupants of the premises, and the net fixed assets in relation to the land will transfer as disposal, accounting treatment will be conduct in line with relevant rules upon receiving of the relocation compensation. Pursuant to the urban planning requirements of Hefei Municipal Government and the Government of Feidong county, the land reserve center of Feidong county will purchase and store the land use right of an economic development zone located at Feidong county, Hefei city, which is owned by the Company’s subordinate companies, Equator Electric and Equator Home Appliance, respectively, with an area of 19,245.09 sq.m. (Approximately 28.87 mu, Land Use Right Certificate No.: Dong Guo Yong (2008) No. 0366, the stated use of the land is for industrial purpose) and an area of 46,161.9 sq.m. (Approximately 69.24 mu, Land Use Right Certificate No.: Dong Guo Yong (2008) No. 0367, the stated use of the land is for industrial purpose). The total consideration for purchasing and storage is approximately RMB36 million, of which the consideration for the land use right owned by Equator Electric and Equator Home Appliance is approximately RMB10.59 million and RMB25.41 million, respectively. The Company has completed the relocation of occupants of the premises, and the net fixed assets in relation to the land will transfer as disposal, accounting treatment will be conduct in line with relevant rules upon receiving of the relocation compensation. No impairment of relevant assets disposal for reserved lands at period-end. 17. Intangible assets (1) According to intangible assets item Trademark Non-patent Item Land use right Other Total special right technology 158 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Trademark Non-patent Item Land use right Other Total special right technology I. Original book value 1.Balance at 613,696,837.62 283,292,439.34 195,407,299.78 161,699.32 1,092,558,276.06 year-begin 2.Increased in the - - 17,766,418.25 179,245.29 17,945,663.54 period (1) purchase - 179,245.29 179,245.29 (2) Internal 17,766,418.25 17,766,418.25 research 3.Decreased in the - - - - - period (1) Disposal - (2)otherdecrease - 4.Balance at 613,696,837.62 283,292,439.34 213,173,718.03 340,944.61 1,110,503,939.60 period-end II. Accumulated - depreciation 1.Balance at 116,684,176.11 270,959,304.29 90,912,770.61 32,753.42 478,589,004.43 year-begin 2.Increased in the 6,549,112.52 1,941,443.40 18,084,625.99 19,157.36 26,594,339.27 period (1) provision 6,549,112.52 1,941,443.40 18,084,625.99 19,157.36 26,594,339.27 3.Decreased in the - period (1)otherdecrease 4.Balance at 123,233,288.63 272,900,747.69 108,997,396.60 51,910.78 505,183,343.70 period-end III. Provision for - impairment IV. Book value - 1.Book value at 490,463,548.99 10,391,691.65 104,176,321.43 289,033.83 605,320,595.90 period-end 2.Book value at 497,012,661.51 12,333,135.05 104,494,529.17 128,945.90 613,969,271.63 year-begin (2) As of the end of the period, mortgage of intangible assets is as follows: Name Property certificate serials Area(M2) Net book value Note Land use right HGYJCZi No.: 0121 27,120.22 19,827,456.74 18. Development expense Increase during the Decrease during the period period Balance at Included in Balance at Item Internal year-begin current Confirmed as period-end development Other Other profits and intangible assets expenditure losses Technology development for 30,878,434.47 41,688,995.69 - - 4,534,710.78 68,032,719.38 Air-conditioner 159 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Technology development for 12,797,092.26 3,915,239.55 - - 13,231,707.47 3,480,624.34 refrigerator Other technology 1,348,223.87 1,099,654.74 - - - 2,447,878.61 development Total 45,023,750.60 46,703,889.98 - - 17,766,418.25 73,961,222.33 19. Goodwill (1) Original value of goodwill Increase during the Decrease during the period period Name of invested Balance at Formation Formation Balance at unit year-begin from from period-end Other Other enterprise enterprise merger merger Hefei Meiling Group 3,553,367.77 3,553,367.77 Holding Co., Ltd. Guangxi Huidian Household Electrics 5,313,913.50 5,313,913.50 Co., Ltd Total 8,867,281.27 8,867,281.27 (2) Impairment provision of goodwill Increase during the Decrease during the Name of invested Balance at period period Balance at unit year-begin period-end Provision Other Provision Other Hefei Meiling Group 3,553,367.77 3,553,367.77 Holding Co., Ltd. Guangxi Huidian Household Electrics 5,313,913.50 5,313,913.50 Co., Ltd Total 8,867,281.27 8,867,281.27 Note: at the period end, the Company conducted impairment test on goodwill, and provided for impairment reserve in connection with the difference between the predicted future cash flow of the investee and the group of assets including the goodwill. The recoverable amount is based on the predicted future cash flow of the investee. 20. Long-term deferred expenses Increase Amortization Other increase Balance at Balance at Item during the during the during the year-begin period-end period period period Relocation expenses of the 1,132,075.48 1,546,289.16 95,258.41 - 2,583,106.23 intelligent manufacturing plant 21. Deferred income tax assets and deferred income tax liabilities (1) Deferred income tax assets without the offset Balance at period-end Balance at year-begin Item Deductible Deferred Deductible Deferred temporary income tax temporary income tax difference assets difference assets 160 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Balance at period-end Balance at year-begin Item Deductible Deferred Deductible Deferred temporary income tax temporary income tax difference assets difference assets Deferred income tax assets recognized from 140,671,711.72 21,466,063.56 107,230,307.69 16,454,229.77 property depreciation preparation Deferred income tax assets recognized from 328,801,716.59 49,320,257.49 331,575,430.79 49,736,314.62 accrual liability Deferred income tax assets recognized from 32,119,825.09 4,817,973.76 35,517,365.78 5,327,604.87 dismission welfare Deferred income tax assets recognized from 68,179,831.33 10,252,327.40 82,260,654.75 12,339,098.21 deferred income Deferred income tax assets recognized from 1,268,504.84 317,126.21 1,293,875.10 323,468.74 ir-reparable losses Deferred income tax assets recognized from 8,881,394.08 1,332,209.11 559,249.58 83,887.44 changes in the fair value Total 579,922,983.65 87,505,957.53 558,436,883.69 84,264,603.65 (2) Deferred income tax liabilities without the offset Balance at period-end Balance at year-begin Item Deductible Deferred Deductible Deferred temporary income tax temporary income tax difference assets difference assets Deferred income tax liabilities recognized 10,023,272.50 1,503,490.88 12,060,213.30 1,809,032.00 from changes in the fair value (3) Deferred income tax assets or liabilities listed after set-off Inter-neutralization at Ending balance after Inter-neutralization at Opening balance after Item period-end set-off year-begin set-off Deferred income 87,505,957.53 84,264,603.65 tax assets Deferred income 1,503,490.88 1,809,032.00 tax liabilities (4) Details of unrecognized deferred income tax assets Item Balance at period-end Balance at year-begin Deductible temporary difference 36,196,248.37 26,140,372.22 Deductible loss 241,612,758.47 373,985,517.42 Total 277,809,006.84 400,125,889.64 22. Other non-current assets Item Balance at period-end Balance at year-begin Term deposit for pledge - 34,615,630.00 Note: This project is the three-year term fixed deposit that the subsidiary Zhongshan Changhong has deposited at Guangdong Development Bank Zhongshan Branch for getting the bank’s long-term loan. The deposit amount is US $ 4,990,000 dollars, part will expire in 2017 and reclassify to this project. 161 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) 23. Short-term loans (1) Types of short-term loans 2. Type of loans Balance at period-end Balance at year-begin Loan in pledge 26,500,000.00 26,500,000.00 Loan in credit 1,406,122,701.07 261,843,724.73 Total 1,432,622,701.07 288,343,724.73 New loans in the period: The Company signed the Agreement on Comprehensive Credit Line of Trade Financing with China Everbright Bank Hefei Branch. Up to June 30, 2017, the financing amount under this service agreement was USD 39,800,000.00, equivalent to RMB 269,621,120.00. The Company signed the Agreement on Trade Financing Business Service with Agricultural Bank of China Co., Ltd., Hefei Jinzhai Road Sub-branch, up to June 30, 2017, the financing amount under this service agreement was EUR 10,005,959.80, equivalent to RMB 77,542,186.07, and the financing period was from April 1, 2017 to August 22, 2017. The Company signed the Agreement on Financing Business Cooperation of Export Commercial Invoice with China Construction Bank Co., Ltd., Hefei Luyang Sub-branch, up to June 30, 2017, the financing amount under this service agreement was EUR 10,000,000.00, equivalent to RMB 77,496,000.00. The Company signed the Agreement on Financing of Export Commercial Invoice with Bank of China Co., Ltd. Hefei Economic Development Zone Branch, up to June 30, 2017, the financing amount under this service agreement was RMB 5,770,000.00, and the financing period was from June 30, 2017 to December 11, 2017. The Company signed the Agreement on Financing of Export Order with Industrial and Commercial Bank of China Co., Ltd., Hefei Changjiang East Road Sub-branch, up to June 30, 2017, the financing amount under this service agreement was RMB 107,000,000.00. The Company signed the Contract of Working Capital Loan with Agricultural Bank of China Co., Ltd., Hefei Jinzhai Road Sub-branch, up to June 30, 2017, the financing amount under this service agreement was RMB 50,000,000.00, and the financing period was from June 12, 2017 to June 11, 2018. The Company signed the Contract of Ren Min Bi Working Capital Loans with China Construction Bank Co., Ltd., Hefei Luyang Sub-branch, up to June 30, 2017, the financing amount under this service agreement was RMB 200,000,000.00, and the financing period was from March 1, 2017 to February 28, 2018. The Company signed the Contract of Working Capital Loan with Bank of Communications Co., Ltd. Anhui Branch, up to June 30, 2017, the financing amount under this service agreement was RMB 162 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) 268,483,395.00. The Company signed the Trade Credit Financing Letter with United Overseas Bank, Chengdu Branch, up to June 30, 2017, the financing amount under this service agreement was RMB 100,000,000.00, and the financing period was from June 20, 2017 to December 20, 2017. The Company signed the Agreement on Trade Financing with China Minsheng Bank, Hefei Branch, up to June 30, 2017, the financing amount under this service agreement was RMB 195,000,000.00. The subsidiary Zhongke Meiling signed the Contract of Working Capital Loan with Bank of China, Anhui Branch on June 26, 2017, the loan amount on the contract was RMB 9,200,000.00 and the loan term was from June 27, 2017 to June 26, 2018, the loan adopted floating interest rate, every 12 months was a floating cycle; the interest rate was the average interest rate floating by 92 base points based on the loan prime rate of one working day before the actual withdrawal date published by National Interbank Funding Center. On March 29, 2021, Zhongshan Changhong Company applied for the financing of EUR 5,500,000.00 to China Construction Bank Co., Ltd. Zhongshan Branch by export commodity financing, equivalent to RMB 42,622,800.00, the financing interest rate was 1.4%, and the financing period was from March 29, 2017 to September 22, 2017. On June 30, 2017, the subsidiary Zhongshan Changhong Company applied for the financing of USD 500,000.00 to Huaxia Bank Co., Ltd. Zhongshan Branch by export commodity financing, equivalent to RMB 3,387,200.00, the financing interest rate was 2.9%, and the financing period was from June 30, 2017 to July 28, 2017. On September 13, 2016, the subsidiary Zhongshan Changhong Company applied for financing of RMB26,500,000.00 from Agricultural Bank of China Co., Ltd., Zhongshan Nantou Sub-branch by export commodity financing, the financing interest rate was 3.15%, and the financing period was from September 13, 2016 to September 8, 2017. (2) No overdue short term borrowings unredeemed at period-end. 24. Financial liabilities at fair value through gains and losses Balance at Balance at Item period-end year-begin Derivative financial liabilities 9,671,394.08 559,249.58 25. Notes payable Type Balance at period-end Balance at year-begin Bank acceptance bill 4,151,427,967.62 2,315,706,781.72 Commercial acceptance bill 422,430,013.95 319,344,958.58 Total 4,573,857,981.57 2,635,051,740.30 Notes expired at period-end without paid. 163 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) 26. Account payable (1) Age of account payable Item Balance at period-end Balance at year-begin Total 3,168,053,679.32 2,331,899,310.82 Including: over 1 year 68,509,996.79 47,332,805.86 (2) No account payable with over one year book age at period-end. 27. Advance payment (1) Age of advance payment Item Amount at period-end Amount at year-begin Total 472,573,801.58 390,935,440.46 Including: over 1 year 18,267,405.69 13,605,202.15 (2) No major account received in advance with over one year age at period-end 28. Wages payable (1) Types of wages payable Balance at Increase in this Decrease in this Balance at Item year-begin period period period-end Short-term compensation 178,822,854.81 583,841,841.44 677,554,930.79 85,109,765.46 After-service welfare- defined 4,948,222.26 47,830,929.91 38,416,264.80 14,362,887.37 contribution plans Dismiss welfare 5,820,961.93 1,652,300.02 3,414,853.22 4,058,408.73 Total 189,592,039.00 633,325,071.37 719,386,048.81 103,531,061.56 (2) Short-term compensation Balance at Increase in this Decrease in this Balance at Item year-begin period period period-end Wages ,bonuses, allowancesand subsidies 146,971,903.13 519,315,260.52 589,643,902.20 76,643,261.45 Welfare for workers and staff 100,340.00 19,747,658.74 19,740,043.13 107,955.61 Social insurance 2,498,982.71 20,788,123.40 20,539,250.66 2,747,855.45 Including: Medical insurance 2,345,425.78 17,580,484.43 17,548,178.68 2,377,731.53 Work injury insurance 47,092.65 1,618,690.35 1,577,678.15 88,104.85 Maternity insurance 106,464.28 1,588,948.62 1,413,393.83 282,019.07 Housing accumulation fund 3,326,804.54 22,868,732.94 22,374,622.48 3,820,915.00 Labor union expenditure and 1,742,673.51 1,122,065.84 1,074,961.40 1,789,777.95 personnel education expense Short-termprofitsharingplan 24,182,150.92 - 24,182,150.92 - Total 178,822,854.81 604,629,964.84 698,094,181.45 87,857,620.91 (3) Defined contribution plans Balance at Increase in this Decrease in this Balance at Item year-begin period period period-end 164 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Balance at Increase in this Decrease in this Balance at Item year-begin period period period-end Basic endowment insurance 3,867,272.79 45,384,484.37 36,077,525.26 13,174,231.90 Unemployment insurance 1,080,949.47 2,446,445.54 2,338,739.54 1,188,655.47 Total 4,948,222.26 47,830,929.91 38,416,264.80 14,362,887.37 29. Tax payable Item Balance at period-end Balance at year-begin Value-added tax 39,161,576.95 19,079,499.27 Enterprise income tax 2,902,240.90 3,423,898.42 Individual income tax 7,340,175.56 3,205,739.98 Urban maintenance and construction tax 2,726,475.63 3,302,546.79 House property tax 5,010,184.86 5,593,587.71 Land-use right tax 4,603,515.26 4,802,263.59 Educational surtax 1,964,898.41 2,428,555.60 Stamp tax 904,624.34 2,944,485.06 Construction fund of Water Conservancy Projects 621,024.81 745,069.75 Treatment fund for abandon electric & electronics products 18,173,836.00 12,328,067.00 Other 1,968,457.01 1,995,318.96 Total 85,377,009.73 59,849,032.13 30. Interest payable (1) Classification of interest payable Item Balance at period-end Balance at year-begin Interest on long-term loans for repayment of principal 708,602.61 1,617,352.01 of installment maturity (2) No significant overdue and unpaid interest at period-end. 31. Dividends payable Item Balance at period-end Balance at year-begin Sichuan Changhong Electric Co., Ltd. 14,082,358.08 - City insurance company 450,504.45 376,729.65 Hefei Branch of BOC 225,252.20 188,364.80 Hefei collective industry association 225,251.86 188,364.52 Entrust Investment Wuhu of Provincial ABC 180,201.78 150,691.86 BOC-Fullgoal Tianyi Securities Investment Fund 153,697.50 153,697.50 Other piecemeal units 1,655,457.01 1,487,952.90 Total 16,972,722.88 2,545,801.23 Note: Balance at period-end refers to the common dividends that not receiving by shareholders. 32. Other payable 165 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) (1) Classification of other payable according to nature of account Nature of account Balance at period-end Balance at year-begin 1.Accrued expenses(expenses occurred without reimbursed) 635,158,520.52 479,907,162.28 2. receivables received temporary and deducted temporary 13,736,245.44 7,725,476.68 3.deposit, margin 94,875,963.37 88,308,204.63 4.not the come-and-go with related parties in statement scope 28,054,566.50 12,959,890.54 5.other 40,945,232.23 33,679,589.30 Total 812,770,528.06 622,580,323.43 (2) Other significant payables aging over one year as at the period-end mainly refers to the procurement deposit. 33. Non-current liability due within one year (1) Classification of non-current liability due within one year Item Balance at period-end Balance at year-begin Long term loans due within one year 46,202,065.60 262,486,600.00 Deferred income transfer to gains and losses within one year 13,516,439.17 9,715,990.10 Total 59,718,504.77 272,202,590.10 (2) Deferred income transfer into profit and loss within 1 year Amount Subsidy reckoned into Amount at Amount at Itemofgovernment subsidies increase during non-operation Other changes year-begin period-end this period revenue in the period Demolition compensation of 2,425,513.16 1,204,791.70 1,188,519.14 2,409,240.60 Assets-related Hefei Meiling Technical reform for Athena 4,286,250.00 2,143,125.00 2,143,125.00 4,286,250.00 Assets-related Project Freezer project of Hefei Meiling 734,062.52 367,031.25 367,031.21 734,062.48 Assets-related Promotion of new industrialization (annual output of 0.6 million large and volume 304,412.50 152,206.24 152,206.22 304,412.48 Assets-related environmental protection energy-saving freezer project,) Demolition compensation of 1,797,880.32 898,940.16 898,940.16 1,797,880.32 Assets-related Jiangxi Meiling Production adaption project of 167,871.60 1,182,490.85 3,379,600.93 2,364,981.68 Assets-related FTXS Industrialization project of the intelligent 105,154.63 315,463.91 210,309.28 Assets-related energy-savingAC VISA research and application 704,651.16 2,113,953.49 1,409,302.33 Assets-related project Total 9,715,990.10 6,758,390.99 10,558,840.06 13,516,439.17 34. Long-term loans (1) Classification of long-term loans Type Amount at period-end Amount at year-begin 166 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Type Amount at period-end Amount at year-begin Loan in pledge - 34,157,788.00 Loan in mortgage 2,560,000.00 3,200,000.00 Loan in credit 250,900,000.00 1,551,000.00 Total 253,460,000.00 38,908,788.00 (2) Details of long-term loans at year-end Amount at Amount at Borrowing Returning Foreign Interest Loan unit period-end year-begin day day currency rate (RMB) (RMB) Zhongshan Branch of China Guangfa 2015-01-06 2018-01-06 USD 3.20% - 34,157,788.00 BankNote1 Ministry of Finance of HefeiNote2 2002-11-21 2017-11-20 RMB 1.80% - 651,000.00 Ministry of Finance of HefeiNote3 2004-12-10 2019-12-10 RMB 1.80% 900,000.00 900,000.00 Note4 Ministry of Finance of Hefei 2006-11-9 2021-11-8 RMB 1.80% 2,560,000.00 3,200,000.00 Anhui branch Import and Export Bank Note5 2017-05-16 2019-05-12 RMB 3.35% 250,000,000.00 - Total 253,460,000.00 38,908,788.00 Note 1: on 6 January 2015, subsidiary Zhongshan Changhong entered into Middle and Long Term Foreign Currency Borrowing Contract with China Guangfa Bank Zhongshan Branch, which agreed that China Guangfa Bank Zhongshan Branch would provide loans of USD 4,924,000.00 to the Company to finance the joint venture project conducted by Zhongshan Changhong Appliances Co., Ltd and RUBA GENERAL TRADING FZE Company in Pakistan. This borrowing was secured by Zhongshan Changhong with the fixed deposits of USD 86, 000.00 and USD 4, 904,000.00 saved by it in China Guangfa Bank Zhongshan Branch, respectively. And re-classified to non-current liability due within one year in the period Note 2: on 1 November 2002, the Company entered into the Agreement Relating to Implementing Construction Projects through Lending Treasury Bond Funds with the finance office of Hefei, pursuant to which, the finance office of Hefei lent the treasure bonds or RMB7.16 million related to our ―Technology Reform Project in relation to Nanometer Materials for Retaining Freshness‖ to our Company, with a terms of 15 years. The lent funds have begun to carry interest commencing from the date of appropriation of funds by the finance office of Hefei (namely 21 November 2002), and the Company shall pay the interests to the finance office of Hefei annually on an average basis during the lending period. The first four years of the loan is grace period. The interest rate per annum applicable to the lent funds is floating interest rate since 1999 (for interest rate per annum in respect of each batch of Treasury bond lending capital, it is determined by reference to one-year time deposit rate per annum on value date of the prevailing year as published by the PBOC, plus 0.3 percentage points). And re-classified to non-current liability due within one year in the period Note 3: It was the special Treasury bond capital appropriated by Ministry of Finance of Hefei for 167 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) enterprises’ information reform, received on Dec. 10th, 2004. Note 4: In August of 2006, the Company signed Asset Mortgage Agreement with Ministry of Finance of Hefei. It takes five industry crusher chambers which cover an area of 2,322.98 square meters as mortgage for the Company to get the lending of treasury bond fund which has 15-year term and worthy of RMB 7,040,000 from the Ministry of Finance of Hefei. The capital on-lending began to bear interest from the appropriate date (November 9, 2006), which would be paid by stages in the loan period to Ministry of Finance of Hefei by the Company. The first four years were grace period, during which the annual interest rate was subject to floating interest rate (the annual interest rate was the annual interest rate of one year fixed deposit plus 0.3%). On 1 March 2013, according to the Letter Relating to Ceasing Process of Other Securities in respect of the Properties in Feidong Longgang Industrial Park of Hefei Meiling Co., Ltd. (HCJ(2006)No.85) issued by the finance office of Hefei, Meiling commenced the national purchase of its land parcels in Longgang in compliance with the land planning of Hefei municipal government, which required its properties in Longgang land parcel to be unrestricted. The real estate for mortgage lifted in 2006 of the Company with registration No. HGYJCZ No.0121 which was used as the security for treasury bonds lending capital (details were set out in Note VI-15). Note 5: On May 12, 2017, the Company signed the Loan Contract (seller's credit on exports) with the Export-Import Bank Anhui Branch, the contract appointed Export-Import Bank Anhui Branch to offer loans of total amount of RMB 250 million to the Company, this loan should be exclusively used in the export of general mechanical and electrical products, the loan period is 2 years, and the interest rate is subject to the interest rate of the seller's credit on exports. 