Wuxi Little Swan Company Limited 2014 Semi-annual Report August 2014 Section I. Important Reminders, Contents & Explanation The Board of Directors, the Supervisory Committee as well as all directors, supervisors and senior management staff of Wuxi Little Swan Company Limited (hereinafter referred to as “the Company”) warrant that this report is factual, accurate and complete without any false record, misleading statement or material omission. And they shall be jointly and severally liable for that. All directors attended the board session for reviewing this report. The Company plans not to distribute cash dividends or bonus shares or turn capital reserve into share capital. Mr. Fang Hongbo, chairman of the Board of Directors, Mr. Zhang Zhaofeng, CFO, and Mr. Zhong Fangliu, chief of the accounting organ (chief of accounting), hereby confirm that the Financial Report enclosed in this report is factual, accurate and complete. This report involves futures plans and some other forward-looking statements, which shall not be considered as virtual promises to investors. Investors are kindly reminded to pay attention to possible risks. This report is prepared in both Chinese and English. Should there be any discrepancy between the two versions, the Chinese version shall prevail. 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Contents Section I. Important Reminders, Contents & Explanation............................................................ 1 Section II. Company Profile .............................................................................................................. 4 Section III. Highlights of Accounting Data & Financial Indicators .............................................. 6 Section IV. Report of the Board of Directors ................................................................................... 8 Section V. Significant Events ........................................................................................................... 19 Section VI. Change in Shares & Shareholders .............................................................................. 33 Section VII. Preferred Shares ......................................................................................................... 38 Section VIII. Directors, Supervisors & Senior Management Staff .............................................. 39 Section IX. Financial Report ........................................................................................................... 40 Section X. Documents Available for Reference ........................................................................... 140 2 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Explanation Term Refers to Contents Company, the Company or Little Swan Refers to Wuxi Little Swan Company Limited Midea Group Refers to Midea Group Co., Ltd. TITONI Refers to TITONI INVESTMENTS DEVELOPMENT LTD. Midea Holding Refers to GD Midea Holding Co., Ltd. Reporting period Refers to 1 Jan. 2014-30 Jun. 2014 3 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Section II. Company Profile I. Basic information of the Company Stock abbreviation XTEA, XTEB Stock code 000418, 200418 Stock exchange listed with Shenzhen Stock Exchange Chinese name of the Company 无锡小天鹅股份有限公司 Abbr. of the Chinese name of the 小天鹅 Company (if any) English name of the Company (if any) Wuxi Little Swan Company Limited Legal representative of the Company Mr. Fang Hongbo II. For Contact Company Secretary Securities Affairs Representative Name Ms. Zhou Sixiu Mr. Zhao Yulin No. 18, Changjiang Road S., National Hi-tech No. 18, Changjiang Road S., National Contact address Development Zone, Wuxi Hi-tech Development Zone, Wuxi Tel. 0510-81082320 0510-81082377 Fax 0510-83720879 0510-83720879 E-mail IR_littleswan@littleswan.com.cn zhaoyl@littleswan.com.cn III. Other information 1. Ways to contact the Company Did any change occur to the registered address, office address and their postal codes, website address and email address of the Company during the reporting period? □ Applicable √ Inapplicable The registered address, office address and their postal codes, website address and email address of the Company did not change during the reporting period. The said information can be found in the 2013 Annual Report. 2. About information disclosure and where this report is placed Did any change occur to information disclosure media and where this report is placed during the reporting period? □ Applicable √ Inapplicable The newspapers designated by the Company for information disclosure, the website designated by CSRC for disclosing this report and the location where this report is placed did not change during the reporting period. The said information can be found in the 2013 Annual Report. 4 2014 Semi-annual Report of Wuxi Little Swan Company Limited. 3. Change of the registered information Did any change occur to the registered information during the reporting period? □ Applicable √ Inapplicable The registration date and place of the Company, its business license No., taxation registration No. and organizational code did not change during the reporting period. The said information can be found in the 2013 Annual Report. 5 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Section III. Highlights of Accounting Data & Financial Indicators I. Major accounting data and financial indicators Does the Company adjust retrospectively or restate accounting data of previous years due to change of the accounting policy or correction of any accounting error? □ Yes √ No Reporting period Same period of last year YoY +/- (%) Operating revenues (RMB Yuan) 4,974,057,020.56 3,998,224,336.31 24.41% Net profit attributable to shareholders of 316,358,532.13 220,961,466.94 43.17% the Company (RMB Yuan) Net profit attributable to shareholders of the Company after extraordinary gains and 272,497,997.10 186,709,366.62 45.95% losses (RMB Yuan) Net cash flows from operating activities 825,104,435.83 931,122,295.82 -11.39% (RMB Yuan) Basic EPS (RMB Yuan/share) 0.50 0.35 42.86% Diluted EPS (RMB Yuan/share) 0.50 0.35 42.86% Weighted average ROE (%) 7.78% 5.82% 1.96% As at the end of the As at the end of last year +/- (%) reporting period Total assets (RMB Yuan) 9,686,393,875.10 9,222,527,380.74 5.03% Net assets attributable to shareholders of 4,041,109,118.33 3,908,897,654.74 3.38% the Company (RMB Yuan) II. Differences between accounting data under domestic and overseas accounting standards 1. Differences of net profit and net assets disclosed in financial reports prepared under international and Chinese accounting standards □ Applicable √ Inapplicable No difference. 2. Differences of net profit and net assets disclosed in financial reports prepared under overseas and Chinese accounting standards □ Applicable √ Inapplicable No difference. 6 2014 Semi-annual Report of Wuxi Little Swan Company Limited. III. Items and amounts of extraordinary gains and losses √Applicable □ Inapplicable Unit: RMB Yuan Item Amount Explanation Gains/losses on the disposal of non-current assets (including the -1,184,389.51 offset part of asset impairment provisions) Government grants recognized in the current period, except for those acquired in the ordinary course of business or granted at 6,454,141.22 certain quotas or amounts according to the country’s unified standards Gain/loss on entrusting others with investments or asset 52,412,042.89 management Gain/loss on debt restructuring 1,688,200.34 Reversal of impairment provisions for the accounts receivable on 5,548,244.81 which impairment tests were carried out separately Other non-operating income and expenses other than the above 1,652,425.93 Other gain/loss items that meet the definition of an extraordinary -5,809,948.33 gain/loss Less: Income tax effects 9,985,599.85 Minority interests effects (after tax) 6,914,582.47 Total 43,860,535.03 -- Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Extraordinary Gains and Losses, or classifies any extraordinary gain/loss item mentioned in the said explanatory announcement as a recurrent gain/loss item □ Applicable √ Inapplicable No such cases. 7 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Section IV. Report of the Board of Directors I. Overview In the first half of 2014, affected by the downward macro-economy, the withdrawal of the consumption stimulus package and the real estate policies, the washing machine industry as a whole slowed down in growth, with the market being stable. Consumption was upgrading in an obvious manner and the business restructuring accelerated, with an increased weight of middle and high-end products, as well as roller washing machines. There was a significant growth in the sale of high-capacity, inverter and intelligent washing machines. The industry became more centralized. During the reporting period, closely adhering to the strategic axis of “leading products, efficiency-driven and global operation”, we continued to focus on changes in the industry, improved products and kept pushing forward and deepening operation transformation. As a result, great progress was achieved in almost all kinds of work. For the reporting period, the Company achieved operating revenues of RMB 4.97 billion, up 24.4% year on year, and a net profit attributable to the shareholders of the Company of RMB 320 million, up 43.2% from a year earlier. During the reporting period, we mainly carried out the following work: In terms of domestic sale, we implemented the “Spring Ploughing Plan” to speed up expansion of the distribution network, which increased the network coverage and effectiveness; vigorously expanded the e-commerce channel and pushed forward the online and off-line channel layout, which enlarged the market share of our retail; and promoted terminal standardization and improved user experience. In the reporting period, domestic sale grew steadily, with an obvious increase in profitability. And the e-business was in fast development. For the domestic sale in the reporting period, the income stood at RMB 3.57 billion, up 24.2% year on year, and the gross profit rate at 33.2%, up by 2.3 percentage points from a year earlier. In terms of export, we continued to optimize the product and customer structures, enhanced our efforts in strategy and market access, and withdrew some overseas operations with no market. We allowed branches in some regions to launch their own brands to increase business incomes and profits. The reporting period saw a strong growth in Europe, the largest market share in Latin America as before and a major breakthrough in the drying machine business. For the reporting period, the export generated an income of RMB 990 million, up 21.3% when compared with the same period of last year; and the gross profit rate of export stood at 9.2%, up 0.3% year on year. In regard to product strength, we developed over 200 new products, launching the third generation automatic throw-in washing machines—the I-intelligent product series. And we continued to improve our strength in R&D and innovation, especially that of intelligent and networked products. During the reporting period, the Company was awarded the “Appliance” Low-carbon Environmental Protection Award by China Household Electrical Appliances Association, and Little Swan Beverly Roller Washing Machine won the Germany IF Product Design Award, and so on. Concerning quality improvement, with “Prevent Massive Quality Problems and Reduce Repair Needs” as the main line and “Focus 8 2014 Semi-annual Report of Wuxi Little Swan Company Limited. on the Beginning of the Production Process and Control the Process” as the means, we focused on massive quality problem prevention, solidified what was fundamental and became more systematic in quality management. With market as the guidance and products as the core, we particularly improved the key indicators about products that decided customers’ satisfaction and our market reputation, enhancing management of “two sources and one process”. As a result, our product quality improved significantly, along with our reputation on the market. As for operating efficiency, we further regulated and optimized our authorization mechanism, decision-making procedure and management mechanism. Meanwhile, we continued to push forward the project of “produce according to sale”, organized lean logistics improvement projects, and input more resources in replacing workers with machines, so as to increase our overall operating efficiency. In the coming six months, we will continue to push forward all the work and deepen operation transformation; continue to explore traditional channels and vigorously expand online channels; promote delicacy channel management, continuously optimize the product sale structure and increase the weight of middle and high-end products; deepen the strategic cooperation with overseas customers, solidify competitive areas, explore new markets, update business modes and move manufacture overseas; continue to focus on products, enhance research in consumer demand, promote planning management and standardization, and build an efficient R&D supporting system; firmly stick to the quality principle and improve the quality of new products and suppliers; carry out quality engineering, particularly improve reliability and realize the transition from “qualified and satisfactory quality” to “charming and habit-forming quality”; and continue to optimize the organization flow and managerial mechanism, implement the order commitment mechanism, constantly optimize the logistics layout, increase the operating and turnover efficiency, accelerate the automation strategy and build a lean manufacture system characteristic of stability, automation and flexibility. II. Main business analysis YoY change of major financial data: Unit: RMB Yuan Reporting period Same period of last year YoY +/-% Main reasons for change Operating revenues 4,974,057,020.56 3,998,224,336.31 24.41% Operating costs 3,655,315,076.59 3,005,810,911.14 21.61% Increased along with the sales Selling expenses 708,872,153.90 539,966,097.76 31.28% income Administrative expenses 210,082,884.69 173,092,190.68 21.37% Increase in the R&D input Exchange loss decreased on Financial expenses -9,899,828.86 20,143,097.74 -149.15% exchange rate fluctuations. Increased along with total Income tax expenses 66,436,602.59 42,992,351.93 54.53% profits R&D input 188,396,276.35 149,156,933.04 26.31% Net cash flows from operating 825,104,435.83 931,122,295.82 -11.39% activities 9 2014 Semi-annual Report of Wuxi Little Swan Company Limited. The cash paid to acquire Net cash flows from investing financing products and the -134,495,207.51 -600,144,036.70 77.59% activities cash returns on maturity were almost even. Net cash flows from financing -134,190,940.03 -182,583,655.47 26.50% activities Net increase in cash and cash 556,418,288.29 148,394,603.65 274.96% equivalents Major changes to the profit structure or sources of the Company during the reporting period: □ Applicable √ Inapplicable No major changes occurred to the profit structure or sources of the Company during the reporting period. Reporting period progress of the future development planning in the disclosed documents of the Company such as share-soliciting prospectuses, offering prospectuses, asset reorganization reports, etc.: □ Applicable √ Inapplicable The Company did not mention any future planning for the reporting period in its disclosed documents such as share-soliciting prospectuses, offering prospectuses, asset reorganization reports, etc. Review the progress of the previously disclosed business plan in the reporting period: In the reporting period, according to the plan set at the beginning of the year, the Company proactively pushed forward all kinds of work and achieved some phasic progress. For details, see “I. Overview” in this section. III. Breakdown of main business Unit: RMB Yuan Increase/decreas Increase/decreas Increase/decrease of e of operating e of operating Operating Gross profit gross profit rate over Operating costs revenues over costs over the revenues rate (%) the same period of last the same period same period of year (%) of last year (%) last year (%) Classified by industry: Household 4,557,126,125.99 3,280,741,426.30 28.01% 23.58% 20.32% 1.95% appliances Classified by product: Washing 4,557,126,125.99 3,280,741,426.30 28.01% 23.58% 20.32% 1.95% machines Classified by region: China 3,568,465,105.73 2,382,803,528.64 33.23% 24.24% 20.11% 2.30% Other countries 988,661,020.26 897,937,897.66 9.18% 21.29% 20.89% 0.30% IV. Core competitiveness analysis The Company is one of the biggest washing machine manufacturers in China, with its main competitiveness as follows: 1. Technology-related competitiveness: The Company has been concentrating on its washing machine business all the time. Through constant input of R&D resources over the years, the Company has owned leading technological competitiveness in the industry. The 10 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Company has a sound technological R&D system, including one state-level technological center and two state-recognized labs. Little Swan Lab is the first washing machine lab in China to pass the UL North American safety verification and the German VDE verification. Little Swan holds on to independent innovation and has the internationally advanced frequency-changing, intelligent control, structure design, industrial design and other core washing technologies. 2. Brand-related competitiveness: The Company adopts a two-brand strategy (“Little Swan” and “Midea”). As a washer brand with a history over 30 years, Little Swan is considered a very reliable brand among consumers, with the slogan of “Whole-hearted Little Swan” being well-known among them. In 2013, according to the evaluation of R&F Global Ranking Information Group Ltd., the brand of Little Swan was worth 19.308 billion, keeping its place in the “Most Valuable Brands in China”. As for Midea, it is a well-known home appliance brand, which is also of a high reputation as a washer brand, and its market share keeps rising. 3. Scale-related competitiveness: The Company is one of the first washer manufacturers in China and it has established the lean manufacturing culture. It now has domestically and internationally first-class manufacturing equipments and an experienced manufacturing team. The Company’s two production bases—Wuxi and Hefei—have a combined production capacity over 16 million units. Its wide product range covers tumbling-box, wave-wheel full-automatic, double-cylinder and agitator washing machines, clothes dryers, etc., creating incomparable scale competitiveness among washer manufacturers. 4. Channel-related competitiveness: Through reform and adjustment in the recent years, the Company has formed its channel competitiveness. In the domestic first and secondary markets, the Company mainly works with Suning, Gome and some other big regional customers. In the tertiary and fourth markets, the Company combines traditional channels and franchised stores to distribute its products to households. In e-commerce, we proactively make plans about online channels by working with JD, TMALL and some other major online channels, as well as making use of the online shopping mall—I. Midea—built by Midea Group. In the overseas markets, the Company keeps deepening its cooperation with customers and the overseas markets keep expanding. With a good and long-term cooperation with all major customers, the Company enjoys good brand loyalty. No significant change occurred to the core competitiveness of the Company in the reporting period. V. Investment analysis 1. Investments in equities of external parties (1) Foreign investment □ Applicable √ Inapplicable There was no foreign investment of the Company in the reporting period. (2) Equity-holdings in financial enterprises √Applicable □ Inapplicable Gain/loss Initial Opening Closing Closing in the Enterpr Opening Closing Enterprise investment equity-hol equity-hol book value reporting Accountin Equity ise equity-hol equity-hol name cost (RMB dings dings (RMB period g title source variety ding ratio ding ratio Yuan) (share) (share) Yuan) (RMB Yuan) Bank of Comm Long-term Private Jiangsu Co., ercial 1,100,000 2,202,564 0.00% 2,202,564 0.00% 1,210,000 0.00 equity offering Ltd. bank investment 11 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Total 1,100,000 2,202,564 -- 2,202,564 -- 1,210,000 0.00 -- -- (3) Investment in securities □ Applicable √ Inapplicable The Company did not invest in any securities in the reporting period. 