35. Long-term wage payable Balance at Item Balance at period-end year-begin Dismissal welfare 28,061,416.36 29,696,403.85 According to the internal early retirement policy, the long-term payable dismissal welfare bears by the Company up to end of the period. 36. Account payable special funds Decrease Balance at Increase in Balance at Item in the Reason year-begin the period period-end period Special fund of technical Zhongshan Science & transformation of 1,400,000.00 420,000.00 980,000.00 Technology Plan Zhongshan 37. Projected liability Item Balance at period-end Balance at year-begin Reason Product quality guarantee 11,795,030.15 11,795,030.15 Guarantee of product Guarantee fund for quality service 317,006,686.44 319,780,400.64 Guarantee of product Total 328,801,716.59 331,575,430.79 168 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Product quality deposit is the maintenance expense provided by the Company under the national policy, while quality service special guarantee capital is the warranty costs provided for product quality in addition to such policy. 38. Deferred income (1) Classification of deferred income Amount at Item Amount at period-end year-begin Government subsidies---subsidies of development project 58,560,896.86 67,032,277.62 Government subsidies---subsidies of relocation 64,152,104.28 75,887,284.87 Total 122,713,001.14 142,919,562.49 (2) Government subsidy Amount New Concerned reckoned into Amount at subsidy Other Amount at with Item non-operating year-begin in the changes period-end assets/earn income in the period ings period Demolition compensation of Hefei Assets 44,974,521.48 1,188,519.14 43,786,002.34 Meiling concerned Assets Demolition compensation 23,356,008.77 9,647,721.29 13,708,287.48 concerned Adaptability improvement of the Assets FTXS production (Propane 18,751,981.92 3,379,600.93 15,372,380.99 concerned instead of the HCFC-22) Special fund of the Athena technical Assets 13,450,312.50 2,143,125.00 11,307,187.50 transformation concerned VISA research and application Assets 10,100,000.00 2,113,953.49 7,986,046.51 project concerned Demolition compensation of Assets 7,556,754.62 898,940.16 6,657,814.46 Jiangxi Meiling concerned Subsidy fund for the new factory of Assets 5,000,000.00 5,000,000.00 Zhongke Meiling concerned Intelligent white-goods software platform and Assets research and industrialization of typical 4,000,000.00 4,000,000.00 concerned applications Capital appropriated fromthenationaltreasury Assets 2,950,000.00 2,950,000.00 concerned Development and productization of the CHIQ Assets 2,350,000.00 2,350,000.00 AC concerned Research and application of frequency Assets 2,300,000.00 2,300,000.00 conversion controlMCUchip concerned Assets Freezer project of Hefei Meiling 2,202,187.45 367,031.21 1,835,156.24 concerned Special fund of strategy emerging industry Assets 2,000,000.00 2,000,000.00 and high-end growth industry concerned Industrialization project of the intelligent Assets 1,700,000.00 315,463.91 1,384,536.09 energy-savingAC concerned Promotion of new industrialization (annual output of 0.6 million large and volume Assets 1,674,268.75 152,206.22 1,522,062.53 environmental protection energy-saving concerned freezer project,) 169 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Amount New Concerned reckoned into Amount at subsidy Other Amount at with Item non-operating year-begin in the changes period-end assets/earn income in the period ings period Design and application of energy saving air Assets 300,000.00 300,000.00 conditioningduct concerned Assets Subsidy ofproject development 253,527.00 253,527.00 concerned Total 142,919,562.49 9,647,721.29 10,558,840.06 122,713,001.14 Note: other movements of this item are attributable to reclassification of the amount to be amortized over one year to non-current liabilities due within one year. 39. Share capital Change during the period(+、-) Shares Balance at New transferred Balance at Item Bonus year-begin shares from Other Subtotal period-end share issued capital reserve Total shares 1,044,597,881.00 1,044,597,881.00 40. Capital reserve Amount at Increase during the Decrease during Amount at Item year-begin period the period period-end Share premium 2,639,787,797.95 - 2,647,197.88 2,637,140,600.07 Other capital reserve 48,173,262.70 - - 48,173,262.70 Total 2,687,961,060.65 - 2,647,197.88 2,685,313,862.77 Note: decrease of the share premium mainly because purchasing minority equity from part of the marketing subsidiaries in the period, which is off-setting the capital reserves as 2,647,197.88 Yuan. 41. Other comprehensive income Account in the period Less: written in other comprehensive Balance at Account income in Belong to Belong to Balance at Item Less : year-begin before previous period parent minority period-end income tax income tax in and carried company shareholders expense the period forward to after tax after tax gains and losses in current period Other comprehensive income re-divided into gains/losses Including: conversion difference arising 3,474,546.95 -3,352,515.41 -2,536,079.62 -816,435.79 938,467.33 from foreign currency financial statement 42. Surplus reserves 170 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Amount at Increase during the Decrease during Amount at Item year-begin period the period period-end Statutory surplus reserve 275,421,718.17 275,421,718.17 Discretionary surplus reserve 115,607,702.16 115,607,702.16 Total 391,029,420.33 391,029,420.33 43. Retained profit Item This period Last year Amount at the end of last year 968,097,382.98 817,667,480.44 Add: adjustment from undistributed profit at year-begin Including: retroactive adjustment by Accounting Standards for Business Enterprise change of accounting policy Correction of former material error Change of combination scope under common control Amount at the beginning of this year 968,097,382.98 817,667,480.44 Add: net profit attributable to shareholders of parent company for this 92,075,039.77 220,216,680.96 year Less: withdraw of statutory surplus reserve 23,962,426.15 withdraw of discretional surplus reserve Withdraw of general risk provision Dividend payable for ordinary shares 62,675,872.85 45,824,352.27 Dividend of ordinary shares transferred to share capital Amount at the end of this period 997,496,549.90 968,097,382.98 44. Operating income and operating cost (1) Operating income and operating cost Amount for this Amount for the same Item period period of last year Main business income 8,133,419,814.85 6,635,243,672.98 Other business income 384,374,378.25 231,387,589.70 Total 8,517,794,193.10 6,866,631,262.68 Main business cost 6,646,020,504.49 5,226,428,116.77 Other business cost 350,205,544.36 206,033,570.33 Total 6,996,226,048.85 5,432,461,687.10 (2) Main business classified according to product Amount for this period Amount for the same period of last year Product Operation income Operation cost Operation income Operation cost Refrigerator, 3,712,357,454.31 3,021,413,721.30 3,511,755,682.66 2,641,347,914.01 freezer Air-condition 3,830,599,287.94 3,157,180,107.27 2,578,582,275.76 2,117,657,552.65 Washing 227,162,009.50 177,357,302.38 214,447,675.62 174,849,330.14 machine 171 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Amount for this period Amount for the same period of last year Product Operation income Operation cost Operation income Operation cost Small appliances and 264,195,096.38 229,232,770.78 192,655,423.38 174,011,438.27 kitchen and toilet Other 99,105,966.72 60,836,602.76 137,802,615.56 118,561,881.70 Total 8,133,419,814.85 6,646,020,504.49 6,635,243,672.98 5,226,428,116.77 (3) Main business classified according to sales region Amount for this period Amount for the same period of last year Region Operation income Operation cost Operation income Operation cost Domestic 6,013,436,261.57 4,647,630,149.87 4,999,875,111.36 3,763,161,367.63 Overseas 2,119,983,553.28 1,998,390,354.62 1,635,368,561.62 1,463,266,749.14 Total 8,133,419,814.85 6,646,020,504.49 6,635,243,672.98 5,226,428,116.77 Top five clients have income in sales of RMB 3,048,439,744.17 yuan in total, a 35.79% in total operation income. 45. Business tax and extra charges Amount for this Amount for the same Item period period of last year Business tax - 354,041.11 City construction tax 8,915,596.60 19,899,317.46 Extra charge for education and local education surcharge 6,645,828.18 14,421,660.64 Real estate tax 5,629,056.96 5,722,192.63 Treatment fund for abandon electrics & electronics 31,420,436.00 27,244,167.00 Land tax 4,976,086.01 5,143,139.80 Stamp duty 4,878,793.95 3,644,166.46 Water fund 3,205,205.83 2,763,018.05 Other 165,016.78 265,878.11 Total 65,836,020.31 79,457,581.26 According to the finance and accounting of the Ministry of Finance No. [2016] 22 ―About Printing the Notice of Accounting Treatment Provisions for Value Added Tax‖, after the overall trial implementation of business tax changing to value-added tax, the title of "business tax and surcharges" changes to ―taxes and surcharges‖, this account is used to calculate the consumption tax, city maintenance and construction tax, resource tax, education surcharge and property tax, land use tax, travel tax, stamp tax and other related taxes occurred in business operations. The company adjusts property tax, land tax, stamp tax, water conservancy funds and other taxes and fees to the taxes and additional subject accounting accordingly, relevant items are re-state in administrative expenses of last period 46. Sales expense 172 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Amount for this Amount for the same Item period period of last year Market support 147,028,679.89 267,473,422.40 Wages and surcharges, social security 236,131,802.33 236,101,636.65 Transport expenses 294,108,877.21 207,605,016.03 Air conditioner installation fee 178,757,254.42 120,680,390.00 National three guarantees expense 119,131,144.08 82,896,108.22 Storage lease expenses 54,395,016.56 51,149,832.06 Advertisement expenses 30,738,929.11 29,181,669.39 Travelling expenses 19,520,650.45 14,924,457.13 Operation activities expenses 10,205,202.11 8,087,086.19 Communication expenses 6,278,918.66 6,235,033.36 House-lease expenses 8,851,097.31 5,521,119.25 Vehicle consumption 3,093,351.13 3,604,088.38 Depreciation 3,128,078.94 2,999,300.47 Communication fee 2,912,337.19 2,432,210.13 Exhibition expenses 2,926,713.09 2,267,160.86 Others 22,963,979.60 34,489,220.08 Total 1,140,172,032.08 1,075,647,750.60 47. Administration expense Amount for this Amount for the same Item period period of last year Salary and social insurance etc. 96,746,046.21 78,371,373.79 Trial fee of R&D 20,069,927.78 19,368,311.75 Amortized intangible assets 26,351,436.68 19,260,530.22 Depreciation 12,215,178.83 10,181,555.80 Inspection and authentication fee 3,236,512.69 4,684,054.78 Domestic travelling fee 3,657,865.58 4,132,225.03 Utilities 5,236,432.59 4,029,484.90 Business activities 2,348,636.48 3,906,395.17 Office charge 3,101,227.29 3,027,548.26 Property insurance 1,947,504.69 1,797,851.23 Others 47,622,322.92 27,205,090.02 Total 222,533,091.74 175,964,420.95 48. Financial expense Amount for this Amount for the same Item period period of last year Interest expenditure 16,357,573.34 4,108,756.46 Less: Interest income 74,918,215.41 32,356,650.27 Add: exchange loss 12,143,246.92 -18,503,350.12 173 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) procedure charge expenditure 6,631,231.15 10,153,124.33 discount expenditure 6,331,681.33 -3,102,122.56 other expenditure 900.00 Total -33,454,482.67 -39,699,342.16 49. Loss from Assets depreciation Amount for this Amount for the same Item period period of last year Bad debt losses 30,101,356.29 33,194,478.64 Provision for falling price of inventory 15,391,916.45 3,392,202.47 Total 45,493,272.74 36,586,681.11 50. Changes in fair value gains/loses Amount for this Amount for the same Item period period of last year Financial assets measured at fair value and whose movements are -1,246,940.80 2,340,308.20 included in the profit and loss of the current period Including :Income of fair value changes from derivative financial -1,246,940.80 2,340,308.20 instruments Financial liabilities measured at fair value and whose movements are -9,112,144.50 -3,618,878.41 included in the profit and loss of the current period Including :Income of fair value changes from derivative financial -9,112,144.50 -3,618,878.41 instruments Total -10,359,085.30 -1,278,570.21 51. Investment income (1) Sources of investment income Amount for this Amount for the same Item period period of last year Long-term equity investment income by equity method -3,226,328.17 -833,210.42 Investment income obtained from disposal of long-term equity 2,506.98 - investment Investment income obtained from held of finance asset available for 19,584,987.35 4,986,301.37 sales Investment income obtained from disposal of financial assets measured at fair value and whose movements are included in the 7,232,183.50 - profit and loss of the current period Total 23,593,349.66 4,153,090.95 (2) Long-term equity investment income by equity method Amount for Amount for the same Reason of change of this period Item this period period of last than last year year Changes of net profit of the Hefei Xingmei Assets Management Co., Ltd. -512,602.26 -56,019.64 invested unit ChanghongRuba Electric Changes of net profit of the 468,491.66 -220,932.04 Company(Private)Limited invested unit and counter 174 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Amount for Amount for the same Reason of change of this period Item this period period of last than last year year Sichuan Zhiyijia Network Technology Co., Ltd. -2,236,489.97 2,322,881.18 current transaction offset Hongyuan Dineng Rebao Technology Co. Ltd. -41,337.05 -2,196,252.31 Sichuan Tianyou Guigu Technology Co., Ltd. 971,714.68 -682,887.61 Chengdu Guigu Environment Technology Co., Ltd. -1,876,105.23 - Total -3,226,328.17 -833,210.42 (3) Investment income obtained from disposal of long-term equity investment Amount for this Amount for the same Item period period of last year Equity income obtained from disposal of Hefei MeiLing Packing 2,506.98 - Products Co., Ltd. (4) Investment income obtained from financial assets available for sales Amount for this Amount for the same Item period period of last year Purchase of bank financial products 19,584,987.35 4,986,301.37 Total 19,584,987.35 4,986,301.37 (5) The investment income from disposal of financial assets at fair value through profit or loss refers to the profit or loss occurred from non-deliverable forward (NDF) transaction. 52. Other income Source of other revenue Amount for this period Amount for the same period of last year Drawback policy of VAT for software 1,275,937.62 - products Total 1,275,937.62 - According to the regulations of Accounting Standards for Business Enterprises No. 16 - Government Subsidy (CK No.[2017] 15) issued and revised by the Ministry of Finance in May 2017, since January 1, 2017, the government subsidy related to the daily activities of the enterprise should be included in other income or offset the relevant costs in accordance with the essence of economic business. During the reporting period, the wholly-owned subsidiary Mianyang Meiling Software Technology Co., Ltd. received the refunds of added-value tax of software products in accordance with the Notice on VAT Policy of Software Products of State Administration of Taxation (CS No. [2011] 100), which is closely related to the company’s normal business, and this business should be included in the subject list in the current period. 