2. Wealth management entrustment, derivative investments and entrustment loans (1) Wealth management entrustment √Applicable □Inapplicable Unit: RMB Ten thousand Actual Related- Impairme Principal gain/loss Name of party Product Amount Beginning Ending Payment nt Predicted Relation actually in trustee transacti variety entrusted date date determination provision gain recovered reporting on or not (if any) period Floating interest rate, Floating 3 Jan. 22 May contractual Bank No No 416,337 400,100 5,241.2 5,241.2 gains 2014 2015 highest annualized income rate Total 416,337 -- -- -- 400,100 5,241.2 5,241.2 All is from the self-owned funds of the Company. The entrusted funds are cumulative. The Source of the entrusted funds line for wealth management entrustment is RMB 2 billion and repeated use is allowed within the said line. Cumulative overdue principals and 0 gains Disclosure date of the board announcement approving the wealth 7 Mar. 2014 management entrustment (if any) (2) Derivative investment √ Applicable □ Inapplicable Unit: RMB Ten thousand Proportion Actual Related- Opening Closing of the Type of Initial Impairmen gain/loss party Beginning Ending investm investm closing Operator Relation derivative investment t provision in transacti date date ent ent investment investment amount (if any) reporting on or not amount amount amount in period the 12 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Company’s closing net assets (%) Forward 16 May Bank No No exchange 48,371 7 Jan. 2015 48,371 18,773 3.99% -958.36 2013 contract Total 48,371 -- -- 48,371 18,773 3.99% -958.36 Capital source for derivative investment All self-owned funds Disclosure date of the board announcement approving the wealth 7 Mar. 2014 management entrustment (if any) Disclosure date of the general meeting announcement approving the wealth 16 Apr. 2014 management entrustment (if any) The Company has formulated the Management Methods for Futures Hedging Business and the Management Methods for Exchange Funds upon review to thoroughly assess and control derivative investment risks, which are detailed as follows: 1. Market risk Price movements of bulk raw materials and fluctuations of exchange rates may incur a great market risk in the futures business and the foreign exchange funds business. Meanwhile, if the Company fails to input enough funds in time to create and maintain hedging positions in its futures hedging operations, or fails to input foreign exchanges on time for contract execution in the foreign exchange funds business, hedging loss and contract breach risk may incur. Counter-measures: The Company will not carry out speculative trading in its futures hedging business and foreign exchange funds business. And the Company will stick to the principle of being prudent in operations. As for the futures hedging business, the hedging Analysis on risks and control measures volume should be determined and futures trading applications should be filed in strict of derivative products held in the accordance with production and operation needs. In principle, the hedging volume shall reporting period (including but not not exceed one third of the planned volume for the year. And a stop-loss mechanism is limited to market risk, liquidity risk, adopted. Guarantee deposits are paid as required and increased according to production credit risk, operation risk, law risk, etc.) and operation needs. As for the foreign exchange funds business, a from-the-bottom-up management mechanism is adopted. When subsidiaries or product enterprises file applications for funds business, they will give a risk analysis on conditions or circumstances that might affect gains and losses, estimate the maximum gain and loss, and state the ratio or total amount of guarantee deposits they can bear. And the Company will, according to their applications, update operations in time in its funds business and make funds arrangements before the maturity date. 2. Operation risk The Company may suffer loss in its hedging business and foreign exchange funds business due to faulty internal procedures, staff, systems and external events. Counter-measures: Responsibility division and approval procedures for the hedging and foreign exchange business have been specified in relevant management rules. And a sound supervision mechanism has been established. And operation risk can be effectively 13 2014 Semi-annual Report of Wuxi Little Swan Company Limited. reduced by enhancing risk control over procedures for operation, decision-making and trading. 3. Risk concerning laws and regulations The Company carries out its hedging and foreign exchange business in compliance with applicable laws and regulations, with rights and duties between the Company and agencies being stated clearly. Counter-measures: The Company urges responsible departments to understand better about relevant laws, regulations and market rules; be strict in contract re-checks; make clear relevant rights and duties; and enhance compliance checks to make sure that the Company operates derivative investments in compliance with applicable laws, regulations and the Company’s internal management rules. Changes of market prices or fair values in the reporting period of the invested The Company adopts public quotations in the futures market or forward foreign exchange derivatives. And the analysis on the fair quotations declared by the People’s Bank of China in its analysis on fair values of value of the derivatives should include derivative products. the specific use methods and the relevant assumptions and parameters. Whether significant changes occurred to the Company’s accounting policy and specific accounting principles of No significant changes. derivatives in the reporting period compared to the previous reporting period Independent directors of the Company believe that: A. The Company has formulated derivative investment rules such as the Management Methods for Futures Hedging Business and the Management Methods for Exchange Funds to help it effectively control risks involved; B. During the reporting period, the Company performed the relevant approval procedure before it conducted derivative investments in strict compliance with Specific opinion from independent the lines and ways approved by the Shareholders’ General Meeting; And C. The directors on the Company’s derivatives Company’s derivative investments in the reporting period mainly targeted its exports. It investment and risk control signed forward exchange contracts with domestic financial institutions, which helped it lock up the exchange rate and avoid the risk of exchange rate fluctuations. The Company conducted no speculative operations, so there was no credit risk. And transaction periods were determined according to expectations and payment receiving and making, with no influence on the Company’s fluidity. (3) Entrustment loans □ Applicable √ Inapplicable There was no entrustment loan of the Company in the reporting period. 14 2014 Semi-annual Report of Wuxi Little Swan Company Limited. 3. Use of raised funds (1) Overview of the use of raised funds □ Applicable √ Inapplicable (2) Projects invested with raised funds as promised □ Applicable √ Inapplicable (3) Change of raised-funds-invested projects □ Applicable √ Inapplicable No change of raised-funds-invested projects during the reporting period. 4. Analysis to main subsidiaries and stock-participating companies √ Applicable □ Inapplicable Main subsidiaries and stock-participating companies: Unit: RMB Ten thousand Company Main Registered Operating Operating Company name Industry Total assets Net assets Net profit variety products/services capital revenues profit Hefei Midea Washing Manufac washing machine 13,552 Subsidiary 362,850.19 173,137.07 221,274.50 8,212.11 6,917.58 Machine Co., ture manufacture (USD) Ltd. Wuxi Little Swan General Manufac Washer-dryer Electrical Subsidiary 2,800 26,340.56 163,843.52 12,630.57 1,176.17 999.74 ture manufacture Appliances Co., Ltd Development and Wuxi FILIN Manufac manufacture of 362.4564 Electronics Co., Subsidiary 42,234.33 31,613.65 17,499.02 3,847.17 3,645.59 ture new electronic (USD) Ltd components 5. Significant projects invested with non-raised funds □ Applicable √ Inapplicable No significant projects of investments with non-raised funds during the reporting period. VI. Predict the operating results of Jan.-Sept. 2014 Warning of possible loss or considerable YoY change of the accumulated net profit made during the period-begin to the end of the 15 2014 Semi-annual Report of Wuxi Little Swan Company Limited. next reporting period according to prediction, as well as explanations on the reasons: □ Applicable √ Inapplicable VII. Explanation by the Board of Directors and the Supervisory Committee about the “non-standard audit report” issued by the CPAs firm for the reporting period □ Applicable √ Inapplicable VIII. Explanation by the Board of Directors about the “non-standard audit report” for last year □ Applicable √ Inapplicable IX. Implementation of profit allocation during the reporting period Profit allocation plan implemented during the reporting period, especially execution and adjustment of the cash dividend plan and the plan for turning capital reserve into share capital: √ Applicable □ Inapplicable As the profit allocation plan for 2013, the Company, based on the total 632,487,764 shares as at the end of 2013, distributed a cash dividend of RMB 3 for every 10 shares held by its shareholders. And the Company did not turn capital reserve into share capital for 2013. The plan was reviewed and approved at the 8th Session of the 7th Board of Directors on 5 Mar. 2014 and then the 2013 Annual Shareholders’ General Meeting on 16 Apr. 2014. Thewas published on 6 Jun. 2014. Implementation of the profit allocation plan was completed in the reporting period. Special statement about the cash dividend policy In compliance with the Company’s Articles of Association and the resolution of the general meeting Yes Specific and clear dividend standard and ratio Yes Complete decision-making procedure and mechanism Yes Independent directors fulfilled their responsibilities and played their due role. Yes Minority shareholders have the chance to fully express their opinion and desire and their legal rights and Yes interests were fully protected. In adjustment or alteration of the cash dividend policy, the conditions and procedure were in compliance with Inapplicable regulations and transparent. X. Preplan for profit distribution and turning capital reserve into share capital for the reporting period □ Applicable √ Inapplicable The Company planed not to distribute cash dividends or bonus shares or turn capital reserve into share capital for the reporting period. 16 2014 Semi-annual Report of Wuxi Little Swan Company Limited. XI. Researches, visits and interviews received in the reporting period √ Applicable □ Inapplicable Way of Main discussion and materials Time Place Visitor type Visitor reception provided by the Company Conference Room of the Changjiang Securities, 14 Jan. 2014 Field research Institution Overall operation of the Company Company Hongyuan Securities Baring Asset Conference Room of the 15 Jan. 2014 Field research Institution Management, First Overall operation of the Company Company State Investments Founder Securities, Macro Vision Conference Room of the 16 Jan. 2014 Field research Institution Investment, Matthews Overall operation of the Company Company International Capital Management Conference Room of the 12 Mar. 2014 Field research Institution Industrial Securities Overall operation of the Company Company Conference Room of the 26 Mar. 2014 Field research Institution Cinda Securities Overall operation of the Company Company Conference Room of the 27 Mar. 2014 Field research Institution Mirae Asset Overall operation of the Company Company Conference Room of the 28 May 2014 Field research Institution Industrial Securities Overall operation of the Company Company Conference Room of the Tianhong Asset 6 Jun. 2014 Field research Institution Overall operation of the Company Company Management Conference Room of the China Galaxy 17 Jun. 2014 Field research Institution Overall operation of the Company Company Securities Conference Room of the 27 Jun. 2014 Field research Institution GM Investment Overall operation of the Company Company 17 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Section V. Significant Events I. Corporate governance The Company continuously perfected its corporate governance, set up modern enterprise system and standardized its operation strictly in accordance with the requirements of relevant laws and rules such as Company Law, Securities Law and Administrative Rule for Listed Companies issued by CSRC. Company governance practice has no difference with requirements of relevant law and rules of Company Law and CSRC. II. Significant litigations and arbitrations □Applicable √Inapplicable The Company was not involved in any significant lawsuit or arbitration during the reporting period. III. Media’s questions □Applicable √Inapplicable The Company was not involved in any media’s questions during the reporting period. IV. Related Events of bankruptcy reorganization □Applicable √Inapplicable The Company was not involved in any related events of bankruptcy reorganization. V. Assets transaction events 1. Purchase of assets □Applicable √Inapplicable The Company was not involved in any purchase of assets. 2. Sales of assets √Applicable □Inapplicable Net profit Ratio of Relation Whether Whether contribute the net ship or not or not Impac Related- d to the profit between the the Transact Transact t to Pricing party Disclos Assets Disposa Company contribu the ownersh creditor’ Disclos ion ion the principl transacti ure sold l date from the ted by transacti ip of the s right ure date party price comp e on or index period-beg the asset on party asset and any not in to the to the and the involve liabilitie disposal Compan Compan d has s 18 2014 Semi-annual Report of Wuxi Little Swan Company Limited. date(RMB y to the y been involve Ten total (applica fully d have thousand) profit ble for transferr been related- ed fully party transferr transacti ed ons) Confirm Compan Equities ed y of the Midea accordin controll Jiangsu Group g to the ed by Inapplic Comme 23 Dec. 881.03 0 N/A 0.00% Yes No Finance market Yes the able rcial 2013 Co., price of controlli Bank Ltd. similar ng Co., assets sharehol Ltd. der The above transfer of property right had completed on 9 Jul. 2014. 3. Combination of enterprises □Applicable √Inapplicable The Company was not involved in any combination of enterprises. VI. Implementation of equity incentive and its influence □Applicable √Inapplicable The Company was not involved in any implementation of equity incentive and its execution. VII. Significant related-party transactions 1. Related-party transaction relevant to routine operation √Applicable □Inapplicable Pricing Type of Content Proporti principle the of the Transaction on in Settlement of the Transa related- related-p amount same method of the Market Disclos Disclosure Related party Relationship related-p ction party arty (RMB Ten kind of related-party price ure date index arty price transacti transacti thousand) transacti transaction transacti on on ons (%) on Subsidiary Revenu Logistic Cash or 7 Mar. On 7 Mar. Ningbo Annto Market controlled e from s, 3,715.26 1.15% acceptance 2014 2014 and 22 Logistics Co., Ltd. price by controller service storage due 3-6 and 22 Apr. 2014, 19 2014 Semi-annual Report of Wuxi Little Swan Company Limited. service months Apr. the company 2014 published on Purchase Cash or Hubei Midea Subsidiary the Purchas of Market acceptance Refrigerator Co., controlled 77.01 0.02% information e material price due 3-6 Ltd. by controller network's s months announceme Huaian Weiling Purchase Cash or Subsidiary nt: Motor Purchas of Market acceptance controlled 19,182.71 5.95% (Announcem Manufacturing e material price due 3-6 by controller ent No.: Co., Ltd. s months 2014-05 and Purchase Cash or 2014-17) Hefei Midea Subsidiary Purchas of Market acceptance Materials Supply controlled 7,903.86 2.45% e material price due 3-6 Co., Ltd. by controller s months Purchase Cash or Ningbo Midea Subsidiary Purchas of Market acceptance Joint Supplies Co., controlled 11,439.34 3.55% e material price due 3-6 Ltd. by controller s months Hefei Hualing Purchase Cash or Subsidiary Electric Purchas of Market acceptance controlled 4.03 0.00% Appliances Co., e material price due 3-6 by controller Ltd. s months Guangdong Midea Cash or Environment Subsidiary Purchase Purchas Market acceptance Appliances controlled of 428.89 0.13% e price due 3-6 Manufacturing by controller products months Co., Ltd. Subsidiary Revenu T/T, Transfer Annto Logistics Logistic Market controlled e from 8.9 0.00% or online Co., Ltd. s service price by controller service banking Huaian Weiling Cash or Naught Naught Subsidiary Sales of Motor Market acceptance controlled Sales material 5.12 0.00% Manufacturing price due 3-6 by controller s Co., Ltd. months Party B paid On 7 Mar. to party A in 2014, the MIDEA cash, after Company CONSUMER Subsidiary Sales of Market receiving the 7 Mar. published on ELECTRIC controlled Sales 81.62 0.02% products price party A’s 2014 the (VIETNAM) by controller supply in the information CO.,LTD bill of lading network's within 90 days announceme 20 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Party B paid nt: to party A in (Announcem MIDEA cash, after ent No.: ELECTRIC Subsidiary receiving the 2014-05) Sales of Market TRADING(SING controlled Sales 67,690.79 13.61% party A’s products price APORE)CO.PTE. by controller supply in the LTD bill of lading within 120 days Party B paid to party A in MIDEA cash, after SCOTT&ENGLIS Subsidiary receiving the Sales of Market H controlled Sales 1,255.35 0.25% party A’s products price ELECTRONILCS by controller supply in the SDN.BHD bill of lading within 150 days Party B paid to party A in cash, after PT. MIDEA Subsidiary Sales of Market receiving the PLANET controlled Sales 205.55 0.04% products price party A’s INDONESIA by controller supply in the bill of lading within 90 days Total -- -- 111,998.43 -- -- -- -- -- As for the prediction on the total amount of routine related-party transactions to be occurred in the For details, see IX. Financial report “(VIII) Related-party and related-party reporting period by relevant types, the actual transactions, 5. Related-party transactions”. performance in the reporting period(If any) 2. Related-party transactions arising from asset acquisition or sale □Applicable √Inapplicable The Company was not involved in any related-party transactions arising from asset acquisition or sale during the reporting period. 3. Related-party transitions with joint investments □Applicable √Inapplicable The Company was not involved in any related-party transaction with joint investments during the reporting period. 21 2014 Semi-annual Report of Wuxi Little Swan Company Limited. 4. Credits and liabilities with related parties √Applicable □Inapplicable Was there any non-operating credit or liability with any related party? □Yes √No The Company was not involved in any credits and liabilities with related parties during the reporting period. 5. Other significant related-party transactions √Applicable □Inapplicable (1) The Company held the 1st Special Shareholder’s General Meeting on 27 Aug. 2013, which reviewed and approved the following proposals: ① Reviewed and approved the Proposal of the Related-party Transactions about Signing the Financial Services Agreement with Midea Group Finance Co., Ltd. The agreement agreed that, according to the requirements of the subsidiary of the Company, the Finance Company should provide deposit services, loan services, bill discounting services, guarantees, settlement services and a series of financial services that what the Finance Company could work on approved by CBRC to the Company and its subsidiary. Within the 3 years validity period since the date of the validation of the agreement, the maximum daily deposit balance the Company and its subsidiary deposit in the Financial Company should not exceed RMB 1 billion; the maximum daily outstanding balance of the loan principal and interest the Financial Company grants for the Company and its subsidiary should not exceed RMB 1 billion. The Company was not involved in any loan business with the deposit balance in the Midea Group Finance Co., Ltd. of RMB 274,842,700 at the end of the reporting period. ② Reviewed and approved the Proposal of the Related-party Transaction about the Trademark Licensing The Company permitted GD Midea Holding and its controlled subsidiaries to use trademark of “LITTLE SWAN and picture” in air conditioner commodities; permitted Hubei Midea Refrigerator Co., Ltd. and its controlled subsidiaries to use trademark of “LITTLE SWAN and picture” in refrigerator and freezer commodities; at the same time GD Midea Holding Co., Ltd permitted the Company and subsidiaries of the Company to use trademark of “Midea” in production, sales and ad campaign of washing machines and dryers. The aforesaid licensing contracts were all contracted with 0.3% charges of net sales revenue of products with the authorized trademark as trademark license fees, and the licensing period ranged from 1 Jan. 2014 to 31 Dec. 2016. (Note: After approved by CSRC through [2013]1014 document, Midea Group had split off as well as consolidated and combined the original controller GD Midea Holding on 18 Sep. 2013. After the consolidation and combination, Midea Group inherited and undertook the whole rights and obligations of the whole assets and liabilities etc of GD Midea Holding as the reminder enterprise and had finished the relevant registration procedures of shares transfer on 31 Dec. 2013.) (2) The 2013 Annual Shareholder’s General Meeting was convened on 16 Apr. 2014, at which reviewed and approved the Proposal on Prediction of the Line of Routine Related Transaction of the Company for 2014. (3) The 9th Meeting of the 7th Board of Directors was convened on 21 Apr. 2014, at which reviewed and approved the Proposal on Adjustment of the Line of Routine Related Transaction of the Company for 2014. For details of the routine related-party transactions, see IX. Financial report “(VIII) Related-party and related-party transactions”. Related queries of disclosure index of significant related-party transactions’ interim report Disclosure date of the Website to disclose the interim Name of the interim announcement interim announcement announcement Announcements about trademark license of related transactions 6 Aug. 2013 www.cninfo.com.cn (No.: 2013-18) 22 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Proposal of the Related-party Transactions about Signing the Financial Services Agreement with Midea