53. Non-operation revenue (1)Non-operation revenue Amount reckoned Amount for the same into non-recurring Item Current period period of last year gains/losses in the period 175 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Amount reckoned Amount for the same into non-recurring Item Current period period of last year gains/losses in the period Gains from disposal of non-current 261,776.49 330,833.76 261,776.49 assets Including:Gains from disposal of 261,776.49 330,833.76 261,776.49 fixed assets Government subsidy 22,490,062.54 16,456,206.17 22,490,062.54 Income of penalty 483,051.41 301,433.90 483,051.41 Other 256,257.41 4,383,228.61 256,257.41 Total 23,491,147.85 21,471,702.44 23,491,147.85 (2) Government subsidy Amount for the Item Current period same period of Resource and basis Assets/benefitrelated last year Drawback policy of VAT for VAT refunds - 1,705,532.50 Income related software product Other government subsidy etc. 1,960,999.85 2,641,549.48 - Income related OtherDeferred income transfer-in 16,406,112.28 4,803,445.57 Deferred income transfer-in Income related NJP production trade enterprise award 1,238,685.00 - Nanjing Port (Group) Co., Ltd. Income related Finance Bureau of Zhongshan Government subsidy for Step Out 526,900.00 - Income related City Supporting fund of Anhui Branch of Hefei Government, He Zheng 508,404.98 - Income related SINOSURE (2014) No.62 etc. National informatization standard He Zheng [2016] No. 35 500,000.00 - Income related recognition award Social security subsidies 304,629.43 - Wan RSF (2016) No. 33 Income related Skills development cash grant from He Cai Zhen 2011 Hefei Human Resources and Social 211,500.00 - Income related [No.1035] Security Bureau Training base grants from Hefei 200,000.00 - He Jiao Mi [2017] No. 234 Income related Board of Education Zhongshan Ke Fa (2017) Subsidy for high-tech enterprise 200,000.00 - Income related No. 85 Contract foreign projects of special Zhong Shangwu He Zi funds for foreign trade and economic 177,831.00 - Income related (2016) No. 24 development of 2016 Supporting fund for multi hierarchy He Jing Qu Guan [2016] 104,000.00 - Income related man power (2nd batch) No.90 Self-service innovation award 100,000.00 - He Zheng [2016] No. 35 Income related Offering rewards for NEEQ 51,000.00 - Cai Jin (2015) No. 2035 Income related - City Commercial Bureau- A special fund of trade promotion for 1,733,000.00 special fund of trade Income related year of 2016 promotion for year of 2016 Reward of the new-type - 1,538,700.00 He Zheng [2015] No. 36 Income related industrialization development policy 176 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Amount for the Item Current period same period of Resource and basis Assets/benefitrelated last year promotion Subsidy for technically improve of - 1,217,800.00 He Zheng [2015] No. 36 Income related the fixed assets - Hefei 2015 Economic & Technological Development Subsidy of industry carry-over fund 1,000,000.00 Area (HETA) - promotion of Income related the new-type industrialization development policy - Agreement of the Tianjin Policy rewards Xintai Industrial Economic 1,014,456.72 Income related Development Management Center - Contract of the investment of Enterprise development fund 801,721.90 2 million refrigerators for one Income related distributed by High-Tech Zone year Total 22,490,062.54 16,456,206.17 54. Non-operating expenditure Amount reckoned Amount for the same into non-recurring Item Current period period of last year gains/losses in the period Loss from disposal of non-current 11,359,875.16 1,545,129.64 11,359,875.16 assets Including: loss from disposal of fixed 11,359,875.16 1,545,129.64 11,359,875.16 assets Penalty and late fee 16,170.32 259,138.22 16,170.32 Other 79,255.15 14,606.32 79,255.15 Total 11,455,300.63 1,818,874.18 11,455,300.63 55. Income tax expenses Amount for the same Item Current period period of last year Current income tax 12,992,795.39 23,825,374.34 Deferred Income Tax -3,553,237.53 -5,009,188.36 Total 9,439,557.86 18,816,185.98 56. Other comprehensive income Found more in ―VI. 41. Other comprehensive income‖ in the Note 57. Items to cash flow statement (1) Cash received (paid) from (for) other activities relating to operation/investment/financing 1) Cash received from other activities relating to operation 177 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Amount for the same Item Current period period of last year Government subsidy and rewards 6,083,950.26 9,947,228.10 Margin, deposit 2,932,691.26 3,672,988.85 Rental and trademark income 2,326,107.91 3,930,732.75 Compensations 492,082.89 103,131.84 Other 4,734,239.77 1,961,189.58 Total 16,569,072.09 19,615,271.12 2) Cash paid for other activities relating to operation Amount for the same Item Current period period of last year Market support fee 107,158,880.74 100,020,332.36 Advertising fee 16,086,131.50 14,594,018.03 Travel expense 25,366,506.33 21,472,512.46 Rental fee 17,832,545.16 9,218,885.60 Business activity fee 16,561,532.31 11,903,159.89 Pretty cash for employees 9,558,081.08 11,554,152.86 Meeting organization fee 6,041,902.70 7,113,406.24 Regular bus expenses 5,069,668.94 4,598,247.00 Inspection and certification fee 6,369,408.44 5,446,512.42 Vehicle cost 5,736,637.76 3,973,278.42 Handling Charges 4,719,226.91 25,077,479.49 Office expenses 5,656,327.46 3,575,528.11 Exhibition expenses 3,018,403.85 3,215,177.35 Penalty and overdue fine 16,170.32 259,138.22 Changes of the limited monetary fund 37,101,414.00 60,085,067.00 Other 53,980,478.26 36,462,279.04 Total 320,273,315.76 318,569,174.49 3) Cash received from other activities relating to investment Amount for the same Item Current period period of last year Interest income arising from bank savings 40,936,820.59 31,720,923.67 Government investment granted - 4,331,970.00 Margin 540,386.28 336,823.00 Total 41,477,206.87 36,389,716.67 4) Cash paid for other activities relating to investment Amount for the same Item Current period period of last year Loses of forward exchange settlement 647,270.61 178 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Bid bond refund 351,000.00 Total 998,270.61 5) Cash received from other activities relating to financing Amount for the same Item Current period period of last year Odd shares returned by stock exchange - 3,451.80 6) Cash paid for other activities relating to financing Amount for the same Item Current period period of last year Amount refund to minority shareholders due to the 15,642.93 - cancellation of subsidiary Handling charge of dividend 135,968.31 98,192.48 Total 151,611.24 98,192.48 (2) Supplementary information about consolidated cash flow statement Amount for the same period Item Current period of last year 1. Net profit is adjusted to cash flow of operation activities: Net profit 98,094,701.39 109,923,646.84 Add: provision for depreciation of assets 45,493,272.74 36,586,681.11 Depreciation of fixed assets, consumption of oil gas 64,958,108.18 69,875,277.54 assets and depreciation of productive biological assets Amortization of intangible assets 26,594,339.27 19,417,253.87 Amortization of long-term retained expense 95,258.41 Loss from disposal of fixed assets, intangible assets 11,098,098.67 1,214,295.88 and other long term assets(gain is listed with ―-‖) Loss from discarding fixed assets as useless (gain is listed with ―-‖) Loss from change of fair value(gain is listed with 10,359,085.30 1,278,570.21 ―-‖) Financial expense (gain is listed with ―-‖) -46,417,395.15 -28,247,893.81 Investment loss (gain is listed with ―-‖) -23,593,349.66 -4,153,090.95 Decrease of deferred income tax assets (increase is -3,241,353.88 -5,009,188.36 listed with ―-‖) Increase of deferred income tax liabilities (decrease -305,541.12 is listed with ―-‖) Decrease of inventories (increase is listed with ―-‖) -622,013,977.03 -27,646,224.86 Decrease of operational accounts receivable -2,129,300,425.57 -995,881,410.16 (increase is listed with ―-‖) Increase of operational accounts payable (decrease 3,052,409,876.36 1,694,331,587.58 is listed with ―-‖) Other Net cash flow arising from operation activities 484,230,697.91 871,689,504.89 2. Major investment and financing activities that do not involve cash receipts: 179 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Amount for the same period Item Current period of last year Conversion of debt into capital Switching Company bonds due within one year financing lease of fixed assets 3. Net change in cash and cash equivalents: Balance at period-end of cash 4,809,458,518.39 4,062,884,413.48 Less: Balance at year-begin of cash 3,986,098,419.76 2,121,161,238.01 Add: Balance at year-end of cash equivalents Less: Balance at year-begin of cash equivalents Net increase in cash and cash equivalents 823,360,098.63 1,941,723,175.47 (3) No net cash paid for subsidiary obtained in the period. (4) No cash received from subsidiary and other operation units disposal in the period (5) Cash and cash equivalent Item Amount at period-end Amount at year-begin Cash 4,809,458,518.39 3,986,098,419.76 Including: cash in stock 83,233.09 94,415.53 Bank deposits available for payment at any time. 4,349,072,332.23 3,810,367,022.13 Bank deposits available for payment at any time 460,302,953.07 175,636,982.10 Cash equivalents including: bond investment due within 3 months Balance of cash and cash equivalents at year end 4,809,458,518.39 3,986,098,419.76 Including: using the restricted cash and cash equivalents of the parent company or subsidiary of the group 58. Assets with ownership or the right to use restricted Item Ending book value Reasons Monetary fund 108,727,129.38 Margin Notes receivable 586,118,629.32 Pledged Intangible assetsnote1 19,827,456.74 Pledged Non-current assets due within 1 46,133,664.00 Pledged yearnote2 Total 760,806,879.44 Note 1: security for intangible assets was security of land use right. For details, please refer to ―34. Long term borrowings‖ under this note VI. Note 2: non-current assts due within one year are pledged as time deposit, found more in 9. non-current assets due within one year in Note VI. 59. Foreign currency 180 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) (1) Foreign currency Ending foreign currency Ending RMB converted Item Exchange rate balance balance Monetary fund Including: USD 58,017,135.02 6.7744 393,031,279.50 Euro 6,580,132.00 7.7496 50,993,390.95 AUD 1,384,006.85 5.2099 7,210,537.29 IDR 2,337,016,816.00 0.0005 1,168,508.41 Rupi 17,834,337.79 0.0645 1,150,314.79 Account receivable Including: USD 126,320,333.81 6.7744 855,744,469.38 Euro 8,571,952.19 7.7496 66,429,200.69 AUD 2,031,639.94 5.2099 10,584,640.92 IDR 17,415,143,335.00 0.0005 8,707,571.67 Rupi 1,593,760,001.86 0.0645 102,797,520.12 Other receivables Including: USD 67,569.47 6.7744 457,742.62 Euro 8,268.56 7.7496 64,078.03 IDR 1,856,629,640.00 0.0005 928,314.82 Rupi 18,676,421.30 0.0645 1,204,629.17 Advance payment Including: USD 1,920,308.16 6.7744 13,008,935.60 IDR 1,052,966.00 0.0005 526.48 Rupi 740,762,639.24 0.0645 47,779,190.23 Other accounts payable Including: USD 225,933.49 6.7744 1,530,563.83 IDR 1,094,956,343.00 0.0005 547,478.17 Rupi 264,014,236.91 0.0645 17,028,918.28 Short-term loans Including: USD 40,300,000.00 6.7744 273,008,320.00 Euro 25,505,959.80 7.7496 197,660,986.07 Payment in advance Including: USD 35,319,258.98 6.7744 239,266,788.04 Euro 2,380,231.99 7.7496 18,445,845.83 AUD 2,273.84 5.2099 11,846.48 IDR 2,500,000.00 0.0005 1,250.00 Advance payment Including: USD 581,515.25 6.7744 3,939,416.91 Euro 2,579,917.72 7.7496 19,993,330.36 IDR 781,556,641.00 0.0005 390,778.32 181 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Ending foreign currency Ending RMB converted Item Exchange rate balance balance Current assets due within one year Including: USD 6,810,000.00 6.7744 46,133,664.00 Non-current liabilities due within 1y ear Including: USD 6,724,000.00 6.7744 45,551,065.60 (2) Foreign operational entity The foreign operational entity of the Company was Changhong Ruba Trading Company (Private) Limited, mainly operates in Lahore, Pakistan; Recording currency is Pakistan Rupi. CHANGHONG MEILING ELECTRIC INDONESIA,PT, mainly operates in Jakarta; Recording currency is IDR. 182 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) VII. Changes of consolidation rage 1. Enterprise combined under the different control: Nil 2. Enterprise combined under the same control: Nil 3. Reversed takeover: Nil 4. Disposal of subsidiary: Nil 5. Subsidiary liquidated Difference betweenthe disposalpriceand Othercomprehensive income Priceofthe proportion of thesubsidiary’s netassets enjoy transferredinto investment Ratio oftheequity Way ofthe equity Determination basisforthe time Subsidiary equity Time point of controlrightlose in aspect of theconsolidatedfinancial income ,whichrelatedwith the disposed disposed point of control rightlose disposed statement,whichisrespond tothe disposal equity investment of original investment subsidiary Xi’an MeizhilaiApplianceMarketingCo., Ltd. 98.50% Liquidation cancelled 2017.6 Liquidation completed 6. Subsidiary established Capital Other balance that Ratio of Registe RC (10 actually paid at Share-hol Business consider as the net voting right Consolidate Minority’s Subsidiary Type red thousand period-end (10 ding Ratio nature investment for subsidiary d (Y/N) interest place Yuan) thousand (%) (%) in nature Yuan) Limited MeiLing Candy Washing 19,962,638.78 Liability Hefei Sale RMB:15,000 RMB:5,000 60.00 60.00 Y Machine Co., Ltd. Company Guangzhou Changhong Trade Limited Zhongsh Sale RMB:100 RMB:100 100.00 100.00 Y - Co., Ltd. Company an Zhongshan Hongling Trade Co., Limited Zhongs Sale RMB:100 RMB:60 100.00 100.00 Y - Ltd. Company han 183 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) VIII. Equity in other entity 1. Equity in subsidiary (1) Composition of the enterprise group Share-holding ratio Registration Business (%) Subsidiary Business area Acquire way place nature Indirectl Directly y Manufactures, ZhongkeMeilingCryogenicTechnologyCo., Ltd. 1) Hefei Hefei 66.76 Investment sales Software MianyangMeilingSoftwareTechnologyCo., Ltd. 2) Mianyang Mianyang 100.00 Investment development Manufactures, MianyangMeilingRefrigeration Co., Ltd.3) Mianyang Mianyang 95.00 5.00 Investment sales Manufactures, JiangxiMeilingAppliance Co., Ld.4) Jingdezhen Jingdezhen 98.75 1.25 Investment sales Hefei MeilingApplianceMarketingCo., Ltd.5) Hefei Hefei Sales 99.82 0.18 Investment Enterprise combined under the GuangxiHuidian HomeApplianceCo., Ltd.6) Nanning Nanning Sales 100.00 differentcontrol Wuhu MeilingApplianceMarketingCo., Ltd.7) Wuhu Wuhu Sales 98.00 Investment ChangchunMeilingApplianceMarketing Co., Ltd.8) Changchun Changchun Sales 100.00 Investment Lanzhou MizhilaiApplianceMarketingCo., Ltd.9) Lanzhou Lanzhou Sales 100.00 Investment JinanMeilingApplianceMarketing Co., Ltd.10) Jinan Jinan Sales 91.40 Investment NanchangXiangyouApplianceMarketingCo., Ltd.11) Nanchang Nanchang Sales 85.00 Investment Jingzhou MeilingApplianceMarketingCo., Ltd.12) Jingzhou Jingzhou Sales 96.00 Investment ShengyangMeilingApplianceMarketingCo., Ltd.13) Shengyang Shengyang Sales 100.00 Investment Wuhan MeizhirongApplianceMarketingCo., Ltd.14) Wuhan Wuhan Sales 91.00 Investment Zhengzhou MeilingApplianceMarketingCo., Ltd.15) Zhengzhou Zhengzhou Sales 100.00 Investment ShijiazhuangMeilingApplianceMarketing Co., Ltd.16) Shijiazhuang Shijiazhuang Sales 100.00 Investment MianyangMeilingApplianceMarketing Co., Ltd.17) Mianyang Mianyang Sales 100.00 Investment Chengdu MeilingApplianceMarketing Co.,Ltd.18) Chengdu Chengdu Sales 94.80 Investment Guiyang MeilingApplianceMarketingCo.,Ltd.19) Guiyang Guiyang Sales 100.00 Investment Fuzhou MeilingApplianceMarketingCo., Ltd.20) Fuzhou Fuzhou Sales 100.00 Investment NanjingMeilingApplianceMarketingCo., Ltd.21) Nanjing Nanjing Sales 100.00 Investment Hefei MeilingWhiteApplianceMarketing Co., Ltd.22) Hefei Hefei Sales 95.00 Investment Taiyuan MeilingApplianceMarketingCo., Ltd.23) Taiyuan Taiyuan Sales 100.00 Investment ChangshaMeilingApplianceMarketingCo., Ltd.24) Changsha Changsha Sales 97.00 Investment HohhotXiangyouApplianceMarketingCo.,Ltd.25) Hohhot Hohhot Sales 95.00 Investment HangzhouMeilingApplianceMarketing Co., Ltd.26) Hangzhou Hangzhou Sales 100.00 Investment ChongqingMeilingApplianceMarketingCo., Ltd.27) Chongqing Chongqing Sales 100.00 Investment KunmingMeilingApplianceMarketingCo.,Ltd.28) Kunming Kunming Sales 97.5 Investment ShanghaiMeilingApplianceMarketing Co.,Ltd.29) Shanghai Shanghai Sales 99.00 Investment NantongMeilingApplianceMarketingCo.,Ltd.30) Nantong Nantong Sales 100.00 Investment 184 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Share-holding ratio Registration Business (%) Subsidiary Business area Acquire way place nature Indirectl Directly y Guangzhou MeilingApplianceMarketingCo., Ltd.31) Guangzhou Guangzhou Sales 98.00 Investment TianjinMeilingApplianceMarketing Co., Ltd.32) Tianjin Tianjin Sales 100.00 Investment UrumchiMeilingApplianceMarketingCo., Ltd.33) Urumchi Urumchi Sales 90.00 Investment Harbin MeilingApplianceMarketingCo., Ltd.34) Harbin Harbin Sales 100.00 Investment BeijingMeilingApplianceMarketing Co., Ltd.35) Beijing Beijing Sales 100.00 Investment Manufactures, Enterprise combined under the Hefei MeiLing NonferrousMetalProductsCo., Ltd.36) Hefei Hefei 100.00 sales differentcontrol Manufactures, Enterprise combined under the GuangdongChanghongRidianTechnologyCo., Ltd.37) Zhongshan Zhongshan 98.855 sales same control ChangmeiTechnologyCo., Ltd. 38) Mianyang Mianyang Sales 92.64 Investment CHONGHONG MEILING ELECTRIC Jakarta Jakarta Sales 100.00 Investment INDONESIA,PT39) ChanghongRubaTradingCompany40) Pakistan Pakistan Sales 60.00 Investment Manufactures, Enterprise combined under the Sichuan ChanghongAirConditionerCo., Ltd.41) Mianyang Mianyang 100.00 sales same control Manufactures, Enterprise combined under the Zhongshan ChanghongElectric Co., LTD42) Zhongshan Zhongshan 90.00 10.00 sales same control Manufactures, Enterprise combined under the Hefei Meiling Group HoldingCo., Ltd.43) Hefei Hefei 100.00 sales differentcontrol Manufactures, Enterprise combined under the MeilingEquatorElectric(Hefei)Co., Ltd. 44) Hefei Hefei 100.00 sales differentcontrol Manufactures, Enterprise combined under the Hefei Equator Electric Co., Ltd. 45) Hefei Hefei 100.00 sales differentcontrol Hongyuan Earth Energy Heat Pump Technology Co. Manufactures, Mianyang Mianyang 51.00 Investment Ltd.46) sales MeiLing Candy Washing Machine Co., Manufactures, Hefei Hefei 60.00 Investment Ltd.47) sales Guangzhou Changhong Trade Co., 100.0 Zhongshan Zhongshan Sales Investment Ltd.48) 0 100.0 Zhongshan Hongling Trade Co., Ltd.49) Zhongshan Zhongshan Sales Investment 0 Note: 1) Zhongke Meiling Low Temperature Technology Company Limited (―Zhongke Meiling‖), the predecessor of which was Zhongke Meiling Low Temperature Technology Limited Liability Company, was established on 29 October 2002 by joint contribution from the Company and Technical Institute of Physics and Chemistry, CAS (―TIPC‖), with registered capital of RMB60 million upon the establishment, among which, the Company made capital contribution of RMB42 million (including the assets in specie at the consideration of RMB35,573,719.70 as evaluated by Beijing Zhongzheng Appraisal Co., Ltd. with issuance of the Appraisal Report (ZZPBZ(2002)No.029) and cash contribution of RMB6,426,280.30) accounting for 70% of the aforesaid registered capital, and TIPC made capital contribution of RMB18 million with intangible assets of such value (namely the single compressor mixture industrial low temperature refrigeration technology) as evaluated by Jingzhongzi Assets Appraisal Co., Ltd. with 185 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) issuance of the Appraisal Report (ZZPBZ(2002)No.225) accounting for 30% of the aforesaid registered capital. The paid-in of the above registered capital has been verified by Huazheng Accounting Firm by issuance of the Assets Verification Report (HZYZ(2002)No.B157) dated 16 October 2002. In October 2014, according to the relevant provision under the Management Rules on Application of State Owned Assets by Central Business Organs, TIPC transferred the 30% equity interests held by it in Zhongke Meiling Low Temperature Technology Company Limited to its wholly-owned subsidiary Zhongke Xianxing (Beijing) Assets Management Co., Ltd (―Zhongke Xianxing‖) which would perform management over the operating assets of TIPC. Upon consideration and approval at the 37th meeting of the 7th Board of Directors of Hefei Meiling Co., Ltd, it is agreed to waive the pre-emptive right. On 10 August 2015, all the founders signed the Founder Agreement of Zhongke Meiling Low Temperature Technology Company Limited, pursuant to which, they decided to change the firm type of Zhongke Meiling Low Temperature Technology Company Limited to a joint stock company. Based on the net assets of RMB96, 431,978.25 as audited by Xinyong Zhonghe CPA as of 30 June 2015, an aggregate of 65,000,000 shares have been converted at the proportion of 1:0.67, which are to be held by the original shareholders according to their respective entitlement. In case that the net assets exceed registered capital, the balance shall be recorded in capital reserve. On 28 August 2015, Xinyong Zhonghe CPA reviewed the registered capital and paid-in thereof in respect of the stock reform, and issued Assets Verification Report (XYZH/2015CDA40161). The Company registered industrial and commercial information on 11 September 2015. On November 25, 2016, the first Extraordinary Shareholders' General Meeting of Zhongke Meiling Low Temperature Technology Co., Ltd. in 2016 considered and approved the Proposal on the Issuance Plan of the Company, Zhongke Meiling Company issued 3,150,000 shares to specific investors by the non-public offering of shares at 1.63 Yuan per share. The current capital increase was verified by the No. [XYZH/2016CDA40294]capital verification report issued by ShineWing CPA (special general partnership). After the completion of the issuance, the share capital of Zhongke Meiling Company increased to 68,150,000 shares and the Company's shareholding ratio was 66.76%. 2) Mianyang Meiling Software Technology Co., Ltd. (hereinafter referred to as Meiling Software Company) was established on Jan. 24, 2014. It is a limited company jointly invested by the Company and Mianyang Meiling Refrigeration Co., Ltd., being approved by the Industrial and Commerce Bureau of Peicheng District, Mianyang City. The company owes registered capital of RMB 5 million, including RMB 4.95 million contributed by Meiling Company in cash, accounted for 99% of the registered capital; Mianyang Meiling Refrigeration Co., Ltd. contributed RMB 50000 in cash with 1% of the register capital occupied. The above mentioned register capital have been verified by verification report of Chuanjinlai Yanzi No.[2014] B039 issued by Sichuan Jinlai Accounting Firm Co., Ltd. In July 2016, the shares of Mianyang Meiling Software Technology Co., Ltd., held by the Company has transferred to Sichuan Changhong AC Co., Ltd., after transferred, Changhong AC has 99% equity of Mianyang Software, the Company has no shares of Mianyang Software directly 186 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) 3) Mianyang Meiling Refrigeration Co., Ltd. (hereinafter referred to as Mianyang Meiling Company), a limited liability company jointly set up by the Company and China-tech Meiling Company, was founded on Mar. 6, 2009. Its registered capital and paid-in capital was RMB 50 million upon establishment, of which, the Company invested RMB 45 million, accounting for 90% of the registered capital; Zhongke Meiling Company invested RMB 5 million, accounting for 10% of the registered capital. The capital receipt was verified by the verification report [CXKY (2009) No. 008] of Sichuan Xingrui Certified Public Accountants. On 19 January 2011, the Company increase RMB 50 million in capital of Mianyang Meiling, of which RMB 95 million invested by the Company, a 95% of total register capital while RMB 5 million invested by Zhongke Meiling, a 5% of total capital occupied. The paid-in capital has been verified by Capital Verification Report [XYZH/2010CDA6040]from Chengdu Branch of Shinewing CPA CO., Ltd. In 2011, Zhongke Meiling entered into ―Equity Transfer Agreement‖ with Jiangxi Meiling Refrigeration Co., Ltd. 5 percent equity of Mianyang Meiling held by Zhongke Meiling was transferred to Jiangxi Meiling Refrigerator. In September 2013, Jiangxi Meiling Refrigeration was combined by Jiangxi Meiling Appliance Co., Ld, than 5 percent equity was transfer to Jiangxi Meiling Appliance. 4) Jiangxi Meiling Appliance Co., Ld.(Jiangxi Meiling Appliance Co.,) was a limited liability company jointly established by the Company and Mianyang Meiling on 23 May 2011. Register capital of the company totally as RMB 50 million, RMB 49.375 million invested by the Company, 98.75% in total register capital while RMB 0.625 million invested by Mianyang Meiling , a 1.25% in total register capital occupied. The initial investment RMB 10.50 million was received dated 13 May 2011 with RMB 10 million from the Company and RMB 0.5 million from Mianyang Meiling. Rest of the capital shall be invested fully within 2 years after the joint ventures established according to capital requirement. The initial investment capital were verified by the Capital Verification Report [JXKYZi(2011) No. 090] issued from Jingdezhen Xingci CPA Co., Ltd. Second capital RMB 39.5 million was fully funded on 28 July 2011, the Company contributed RMB 39.375 million while Mianyang Meiling Company invested RMB 125,000, the contributions have been verified by the capital verification report [Jing Xing Kuai Yan Zi (2011) No.: 134] issued from JDZ Xingci CPA Co., Ltd. 5) Hefei Meiling Appliance Marketing Co., Ltd. (Meiling Marketing Company for short) is the limited company jointly invested by the Company and Mianyang Meiling Company on 21 Oct. 2009. Registered capital and paid-up capital was RMB 10 million, including RMB 9.9 million invested by the Company, a 99% of the registered capital; Mianyang Meiling Company contributed RMB 0.1 million, a 1% of the registered capital. The above mentioned paid-up register capital have been verified by verification report of [Wan An Lian Xin Da Yan Zi (2009) No. 074] issued by Anhui An Lian Xin Da Accounting Firm Co., Ltd. On 25 Nov. 2010, the Company increased capital RMB 45 million, registered capital amounting to RMB 55 million, including RMB 54.9 million contributed by the Company, a 99.82% of the registered capital, while Mianyang Meiling invested RMB 0.1 million, a 0.18% of the registered capital. The increased capital have been verified by verification report of [Wan Hua Shen Zheng Da Kuai Yan Zi (2010) No. 1514] issued by Anhui Hua Shen Zhengda CPA Co., Ltd. 187 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) 6) Guangxi Huidian Home Appliance Co., Ltd. (Guangxi Huidian for short) established in March 2010 with registered capital of RMB 5 million. The Company invested RMB 1 million, accounted for 20% of the registered capital; Meiling Marketing acquired 44% equity interests from the minority shareholders in 2014. In 2015, Meiling Marketing and Jiangxi Meiling Appliances entered into equity transfer agreements with minority shareholders respectively, to acquire as the transferees the 35.6% and 0.4% equity interests of Guangxi Weidian held by minority shareholders. Upon completion of equity transfer in April 2015, Meiling Marketing and Jiangxi Meiling Appliances held the entire equity interests of Guangxi Weidian as a whole. 7) Wuhu Meiling Appliance Marketing Co., Ltd. (Wuhu Meiling for short) was established dated 24 December 2010 with registered capital of RMB 6 million; the Company invested RMB 2.16 million, accounted for 36% of the registered capital. After Meiling Marketing acquired 65% equity interests from the minority shareholders in 2014, Meiling Marketing the Company totally holds 98% equity of the Wuhu Meiling. 8) Changchun Meiling Appliance Marketing Co., Ltd. (Changchun Meiling for short) was established dated 22 December 2010 with registered capital of RMB 3million; Meiling Marketing invested RMB 2.91 million, accounted for 97% of the registered capital. After Meiling Marketing acquired 3% equity interests from the minority shareholders in 2017, Meiling Marketing the Company totally holds 100% equity of the Changchun Meiling. 9) Lanzhou Meizhilai Meiling Appliance Marketing Co., Ltd., originally named Lanzhou Meiling Appliance Marketing Co., Ltd. (Meiling for short) was established dated 25 March 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 1.215 million, accounted for 40.50% of the registered capital. After Meiling Marketing acquired 11% equity interests from the minority shareholders in 2013, Meiling Marketing acquired 48.5% equity interests from the minority shareholders in 2016, Meiling Marketing the Company totally holds 100% equity of Lanzhou Meiling. 10) Jinan Meiling Appliance Marketing Co., Ltd. (Jinan Meiling for short) was established dated 3 June 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 1.08 million, accounted for 36% of the registered capital; after Meiling Marketing acquired 55.4% equity interests from the minority shareholders in 2015, Meiling Marketing totally holds 91.4% equity of the Jinan Meiling. 11) Nanchang Youxiang Appliance Marketing Co., Ltd. (Nanchang Xiangyou for short) was established dated 5 January 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 1.08 million, accounted for 36% of the registered capital. After the Company acquired 49% equity interests from the minority shareholders in 2014, Meiling Marketing totally holds 85% equity of Nanchang Meiling. 12) Jingzhou Meiling Appliance Marketing Co., Ltd. (Jingzhou Meiling for short) was established dated 10 January 2011 with registered capital of RMB 4 million; Meiling Marketing invested RMB 2.4 million, accounted for 60% of the registered capital. In 2013, the Company purchased 20% equity from 188 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) minority; After Meiling Marketing acquired 1% equity interests from the minority shareholders in 2014, Meiling Marketing acquired 15% equity interests from the minority shareholders in 2016, Meiling Marketing totally holds 96% equity of Jingzhou Meiling. 13) Shengyang Meiling Appliance Marketing Co., Ltd. (Shengyang Meiling for short) was established dated 26 January 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 2.844 million, accounted for 94.8% of the registered capital. 14) Wuhan Meizhirong Appliance Marketing Co., Ltd. (Wuhan Meizhirong for short) was established dated 10 January 2011 with registered capital of RMB 5 million; Meiling Marketing invested RMB 4.55 million, accounted for 91% of the registered capital. 15) Zhengzhou Meiling Appliance Marketing Co., Ltd. (Zhengzhou Meiling for short) was established dated 17 January 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 1.08 million, accounted for 36% of the registered capital. In 2013, Meiling Marketing purchased 10% equity from minority; Meiling Marketing signed equity transfer agreement with the minority shareholders in April 2015, to acquire as the transferee the 39% equity interests of Zhengzhou Meiling held by minority shareholders, Meiling Marketing acquired 10% equity interests from the minority shareholders in February 2016; Upon completion of such equity transfer, Meiling Marketing held in aggregate the 95% equity interests of Zhengzhou Meiling. After Meiling Marketing acquired 5% equity interests from the minority shareholders in 2017, Meiling Marketing held in aggregate the 100% equity interests of Zhengzhou Meiling. 16) Shijiazhuang Meiling Appliance Marketing Co., Ltd. (Shijiazhuang Meiling for short) was established dated 14 January 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 1.08 million, accounted for 36% of the registered capital; After Meiling Marketing acquired 27.33% equity held by the minority in 2014, holding 63.33% equity of the Shijiazhuang Meiling; After Meiling Marketing acquired 32% equity held by the minority in 2015, totally holding 95.33% equity of Shijiazhuang Meiling. After Meiling Marketing acquired 4.67% equity interests from the minority shareholders in 2017, Meiling Marketing held in aggregate the 100% equity interests of Shijiazhuang Meiling. 17) Mianyang Meiling Appliance Marketing Co., Ltd. (Mianyang Meiling for short) was established dated 27 January 2011 with registered capital of RMB 5 million; Meiling Marketing invested RMB 2.6 million, accounted for 52% of the registered capital. After Meiling Marketing purchased 33% equity from minority in 2013, and purchased 8.8% equity from minority in 2015, Meiling Marketing totally holds 93.8% equity of Mianyang Meiling. After Meiling Marketing acquired 6.2% equity interests from the minority shareholders in 2017, Meiling Marketing held in aggregate the 100% equity interests of Mianyang Meiling. 18) Chengdu Meiling Appliance Marketing Co., Ltd. (Chengdu Meiling for short) was established dated 26 January 2011 with registered capital of RMB 5 million; Meiling Marketing invested RMB 4.17 189 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) million, accounted for 83.4% of the registered capital; After Meiling Marketing purchased 9% equity from minority in 2015, and purchased 0.8% equity from minority in 2016, Meiling Marketing totally holds 94.8% equity of Chengdu Meiling. 19) Guiyang Meiling Appliance Marketing Co., Ltd. (Guiyang Meiling for short) was established dated 24 January 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 0.78 million, accounted for 26% of the registered capital; after Meiling Marketing purchased 18% equity from minority in 2013, Meiling Marketing purchased 42% equity from minority in 2015, Meiling Marketing purchased 14% equity from minority in 2016, Meiling Marketing held in aggregate the 100% equity interests of Guiyang Meiling. 20) Fuzhou Meiling Appliance Marketing Co., Ltd. (Fuzhou Meiling for short) was established dated 25 January 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 2.97 million, accounted for 99% of the registered capital. After Meiling Marketing acquired 1% equity interests from the minority shareholders in 2017, Meiling Marketing held in aggregate the 100% equity interests of Fuzhou Meiling. 21) Nanjing Meiling Appliance Marketing Co., Ltd. (Nanjing Meiling for short) was established dated 14 Feb. 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 2.97 million, accounted for 99% of the registered capital. After Meiling Marketing acquired 1% equity interests from the minority shareholders in 2017, Meiling Marketing held in aggregate the 100% equity interests of Nanjing Meiling. 22) Hefei Meiling White Appliance Marketing Co., Ltd. (White Appliance for short) was established dated 21 January 2011 with registered capital of RMB 6 million; Meiling Marketing invested RMB 5.1 million, accounted for 85% of the registered capital; Meiling Marketing signed equity transfer agreement with the minority shareholders in 2015, to acquire as the transferee the 10% equity interests of White Appliance held by minority shareholders. Upon completion of such equity transfer in February 2015, Meiling Marketing held in aggregate the 95% equity interests of White Appliance. 23) Taiyuan Meiling Appliance Marketing Co., Ltd. (Taiyuan Meiling for short) was established dated 18 January 2011 with registered capital of RMB 4 million; Meiling Marketing invested RMB 1.59 million, accounted for 39.75% of the registered capital; after Meiling Marketing purchased 45.5% equity from minority in 2013, Meiling Marketing purchased 14.75% equity from minority in 2016, Meiling Marketing totally holds 100% equity of the Taiyuan Meiling. 24) Changsha Meiling Appliance Marketing Co., Ltd. (Changsha Meiling for short) was established dated 26 January 2011 with registered capital of RMB 5 million; Meiling Marketing invested RMB 1.8 million, accounted for 36% of the registered capital; the Company entered into equity transferred agreement with minority shareholders in 2014, transferred 50% equity of Changsha Meiling held by the minority, after Meiling Marketing purchased 11% equity from minority in 2016, Meiling Marketing totally holds 97% equity of Changsha Meiling. 190 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) 25) Hohhot Meiling Appliance Marketing Co., Ltd., originally called Hohhot Xiangyou Appliance Marketing Co., Ltd.(Hohhot Meiling for short) was established dated 21 Feb. 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 1.65 million, accounted for 55% of the registered capital; after Meiling Marketing purchased 28% equity from minority in 2013, Meiling Marketing purchased 12% equity from minority in 2016, Meiling Marketing totally holds 95% equity of the Hohhot Meiling. 26) Hangzhou Meiling Appliance Marketing Co., Ltd. was established dated 17 Feb. 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 2.655 million, accounted for 88.5% of the registered capital; Meiling Marketing signed equity transfer agreement with the minority shareholders in 2015, to acquire as the transferee the 6.5% equity interests of Hangzhou Meiling held by minority shareholders. Upon completion of such equity transfer in February 2015, Meiling Marketing held in aggregate the 95% equity interests of Hangzhou Meiling. After Meiling Marketing acquired 5% equity interests from the minority shareholders in 2017, Meiling Marketing held in aggregate the 100% equity interests of Hangzhou Meiling. 27) Chongqing Meiling Appliance Marketing Co., Ltd. (Chongqing Meiling for short) was established dated 1 March 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 2.55 million, accounted for 85% of the registered capital; After Meiling Marketing purchased 13% equity from minority in 2015, Meiling Marketing totally holds 98% equity of Chongqing Meiling. After Meiling Marketing acquired 2% equity interests from the minority shareholders in 2017, Meiling Marketing held in aggregate the 100% equity interests of Chongqing Meiling. 28) Kunming Meiling Appliance Marketing Co., Ltd. (Kunming Meiling for short) was established dated 28 Feb. 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 1.395 million, accounted for 46.5% of the registered capital; after Meiling Marketing purchased 40% equity from minority in 2013, Meiling Marketing purchased 9% equity from minority in 2016, Meiling Marketing totally holds 95.5% equity of the Kunming Meiling. After Meiling Marketing acquired 2% equity interests from the minority shareholders in 2017, Meiling Marketing held in aggregate the 97.5% equity interests of Kuming Meiling. 29) Shanghai Meiling Appliance Marketing Co., Ltd. (Shanghai Meiling for short) was established dated 9 March 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 2.97 million, accounted for 99% of the registered capital. 30) Nantong Meiling Appliance Marketing Co., Ltd. (Nantong Meiling for short) was established dated 8 March 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 1.74 million, accounted for 58% of the registered capital; In 2013, after Meiling Marketing purchased 34% equity from minority, Meiling Marketing totally holds 92% equity of the Nantong Meiling. After Meiling Marketing acquired 8% equity interests from the minority shareholders in 2017, Meiling Marketing held in aggregate the 100% equity interests of Nantong Meiling. 191 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) 31) Guangzhou Meiling Appliance Marketing Co., Ltd. (Guangzhou Meiling for short) was established dated 13 May 2011 with registered capital of RMB 5 million; Meiling Marketing invested RMB 4.3 million, accounted for 86% of the registered capital; after Meiling Marketing acquired 12% equity interests from the minority shareholders in 2014, Meiling Marketing totally held the 98% equity interests of Guangzhou Meiling. 32) Tianjin Meiling Appliance Marketing Co., Ltd. (Tianjin Meiling for short) was established dated 2 March 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 2.565 million, accounted for 85.5% of the registered capital; In 2015, Meiling Marketing and Jiangxi Meiling Appliances entered into equity transfer agreements with minority shareholders respectively, to acquire as the transferees the 14.1% and 0.4% equity interests of Guangxi Weidian held by minority shareholders. Upon completion of equity transfer in December 2015, Meiling Marketing totally held the entire equity interests of Tinjian Meiling. 33) Urumchi Meiling Appliance Marketing Co., Ltd. (Urumchi Meiling for short) was established dated 4 March 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 2.7 million, accounted for 90% of the registered capital. 34) Harbin Meiling Appliance Marketing Co., Ltd. (Harbin Meiling for short) was established dated 6 April 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 1.08 million, accounted for 36% of the registered capital; Meiling Marketing acquired 41.5% equity interests from the minority shareholders in 2014, Meiling Marketing acquired 17.5% equity interests from the minority shareholders in 2015, Meiling Marketing totally held the 95% equity interests of Harbin Meiling. After Meiling Marketing acquired 5% equity interests from the minority shareholders in 2017, Meiling Marketing held in aggregate the 100% equity interests of Harbin Meiling. 35) Beijing Meiling Appliance Marketing Co., Ltd. (Beijing Meiling for short) was established dated 28 March 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 2.97 million, accounted for 99% of the registered capital. After Meiling Marketing acquired 1% equity interests from the minority shareholders in 2017, Meiling Marketing held in aggregate the 100% equity interests of Beijing Meiling. 