Group Finance Co., 6 Aug. 2013 www.cninfo.com.cn Ltd. (No.: 2013-17) Proposal on Prediction of the Line of Routine Related Transaction 7 Mar. 2014 www.cninfo.com.cn of the Company for 2014 (No.: 2014-05) Proposal on Adjustment of the Line of Routine Related 22 Apr. 2014 www.cninfo.com.cn Transaction of the Company for 2014 (No.: 2014-17) VIII. Particulars about the non-operating occupation of funds by the controlling shareholder and other related parties of the Company □ Applicable √ Inapplicable The Company was not involved in the non-operating occupation of funds by the controlling shareholder and other related parties during the reporting period. IX. Particulars about significant contracts and their fulfillment 1. Particulars about trusteeship, contract and lease (1) Trusteeship □ Applicable √ Inapplicable There was no any trusteeship of the Company in the reporting period. (2) Contract □ Applicable √ Inapplicable There was no any contract of the Company in the reporting period. (3) Lease √ Applicable □ Inapplicable Explanation on the lease There was neither any significant lease event nor any significant lease event carried down into the reporting period. The lease whose profits reaching more than 10% of the total profits of the Company in the reporting period. □ Applicable √ Inapplicable 2. Guarantees provided by the company √ Applicable □ Inapplicable Unit: RMB Ten Thousand Yuan Guarantees provided by the company for external parties (excluding those for subsidiaries) Guaranteed party Disclosure Amount for Actual Actual Type of Period of Executed Guarante 23 2014 Semi-annual Report of Wuxi Little Swan Company Limited. date on guarantee occurrence date guarantee guarantee guarantee or not e for a relevant (date of amount related announcem agreement) party or ent of not guaranteed amount Total external guarantee line Total actual occurred amount approved during the reporting 0 of external guarantee during 0 period (A1) the reporting period (A2) Total external guarantee line that Total actual external guarantee has been approved at the end of 0 balance at the end of the 0 the reporting period (A3) reporting period (A4) Guarantees provided by the company for its subsidiaries Disclosure date on Guarante Actual relevant Actual e for a Amount for occurrence date Type of Period of Executed Guaranteed party announcem guarantee related guarantee (date of guarantee guarantee or not ent of amount party or agreement) guaranteed not amount Hefei Midea General Washing Machine 7 Mar. 2014 127,000 28 Mar. 2014 64.54 Six months No No warranty Co., Ltd. Hefei Midea General Washing Machine 7 Mar. 2014 127,000 28 Mar. 2014 6.37 Six months No No warranty Co., Ltd. Total actual occurred amount Total guarantee line approved for of guarantee for the the subsidiaries during the 129,000 70.90 subsidiaries during the reporting period (B1) reporting period (B2) Total guarantee line that has been Total actual guarantee balance approved for the subsidiaries at 129,000 for the subsidiaries at the end 70.90 the end of the reporting period of the reporting period (B4) (B3) Total guarantee amount provided by the Company (total of the above-mentioned two kinds of guarantees) Total guarantee line approved Total actual occurred amount during the reporting period 129,000 of guarantee during the 70.90 (A1+B1) reporting period (A2+B2) Total guarantee line that has been Total actual guarantee balance approved at the end of the 129,000 at the end of the reporting 70.90 reporting period (A3+B3) period (A4+B4) 24 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Proportion of total guarantee amount (A4+B4) to the net assets 0.02% of the Company Of which: Amount of guarantee for shareholders, actual controller and 0 related parties (C) Amount of debt guarantee provided for the guaranteed party whose asset-liability ratio is not less than 70% directly or 0 indirectly (D) Part of the amount of the total guarantee over 50% of net assets 0 (E) Total amount of the above three guarantees (C+D+E) 0 (1) Particulars about illegal external guarantee □ Applicable √ Inapplicable There was no particular about illegal external guarantee of the Company in the reporting period. 3. Other significant contracts □ Applicable √ Inapplicable There was no other significant contract of the Company in the reporting period. 4. Other significant transactions □ Applicable √ Inapplicable There was no other significant transaction of the Company in the reporting period. X. Commitments made by the Company or shareholders holding over 5% of the Company’s shares in the reporting period or such commitments carried down into the reporting period √Applicable □Inapplicable Time of Period of Commitmen Commitm making Fulfil Contents commitme t ent maker commitme lment nt nt Where the controlling shareholder GD Midea Holding Co., Ltd. (Midea In the Holding) plans to sell the Company’s shares released from trading Controllin proce Commitmen moratorium held by it via the bid trading system of the Shenzhen Stock g 28 Feb. ss of t on share Exchange, and Midea Holding decreases over 5% shares within six months Long-term shareholde 2008 imple reform since the first reduction of holdings, Midea Holding will disclose the r menta suggestive announcement on share selling through the Company two tion trading days before its first reduction of holdings. 25 2014 Semi-annual Report of Wuxi Little Swan Company Limited. 1. As for the commitment of avoiding horizontal competition, Midea Group (the controlling shareholder) and Mr. He Xiangjian (the actual controller) has promised that, for the period after the said transaction when the Company’s controlling shareholder and actual controller remain unchanged, the actual controller Mr. He Xiangjian, his immediate family, Midea Group and its controlled other enterprises neither recently nor in the future will engage in any production or operation activity the same as or similar to the recently main business of Little Swan or its controlled Controllin In the enterprises, as well as will neither engage in nor participate in any g proce competitive business the same as the recently main business of Little Swan 1 Dec. shareholde ss of or its controlled enterprises through controlling other economic entities, 2010, 6 Long-term r and imple institutions, economic organizations. If Little Swan and its controlled Jun. 2014 actual menta enterprises further developed its scope of the operation business on the controller tion basis of the recently business, and if the actual controller Mr. He Xiangjian, his immediate family, Midea Group and its controlled other enterprises had executed production of that, would solve the corresponding horizontal competition problems within the reasonable period. If recently there was no any production or operation, would not engage in the similar new business that competed with Little Swan and its controlled enterprises. If there was Commitmen any situation violated the above commitments, the profits gained from the t in the business related to operation were belongs to Little Swan. acquisition 2. The commitment by Midea Group and the actual controller on the report or the specification of the related-party transaction. Midea Group (the controlling report on shareholder) and Mr. He Xiangjian (the actual controller) has promised equity that, for the period after the said transaction when the Company’s changes controlling shareholder and actual controller remain unchanged, the actual controller Mr. He Xiangjian, his immediate family, Midea Group and its controlled other enterprises will specify and try their best to reduce the related-party transactions with Little Swan and its controlled enterprises. If occurred the unavoidable related transactions with Little Swan and its Controllin In the controlled enterprises, would sign the normative related-party transactions g proce agreement Little Swan according to laws and would execute the approval 1 Dec. shareholde ss of procedure according to the relevant regulations to ensure the fairness of the 2010, 6 Long-term r and imple price of the related-party transactions; ensure to execute the information Jun. 2014 actual menta disclose obligation of related-party transactions according to the relevant controller tion regulations; ensure not to make advantage of the related-party transactions for illegally transferring the assets and profits of Little Swan, as well as not to make advantage of the related-party transactions for harming to the interests of Little Swan and the shareholders; would not require Little Swan to offer any more favorable condition compared with that offered to the independent third party in any fair trade market transaction; execute the voting debarb obligation when involved in the voting of the related events of the actual controller Mr. He Xiangjian, his immediate family, Midea Group and its controlled other enterprises. If Midea Group and Mr. He 26 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Xiangjian violated the above commitments and promises that led to the harm for the equity of Little Swan or other shareholders, Midea Group and Mr. He Xiangjian should taike the responsibility of the corresponding liability for damage. 3. As for the commitment on independence, Midea Group has promised to protect Little Swan’s independence in terms of assets, staff, finance, In the organization and business. 3. As for the commitment on independence, Controllin proce Midea Group and the actual controller Mr. He Xiangjian has promised that, 1 Dec. g ss of to further ensure the independent operation of Little Swan, Mr. He 2010, 6 Long-term shareholde imple Xiangjian, Midea Group and its controlled other enterprises would maintain Jun. 2014 r menta the mutual independent in terms of personnel, finance, assets, bunisess and tion institutions with Little Swan according to the relevant laws and regulations as well as the normative documents. 4. As for the commitment on related-party deposits and borrowings, up to 8 In the Apr. 2010, the Financial Settlement Center of Midea Group had settled all Controllin proce internal deposits and borrowings with Hefei Royalstar Washing Equipment g 1 Dec. ss of Manufacturing Co., Ltd.; and Midea Group has promised that there will be Long-term shareholde 2010 imple no more deposits, borrowings or other funds flows incurred between the r menta Financial Settlement Center and Hefei Royalstar Washing Equipment tion Manufacturing Co., Ltd.. 5. The commitment by Midea Group on housing properties with no ownership certificates of the target company for sale is detailed as follows. Two pieces of the buildings of Royalstar Washing Equipment assessed and In the Controllin sold to the Company are of no ownership certificates—the warehouse for proce g half-finished products (176 square meters) and the workshop for injection 1 Dec. ss of Long-term shareholde molding (834 square meters), both located in the old factory of Royalstar 2010 imple r Washing Equipment, Hewa Road, Hefei. Midea Group has promised that if menta loss occurs due to the said two buildings without ownership certificates in tion the asset disposal process in the future, it will assume the loss thus caused and make compensation to the Company. 