36) Hefei Meiling Nonferrous Metal Products Co., Ltd. (Nonferrous Metal) was the Sino-foreign joint venture jointly set up by original Meiling Group, Hefei Meiling Copper Co., Ltd. And Singapore Kim Shin Development Co., Ltd., which have been originally approved by the [WJMWFZZ(1996) No.349] of Foreign Trade and Economic Committee of Anhui Province. Its registered capital was US$ 2.92 million upon establishment, of which, original Meiling Group invested US$ 1.46 million (monetary capital), accounting 50% of the registered capital, Hefei Meiling Copper Co., Ltd invested US$ 0.584 million (monetary capital of RMB 0.18 million and real assets of US$ 0.404 million), accounting 20% of registered capital while Singapore Kim Shin Development Co., Ltd invested US$ 0.876 million (monetary capital), accounting 30% of the registered capital. The above mentioned investment verified by the verification report of [HSWZ(1995) No. 0737], [HSWZ(1996) No. 328] and 192 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) [HSWZ(1998) No. 088] from Anhui CPAs Co., Ltd. In July 2008, approved by [HWS(2008) No.53] from Foreign Trade Economic Cooperation Bureau of Hefei City, 30% equity and 20% equity held by Singapore Kim Shin Development Co., Ltd and Hefei Meiling Copper Co., Ltd respectively transferred to original Meiling Group Totally. The Company’s register capital came into RMB 24,286,808.00 after transference, and was not the joint-venture any more. 37) Guangdong Changhong Ridian Technology Co., Ltd. (hereinafter referred to as the Company, the company) is a limited liability company invested and established by Sichuan Changhong Electric Co., Ltd. (hereinafter referred to as Sichuan Changhong) and Sichuan Changhong Motor Transport Co., Ltd. (hereinafter referred to as Changhong Motor Transport Company) on May 25, 2016. The registered capital and paid-in capital are RMB 40 million Yuan, of which Sichuan Changhong has invested 32 million Yuan by monetary capital, accounting for 80% of the registered capital; Changhong Motor Transport Company has invested 8 million Yuan, accounting for 20% of the registered capital. The official receipts of registered capital have been verified by original Sichuan Junhe Accounting Firm [No. JHYZ (2006) 3027]. The company increased registered capital of 43 million Yuan on January 4, 2007, changing from 40 million Yuan to 83 million Yuan , for the newly increased 43 million Yuan , Sichuan Changhong invested 1.8 million Yuan , Guangdong Xiongfeng Electric Co., Ltd. invested 40 million Yuan , and Kou Huameng and other 9 natural person shareholders invested 1.2 million Yuan , at the same time, the shareholders' meeting considered and agreed to transfer the investment of 8 million Yuan of Changhong Motor Transport Company to Sichuan Changhong Innovation Investment Co., Ltd., the structure of the registered capital after changes was that Sichuan Changhong invested 33.8 million Yuan , accounting for 40.72%; Guangdong Xiongfeng Electric Co., Ltd. invested 40 million Yuan , accounting for 48.19%; Sichuan Changhong Innovation Investment Co., Ltd. Invested 8 million Yuan, accounting for 9.64%; Kou Huameng and other 9 natural person shareholders invested 1.2 million Yuan , accounting for 1.45%. The change of registered capital was verified by Zhongshan Promise Accounting Firm [No. ZCHZ (2007)501010]. On February 18, 2009, 7 natural person shareholders transferred total 0.76% stock rights to Hu Zhiheng, after the transfer, the registered capital of the company was still 83 million Yuan , the structure of registered capital after changes was that Sichuan Changhong invested 33.8 million Yuan , accounting for 40.72%; Guangdong Xiongfeng Electric Co., Ltd. invested 40 million Yuan , accounting for 48.19%; Sichuan Changhong Innovation Investment Co., Ltd. invested 8 million Yuan , accounting for 9.64%; Hu Zhiheng and other two natural person shareholders invested 1.2 million Yuan , accounting for 1.45%. On October 9, 2014, the company held the shareholders meeting which considered and agreed Kou Huameng to transfer its stock rights of total 250,000 Yuan which accounts for 0.301% of the company's registered capital to Sichuan Changhong Innovation Investment Co., Ltd. at the cost of 317,802 Yuan. The other shareholders of the Company waived the right of pre-emption. On December 11, 2014, the company held the shareholders meeting which considered and agreed Guangdong Xiongfeng Electric Co., Ltd. to transfer its stock rights of total 40 million Yuan which accounts for 48.19 % of the company's registered 193 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) capital to Sichuan Changhong Electric Co., Ltd. at the cost of 43,977,300 Yuan. The other shareholders of the Company waived the right of pre-emption. The structure of registered capital after changes was that Sichuan Changhong invested 73.8 million Yuan , accounting for 88.92%; Sichuan Changhong Innovation Investment Co., Ltd. Invested 8.25 million Yuan , accounting for 9.94%; Hu Zhiheng and another natural person shareholder invested 950,000 Yuan , accounting for 1.14%. On January 4, 2016, Sichuan Changhong and Sichuan Changhong Innovation Investment Co., Ltd. transferred total 98.855% of the Company’s stock rights they held to the Company. After the transfer, the Company directly holds 98.855% stock rights of Changhong Ridian. 38) Changmei Technology Co., Ltd. (Changmei Technology for short) was invested and set up on May 12, 2016 in order to promote intelligent transformation and implement the company’s intelligent life project according to the company's strategic planning and business development needs. Changmei Technology has registered capital of 50 million Yuan, of which the Company subscribed and paid 45 million Yuan in cash, accounting for 90% of the registered capital, and Changmei Management Group team subscribed and paid 5 million Yuan in cash, accounting for 10% of the registered capital. On 19 December 2016, being deliberated on shareholders meeting, 2.64% equity held by part of the natural persons, are agreed to transferred to Hefei Meiling Co., Ltd. After transferred, the equity structures are as: Hefei Meiling Co., Ltd. contributes 46.32 million Yuan, a 92.64% in registered capital; natural person of Changmei management team totally contributed 3.68 million Yuan, a 7.36% in registered capital. 39) CHANGHONG MEILING ELECTRIC INDONESIA, PT.(Indonesia Changhong for short) is a subsidiary established in Indonesia and jointly invested by Zhongshan Changhong and Sichuan Changhong in 2016, the company’s registered capital is 6 million US dollars, of which Zhongshan Changhong subscribed and paid 5.88 million US dollars in cash, accounting for 98% of the registered capital, Changhong Air Conditioning subscribed and paid 120,000 US dollars in cash, accounting for 2% of the registered capital. 40) Changhong Ruba Trading Company (Private) Limited (―Changhong Ruba‖) was a joint venture established by Zhongshan Changhong Appliances Company Limited and RUBA GENERAL TRADING FZE Company (―RUBA‖) on 5 August 2011 with the approval from Guangdong Development and Reform Commission by issuance of the Approval Relating to Joint Construction of a Manufacturing and Selling Platform Project in Pakistan by Zhongshan Changhong Appliances Company Limited (YFGWZ(2011)958). The resolution of the second extraordinary shareholders' meeting of Zhongshan Changhong in 2016 passed the "Proposal on the Company's Capital Increase to Changhong Ruba Trading Company (Private) Limited", and agreed that the company and UAE RUBA Company jointly increase capital to Changhong Ruba Trading Company(Private) Limited which was invested by both sides in Pakistan at an earlier stage, Zhongshan Changhong invested 3.84 million US dollars in this capital increase, and UAE RUBA Company invested 2.56 million US dollars, the shares held by both sides remained unchanged. After the capital increase, the company’s registered capital became 12.4 million US dollars, of 194 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) which Zhongshan Changhong Electric Co., Ltd. Invested 7.44 million US dollars in cash, shareholding ratio was 60%, UAE RUBA Company invested 4.96 million US dollars in cash, and shareholding ratio was 40%. 41) Sichuan Changhong Air-conditioners Co., Ltd.(Changhong Air-conditioner for short), a limited liability company jointly set up by Sichuan Changhong and Changhong Chuangtou, was founded on November 28, 2008. Its registered capital was RMB 200 million upon establishment, of which, Sichuan Changhong invested RMB 298 million (RMB 210,088,900 invested by monetary capital while RMB 87,911,100 invested by real material), equivalent to RMB 198 million shares, accounting for 99% of the registered capital; and Changhong Chuangtou invested RMB 3 million, accounting for 1% of the registered capital with equivalent of RMB 2 million shares. The registered capital receipt was verified by the verification report [CGYYZ (2008) No. 177] of Sichuan Guangyuan Certified Public Accountants Co., Ltd. and [HLTHYZ(2008) No. 12-006] of Sichuan Henglitai Certified Public Accountants Co., Ltd. In December 2009, the Company obtained 100% equity of Changhong Air-conditioner by consolidated under the same control. 42) Zhongshan Changhong Electric Co., Ltd.( Zhongshan Changhong), was the original Guangdong Changhong Electric Co., Ltd., and is a limited liability company jointly set up by Sichuan Changhong and China Minmetals on May 22, 2001. Its registered capital was RMB 80 million upon establishment, of which, Sichuan Changhong invested RMB 72 million, including RMB 69.3 million biding for the estate/ non-estate from original Zhongshan Sanrong Air-conditioner Co., Ltd. And its patent use-right of RMB2.7 million, accounting for 90% of the registered capital; Chine Minmetals invested RMB 8 million in monetary capital accounting 10% of the registered capital. The Company changed its name originally from Guangdong Changhong Electric Co., Ltd in July 2003. In December 2009, the Company obtained 90% equity of Zhongshan Changhong by consolidated under same control. 10% equity held by China Minmetals has been transferred by Changhong Air-conditioner on April 11, 2010. On 25 May 2014, the Company increased RMB 36 million to Zhongshan Changhong, and Changhong AC increased RMB 4 million. In 2016, according to the overseas development strategy of the Company and the development and operation needs of the subsidiaries, the Company and the wholly-owned subsidiary Changhong Air Conditioning have increased capital of RMB 64 million Yuan to Zhongshan Changhong according to the existing shareholding ratio, among which the capital increase of the Company was RMB 57.6 million Yuan, and the capital increase of Changhong Air Conditioning was RMB 6.4 million Yuan. After the completion of this capital increase, the registered capital Zhongshan Changhong shall increase to RMB 184 million Yuan, the shareholding ratio of the company and Changhong Air Conditioning remained unchanged and was still 90% and 10%, of which the Company invested 165.6 million Yuan, accounting for 90% of the registered capital, Changhong Air Conditioning invested 18.4 million Yuan, accounting for 10% of the registered capital. 43) Hefei Meiling Group Holding Co., Ltd (Meiling Group), was the state-owned company originally approved by People’s Government of Hefei Province and established authorized by SASAC of 195 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Hefei City. On July 14, 2008, 100% state-owned equity of Meiling Group has freely transferred to Xingtai Holding by Hefei SASAC. Agreement by the approval of < State-owned property agreement transfer from Meiling Group> [ HGZCQ(2010) No.34] of Hefei SASAC on April 9, 2010, 100% state-owned property of Meiling Group after partial assets and liabilities separated transferred to the Company from Xingtai Holding as amount of RMB 113.2 million. The re-registration of industrial and commercial procedure for Meiling Group after separated partial assets liability has finished on July 28, 2010. The new Meiling Group has register capital of RMB 80 million, and has been verified by the [AD(2010)YZD No. 016] from Anhui Anding CPAs Co., Ltd. 44) Meiling Equator Appliance (Hefei) Co., Ltd.( Equator Appliance for short) was the Sino-foreign joint venture jointly set up by original Meiling Group and EQUATOR INVESTMENTS (USA) INC.( EQUATOR for short), which have been approved by the [SWZWFZZ(2004) No.0103] of Approval Certificate of Foreign Enterprise from People’s Government of Anhui Province. Its registered capital was US$ 3 million upon establishment, of which, Sino company invested US$ 2.25 million in machinery equipment, accounting 75% of the registered capital while foreign company invested US$ 0.5 million in monetary capital and US$ 0.25 million in intangible assets, amounting to US$0.75 million, accounting 25% of the registered capital. The above mentioned investment verified by the verification report of [WYAYZ (2004) No. 135] from Anhui Yongan CPAs Co., Ltd. In July 2007, approved by [HWJ(2007) No.136] from Foreign Trade Economic Cooperation Bureau of Hefei City, 25% equity held by EQUATOR transferred to Anhui Meiling Electric Co., Ltd. Totally. The Company’s register capital came into RMB 24,793,200 after transference, and was not the joint-venture any more. 25% equity owned by Anhui Meiling Electric Co., Ltd has been transferred totally to original Meiling Group in July 2009. 45) Hefei Equator Appliance Co., Ltd.( Equator Appliance) was jointly set up by original Meiling Group and Yingkaite Appliance on September 26, 2007. Its register capital was RMB 12 million, among which, original Meiling Group invested RMB 8,670,600 in monetary capital, accounting 72.255% in registered capital; Equator Appliance invested RMB 3,329,400 in the assessment value of intangible assets (land-use right), accounting 27.745% of total registered capital. The investment being verified by [WYAZ(2004) No. 135] from Anhui Yongan CPAs Co., Ltd. 46) Hongyuan Ground Energy Heating Pump Technology Company (―Hongyuan Ground Energy‖) was established as a limited liability company with joint capital contribution from Sichuan Changhong Air Conditioner Company (―Changhong Air Conditioner‖) and Hengyouyuan Science & Technology Development Group on 28 August 2015, with the approval from the Industrial and Commercial Administration Office of Fucheng district, Mianyang, Sichuan province. The registered capital of the company is RMB50 million, among which, RMB25.5 million is contributed by Changhong Air Conditioner in cash with shareholding proportion of 51%, and the remaining RMB24.5 million is contributed by Hengyouyuan Science & Technology Development Group in cash with shareholding proportion of 49%. 47) Meiling Candy Washing Machine Co., Ltd. (―Meiling Candy‖) was established on 27 April 2017 196 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) with joint capital contribution from Hefei Meiling Co., Ltd. and Candy Hoover Group S.r.l.. Registered capital amounting to 150 million Yuan, including 90 million Yuan contributed by Hefei Meiling Co., Ltd., a 60% in total registered capital while 60 million Yuan or equivalent USD contributed by Candy Hoover Group S.r.l., a 40%in total registered capital. Ended as 30 June, the first phase contribution 30 million Yuan and 20 million Yuan are paid respectively by Hefei Meiling and Candy Hoover Group S.r.l. 48) Guangzhou Changhong Trade Co., Ltd. (―Guangzhou Changhong‖) was established in line with the strategy plans and operation development requirement by Zhongshan Changhong Electric Co., LTD on 6 January 2017 with registered capital of one million Yuan. Zhongshan Changhong contributed in cash, a 100% in registered capital. 49) Zhongshan Hongling Trade Co., Ltd. (―Hongling Trade‖) was established as a limited liability company by Guangdong Changhong Ridian Technology Co., Ltd. dated 5 December 2016. Registered capital amounting to one million Yuan, Guangdong Changhong Ridian Technology takes 100% equity. (2) Major non-wholly-owned subsidiary Dividend Gains/losses Balance of Shareholdi distributed to attributable to minority’s Subsidiary ng of minority minority in the interest at minority announced in the period period-end period Zhongke Meiling 33.24% 986,542.54 38,507,489.75 Hongyuan Ground Energy 49.00% 2,372,403.10 12,095,380.59 Changhong Ridian 1.14% 46,439.28 1,295,378.72 Meiling Kadi 40.00% -37,361.22 19,962,638.78 (3) Financial information for major non-wholly-owned subsidiary Ending balance Subsidiary Non-current Current assets Non-current assets Total assets Current liabilities Totalliabilities liability Zhongke 125,050,695.49 101,526,920.98 226,577,616.47 105,715,124.36 5,000,000.00 110,715,124.36 Meiling Hongyuan Ground 195,690,658.99 1,877,476.61 197,568,135.60 172,883,685.42 - 172,883,685.42 Energy Changhong 190,122,411.51 58,864,880.48 248,987,291.99 135,812,098.27 - 135,812,098.27 Ridian Meiling Kadi 111,284,441.35 158,066.04 111,442,507.39 61,535,910.44 - 61,535,910.44 (Continued) Opening balance Subsidiary Non-current Current assets Non-current assets Total assets Current liabilities Totalliabilities liability Zhongke 95,736,799.26 79,041,552.96 174,778,352.22 56,884,199.81 5,000,000.00 61,884,199.81 Meiling Hongyuan Ground 94,131,015.35 214,113.11 94,345,128.46 74,502,317.25 74,502,317.25 Energy 197 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Subsidiary Opening balance Changhong 201,344,325.02 59,154,559.91 260,498,884.93 151,381,017.63 151,381,017.63 Ridian Meiling Kadi - - - - - - (Continued) Current period Subsidiary Total comprehensive Cash flow from Operation income Net profit income operation activity Zhongke 60,567,937.18 2,968,339.70 2,968,339.70 36,565,279.44 Meiling Hongyuan Ground 266,905,097.64 4,841,638.97 4,841,638.97 -9,120,688.64 Energy Changhong 208,290,529.53 4,057,326.42 4,057,326.42 -5,939,023.08 Ridian Meiling Kadi 24,592,916.36 -93,403.05 -93,403.05 309,458.60 (Continued) Amount for the same period of last year Subsidiary Total comprehensive Cash flow from Operation income Net profit income operation activity Zhongke 38,908,381.02 2,151,566.44 2,151,566.44 6,169,648.52 Meiling Hongyuan Ground 34,314,113.36 -798,632.06 -798,632.06 -926,619.14 Energy Changhong 222,027,059.04 3,034,542.05 3,034,542.05 27,949,640.51 Ridian Meiling Kadi - - - - (4) Major limitation on using enterprise group’s assets and liquidate debts of enterprise group: Nil (5) Offering financial supporting or other supports for structured entity that included in consolidation statement scope: Nil 198 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) 2. Changes of owner’ equity shares in subsidiary and its impacts Changchun zhengzhou Shijiazhuang Mianyang Fuzhou Nanjing Hangzhou Chongqing Kunming Nantong Harbin Beijing Item Total Meiling Meiling Meiling Meiling Meiling Meiling Meiling Meiling Huidian Meiling Meiling Meiling Originalratio ofsharesheld 97.00% 95.00% 95.33% 93.80% 99.00% 99.00% 95.00% 98.00% 95.50% 92.00% 95.00% 99.00% Equitypurchased fromminority 3.00% 5.00% 4.67% 6.20% 1.00% 1.00% 5.00% 2.00% 2.00% 8.00% 5.00% 1.00% Ratio of shares held at 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 97.50% 100.00% 100.00% 100.00% period-end Cash 1 3 1 5 1 1 1 1 4 1 1 1 21.00 Acquisition cost/total disposal 1 3 1 5 1 1 1 1 4 1 1 1 21.00 consideration Less: net assets of subsidiary measured by equity shares -170,960.56 -769,777.59 -97,449.94 412,939.38 -119,653.94 -117,860.92 -735,435.01 -48,991.17 -20,037.95 -441,685.90 -156,586.55 -381,676.73 -2,647,176.88 obtainedbydisposed Balance 170,961.56 769,780.59 97,450.94 -412,934.38 119,654.94 117,861.92 735,436.01 48,992.17 20,041.95 441,686.90 156,587.55 381,677.73 2,647,197.88 Including: -170,961.56 -769,780.59 -97,450.94 412,934.38 -119,654.94 -117,861.92 -735,436.01 -48,992.17 -20,041.95 -441,686.90 -156,587.55 -381,677.73 -2,647,197.88 Capitalpublicreserveadjusted The balance between the newly achieved long-term equity investment by purchasing stock rights of minority shareholders of some marketing subsidiaries and the net asset shares held by the subsidiary continuously calculated from the purchase date and calculated by the newly increased shareholding ratio was -2,647,197.88 Yuan, and should be included in the capital reserve. 199 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) 3. Equity in joint venture or affiliated enterprise (1) Major joint venture or affiliated enterprise Share holding (%) Accounting treatment for Main office Registe Business investment of Joint venture or affiliated enterprise place r place nature Direct Indire ly ctly joint venture or affiliated enterprise Affiliated enterprise: 1.ChanghongRubaElectricCompany Lahore, Manufactures, Lahore 40.00 Equity (Private)Ltd. Pakistan sales 2.Hefei Xingmei Assets Management Co., Rental, Hefei Hefei 48.28 Equity Ltd. agency 3.Sichuan Zhiyijia Network Technology Mianyang Mianyang Sales 30.00 Equity Co., Ltd. 4.Hongyuan Dineng Rebao Technology Co. R & D, sales, Mianyang Mianyang 49.00 Equity Ltd. after-sales 5.Sichuan Tianyou Guigu Technology Co., Manufactures, Mianyang Mianyang 25.00 Equity Ltd. sales 6.Chengdu Guigu Environment Technology Manufactures, Chengdu Chengdu 25.00 Equity Co., Ltd. sales (2) Financial information for major Joint venture: Nil (3) Financial information for affiliated enterprise Ending balance /Current period Chengdu HefeiXingmei Sichuan Zhiyijia Hongyuan Sichuan Item ChanghongRub Guigu Assets Network Dineng Rebao Tianyou Guigu aElectricCompa Environmen Management Technology Co., Technology Co. Technology Co., ny(Private)Ltd. t Technology Co.,Ltd. Ltd. Ltd. Ltd. Co., Ltd. Currentassets: 106,622,727.23 3,794,894.67 1,767,413,320.51 108,375,007.35 11,803,904.00 37,397,817.27 Including: cash and cash 862,247.27 3,737,574.67 525,244,514.18 536,417.51 6,302,339.05 25,814,460.87 equivalent Non-currentassets 81,040,087.59 22,419,345.68 13,977,775.32 4,042,220.08 25,380,204.84 14,467,194.33 Total assets 187,662,814.82 26,214,240.35 1,781,391,095.83 112,417,227.43 37,184,108.84 51,865,011.60 Currentliability 101,018,008.57 1,603,225.17 1,730,935,643.69 59,301,986.01 606,786.89 9,124,966.94 Mom-currentliability - - 1,400,000.00 - 1,511,363.63 243,750.00 Totalliabilities 101,018,008.57 1,603,225.17 1,732,335,643.69 59,301,986.01 2,118,150.52 9,368,716.94 Minority’sinterest - - - 104,684.88 - - Equity attributable to shareholder 86,644,806.25 24,611,015.18 49,055,452.14 53,010,556.54 35,065,958.32 42,496,294.66 ofparentcompany Share of net assets measured by 34,657,922.50 11,882,198.13 14,716,635.63 25,975,172.70 8,766,489.58 10,624,073.66 shareholding Adjustmenttime - - - - - - --Goodwill - - - - - - 200 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Unrealized profit of the internal 5,544,313.98 - 7,572,751.93 3,245,444.30 12,057.40 178.89 downstreamtransactions Unrealized profit of the internal 517,388.80 - - - - - upstreamtransactions Other - - - - - - Book value of the equity 29,113,608.52 11,882,198.13 7,143,883.70 22,729,728.40 8,754,432.18 10,623,894.77 investmentforaffiliate Fair value of equity investment for the affiliates with consideration - - - - - - publicly Operation income 130,908,878.06 74,174.75 1,824,770,956.91 24,702,679.10 513,414.56 2,635,882.58 Financialexpenses 191,224.13 -5,430.52 -11,144,192.28 69,906.80 -310,264.28 -76,340.87 Income taxexpenses - - 7,230,229.39 - - - Netprofit -632,619.48 -1,061,727.97 12,060,219.73 -71,775.81 -304,136.00 -3,422,217.75 Net profit of discontinuing - - - - - - operation Othercomprehensiveincome - - - - - - Total comprehensiveincome - - - - - - Dividend received from affiliates - - - - - - in theYear (Continued) Opening balance /Amount forthe same period of lastYear ChanghongRuba HefeiXingmei Sichuan Zhiyijia Hongyuan Item SichuanTianyou ElectricCompany Assets Network Dineng Rebao GuiguTechnology Management Technology Co., Technology Co. (Private)Ltd Co.,Ltd. Co.,Ltd. Ltd. Ltd. Currentassets: 53,816,804.37 4,306,112.28 1,082,166,887.90 110,218,752.45 46,813,516.00 Including: cash and cash 3,218,558.81 4,230,072.28 432,181,490.05 3,089,747.24 36,370,617.75 equivalent Non-currentassets 87,139,096.04 22,951,140.57 14,581,224.90 4,316,949.46 42,568,210.38 Total assets 140,955,900.41 27,257,252.85 1,096,748,112.80 114,535,701.91 89,381,726.38 Currentliability 51,373,683.63 1,584,509.70 1,058,052,880.39 61,339,639.80 54,110,854.39 Mom-currentliability 1,700,000.00 4,078,409.09 Totalliabilities 51,373,683.63 1,584,509.70 1,059,752,880.39 61,339,639.80 58,189,263.48 Minority’sinterest 113,729.76 Equity attributable to shareholder 89,582,216.78 25,672,743.15 36,995,232.41 53,082,332.35 31,192,462.90 ofparentcompany Share of net assets measured by 35,832,886.70 12,394,800.39 11,098,569.71 26,010,342.85 7,798,115.73 shareholding Adjustmenttime --Goodwill Unrealized profit of the internal 6,783,242.24 1,718,196.04 3,239,277.40 15,398.22 downstreamtransactions Unrealized profit of the internal 265,029.89 upstreamtransactions Other 201 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Book value of the equity 29,314,674.36 12,394,800.39 9,380,373.67 22,771,065.45 7,782,717.50 investmentforaffiliate Fair value of equity investment for the affiliates with consideration publicly Operation income 70,462,882.13 844,579.58 1,558,745,387.54 90,683,257.48 4,030,586.19 Financialexpenses 100,521.40 -3,138.37 -4,722,600.31 -24,436.43 -310,111.90 Income taxexpenses - - 1,997,985.96 - - Netprofit -2,017,456.15 -116,030.74 9,003,340.70 -4,238,296.19 -2,700,889.12 Net profit of discontinuing operation Othercomprehensiveincome Total comprehensiveincome Dividend received from affiliates in theYear (4) Financial summary for non-important Joint venture and affiliate enterprise Ending balance / Current Opening balance /Amount forthe same period Item period of lastYear Affiliate: Total book value of investment Total amount measured by shareholding ratio --net profit -4,967,426.56 -1,831,541.72 --Other comprehensiveincome -- Total comprehensiveincome -4,967,426.56 -1,831,541.72 (5) Major limitation on capital transfer ability to the Company from joint venture or affiliates: Nil (6) Excess loss occurred in joint venture or affiliates: Nil (7) Unconfirmed commitment with joint venture investment concerned: Nil (8) Intangible liability with joint venture or affiliates investment concerned: Nil 4. Major conduct joint operation: Nil 5. Structured body excluding in consolidate financial statement: Nil IX. Relevant risks related with financial instrument The major financial instruments of the Company include borrowings, account receivables, account payables, transactional financial assets, transactional financial liabilities, the details of which are set out in Note 6. Risks related to these financial instruments include exchange risks and interest rate risks. The management of the Company controls and monitors the risk exposures to ensure the above risks are under control. In connection with exchange risks, in order to prevent from exchange risks arising from foreign currency transaction amount, foreign currency dominated loans and interest expenditure, the Company 202 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) entered into several forward exchange contracts with banks. Fair value of the forward exchange contract which has been recognized as derivative financial instrument as of 31 December 2016 has been included in profits and losses. As export business is increasing, if risks that are out of control of the Company occur such as appreciation of RMB, the Company will mitigate the relevant risks by adjusting its sales policy. The Company’s interest rate risk arises from bank borrowings and interest-bearing debt. Financial liabilities at floating rate expose the Company to cash flow interest rate risk, and financial liabilities at fixed rate expose the Company to fair value interest rate risk. The Company will determine the respective proportion of contracts at fixed and floating rates based on the prevailing market conditions. As of 30 June 2017, the interest-bearing debts mainly referred to borrowing contracts at floating rate denominated in RMB with total amount of 1,215,413,395.00, borrowing contracts at fixed rate denominated in USD with total amount of 273,008,320.00, borrowing contracts at fixed rate denominated in EURO with total amount of 197,660,986.07. Risks relating to change of fair value of financial instruments arising from movement of interest rate mainly related to bank borrowings at fixed rate. As for borrowings at fixed rate, the Company aims to keep its floating rate. Risks relating to change of cash flow of financial instruments arising from movement of interest rate mainly related to bank borrowings at floating rate. The Company establishes its policy to keep floating rate for these borrowings so as to eliminate fair value risk arising from movement of interest rate. X. Fair value 1. Asset and liability measured by fair value at end of the period and fair value measurement level F ai r v al u e at p e r i o d - e n d Item 1st level 2nd level 3rd level Total Financial assets measured by fair value and with variation reckoned into current gains/losses 1. Transactional financial assets (1) Derivative financial assets 10,813,272.50 10,813,272.50 Financial liabilities measured by fair value and with variation reckoned into current gains/losses 1. Transactional financial liabilities (1) Derivative financial liabilities 9,671,394.08 9,671,394.08 The derivative contract is measured by fair value on 2nd level, which is the real-time quote on foreign exchange market on balance sheet date. XI. Related parties and related transaction (I) Relationship of related parties 1. Controlling shareholder and ultimate controller (1) Controlling shareholder and ultimate controller 203 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Controlling shareholder and Place of Legal Type of Nature of Organization registratio representativ entity business code ultimate controller n e Sichuan Changhong Electric Co., Mianya Manufactur 4,616,244,222 25.10% 25.10% LTD ng e and sales Sichuan Changhong Electronic Holding Group is the controlling shareholder of Sichuan Changhong Appliances, and the SASAC Mianyang office holds 100.00% equity interests of Sichuan Changhong Electronic Holding Group, which means that SASAC Mianyang office is the ultimate controller of the Company. (2) Register capital and change thereof of controlling shareholder Increase Decrease Controlling shareholder Opening balance during the during the Ending balance period period Sichuan Changhong Electric Co., 4,616,244,222 4,616,244,222 LTD (3) Shares held by the controlling shareholder and its changes on equity Amount of shares held Shareholding ratio (%) Controlling shareholder Ratio at Ratio at Ending balance Opening balance period-end year-begin Sichuan Changhong Electric Co., 262,171,365 259,871,791 25.10% 24.88% LTD 2. Subsidiary Found more in Note ―VIII. 1 (1) Enterprise group composition‖ 3. Joint venture and affiliated enterprise Major Joint venture and affiliated enterprise of the Company found more in Note ―VIII. 3 (1) major joint venture and affiliated enterprise‖. Other Joint venture and affiliated enterprise that have related transactions occurred with the Company in the Year or occurred in last period, and with balance results: Joint venture and affiliated enterprise Relationship Hefei Meiling Sole Energy Technology Co., Ltd. Affiliated enterprise of Subsidiary Meiling Group ChanghongRubaElectricCompany(Private)Ltd. Affiliated enterprise of Subsidiary Zhongshan Changhong Hefei Xingmei Assets Management Co., Ltd. Affiliated enterprise of the Company Affiliated enterprise of the Company, sharing the same Sichuan Zhiyijia Network Technology Co., Ltd. controlling shareholder with the Company and actual controller Affiliated enterprise of Subsidiary Changhong Hongyuan Dineng Rebao Technology Co. Ltd. Air-conditioning Affiliated enterprise of Subsidiary Changhong Sichuan Tianyou Guigu Technology Co., Ltd. Air-conditioning Affiliated enterprise of Subsidiary Changhong Chengdu Guigu Environment Technology Co., Ltd. Air-conditioning 4. Other related parties 204 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Other related parties Relationship Control by same controlling shareholder and ultimate CHANGHONG(HK)TRADINGLIMITED controller Control by same controlling shareholder and ultimate CHANGHONGELECTRIC(AUSTRALIA) controller Control by same controlling shareholder and ultimate CHANGHONGELECTRICMIDDLEEASTFZE controller Control by same controlling shareholder and ultimate PT.CHANGHONGELECTRICINDONESIA controller Control by same controlling shareholder and ultimate Chengdu Changhong Electronic Technology Co., Ltd. controller Control by same controlling shareholder and ultimate Guangdong Changhong Electronics Co., Ltd. controller Control by same controlling shareholder and ultimate Guangdong Changhong Device Technology Co., Ltd. controller Control by same controlling shareholder and ultimate Guangyuan Changhong Electronics Technology Co., Ltd. controller Control by same controlling shareholder and ultimate Hefei Changhong Industrial Co., Ltd. controller Control by same controlling shareholder and ultimate Huayi Compressor Co., Ltd. controller Control by same controlling shareholder and ultimate Lejiayi Chain Management Co., Ltd. controller Mianyang Technology Town Big Data Technology Co., Control by same controlling shareholder and ultimate Ltd. controller Control by same controlling shareholder and ultimate Sichuan Hongwei Technology Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Hongxin Software Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Service Exp. Appliance Service Chain Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Changhong Package Printing Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Changhong Innovation Investments Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Changhong Diandianbang Tech. Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Changhong Power Source Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Changhong Electronic Products Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Changhong Electronic System Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Changhong Energy Sunshine Technology Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Changhong Jijia Fine Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Changhong Precision Electronics Tech. Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Changhong Minsheng Logistics Co., LTD controller Control by same controlling shareholder and ultimate Sichuan Changhong Mold Plastic Tech. Co., Ltd. controller Sichuan Changhong Devices Technology Co., Ltd. Control by same controlling shareholder and ultimate 205 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Other related parties Relationship controller Control by same controlling shareholder and ultimate Sichuan Changhong Network Tech. Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Changhong New Energy Tech. Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Changhong Wisdom Health Technology Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Changhong Property Co., Ltd. controller Control by same controlling shareholder and ultimate Changhong International Holdings (Hong Kong) Co., Ltd. controller Control by same controlling shareholder and ultimate BVCH Optronics (Sichuan) Co., Ltd. controller Control by same controlling shareholder and ultimate Orion PDP Co.,ltd controller Control by same controlling shareholder and ultimate Anhui Xinhao PDP Co., Ltd. controller Control by same controlling shareholder and ultimate Guangyuan Hongcheng Industrial Co., Ltd. controller Control by same controlling shareholder and ultimate 081 Electronic Group controller Control by same controlling shareholder and ultimate Sichuan Ailian Technology Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Hongcheng Real Estate Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Hongcheng Construction Engineering Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Huafeng Enterprise Group Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Huanyu Industrial Co. Ltd. controller Control by same controlling shareholder and ultimate Sichuan Jiahong Industry Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Changhong Electronic Technology Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Changhong Gerun Renewable Resources Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Changhong International Hotel Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Changhong International Travel Agency Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Changhong Group Finance Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Changhong Educational Technology Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Changhong Property Service Co., Ltd. controller Control by same controlling shareholder and ultimate Sichuan Changhong Xinrui Technology Co., Ltd controller Sichuan Changhong Intelligent Manufacturing Technology Control by same controlling shareholder and ultimate Co., Ltd. controller Control by same controlling shareholder and ultimate Yibing Hongxing Electronics Co., Ltd. controller 206 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Other related parties Relationship Sichuan Hongyu Metal Manufacture Co., Ltd. Affiliate enterprise of controlling shareholder Sichuan Changxin Refrigeration Parts Co., Ltd. Affiliate enterprise of controlling shareholder Mianyang Highly Electric Co., Ltd. Affiliate enterprise of controlling shareholder Sichuan Changhe Technology Co., Ltd. Affiliate enterprise of controlling shareholder Sichuan Jiashibang Electric Service Co., Ltd. Affiliate enterprise of controlling shareholder Hengyouyuan Technology Development Group Co., Ltd. The investor has major influence on the subsidiary (II) Related transactions 1. Purchasing commodity Amount for the Current period same period of Related parties Content (10 thousand last Year Yuan) (10 thousand Yuan) Purchasing Sichuan Changhong Electric Co., Ltd. 20,358.26 7,972.57 commodity Purchasing Huayi Compressor Co., Ltd. 22,954.46 23,598.51 commodity Purchasing Sichuan Changhong Mold Plastic Tech. Co., Ltd. 32,589.07 24,724.78 commodity Purchasing Sichuan Changhong Jijia Fine Co., Ltd. 15,533.97 11,425.50 commodity Purchasing Sichuan Changhong Package Printing Co., Ltd. 5,360.60 2,819.62 commodity Purchasing Sichuan Changhong Precision Electronics Tech. Co., Ltd. 748.78 471.03 commodity Purchasing Sichuan Jiahong Industry Co., Ltd. 2.91 commodity Purchasing Sichuan Changhong New Energy Tech. Co., Ltd. 0.71 16.18 commodity Purchasing 081 Electronic Group 235.55 165.29 commodity Purchasing Sichuan Changhong Devices Technology Co., Ltd. 2,578.26 commodity Purchasing Guangdong Changhong Electronics Co., Ltd. 663.79 561.62 commodity Purchasing CHANGHONG(HK)TRADINGLIMITED 179.34 commodity Purchasing Sichuan Changhong Energy Sunshine Technology Co., Ltd. 0.57 commodity Sichuan Changhong Intelligent Manufacturing Technology Purchasing 86.44 46.93 Co., Ltd. commodity Purchasing Sichuan Changhong Xinrui Technology Co., Ltd 4,901.96 2,874.03 commodity Purchasing Sichuan Changhong Power Source Co., Ltd. 3.68 commodity Purchasing Sichuan Hongwei Technology Co., Ltd. 4.92 commodity Purchasing Sichuan Zhiyijia Network Technology Co., Ltd. 0.92 1.32 commodity 207 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Amount for the Current period same period of Related parties Content (10 thousand last Year Yuan) (10 thousand Yuan) Purchasing Sichuan Huafeng Enterprise Group Co., Ltd. 1.40 commodity Purchasing Sichuan Changhong Electronic Products Co., Ltd. 2,403.23 commodity Purchasing Sichuan Ailian Technology Co., Ltd. 434.57 commodity Purchasing Sichuan Changhong Educational Technology Co., Ltd. 5.03 commodity Purchasing Sichuan Hongyu Metal Manufacture Co., Ltd. 63.52 6.97 commodity Purchasing Sichuan Changhe Technology Co., Ltd. 431.07 308.60 commodity Purchasing Sichuan Changxin Refrigeration Parts Co., Ltd. 21,212.11 11,569.40 commodity Purchasing Mianyang Highly Electric Co., Ltd. 18,335.82 11,853.60 commodity Purchasing Mianyang Hongrun Electronics Co., Ltd. 583.74 commodity Purchasing Hongyuan Dineng Rebao Technology Co. Ltd. 7,981.68 commodity Purchasing Sichuan Tianyou Guigu Technology Co., Ltd. 175.02 commodity Purchasing Chengdu Guigu Environment Technology Co., Ltd. 3.28 commodity Total 146,324.54 109,926.07 2. Labor service receive Amount for the Related parties Content Current period same period of last Year Labor service Sichuan Changhong Electric Co., Ltd. 8,164,963.58 12,247,946.22 receive Labor service Sichuan Changhong Electronics Holding Group Co., Ltd. 23,035.00 9,235.00 receive Labor service Sichuan Changhong Minsheng Logistics Co., LTD 251,485,024.96 179,284,102.84 receive Labor service Sichuan Service Exp. Appliance Service Chain Co., Ltd. 73,918,850.99 54,735,610.51 receive Labor service Sichuan Hongxin Software Co., Ltd. 632,000.00 37,735.85 receive Labor service Guangdong Changhong Electronics Co., Ltd. 308,552.78 298,128.51 receive Labor service Sichuan Jiahong Industry Co., Ltd. 236,642.41 148,240.81 receive Labor service Sichuan Changhong International Hotel Co., Ltd. 83,082.01 81,913.94 receive Labor service CHANGHONG(HK)TRADINGLIMITED 237,531.09 97,468.90 receive Labor service Sichuan Changhong International Travel Agency Co., Ltd. 31,250.00 receive 208 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Labor service Sichuan Changhong Property Service Co., Ltd. 386,219.15 receive Labor service Sichuan Hongwei Technology Co., Ltd. 206,683.02 receive Labor service Sichuan Zhiyijia Network Technology Co., Ltd. 155,943.39 receive Labor service Lejiayi Chain Management Co., Ltd. 22,641.51 receive Labor service Sichuan Changhong Network Tech. Co., Ltd. 5,743.71 receive Sichuan Changhong Intelligent Manufacturing Technology Labor service 196,581.20 Co., Ltd. receive Labor service Sichuan Changhong Jijia Fine Co., Ltd. 1,794.87 receive Total 336,096,539.67 246,940,382.58 3. Purchase of fuels and energy Amount for the Related parties Content Current period same period of last Year Receive fuels and Sichuan Changhong Electric Co., Ltd. 6,950,453.59 6,045,488.65 energy Receive fuels and Sichuan Changhong Electronics Holding Group Co., Ltd. 10,243.00 energy Receive fuels and Huayi Compressor Co., Ltd. 262,087.18 energy Receive fuels and Guangdong Changhong Electronics Co., Ltd. 498,792.14 570,996.81 energy Receive fuels and Sichuan Jiahong Industry Co., Ltd. 4,781.60 7,135.70 energy Receive fuels and Sichuan Changhong Property Service Co., Ltd. 10,928.55 energy Total 7,464,955.88 6,895,951.34 4. Sales of goods/ labor service providing Amount for the Current period same period of Related parties Content (10 thousand last Year Yuan) (10 thousand Yuan) Sichuan Changhong Electric Co., Ltd. Sales of goods 84,180.47 53,934.25 Sichuan Changhong Electronics Holding Group Co., Ltd. Sales of goods 99.47 148.47 Sichuan Changhong Jijia Fine Co., Ltd. Sales of goods 3,774.84 2,269.56 Sichuan Changhong Mold Plastic Tech. Co., Ltd. Sales of goods 5,503.42 8,989.13 Lejiayi Chain Management Co., Ltd. Sales of goods 173.06 176.06 209 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Amount for the Current period same period of Related parties Content (10 thousand last Year Yuan) (10 thousand Yuan) PT.CHANGHONGELECTRICINDONESIA Sales of goods 0.49 CHANGHONG(HK)TRADINGLIMITED Sales of goods 24,741.31 36,112.72 CHANGHONGELECTRIC(AUSTRALIA) Sales of goods 847.30 10.66 Sichuan Hongwei Technology Co., Ltd. Sales of goods 8.95 0.61 Sichuan Changhong Devices Technology Co., Ltd. Sales of goods 0.17 Sichuan Changhong Minsheng Logistics Co., LTD Sales of goods 108.76 58.92 Sichuan Service Exp. Appliance Service Chain Co., Ltd. Sales