6. The commitment by Midea Group on trademarks is detailed as follows. No. (2), (1) Concerning the “Midea” trademark: Upon approval and implementation RongShiD of the equity transfer transaction, Midea Group has promised that it will a make sure that Royalstar Washing Equipment uses the “Midea” trademark trademark In the in a proper manner. Royalstar Washing Equipment will be allowed to use is due by Controllin proce the “Midea” trademark with a trademark use fee not more than that paid by March 31, g 1 Dec. ss of Midea Group (the controlling shareholder of Midea Group) and its 2013 and shareholde 2010 imple subsidiaries (currently 3‰ of the annual sales income generated by won’t r menta products using the “Midea” trademark), and upon negotiation and signing renew its tion of the “Agreement for Trademark Use”. The related-party transactions contract; incurred due to the said use of the “Midea” trademark will be submitted to Other the decision-making organ of the Company for approval according to the items for a stipulated procedure. As such, interests of the Company and its minority long term 27 2014 Semi-annual Report of Wuxi Little Swan Company Limited. shareholders will be safeguarded. (2) Concerning the “Royalstar” implement trademark: Midea Group has signed the “Contract for Trademark Use” with Royalstar Group and obtained the ordinary use rights of the “Royalstar” (or “RongShiDa”) trademark. As the transferor in the transfer transaction of equity interests of Royalstar Washing Equipment, Midea Group has promised that within the scope as agreed in the “Contract for Trademark Use”, if any dispute arises between Royalstar Washing Equipment and Royalstar Group over the former’s execution of the “Contract for Trademark Use”, Little Swan will not be involved. If Royalstar Washing Equipment and Little Swan have to assume any responsibility or loss due to the aforesaid dispute, Midea Group is willing to take on the responsibility instead and make compensations to Royalstar Washing Equipment and Little Swan at full amount. 7. The commitment by Midea Group on social security payment and tax risks is detailed as follows. Midea Group has promised that upon the completion of the said equity transfer deal, if Royalstar Washing Equipment is obliged to take on any responsibility or pay relevant fares as required by relevant government authorities due to its social security payment before the said deal, Midea Group is willing to pay relevant fares In the Controllin for Royalstar Washing Equipment to relevant government authorities in a proce g timely manner and assume any other liability. If any loss thus occurs to 1 Dec. ss of Long-term shareholde Royalstar Washing Equipment or Little Swan, Midea Group is willing to 2010 imple r assume relevant responsibilities for compensation. Upon the completion of menta the said equity transfer deal, if income tax evasion or any other tax risk is tion found in Royalstar Washing Equipment, Midea Group is willing to assume relevant legal responsibilities and risks and pay relevant taxes in a timely manner to relevant government authorities; and if any loss thus occurs to Little Swan, Midea Group will assume the corresponding responsibility for compensation. Commitmen ts made in Naught an asset exchange Commitmen ts made in first public Naught issuance or refinancing. Other commitment s made to Naught minority shareholders 28 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Executed timely or Yes not? XI. Particulars about engagement and disengagement of CPAs firm Whether the semi-annual financial report had been audited? □ Yes √ No XII. Punishment and Rectification □ Applicable √ Inapplicable There was no any punishment and rectification of the Company in the reporting period. XIII. Reveal of the delisting risks of illegal or violation □ Applicable √ Inapplicable There was no any delisting risk of illegal or violation of the Company in the reporting period. XIV. Explanation about other significant matters □ Applicable √ Inapplicable There was no any other significant matter needed to be explained in the reporting period. 29 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Section VI. Changes in Share Capital and Particulars about Shareholders I. Changes in share capital Unit: Share Before this change Increase/decrease (+, -) After the change Capitalizat Issuance ion of Proportion Bonus Proportio Amount of new public Other Subtotal Amount (%) share n (%)) shares reserve fund I. Shares subject to trading 3,689,890 0.58% 1,000 1,000 3,690,890 0.58% moratorium 1. State-owned shares 2. State-owned legal person shares 3. Other domestic shares 3,689,890 0.58% 1,000 1,000 3,690,890 0.58% Including: Shares held by 3,686,890 0.58% 3,686,890 0.58% domestic legal persons Shares held by domestic 3,000 1,000 1,000 4,000 individuals 4. Shares held by overseas shareholders Including: Shares held by overseas legal persons Shares held by overseas individuals II. Shares not subject to 628,797,874 99.42% -1,000 -1,000 628,796,874 99.42% trading moratorium 1. Ordinary shares 437,762,002 69.21% -1,000 -1,000 437,761,002 69.21% denominated in RMB 2. Domestically listed 191,035,872 30.20% 191,035,872 30.20% foreign shares 3. Overseas listed foreign 30 2014 Semi-annual Report of Wuxi Little Swan Company Limited. shares 4. Other III. Total of shares 632,487,764 100.00% 632,487,764 100.00% Reasons for changes in share □ Applicable √ Inapplicable Approval of share changes □ Applicable √ Inapplicable Transfers in share changes □ Applicable √ Inapplicable Influence of share changes towards financial indexes in the latest year and latest period such as basic EPS and diluted EPS, and net assets per share belonging to shareholder with ordinary share □ Applicable √ Inapplicable Other contents that the Company thinks necessary or is asked by securities regulators to be disclosed □ Applicable √ Inapplicable Explanation of the changes in the sum of the shares and the structure of the shareholders and the structure of the assets as well as the liabilities of the Company □ Applicable √ Inapplicable II. Number of shareholders and shareholding Unit: Share Total number of preferred Total number of common shareholders that had restored shareholders at the end of the 29,163 0 the voting right at the end of the reporting period reporting period (if any) Shareholding of shareholders holding more than 5% shares Number Pledged or Increase of shares frozen shares Number of and Number of held Holding shareholding decrease shares held Nature of subject Num Name of shareholder percenta at the end of of shares not subject to Status shareholder to ber of ge (%) the reporting during trading of trading share period reporting moratorium shares moratori s period um Domestic MIDEA GROUP CO., LTD. non-state-owned 35.20% 222,661,571 0 222,661,571 corporation Overseas GAOLING FUND,L.P. 8.57% 54,207,686 56,100 54,207,686 corporation TITONI INVESTMENTS Overseas 4.88% 30,851,714 0 30,851,714 DEVELOPMENT LTD. corporation 31 2014 Semi-annual Report of Wuxi Little Swan Company Limited. On behalf of the FINANCE BUREAU OF WUXI 3.49% 22,057,657 0 22,057,657 government Overseas BOCI SECURITIES LIMITED 3.36% 21,273,615 63,806 21,273,615 corporation GUOTAI JUNAN Overseas SECURITIES(HONGKONG) 2.39% 15,089,700 741,629 15,089,700 corporation LIMITED NATIONAL SOCIAL Domestic SECURITY FUND PORTFOLIO non-state-owned 1.90% 12,000,000 0 12,000,000 102 corporation CCB-PENGHUA VALUE Domestic ADVANTAGE STOCK non-state-owned 1.04% 6,593,148 -500,000 6,593,148 SECURITIES INVESTMENT corporation FUND Domestic INDUSTRIAL SECURITIES non-state-owned 0.98% 6,200,000 6,200,000 6,200,000 CO., LTD corporation NATIONAL SOCIAL Domestic SECURITY FUND PORTFOLIO non-state-owned 0.98% 6,180,101 -1,000,000 6,180,101 108 corporation Strategic investors or the general legal person due to the placement of new shares become the top 10 Inapplicable shareholders (if any) MIDEA GROUP CO., LTD. and TITONI INVESTMENTS Explanation on associated relationship or/and persons DEVELOPMENT LTD. are parties acting in concert. Particulars about shares held by top 10 shareholders not subject to trading moratorium Number of shares held not Type of share subject to trading Name of shareholder moratorium at the end of Type of share Number the period Midea Group Co., Ltd. 222,661,571 RMB ordinary share 222,661,571 Domestically listed GAOLING FUND,L.P. 54,207,686 222,661,571 foreign share Domestically listed TITONI INVESTMENTS DEVELOPMENT LTD. 30,851,714 30,851,714 foreign share FINANCE BUREAU OF WUXI 22,057,657 RMB ordinary share 22,057,657 Domestically listed BOCI SECURITIES LIMITED 21,273,615 21,273,615 foreign share GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED 15,089,700 Domestically listed 15,089,700 32 2014 Semi-annual Report of Wuxi Little Swan Company Limited. foreign share NATIONAL SOCIAL SECURITY FUND PORTFOLIO 102 12,000,000 RMB ordinary share 12,000,000 CCB-Penghua Value Advantage Stock Securities Investment 6,593,148 RMB ordinary share 6,593,148 Fund INDUSTRIAL SECURITIES CO., LTD 6,200,000 RMB ordinary share 6,200,000 NATIONAL SOCIAL SECURITY FUND PORTFOLIO 108 6,180,101 RMB ordinary share 6,180,101 Explanation on associated relationship among the top ten shareholders of tradable share not subject to trading Midea Group Co., Ltd. and TITONI INVESTMENTS moratorium, as well as among the top ten shareholders of DEVELOPMENT LTD. are parties acting in concert. tradable share not subject to trading moratorium and top ten shareholders, or explanation on acting-in-concert Particular about shareholder participate in the securities Naught lending and borrowing business (if any) Did any shareholder of the Company carry out an agreed buy-back in the reporting period? □ Yes √ No Shareholders of the Company had not carried out any agreed buy-back in the reporting period. III. Change of the controlling shareholder or the actual controller Change of the controlling shareholder in the reporting period □ Applicable √ Inapplicable There was no any change of the controlling shareholder of the Company in the reporting period. Change of the actual controller in the reporting period □ Applicable √ Inapplicable There was no any change of the actual controller of the Company in the reporting period. IV. Particulars on shareholding increase scheme during the reporting period proposed or implemented by the shareholders and act-in-concert persons √Applicable □Inapplicable Disclosure date Shares Initial disclosure for the Amount of shares Shares Amount of Name of shareholder / proportion date of the completion of to be increased proportion to be shares actually act-in-concert person increased shareholding implementing the holding increased held actually increase scheme shareholding increase scheme Midea Group and 126,497,553 20.00% 9 Jun. 2014 TITONI For further improve the business synergistic effect between Midea Group and Little Swan, strengthen the core competition power of the washing machine industry of Little Swan, Midea Group planed to associate with its wholly owned and controlled foreign company TITONI to execute partly tender offer of Share A and Share B of Little Swan, in order to strengthen the control power of Little Swan. The tender offer was not for terminating the listing status of the stocks of Little Swan. Up to the date of the disclosure of 33 2014 Semi-annual Report of Wuxi Little Swan Company Limited. the report, the period of the tender offer had expired and according to the disclosure of the Shenzhen Exchange Stock website, the amount of the accumulative estimated offer shares was of 79,639,774 shares which was of 12.59% of the total shares of the Company. Midea Group is going through the registration procedures of the shares transfer. For the details of the tender offer please refer to the relevant announcements disclosed by the Company. Section VII. Situation of the Preferred Shares I. Situation of issue and listing of preferred shares in the reporting period □ Applicable √ Inapplicable II. Situation of the number and holding of the preferred shares shareholders of the Company □ Applicable √ Inapplicable III. Situation of buy-back or transfer of the preferred shares 1. Situation of buy-back the preferred shares □ Applicable √ Inapplicable 2. Situation of transfer the preferred shares □ Applicable √ Inapplicable IV. Situation of recovery and execution of the voting right of preferred shares □ Applicable √ Inapplicable V. Accounting policies and reasons adopted by the preferred shares □ Applicable √ Inapplicable 34 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Section VIII. Directors, Supervisors, Senior Management Staffs I. Changes in shareholding of directors, supervisors and senior management staffs □ Applicable √ Inapplicable There was no change in shareholding of directors, supervisors and senior management staffs, for the specific information please refer to the 2013 Annual Report. II. Changes in directors, supervisors and senior management staffs √Applicable □Inapplicable Name Position Type Date Reason Yang Xiaowen Supervisor Left 7 Mar. 2014 Personal reasons Deputy General Hu Ziqiang Left 22 Apr. 2014 Job transfer Manager Chen Jianwu Supervisor Selected 16 Apr. 2014 Special election of Supervisors Chairman of the Jiang Huafang Left 5 Aug. 2014 Job transfer Supervisory Chen Jianwu Supervisor Left 5 Aug. 2014 Job transfer Supervisor of the Ye Dexin Left 5 Aug. 2014 Personal reasons Staff Representative Staff-representative Became the Staff-representative Xu Pengcheng Elected 5 Aug. 2014 supervisor Supervisor on by-election The service term of the Independent Directors of the Company—Mr. Zhao Shuming and Mr. Ye Yongfu had expired and the Company held the 11th Meeting of the 7th Board of Directors on 5 Aug. 2014, at which the Board nominated Mr. Jiang Qingyun and Mr. Liu Chunlin as candidates for the Independent Directors of the 7th Board of Directors. The Company also held the 11th Session of the 7th Supervisory Committee on 5 Aug. 2014, at which the Supervisory Committee nominated Mr. Liang Pengfei and Mr. Wang Shouhu as supervisor candidates for the 7th Supervisory Committee. For more information, see relevant announcements of the Company. 35 2014 Semi-annual Report of Wuxi Little Swan Company Limited. IX. Financial Report I. Audit report Has this semi-annual report been audited? □ Yes √ No The semi-annual financial report has not been audited. II. Financial statements Currency unit for the statements in the notes to these financial statements: RMB Yuan 1. Consolidated balance sheet Prepared by Wuxi Little Swan Company Limited Unit: RMB Yuan Item Closing balance Opening balance Current Assets: Monetary funds 2,165,295,105.79 1,617,373,088.50 Settlement reserves Intra-group lendings Transactional financial assets 1,486,950.00 15,016,740.00 Notes receivable 2,376,741,559.62 2,449,770,225.41 Accounts receivable 825,357,689.50 777,744,132.32 Accounts paid in advance 163,170,120.91 140,841,924.06 Premiums receivable Reinsurance premiums receivable Receivable reinsurance contract reserves Interest receivable Dividend receivable Other accounts receivable 25,557,616.45 26,163,524.13 Financial assets purchased under agreements to resell Inventories 581,264,111.18 798,141,838.58 Non-current assets due within 1 year Other current assets 1,959,627,280.92 1,791,288,539.62 Total current assets 8,098,500,434.37 7,616,340,012.62 36 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Non-current assets: Loans by mandate and advances granted Available-for-sale financial assets 251,664.00 312,816.00 Held-to-maturity investments Long-term accounts receivable Long-term equity investment 4,598,996.45 4,579,148.88 Investing property 8,961,631.44 9,466,777.10 Fixed assets 1,131,351,176.29 1,194,244,286.86 Construction in progress 2,957,911.82 Engineering materials Disposal of fixed assets Production biological assets Oil-gas assets Intangible assets 216,719,963.63 219,445,532.87 R&D expense Goodwill Long-term deferred expenses 3,466,516.25 7,147,835.74 Deferred income tax assets 219,585,580.85 170,990,970.67 Other non-current assets Total of non-current assets 1,587,893,440.73 1,606,187,368.12 Total assets 9,686,393,875.10 9,222,527,380.74 Current liabilities: Short-term borrowings 50,117,340.00 Borrowings from Central Bank Customer bank deposits and due to banks and other financial institutions Intra-group borrowings Transactional financial liabilities Notes payable 868,240,658.99 385,673,110.34 Accounts payable 3,157,373,388.21 2,768,046,095.46 Accounts received in advance 439,535,919.42 1,057,952,597.52 Financial assets sold for repurchase Handling charges and commissions payable Employee’s compensation payable 165,171,100.88 207,323,619.92 37 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Tax payable 246,020,710.21 199,203,856.56 Interest payable Dividend payable 4,088,128.36 3,740,152.33 Other accounts payable 40,154,741.17 50,021,093.66 Reinsurance premiums payable Insurance contract reserves Payables for acting trading of securities Payables for acting underwriting of securities Non-current liabilities due within 1 year Other current liabilities Total current liabilities 4,970,701,987.24 4,671,960,525.79 Non-current liabilities: Long-term borrowings Bonds payable Long-term payables Specific payables 3,783,957.30 2,073,957.30 Estimated liabilities 10,162,452.89 11,310,523.59 Deferred income tax liabilities 245,747.10 2,284,388.40 Other non-current liabilities 517,000.00 568,600.00 Total non-current liabilities 14,709,157.29 16,237,469.29 Total liabilities 4,985,411,144.53 4,688,197,995.08 Owners’ equity (or shareholders’ equity) Paid-up capital (or share capital) 632,487,764.00 632,487,764.00 Capital reserves 1,134,752,577.59 1,129,431,304.91 Less: Treasury stock Specific reserves Surplus reserves 290,958,368.49 290,958,368.49 Provisions for general risks Retained profits 1,986,192,134.05 1,859,579,931.10 Foreign exchange difference -3,281,725.80 -3,559,713.76 Total equity attributable to owners of the 4,041,109,118.33 3,908,897,654.74 Company Minority interests 659,873,612.24 625,431,730.92 Total owners’ (or shareholders’) equity 4,700,982,730.57 4,534,329,385.66 38 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Total liabilities and owners’ (or 9,686,393,875.10 9,222,527,380.74 shareholders’) equity Legal representative: Fang Hongbo Person-in-charge of the accounting work: Zhang Zhaofeng Chief of the accounting division: Zhong Fangliu 2. Balance sheet of the Company Prepared by Wuxi Little Swan Company Limited Unit: RMB Yuan Item Closing balance Opening balance Current Assets: Monetary funds 1,319,381,125.13 910,325,739.17 Transactional financial assets 891,830.00 8,727,740.00 Notes receivable 1,775,116,288.67 1,541,082,811.22 Accounts receivable 466,793,123.77 731,446,199.69 Accounts paid in advance 49,001,417.27 56,620,106.39 Interest receivable Dividend receivable Other accounts receivable 20,467,623.01 18,752,200.83 Inventories 368,431,047.85 543,401,541.27 Non-current assets due within 1 year Other current assets 915,046,019.24 939,664,538.10 Total current assets 4,915,128,474.94 4,750,020,876.67 Non-current assets: Available-for-sale financial assets 251,664.00 312,816.00 Held-to-maturity investments Long-term accounts receivable Long-term equity investment 1,401,743,488.02 1,601,723,640.45 Investing property 8,961,631.44 9,466,777.10 Fixed assets 540,694,322.78 568,924,123.24 Construction in progress 2,184,273.62 Engineering materials Disposal of fixed assets Production biological assets Oil-gas assets 39 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Intangible assets 99,829,619.68 101,069,007.28 R&D expense Goodwill Long-term deferred expenses 2,991,763.99 6,781,326.79 Deferred income tax assets 148,189,983.08 119,667,809.75 Other non-current assets Total of non-current assets 2,204,846,746.61 2,407,945,500.61 Total assets 7,119,975,221.55 7,157,966,377.28 Current liabilities: Short-term borrowings Transactional financial liabilities Notes payable 461,682,942.33 273,399,760.34 Accounts payable 2,164,235,637.83 1,766,585,288.21 Accounts received in advance 257,588,046.63 724,228,146.67 Employee’s compensation payable 91,049,261.41 118,237,120.06 Tax payable 183,250,231.91 156,722,107.53 Interest payable Dividend payable 4,088,128.36 3,740,152.33 Other accounts payable 11,228,323.15 208,682,591.14 Non-current liabilities due within 1 year Other current liabilities Total current liabilities 3,173,122,571.62 3,251,595,166.28 Non-current liabilities: Long-term borrowings Bonds payable Long-term payables Specific payables Estimated liabilities Deferred income tax liabilities 156,479.10 1,341,038.40 Other non-current liabilities Total non-current liabilities 156,479.10 1,341,038.40 Total liabilities 3,173,279,050.72 3,252,936,204.68 Owners’ equity (or shareholders’ equity) Paid-up capital (or share capital) 632,487,764.00 632,487,764.00 40 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Capital reserves 1,295,769,729.27 1,291,483,360.14 Less: Treasury stock Specific reserves Surplus reserves 278,308,224.59 278,308,224.59 Provisions for general risks Retained profits 1,740,130,452.97 1,702,750,823.87 Foreign exchange difference Total owners’ (or shareholders’) equity 3,946,696,170.83 3,905,030,172.60 Total liabilities and owners’ (or shareholders’) equity 7,119,975,221.55 7,157,966,377.28 Legal representative: Fang Hongbo Person-in-charge of the accounting work: Zhang Zhaofeng Chief of the accounting division: Zhong Fangliu 3. Consolidated income statement Prepared by Wuxi Little Swan Company Limited Unit: RMB Yuan Item Jan.