of goods 559.66 285.23 Sichuan Changhong Gerun Renewable Resources Co., Ltd. Sales of goods 759.82 364.88 Hefei Changhong Industrial Co., Ltd. Sales of goods 2.11 104.71 Sichuan Huafeng Enterprise Group Co., Ltd. Sales of goods 0.26 15.58 Sichuan Zhiyijia Network Technology Co., Ltd. Sales of goods 98,589.85 66,360.65 Sichuan Changhong Property Co., Ltd. Sales of goods 5.97 3.70 Anhui Xinhao PDP Co., Ltd. Sales of goods 5.13 Sichuan Changhong Network Tech. Co., Ltd. Sales of goods 8.71 0.61 Chengdu Changhong Electronic Technology Co., Ltd. Sales of goods 1.55 Sichuan Changhong Wisdom Health Technology Co., Ltd. Sales of goods 0.36 0.30 Sichuan Changhong Property Service Co., Ltd. Sales of goods 2.05 Guangdong Changhong Electronics Co., Ltd. Sales of goods 0.14 Sichuan Huanyu Industrial Co. Ltd. Sales of goods 12.10 0.42 Sichuan Changhong Xinrui Technology Co., Ltd Sales of goods 1.89 75.89 Orion PDP Co.,ltd Sales of goods 961.52 Sichuan Changhong Intelligent Manufacturing Technology Sales of goods 1.12 0.23 Co., Ltd. Mianyang Technology Town Big Data Technology Co., Ltd. Sales of goods 0.29 BVCH Optronics (Sichuan) Co., Ltd. Sales of goods 1.28 Sichuan Changhong Electronic Products Co., Ltd. Sales of goods 9.04 Sichuan Changhong Group Finance Co., Ltd. Sales of goods 1.59 Sichuan Changhong Package Printing Co., Ltd. Sales of goods 1.76 Sichuan Changhong Power Source Co., Ltd. Sales of goods 35.17 Sichuan Changhong Educational Technology Co., Ltd. Sales of goods 1.63 081 Electronic Group Sales of goods 4.46 Guangyuan Changhong Electronics Technology Co., Ltd. Sales of goods 39.05 Sichuan Ailian Technology Co., Ltd. Sales of goods 19.22 Sichuan Changhong Innovation Investments Co., Ltd. Sales of goods 0.02 Guangyuan Hongcheng Industrial Co., Ltd. Sales of goods 0.10 Sichuan Changhong Energy Sunshine Technology Co., Ltd. Sales of goods 0.12 210 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Amount for the Current period same period of Related parties Content (10 thousand last Year Yuan) (10 thousand Yuan) Sichuan Changhong Electronic Technology Co., Ltd. Sales of goods 0.42 Sichuan Hongxin Software Co., Ltd. Sales of goods 0.62 Sichuan Hongcheng Real Estate Co., Ltd. Sales of goods 0.75 Sichuan Changhong New Energy Tech. Co., Ltd. Sales of goods 64.70 Sichuan Changhong Electronic System Co., Ltd. Sales of goods 3.23 Sichuan Changhong Precision Electronics Tech. Co., Ltd. Sales of goods 8.86 Changhong International Holdings (Hong Kong) Co., Ltd. Sales of goods 0.05 Sichuan Changxin Refrigeration Parts Co., Ltd. Sales of goods 5,863.82 3,962.85 Hongyuan Dineng Rebao Technology Co. Ltd. Sales of goods 1,040.01 12,126.08 Sichuan Tianyou Guigu Technology Co., Ltd. Sales of goods 36.18 210.02 ChanghongRubaElectricCompany(Private)Ltd. Sales of goods 1,122.42 3,524.40 Total 228,598.28 188,742.92 Businesses between the Company and its connected persons are generally conducted under market operation rules as if they were the same as other business counterparties. For price of sale or purchase and provision of other labor service between the Company and its related parties, the state pricing is applicable if the pricing do exists; in case of absence of such state pricing, price is determined under market price; in case of absence of such market price, price is determined by both parties at actual cost plus reasonable expenses; for some special services, the price of which cannot be determined under the rule of cost plus expense, the price shall be determined by both parties by negotiation. 5. Fuel and energy providing Amount for the Related parties Content Current period same period of last Year Fuel and energy Guangdong Changhong Electronics Co., Ltd. 51,666.51 292,821.41 providing Fuel and energy Sichuan Changhong Minsheng Logistics Co., LTD 10,848.03 20,229.17 providing Fuel and energy Sichuan Hongwei Technology Co., Ltd. 71.89 providing Fuel and energy Sichuan Changhong Devices Technology Co., Ltd. 333,399.12 136,553.66 providing Fuel and energy Sichuan Changhong Jijia Fine Co., Ltd. 13,781.32 65,288.54 providing Fuel and energy Sichuan Changhong Mold Plastic Tech. Co., Ltd. 2,030,399.35 3,010,107.37 providing Fuel and energy Hefei Changhong Industrial Co., Ltd. 9,677.31 providing Fuel and energy Sichuan Changhong Precision Electronics Tech. Co., Ltd. 1,964.92 providing Fuel and energy Sichuan Service Exp. Appliance Service Chain Co., Ltd. 2,269.46 providing 211 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Amount for the Related parties Content Current period same period of last Year Total 2,454,077.91 3,525,000.15 6. Related rental (1) Renting Leasing income Type of Leasing income in the same Lessor Lessee assets in this period period of last year Hefei Meiling Sichuan Changhong Jijia Fine Co., Ltd. Plant 253,680.00 Co.,Ltd. Hefei Meiling Sichuan Changhong Jijia Fine Co., Ltd. Warehouse 14,060.38 Co.,Ltd. Hefei Meiling Sichuan Changhong Jijia Fine Co., Ltd. Forklifttruck 442.45 Co.,Ltd. Hefei Meiling Sichuan Changhong Mold Plastic Tech. Co., Ltd. Plant 702,270.00 Co.,Ltd. Hefei Meiling Sichuan Changhong Mold Plastic Tech. Co., Ltd. Apartment 152,224.76 Co.,Ltd. Hefei Meiling Sichuan Changhong Mold Plastic Tech. Co., Ltd. Warehouse 34,301.89 Co.,Ltd. Hefei Meiling Sichuan Changhong Minsheng Logistics Co., LTD Office 10,608.00 Co.,Ltd. Hefei Meiling Sichuan Service Exp. Appliance Service Chain Co., Apartment 106,491.41 Co.,Ltd. Ltd. Hefei Meiling Sichuan Changhong Xinrui Technology Co., Ltd Forklifttruck 2,016.51 390.57 Co.,Ltd. Hefei Meiling Sichuan Changhong Xinrui Technology Co., Ltd Warehouse 14,867.93 12,226.42 Co.,Ltd. Hefei Meiling Sichuan Changhe Technology Co., Ltd. Warehouse 5,458.49 1,833.96 Co.,Ltd. Hefei Meiling Hefei Changhong Industrial Co., Ltd. Apartment 87,680.00 Co.,Ltd. Hefei Meiling Sichuan Changhong Precision Electronics Tech. Co., Apartment 15,657.14 Co.,Ltd. Ltd. Changhong Freight Air-conditio BVCH Optronics (Sichuan) Co., Ltd. 52,480.00 63,720.00 elevator ner Changhong Machinery Air-conditio Sichuan Changhong Mold Plastic Tech. Co., Ltd. 25,433.40 equipment ner Changhong Air-conditio Sichuan Changhong Jijia Fine Co., Ltd. Driving 7,000.00 ner Zhongshan Guangdong Changhong Electronics Co., Ltd. 2# livingarea 59,606.04 3,889.43 Changhong Zhongshan Sichuan Changhong Minsheng Logistics Co., LTD Warehouse 100,000.00 Changhong Zhongshan Trade Guangdong Changhong Electronics Co., Ltd. 402,298.16 Changhong Center Zhongshan Trade Sichuan Changhong Minsheng Logistics Co., LTD 20,006.99 Changhong Center 212 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Leasing income Type of Leasing income in the same Lessor Lessee assets in this period period of last year Jiangxi Sichuan Changhong Mold Plastic Tech. Co., Ltd. Plant 237,432.38 241,197.71 Meiling Changhong Sichuan Changhong Minsheng Logistics Co., LTD Plant 514,072.40 515,462.10 Ridian Changhong Sichuan Changhong Devices Technology Co., Ltd. Plant 463,469.00 418,624.00 Ridian Changhong Sichuan Hongwei Technology Co., Ltd. Plant 35,218.29 Ridian Mianyang Sichuan Changhong Mold Plastic Tech. Co., Ltd. Warehouse 32,943.40 Refrigeration Mianyang Sichuan Changhe Technology Co., Ltd. Warehouse 113.21 Refrigeration Mianyang Sichuan Changxin Refrigeration Parts Co., Ltd. Warehouse 113.21 Refrigeration Total 2,745,665.75 1,861,623.88 (2) Lessee of related parties Leasing Leasing expense expense in the Lessor Lessee Type of assets in this period same period of last year Changhong Sichuan Changhong Electric Co., Ltd. Workshop 2,204,901.44 Air-conditioner Changhong Sichuan Changhong Electric Co., Ltd. Office 46,951.52 Air-conditioner Sichuan Changhong Electronics Holding Changhong Building 33,310.74 51,912.42 Group Co., Ltd. Air-conditioner Sichuan Changhong Property Service Changhong Workshop 908,313.35 Co., Ltd. Air-conditioner Guangdong Changhong Electronics Co., Changhong Staffdormitory 4,763.20 Ltd. Air-conditioner Chengdu Changhong Electronic Changhong Office 84,765.80 Technology Co., Ltd. Air-conditioner Workshop Sichuan Changhong Electric Co., Ltd. Mianyang Refrigeration 583,939.82 leasing Sichuan Changhong Electronics Holding Mianyang Refrigeration Staffdormitory 3,280.00 2,080.00 Group Co., Ltd. Sichuan Changhong Electric Co., Ltd. Appliance marketing Office 354,901.77 Sichuan Changhong Electric Co., Ltd. BeijingMeiling Office 89,128.50 Sichuan Changhong Electric Co., Ltd. NanjingMeiling Office 10,584.72 Sichuan Changhong Property Service Changmei Office 13,207.55 Co., Ltd. Technology Chengdu Changhong Electronic Changmei Office 80,048.73 Technology Co., Ltd. Technology Guangdong Changhong Electronics Co., Changhong Staffdormitory 30,975.80 279,543.46 Ltd. Ridian Total 1,753,189.71 3,029,419.11 7. Related guarantee 213 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Maximum guarantee Completed Secured party Sponsored party amount (in 10 Start End (Y/N) thousand Yuan) Zhongshan Hefei Meiling Co., Ltd. 5,000.00 2016.08.05 2017.08.04 N Changhong Zhongshan Hefei Meiling Co., Ltd. 5,000.00 2016.10.28 2017.10.28 N Changhong Zhongshan Hefei Meiling Co., Ltd. 6,000.00 2017.01.03 2018.01.03 N Changhong Zhongshan Hefei Meiling Co., Ltd. 5,500.00 2017.01.22 2018.01.22 N Changhong Zhongshan Hefei Meiling Co., Ltd. 20,000.00 2017.03.01 2018.03.31 N Changhong Zhongshan Hefei Meiling Co., Ltd. 10,000.00 2017.03.29 2018.03.29 N Changhong Hefei Meiling Co., Ltd. Changhong Ridian 4,500.00 2016.05.05 2017.05.05 N Hefei Meiling Co., Ltd. Changhong Ridian 2,000.00 2016.09.01 2017.09.01 N Hefei Meiling Co., Ltd. Changhong Ridian 2,000.00 2017.06.13 2017.09.01 N Hefei Meiling Co., Ltd. Zhongke Meiling 2,000.00 2017.02.16 2018.01.05 N Hefei Meiling Co., Ltd. Zhongke Meiling 1,000.00 2017.06.23 2018.06.22 N Counter guarantee: Zhongshan Hefei Meiling Co., Ltd. 5,000.00 2016.08.05 2017.08.04 N Changhong Zhongshan Hefei Meiling Co., Ltd. 5,000.00 2016.10.28 2017.10.28 N Changhong Zhongshan Hefei Meiling Co., Ltd. 6,000.00 2017.01.03 2018.01.03 N Changhong Zhongshan Hefei Meiling Co., Ltd. 5,500.00 2017.01.22 2018.01.22 N Changhong Zhongshan Hefei Meiling Co., Ltd. 20,000.00 2017.03.01 2018.03.31 N Changhong Zhongshan Hefei Meiling Co., Ltd. 10,000.00 2017.03.29 2018.03.29 N Changhong Changhong Ridian Hefei Meiling Co., Ltd. 4,500.00 2016.05.05 2017.05.05 N Changhong Ridian Hefei Meiling Co., Ltd. 2,000.00 2016.09.01 2017.09.01 N Changhong Ridian Hefei Meiling Co., Ltd. 2,000.00 2017.06.13 2017.09.01 N Zhongke Meiling Hefei Meiling Co., Ltd. 2,000.00 2017.02.16 2018.01.05 N Zhongke Meiling Hefei Meiling Co., Ltd. 1,000.00 2017.06.23 2018.06.22 N 8. Assets transfer, debt restructuring of related parties Amount for the Related parties Type Current period same period of last year Purchase and Sichuan Changhong Electric Co., Ltd. construction of fixed 25,000.00 216,211.27 assets Purchase and Sichuan Changhong Intelligent Manufacturing construction of fixed 13,629,166.26 Technology Co., Ltd. assets Sichuan Hongxin Software Co., Ltd. Purchase and 1,895,509.44 188,679.25 construction of fixed 214 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Amount for the Related parties Type Current period same period of last year assets Sichuan Hongcheng Construction Engineering Co., Purchasing fixed assets 3,688,920.36 Ltd. Sichuan Hongcheng Real Estate Co., Ltd. Purchasing fixed assets 509,433.94 Sichuan Hongwei Technology Co., Ltd. Purchasing fixed assets 1,110,261.19 Purchase of intangible Sichuan Hongxin Software Co., Ltd. 149,292.45 assets Sichuan Changhong Gerun Renewable Resources Fixed assets sold 31,091.89 Co., Ltd. 9. Related transaction with Changhong Finance Company (1) Saving balance Income from bank Company Opening balance Ending balance saving Hefei Meiling Co., Ltd. 1,269,669,769.16 770,376,202.99 7,605,780.39 Sichuan Changhong Air-conditioner Co., 419,338,790.38 502,791,520.88 7,453,833.28 Ltd. Zhongshan Changhong Electric Co., LTD 67,318,559.05 102,644,880.25 296,153.11 Hefei Meiling Group Holdings Limited 1,185,381.05 101,771,524.73 12,143.68 Mianyang Meiling Refrigeration Co., Ltd. 60,008.27 3,987,404.56 5,807.24 Zhongke Meiling Cryogenic Technology 25,450,411.46 17,294,389.52 83,978.06 Co., Ltd. Jiangxi MeiLing Electric Appliance Co., 405,000,000.00 7,198.58 Ltd. Guangdong Changhong Ridian Technology 125,819,243.83 1,370,298.23 511,270.45 Co., Ltd. Total 1,908,842,163.20 1,905,236,221.16 15,976,164.79 (2) Notes discounted Bank acceptance book Bank acceptance Expenses of Company discounted amount discounted amount discounted Hefei Meiling Co., Ltd. 508,958,028.25 502,739,694.94 6,218,333.31 Sichuan Changhong Air-conditioner Co., 513,290,861.30 507,593,215.01 5,697,646.29 Ltd. Mianyang Meiling Refrigeration Co., Ltd. 4,000,000.00 3,971,666.67 28,333.33 Jiangxi MeiLing Electric Appliance Co., 205,000,000.00 205,000,000.00 Ltd. Total 1,231,248,889.55 1,219,304,576.62 11,944,312.93 (3) Notes issued Company Issuing unit Note amount Type Sichuan Changhong Group Hefei Meiling Co., Ltd. 99,403,000.00 Bankacceptance Finance Co., Ltd. Sichuan Changhong Air-conditioner Sichuan Changhong Group 626,539,394.79 Bankacceptance Co., Ltd. Finance Co., Ltd. 215 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Zhongshan Changhong Electric Co., Sichuan Changhong Group 282,638,177.49 Bankacceptance LTD Finance Co., Ltd. Mianyang Meiling Refrigeration Co., Sichuan Changhong Group 5,233,311.20 Bankacceptance Ltd. Finance Co., Ltd. Zhongke Meiling Cryogenic Sichuan Changhong Group 17,277,060.00 Bankacceptance Technology Co., Ltd. Finance Co., Ltd. Guangdong Changhong Ridian Sichuan Changhong Group 7,490,730.08 Bankacceptance Technology Co., Ltd. Finance Co., Ltd. Jiangxi MeiLing Electric Appliance Sichuan Changhong Group 200,000,000.00 Bankacceptance Co., Ltd. Finance Co., Ltd. Total 1,238,581,673.56 (4) Borrowing: Nil (5) Accounts receivable factoring: Nil (III) Come and go balance with related parties 1. Receivables Ending balance Opening balance Bad Bad Item Related parties debt debt Book balance Book balance prov provi ision sion Account Sichuan Changhong Electric Co., Ltd. 678,572.23 521,671.35 receivable Account Sichuan Changhong Electronics Holding 17,850.00 376,186.92 receivable Group Co., Ltd. Account Sichuan Changhong Mold Plastic Tech. 608,155.97 965,201.45 receivable Co., Ltd. Account CHANGHONGELECTRIC(AUSTRALI 8,568,997.49 144,829.93 receivable A) Account Sichuan Changhong Property Service 12,516.00 receivable Co., Ltd. Account Huayi Compressor Co., Ltd. 275,400.00 334,800.00 receivable Account Sichuan Changhong Jijia Fine Co., Ltd. 164,379.15 receivable Account Sichuan Changhong Minsheng Logistics 196,189.88 receivable Co., LTD Account PT.CHANGHONGELECTRICINDONE 4,809.82 26,971.06 receivable SIA Account CHANGHONG(HK)TRADINGLIMITE 233,409,742.89 60,541,639.57 receivable D Account Sichuan Changhong Package Printing 19,943.20 4,400.00 receivable Co., Ltd. Account Sichuan Changhong International Hotel 825,626.90 1,334,736.90 receivable Co., Ltd. Account Chengdu Changhong Electronic 434,509.01 434,509.01 receivable Technology Co., Ltd. Account Sichuan Changhong Gerun Renewable 0.60 0.60 receivable Resources Co., Ltd. Account 394,817.20 receivable Lejiayi Chain Management Co., Ltd. 216 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Ending balance Opening balance Bad Bad Item Related parties debt debt Book balance Book balance prov provi ision sion Account Sichuan Zhiyijia Network Technology 232,654,318.73 174,033,095.60 receivable Co., Ltd. Account Sichuan Hongwei Technology Co., Ltd. 70,553.20 7,600.00 receivable Account Anhui Xinhao PDP Co., Ltd. 63,000.00 63,000.00 receivable Account Sichuan Changhong Power Source Co., 26,289.18 receivable Ltd. Account 147,174.10 receivable Yibing Hongxing Electronics Co., Ltd. Account Sichuan Changhong Educational 18,765.20 receivable Technology Co., Ltd. Account Sichuan Huanyu Industrial Co. Ltd. 141,550.00 receivable Account Sichuan Changhong Property Co., Ltd. 69,900.00 receivable Account Sichuan Changhong New Energy Tech. 313,864.41 receivable Co., Ltd. Account Sichuan Changhong Innovation 232.80 receivable Investments Co., Ltd. Account Mianyang Technology Town Big Data 3,313.20 receivable Technology Co., Ltd. Account Sichuan Changhong Electronic System 3,000.00 receivable Co., Ltd. Account Sichuan Changhong Electronic Products 4,100.00 receivable Co., Ltd. Account Sichuan Changhong Network Tech. Co., 34,064.00 receivable Ltd. Account 9,469,893.05 receivable Orion PDP Co.,ltd Account Hefei Changhong Industrial Co., Ltd. 8,744.00 receivable Account Changhong International Holdings (Hong 620.80 receivable Kong) Co., Ltd. Account Hongyuan Dineng Rebao Technology Co. 59,547,184.81 36,070,419.59 receivable Ltd. Account ChanghongRubaElectricCompany(Privat 26,854,326.22 16,296,282.53 receivable e)Ltd. Account paid Sichuan Changhong Electric Co., Ltd. 7,816,525.64 1,054,531.13 in advance Account paid Sichuan Changhong Electronics Holding 93,901.98 in advance Group Co., Ltd. Account paid Sichuan Hongwei Technology Co., Ltd. 363,948.00 263,948.00 in advance Account paid Sichuan Zhiyijia Network Technology 5,258.97 14,074.00 in advance Co., Ltd. Account paid Sichuan Changhong Intelligent 616,680.00 254,682.00 in advance Manufacturing Technology Co., Ltd. Account paid 21,000.00 in advance Sichuan Changhong Jijia Fine Co., Ltd. 217 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Ending balance Opening balance Bad Bad Item Related parties debt debt Book balance Book balance prov provi ision sion Other 39,617.46 receivables Sichuan Changhong Electric Co., Ltd. Other Sichuan Service Exp. Appliance Service 200,000.00 200,000.00 receivables Chain Co., Ltd. Other Hongyuan Dineng Rebao Technology Co. 130,396.62 receivables Ltd. Other Sichuan Tianyou Guigu Technology Co., 12,500,000.00 receivables Ltd. Total 584,000,028.53 305,772,283.82 2. Payables Item Related parties Ending balance Opening balance Accounts Sichuan Changhong Electric Co., Ltd. 65,507,692.60 18,441,774.94 payable Accounts Sichuan Changhong Mold Plastic Tech. Co., Ltd. 234,352,253.68 111,859,645.07 payable Accounts Huayi Compressor Co., Ltd. 96,415,634.09 54,756,261.49 payable Accounts Sichuan Changhong Jijia Fine Co., Ltd. 173,559,467.19 49,428,116.49 payable Accounts Sichuan Changhong Minsheng Logistics Co., LTD 18,962,093.41 40,128,307.43 payable Accounts Sichuan Changhong Package Printing Co., Ltd. 47,699,791.37 11,582,508.82 payable Accounts Sichuan Changhong Devices Technology Co., Ltd. 8,244,251.90 payable Accounts Sichuan Changhong Precision Electronics Tech. Co., 15,312,633.09 2,231,885.31 payable Ltd. Accounts 081 Electronic Group 864,603.30 397,568.22 payable Accounts Sichuan Changhong New Energy Tech. Co., Ltd. 235.76 payable Accounts Guangdong Changhong Electronics Co., Ltd. 6,432,120.19 3,602,882.13 payable Accounts Sichuan Changhong Power Source Co., Ltd. 4,806.70 payable Accounts Sichuan Service Exp. Appliance Service Chain Co., 14,622,269.15 6,593,913.18 payable Ltd. Accounts Sichuan Hongwei Technology Co., Ltd. 1,647,512.58 1,647,512.58 payable Accounts Sichuan Hongxin Software Co., Ltd. 1,377,000.00 payable Accounts Sichuan Changhong Gerun Renewable Resources 10,503.63 10,503.63 payable Co., Ltd. Accounts Sichuan Changhong International Hotel Co., Ltd. 24,483.00 payable Accounts Sichuan Changhong Xinrui Technology Co., Ltd 23,817,184.85 31,134,508.32 payable 218 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Item Related parties Ending balance Opening balance Accounts Sichuan Changhong Intelligent Manufacturing 13,381,744.45 1,159,293.19 payable Technology Co., Ltd. Accounts Sichuan Changhong International Travel Agency Co., 104,170.00 14,981.00 payable Ltd. Accounts Sichuan Changhong Electronic System Co., Ltd. 77,000.00 77,000.00 payable Accounts Sichuan Jiahong Industry Co., Ltd. 1,500.00 payable Accounts Sichuan Changhong Property Service Co., Ltd. 546.00 28.00 payable Accounts Sichuan Huafeng Enterprise Group Co., Ltd. 16,335.76 283,500.63 payable Accounts Sichuan Changhong Electronic Products Co., Ltd. 20,441,553.82 payable Accounts Sichuan Ailian Technology Co., Ltd. 4,487,817.51 payable Accounts Sichuan Jiashibang Electric Service Co., Ltd. 2,325.00 payable Accounts Sichuan Hongyu Metal Manufacture Co., Ltd. 962,208.48 475,411.87 payable Accounts Sichuan Changxin Refrigeration Parts Co., Ltd. 44,248,452.99 16,767,170.82 payable Accounts Mianyang Highly Electric Co., Ltd. 47,125,794.58 33,257,152.05 payable Accounts Sichuan Changhe Technology Co., Ltd. 3,063,524.32 2,769,516.97 payable Accounts Hongyuan Dineng Rebao Technology Co. Ltd. 1,783.60 payable Accounts Sichuan Tianyou Guigu Technology Co., Ltd. 397,435.50 payable Accounts Chengdu Guigu Environment Technology Co., Ltd. 441,220.12 payable Account received in Sichuan Changhong Electric Co., Ltd. 36,470,918.03 advance Account received in Lejiayi Chain Management Co., Ltd. 0.02 559,819.59 advance Account received in 081 Electronic Group 2,906,393.55 advance Account received in CHANGHONGELECTRICMIDDLEEASTFZE 1,696.65 37,303.37 advance Account Sichuan Changhong Gerun Renewable Resources received in 47,011.00 273,106.03 Co., Ltd. advance Account Sichuan Service Exp. Appliance Service Chain Co., received in 85,406.59 52,999.49 Ltd. advance Account received in Sichuan Changhong Power Source Co., Ltd. 164,400.00 advance Account Sichuan Changhong Precision Electronics Tech. Co., 0.01 received in Ltd. 219 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Item Related parties Ending balance Opening balance advance Account received in Sichuan Changhong Diandianbang Tech. Co., Ltd. 259.00 259.00 advance Account received in Hefei MeiLing Solar Energy Technology Co., Ltd. 315,389.49 advance Account received in Hongyuan Dineng Rebao Technology Co. Ltd. 633,687.85 advance Account received in Sichuan Tianyou Guigu Technology Co., Ltd. 269,700.06 advance Other accounts Sichuan Changhong Electric Co., Ltd. 15,310,127.66 189,285.06 payable Other accounts Sichuan Changhong Mold Plastic Tech. Co., Ltd. 7,275,110.79 6,021,988.84 payable Other accounts Sichuan Changhong Jijia Fine Co., Ltd. 1,900,500.00 1,900,500.00 payable Other Sichuan Changhong Gerun Renewable Resources accounts 10,000.00 10,000.00 Co., Ltd. payable Other accounts Huayi Compressor Co., Ltd. 1,598,900.00 1,050,000.00 payable Other accounts Sichuan Changhong Package Printing Co., Ltd. 50,000.00 50,000.00 payable Other Sichuan Changhong Precision Electronics Tech. Co., accounts 322.46 145.16 Ltd. payable Other accounts Sichuan Changhong Minsheng Logistics Co., LTD 586,504.95 586,504.95 payable Other accounts CHANGHONG(HK)TRADINGLIMITED 45,136.48 1,881,972.53 payable Other accounts Sichuan Changhong Devices Technology Co., Ltd. 260.07 payable Other accounts Sichuan Changhong Electronic Products Co., Ltd. 50,013.43 50,000.00 payable Other accounts Sichuan Changhong Xinrui Technology Co., Ltd 200,000.00 200,000.00 payable Other accounts 081 Electronic Group 169.00 169.00 payable Other accounts Sichuan Jiahong Industry Co., Ltd. 7,193.12 4,643.32 payable Other Guangdong Changhong Electronics Co., Ltd. 4,602.00 4,602.00 220 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Item Related parties Ending balance Opening balance accounts payable Other Sichuan Changhong Intelligent Manufacturing accounts 219,375.00 219,375.00 Technology Co., Ltd. payable Other accounts Mianyang Highly Electric Co., Ltd. 637,644.61 637,644.61 payable Other accounts Sichuan Changhe Technology Co., Ltd. 100,000.00 100,000.00 payable Other accounts Sichuan Changxin Refrigeration Parts Co., Ltd. 50,000.00 50,000.00 payable Other Hengyouyuan Technology Development Group Co., accounts 2,800.00 Ltd. payable Other accounts Hongyuan Dineng Rebao Technology Co. Ltd. 8,967.00 payable Dividends Sichuan Changhong Electric Co., Ltd. 14,082,358.08 payable Total 877,840,221.45 449,302,334.16 (IV) Commitments from related parties: Nil XII. Share-based payment: Nil XIII. Contingency 1. Pending action or possible liabilities formed from arbitration: Nil 2. Contingency from external guarantee: Nil 3. Other contingency: Nil XIV. Commitments: Nil XV. Events occurring after the balance sheet date 1. Important non-adjustment items: Nil 2. Profit distribution: Nil 3. Major sales return: Nil 4. Other than the above mentioned events, the Company have no other events occurred after balance sheet date. XVI. Other significant matters 1. Correction of previous periods and influence: Nil 2. Debt restructuring: Nil 221 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) 3. Assets replacement: Nil 4. Pension plan: Nil 5. Discontinuing operation: Nil 6. Branch information Small househol Item Ice cumber AC Marketing Other Salesin branch Total d appliances Operation income 406,929.55 407,704.24 80,240.23 20,829.05 14,608.07 78,531.72 851,779.42 Including:: Income fromtradingoutside 338,516.23 407,605.54 80,240.23 20,452.80 4,964.62 - 851,779.42 Income fromtradinginbranch 68,413.32 98.70 - 376.26 9,643.45 78,531.72 - Operation expenses 407,400.30 408,202.14 76,076.39 20,583.76 13,251.49 78,290.82 847,223.26 Operationprofit -470.75 -497.90 4,163.84 245.29 1,356.58 4,797.06 Total assets 1,251,216.60 508,806.84 27,832.11 24,898.73 15,082.90 158,886.21 1,668,950.97 Totalliability 720,335.31 427,527.47 54,495.73 13,581.21 8,381.39 77,183.35 1,147,137.76 Supplementaryinformation - - - - - - - Depreciation and amortization expenses 6,110.27 2,328.24 9.48 198.48 390.51 -118.26 9,155.24 Capital expenditure 10,680.29 7,194.96 26.39 169.51 264.47 62.79 18,272.83 Non-cash expenses except for depreciation and 39,292.71 52,444.60 7,399.60 1,512.96 1,748.39 -310.60 102,708.86 amortization 7. Other major transactions and events shows impact on investor’s decision-making: Nil XVII. Notes to main items of financial statement of parent company 1. Account receivable (1) Risk structure of account receivable Ending amount Category Book balance Bad debt provision Book value Amount Ratio Amount Ratio Account receivable with single significant amount and withdrawal single item bad debt provision Account receivable withdrawal bad debt provision by combination Combination 1 317,354,799.99 17.92% 16,042,896.99 5.06% 301,311,903.00 Combination 2 1,453,826,130.66 82.08% - 1,453,826,130.66 Combination Subtotal 1,771,180,930.65 100.00% 16,042,896.99 0.91% 1,755,138,033.66 Account receivable with single minor amount but withdrawal single item bad debt provision Total 1,771,180,930.65 100.00% 16,042,896.99 0.91% 1,755,138,033.66 (Continued) 222 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Opening amount Category Book balance Bad debt provision Book value Amount Ratio Amount Ratio Account receivable with single significant amount and withdrawal single item bad debt provision Account receivable withdrawal bad debt — — — — — provision by combination Combination 1 234,535,499.95 23.02% 12,281,916.10 5.24% 222,253,583.85 Combination 2 784,448,310.52 76.98% 784,448,310.52 Combination Subtotal 1,018,983,810.47 100.00% 12,281,916.10 1.21% 1,006,701,894.37 Account receivable with single minor amount but withdrawal single item bad debt provision Total 1,018,983,810.47 100.00% 12,281,916.10 1.21% 1,006,701,894.37 1) No account receivable with single significant amount and withdrawal bad debt provision single at period-end. 2) Account receivable with withdrawal of bad debt provision by aging account in combination 1 Ending balance Book Age Account receivable Bad debt provision Provision ratio (%) Within 1 year 316,931,501.71 15,846,575.09 5% 1-2 years 78,258.40 11,738.76 15% 2-3 years 246,846.47 86,396.26 35% 3-4 years - - 55% 4-5 years 43.55 37.02 85% Over 5 years 98,149.86 98,149.86 100% Total 317,354,799.99 16,042,896.99 3) Account receivable without bad debt provision withdrawal in combination 2 Combination Book balance Connected amount between related parties 1,408,187,606.66 Account receivable with L/C 45,638,524.00 Total 1,453,826,130.66 4) No account receivable with single minor amount but withdrawal single item bad debt provision at period-end (2) Provision, reversal (or recovery) of bad debt provision The bad debt accrual in the period was RMB 3,760,980.89; no recovery or reversal bad debt provision in the year. (3) No account receivable actually written-off in the period. 223 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) (4) No arrears of the shareholders holding more than 5% (including 5%) shares with voting rights of the Company at period-end. (5) The top five account receivable at period-end has RMB 1,047,684,539.21 in total, a 59.15% in total account receivable. (6) Account receivable de-recognized: Nil 2. Other account receivable (1) Category of other account receivable Ending amount Category Book balance Bad debt provision Book value Amount Ratio Amount Ratio Other account receivable with single significant amount and withdrawal single item bad debt provision Other account receivable withdrawal bad debt provision by combination Combination 1 3,031,000.28 5.06% 296,487.57 9.78% 2,734,512.71 Combination 2 56,814,966.89 94.94% - - 56,814,966.89 Combination Subtotal 59,845,967.17 100.00% 296,487.57 0.50% 59,549,479.60 Other account receivable with single minor amount but withdrawal single item bad debt provision Total 59,845,967.17 100.00% 296,487.57 0.50% 59,549,479.60 (Continued) Opening amount Category Book balance Bad debt provision Book value Amount Ratio Amount Ratio Other account receivable with single significant amount and withdrawal single item bad debt provision Other account receivable withdrawal bad debt provision by combination Combination 1 2,286,196.46 8.50% 164,504.75 7.20% 2,121,691.71 Combination 2 24,620,732.24 91.50% 24,620,732.24 Combination Subtotal 26,906,928.70 100.00% 164,504.75 0.61% 26,742,423.95 Other account receivable with single minor amount but withdrawal single item bad debt provision Total 26,906,928.70 100.00% 164,504.75 0.61% 26,742,423.95 1) No other account receivable with single significant amount and no withdrawal bad debt provision single at period-end. 2) Other account receivable with withdrawal bad debt provision by aging account for combination 224 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) 1 Ending balance Item Account receivable Bad debt provision Provision ratio (%) Within 1 year 2,546,998.03 127,349.90 5% 1-2 years 11,315.60 1,697.34 15% 2-3 years 462,686.65 161,940.33 35% 3-4 years 10,000.00 5,500.00 55% 4-5 years - - 85% Over 5 years - - 100% Total 3,031,000.28 296,487.57 3) Other receivable without bad debt provision withdrawal in combination 2 Combination Book balance Connected amount between related parties 20,240,856.48 Loans of employee’s pretty cash 7,380,361.69 Export rebate 29,193,748.72 Total 56,814,966.89 4) No other account receivable with single minor amount but withdrawal bad debt provision singly, refers to the minor single receivables at period-end. (2) Reversal (or withdraw) of reserve for bad debts in the period The bad debt accrual in the period was RMB 131,982.82; no recovery or reversal bad debt provision in the year. (3) Other account receivable charge off in this period: Nil (4) No areas from shareholders’ unit with over 5 percent (5 percent included) voting rights held at period-end. (5) Top 5 other account receivable has RMB 52,706,330.90 in total, an 88.07% in total account receivable at period-end. (6) Other receivables classify by nature Nature Ending book balance Opening book balance Related parties 20,240,856.48 21,867,562.15 Loans of employee’s pretty cash 7,380,361.69 2,753,170.09 Margin 1,344,924.85 Advance money paid temporary 619,956.01 Other 3,031,000.28 321,315.60 Export rebate 29,193,748.72 Total 59,845,967.17 26,906,928.70 225 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) (7) Other receivable de-recognized: Nil 226 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) 3. Long-term equity investments (1) Classification of long-term equity investments Ending balance Opening balance Item Book balance Impairment loss Book value Book balance Impairment loss Book value Investment in subsidiaries: ZhongkeMeilingCryogenicTechnologyCo., Ltd. 42,000,000.00 42,000,000.00 42,000,000.00 42,000,000.00 Mianyang Meiling Refrigeration Co., Ltd. 95,000,000.00 95,000,000.00 95,000,000.00 95,000,000.00 Hefei Meiling Appliance Marketing Co., 54,900,000.00 54,900,000.00 54,900,000.00 54,900,000.00 Ltd. Zhongshan Changhong Electric Co., LTD 169,856,419.37 169,856,419.37 169,856,419.37 169,856,419.37 Sichuan Changhong Air-conditioner Co., 305,600,437.79 305,600,437.79 305,600,437.79 305,600,437.79 Ltd. Hefei Meiling Group Holdings Limited 113,630,000.00 113,630,000.00 113,630,000.00 113,630,000.00 Jiangxi MeiLing Electric Appliance Co., 79,000,000.00 79,000,000.00 79,000,000.00 79,000,000.00 Ltd. Guangdong Changhong Ridian 90,802,061.95 90,802,061.95 90,802,061.95 90,802,061.95 Technology Co., Ltd. Changmei Technology Co., Ltd. 18,528,000.00 18,528,000.00 18,000,000.00 18,000,000.00 Meiling Candy Washing Machine Co., 30,000,000.00 30,000,000.00 - - Ltd. Investment in associates: Hefei Xingmei Assets Management Co., 11,882,198.13 11,882,198.13 12,394,800.39 12,394,800.39 Ltd. Sichuan Zhiyijia Network Technology 14,716,635.63 14,716,635.63 11,098,569.71 11,098,569.71 Co., Ltd. Total 1,025,915,752.87 1,025,915,752.87 992,282,289.21 992,282,289.21 (2) Investment in subsidiaries 227 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Increase during the Decrease during the Provision forimpairment Ending balance of Invested unit Opening balance Ending balance period period losses impairment loss Zhongke Meiling Cryogenic Technology 42,000,000.00 42,000,000.00 Co., Ltd. Mianyang Meiling Refrigeration Co., Ltd. 95,000,000.00 95,000,000.00 Hefei Meiling Appliance Marketing Co., 54,900,000.00 54,900,000.00 Ltd. Zhongshan Changhong Electric Co., LTD 169,856,419.37 169,856,419.37 Sichuan Changhong Air-conditioner Co., 305,600,437.79 305,600,437.79 Ltd. Hefei Meiling Group Holdings Limited 113,630,000.00 113,630,000.00 Jiangxi MeiLing Electric Appliance Co., 79,000,000.00 79,000,000.00 Ltd. Guangdong Changhong Ridian 90,802,061.95 90,802,061.95 Technology Co., Ltd. Changmei Technology Co., Ltd. 18,000,000.00 528,000.00 18,528,000.00 Meiling Candy Washing Machine Co., 30,000,000.00 30,000,000.00 Ltd. Total 968,788,919.11 30,528,000.00 999,316,919.11 (3) Investment in associates Changes inthe period Opening Adjustment Ending balance Invested unit Investment income Other Cash dividend or Ending balance balance Additional Negative for other Provision for of impairment recognizedunder equity profitannounced to Other Investment Investment comprehensi impairment loss equity change issued ve income Hefei Xingmei Assets 12,394,800.39 -512,602.26 11,882,198.13 Management Co., Ltd. Sichuan Zhiyijia Network 11,098,569.71 3,618,065.92 14,716,635.63 TechnologyCo.,Ltd. Total 23,493,370.10 3,105,463.66 26,598,833.76 228 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) 3. Operation income and operation cost Amount in the period Amount in the same period of last year Item Income Cost Income Cost Main business 3,544,613,227.13 3,199,404,365.71 3,359,972,441.96 2,762,714,566.29 Other business 584,995,125.37 575,965,090.55 410,800,721.97 397,417,660.72 Total 4,129,608,352.50 3,775,369,456.26 3,770,773,163.93 3,160,132,227.01 (1) Classified according to product Amount in the period Amount in the same period of last year Product Operation income Operation cost Operation income Operation cost Refrigerator and 3,279,271,848.62 2,971,360,809.10 3,178,958,581.60 2,612,206,850.23 freezer Washing machine 176,232,144.12 151,753,972.11 179,396,785.22 150,507,716.06 Small household appliances and 89,105,560.29 76,286,085.40 - - kitchen and toilet Other 3,674.10 3,499.10 1,617,075.14 - Total 3,544,613,227.13 3,199,404,365.71 3,359,972,441.96 2,762,714,566.29 (2) Classified according to region Amount in the period Amount in the same period of last year Regions Operation income Operation cost Operation income Operation cost Domestic income 2,457,823,202.55 2,162,505,987.73 2,481,708,373.76 2,002,163,732.22 Export income 1,086,790,024.58 1,036,898,377.98 878,264,068.20 760,550,834.07 Total 3,544,613,227.13 3,199,404,365.71 3,359,972,441.96 2,762,714,566.29 Top five clients of the Company owe income in sales of RMB 2,076,958,447.26 yuan, a 50.29% in total operation income. 4. Investment income Amount in the same Item Amount in the period period of last year Long-term equity investment income by equity method 3,105,463.66 2,644,982.57 Investment income arising from disposal of the long-term equity 2,506.98 investment Investment income arising from period of holding the long-term - 75,261,313.40 equity investment Investment income from disposal of financial assets, which is measured by fair value and with its variation reckoned into current 7,232,183.50 gains/losses Investment income during holding the financial assets available for 19,389,929.81 4,986,301.37 sale Total 29,730,083.95 82,892,597.34 XI. Approval of financial statement 229 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) The financial statement has already been approved from the board of directors of the Company for reporting dated 9 August 2017. 230 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) Supplementary information for financial statement 1. Non-operational gains and losses for this period (1) Non-recurring gains and losses regulated by Explanation Announcement of Information Disclosure on Stock Issuance Enterprise No.1—Non-recurring gains/losses (2008) from CSRC: Item Current Period Note Gains and losses from disposal of non-current assets -11,095,591.69 Tax refund or mitigate due to examination-and-approval beyond power or without official approval document or accident Government subsidy recorded in current gains and losses 22,490,062.54 Capital occupancy expense, collected from non-financial enterprises and recorded in current gains and losses Income from the exceeding part between investment cost of the Company paid for obtaining subsidiaries, associates and joint-ventures and recognizable net assets fair value attributable to the Company when acquiring the investment Gains and losses from exchange of non-monetary assets Gains and losses from assets under trusted investment or management Various provision for impairment of assets withdrew due to act of God, such as natural disaster Gains and losses from debt restructuring Enterprise reorganization expense Gains and losses of the part arising from transaction in which price is not fair and exceeding fair value Current net gains and losses occurred from period-begin to combination day by subsidiaries resulting from business combination under common control Gains and losses arising from contingent proceedings irrelevant to normal operation of the Company Except for effective hedge business relevant to normal operation of the Company, gains and losses arising from fair value change of tradable financial assets and tradable financial -10,359,085.30 liabilities, and investment income from disposal of tradable financial assets, tradable financial liabilities and financial assets available for sale Switch-back of provision of impairment of account receivable which are treated with separate depreciation test Gains and losses obtained from external trusted loans Gains and losses arising from change of fair value of investment real estate whose follow-up measurement are conducted according to fair value pattern Affect on current gains and losses after an one-time adjustment according to requirements of laws and regulations regarding to taxation and accounting Trust fee obtained from trust operation Other non-operating income and expenditure except for the aforementioned ones 643,883.35 Other gains and losses items complying with definition for non-current gains and losses 26,817,170.85 Subtotal 28,496,439.75 Affect on income tax 3,129,349.31 Affect on minority equity(after taxation) 197,389.65 Total 25,169,700.79 2. Return on equity and earnings per share 231 Annotations of Financial Statements of Hefei Meiling Co., Ltd. From 1 January 2017 to 30 June 2017 (Unless other wise specified, RMB for record in the Statement) In accordance with requirement of the No. 9 Rule of Information Disclosure Compiling of Public Listed Companies: Calculation and Disclosure of Return on Equity and Earnings per Share (revised in 2010), the weighted average return on equity, basic earnings per share and diluted earnings per share of the Company semi-annual report in 2017 are as follow: Weighted average Earnings per share/EPS Profit during the report period return on equity Basic EPS Diluted EPS Net profit attributable to shareholders of 1.79% 0.0881 0.0881 parent company Net profit attributable to shareholders of parent company after deduction of 1.30% 0.0640 0.0640 non-recurring gains and losses 3. Accounting difference under the accounting rules in and out of China: Nil 4. Supplementary information for accounting policy changed: Nil 232 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017 Section XI Documents available for Reference I. Text of Semi-Annual Report carrying the signatures of the Chairman; II. Financial statement carrying the signatures and seals of the Chairman, Vice President and person in charge of finance, and person in charge of accounting organ (accountant in charge); III. Original documents of the Company and manuscripts of public notices that disclosed in the website designated by CSRC in the report period; The aforesaid documents are all available at headquarter of the Company. The Company would provide them timely when CSRC and Shenzhen Stock Exchange require or the shareholders need consultation according to the regulations and Articles of Association. Chairman: Li Wei Hefei Meiling Co., Ltd. 10 August 2017 233