-Jun. 2014 Jan.-Jun 2013 I. Total operating revenues 4,974,057,020.56 3,998,224,336.31 Including: Sales income 4,974,057,020.56 3,998,224,336.31 Interest income Premium income Handling charge and commission income II. Total operating cost 4,606,970,952.57 3,778,696,264.86 Including: Cost of sales 3,655,315,076.59 3,005,810,911.14 Interest expenses Handling charge and commission expenses Surrenders Net claims paid Net amount withdrawn for the insurance contract reserve Expenditure on policy dividends Reinsurance premium Taxes and associate charges 31,180,668.93 25,957,616.21 Selling and distribution expenses 708,872,153.90 539,966,097.76 Administrative expenses 210,082,884.69 173,092,190.68 41 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Financial expenses -9,899,828.86 20,143,097.74 Asset impairment loss 11,419,997.31 13,726,351.33 Add: Gain/(loss) from change in fair value (“-” means loss) -13,529,790.00 10,584,660.00 Gain/(loss) from investment (“-” means loss) 56,378,070.46 38,581,681.44 Including: share of profits in associates and joint ventures Foreign exchange gains (“-” means loss) III. Business profit (“-” means loss) 409,934,348.45 268,694,412.89 Add: non-operating income 11,614,209.80 17,650,895.21 Less: non-operating expense 4,748,238.66 7,432,491.94 Including: loss from non-current asset disposal IV. Total profit (“-” means loss) 416,800,319.59 278,912,816.16 Less: Income tax expense 66,436,602.59 42,992,351.93 V. Net profit (“-” means loss) 350,363,717.00 235,920,464.23 Including: Net profit achieved by combined parties before the combinations Attributable to owners of the Company 316,358,532.13 220,961,466.94 Minority shareholders’ income 34,005,184.87 14,958,997.29 VI. Earnings per share -- -- (I) Basic earnings per share 0.50 0.35 (II) Diluted earnings per share 0.50 0.35 VII. Other comprehensive incomes 226,008.76 -569,691.66 VIII. Total comprehensive incomes 350,589,725.76 235,350,772.57 Attributable to owners of the Company 316,584,540.89 220,391,775.28 Attributable to minority shareholders 34,005,184.87 14,958,997.29 Legal representative: Fang Hongbo Person-in-charge of the accounting work: Zhang Zhaofeng Chief of the accounting division: Zhong Fangliu 4. Income statement of the Company Prepared by Wuxi Little Swan Company Limited Unit: RMB Yuan Item Jan.-Jun. 2014 Jan.-Jun 2013 I. Total sales 3,642,700,222.95 2,910,402,363.86 Less: cost of sales 2,718,742,930.62 2,197,383,259.40 Business taxes and surcharges 21,764,077.70 20,320,831.11 42 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Distribution expenses 518,302,677.11 394,075,467.07 Administrative expenses 144,963,100.14 109,549,513.68 Financial costs -4,561,649.19 12,174,679.39 Impairment loss -5,948,475.57 2,850,533.92 Add: gain/(loss) from change in fair value (“-” means -7,835,910.00 6,513,520.00 loss) Gain/(loss) from investment (“-” means loss) 23,473,873.16 22,742,688.68 Including: income form investment on associates and joint ventures II. Business profit (“-” means loss) 265,075,525.30 203,304,287.97 Add: non-business income 3,734,536.38 7,992,467.00 Less: non-business expense 3,191,532.34 4,601,303.60 Including: loss from non-current asset disposal III. Total profit (“-” means loss) 265,618,529.34 206,695,451.37 Less: income tax expense 38,492,571.05 31,275,244.26 IV. Net profit (“-” means loss) 227,125,958.29 175,420,207.11 V. Earnings per share -- -- (I) Basic earnings per share 0.36 0.28 (II) Diluted earnings per share 0.36 0.28 VI. Other comprehensive income -51,979.20 -37,984.80 VII. Total comprehensive income 227,073,979.09 175,382,222.31 Legal representative: Fang Hongbo Person-in-charge of the accounting work: Zhang Zhaofeng Chief of the accounting division: Zhong Fangliu 5. Consolidated cash flow statement Prepared by Wuxi Little Swan Company Limited Unit: RMB Yuan Item Jan.-Jun. 2014 Jan.-Jun 2013 I. Cash flows from operating activities: Cash received from sale of commodities and 3,811,640,189.96 3,863,185,024.86 rendering of service Net increase of deposits from customers and dues from banks Net increase of loans from the central bank 43 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Net increase of funds borrowed from other financial institutions Cash received from premium of original insurance contracts Net cash received from reinsurance business Net increase of deposits of policy holders and investment fund Net increase of disposal of tradable financial assets Cash received from interest, handling charges and commissions Net increase of intra-group borrowings Net increase of funds in repurchase business Tax refunds received 3,315,534.83 50,388,592.37 Other cash received relating to operating activities 15,703,387.98 18,947,986.23 Subtotal of cash inflows from operating activities 3,830,659,112.77 3,932,521,603.46 Cash paid for goods and services 1,682,161,655.09 1,835,326,159.78 Net increase of customer lendings and advances Net increase of funds deposited in the central bank and amount due from banks Cash for paying claims of the original insurance contracts Cash for paying interest, handling charges and commissions Cash for paying policy dividends Cash paid to and for employees 378,843,499.77 309,287,589.09 Various taxes paid 332,132,100.43 221,545,520.17 Other cash payment relating to operating activities 612,417,421.65 635,240,038.60 Subtotal of cash outflows from operating activities 3,005,554,676.94 3,001,399,307.64 Net cash flows from operating activities 825,104,435.83 931,122,295.82 II. Cash flows from investing activities: Cash received from withdrawal of investments 4,001,000,000.00 4,832,824,376.42 Cash received from return on investments 56,358,222.89 4,704,180.00 Net cash received from disposal of fixed assets, 264,120.00 16,794,737.42 intangible assets and other long-term assets Net cash received from disposal of subsidiaries or other business units 44 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Other cash received relating to investing activities Subtotal of cash inflows from investing 4,057,622,342.89 4,854,323,293.84 activities Cash paid to acquire fixed assets, intangible assets 28,747,550.40 30,407,330.54 and other long-term assets Cash paid for investment 4,163,370,000.00 5,424,060,000.00 Net increase of pledged loans Net cash paid to acquire subsidiaries and other business units Other cash payments relating to investing activities Subtotal of cash outflows from investing activities 4,192,117,550.40 5,454,467,330.54 Net cash flows from investing activities -134,495,207.51 -600,144,036.70 III. Cash Flows from Financing Activities: Cash received from capital contributions Including: Cash received from minority shareholder investments by subsidiaries Cash received from borrowings 50,117,340.00 Cash received from issuance of bonds Other cash received relating to financing activities Subtotal of cash inflows from financing activities 50,117,340.00 Repayment of borrowings Cash paid for interest expenses and distribution of 184,308,280.03 182,583,655.47 dividends or profit Including: dividends or profit paid by subsidiaries to minority shareholders Other cash payments relating to financing activities Sub-total of cash outflows from financing activities 184,308,280.03 182,583,655.47 Net cash flows from financing activities -134,190,940.03 -182,583,655.47 IV. Effect of foreign exchange rate changes on cash and cash equivalents V. Net increase in cash and cash equivalents 556,418,288.29 148,394,603.65 Add: Opening balance of cash and cash 1,558,204,866.53 1,293,126,217.00 equivalents VI. Closing balance of cash and cash equivalents 2,114,623,154.82 1,441,520,820.65 45 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Legal representative: Fang Hongbo Person-in-charge of the accounting work: Zhang Zhaofeng Chief of the accounting division: Zhong Fangliu 6. Cash flow statement of the Company Prepared by Wuxi Little Swan Company Limited Unit: RMB Yuan Item Jan.-Jun. 2014 Jan.-Jun 2013 I. Cash flows from operating activities: Cash received from sale of commodities and 2,579,939,149.03 2,373,009,947.22 rendering of service Tax refunds received 23,034,383.44 Other cash received relating to operating activities 9,230,784.56 12,592,559.37 Subtotal of cash inflows from operating activities 2,589,169,933.59 2,408,636,890.03 Cash paid for goods and services 1,106,675,777.67 1,049,033,086.46 Cash paid to and for employees 244,060,695.70 193,294,387.88 Various taxes paid 244,269,676.94 166,569,207.35 Other cash payment relating to operating activities 443,271,306.57 298,898,195.89 Subtotal of cash outflows from operating activities 2,038,277,456.88 1,707,794,877.58 Net cash flows from operating activities 550,892,476.71 700,842,012.45 II. Cash flows from investing activities: Cash received from retraction of investments 2,040,000,000.00 2,072,567,723.65 Cash received from return on investments 31,967,080.07 3,121,840.00 Net cash received from disposal of fixed assets, 1,722,280.00 intangible assets and other long-term assets Net cash received from disposal of subsidiaries or 38,977.14 other business units Other cash received relating to investing activities Subtotal of cash inflows from investing 2,072,006,057.21 2,077,411,843.65 activities Cash paid to acquire fixed assets, intangible assets 13,518,301.57 19,877,046.82 and other long-term assets Cash paid for investment 2,013,000,000.00 2,620,000,000.00 Net cash paid to acquire subsidiaries and other business units Other cash payments relating to investing activities 46 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Subtotal of cash outflows from investing activities 2,026,518,301.57 2,639,877,046.82 Net cash flows from investing activities 45,487,755.64 -562,465,203.17 III. Cash Flows from Financing Activities: Cash received from capital contributions Cash received from borrowings Cash received from issuance of bonds Other cash received relating to financing activities Subtotal of cash inflows from financing activities Repayment of borrowings Cash paid for interest expenses and distribution of 184,964,713.60 182,583,655.47 dividends or profit Other cash payments relating to financing activities Sub-total of cash outflows from financing activities 184,964,713.60 182,583,655.47 Net cash flows from financing activities -184,964,713.60 -182,583,655.47 IV. Effect of foreign exchange rate changes on cash and cash equivalents V. Net increase in cash and cash equivalents 411,415,518.75 -44,206,846.19 Add: Opening balance of cash and cash 882,413,120.18 848,257,647.96 equivalents VI. Closing balance of cash and cash equivalents 1,293,828,638.93 804,050,801.77 Legal representative: Fang Hongbo Person-in-charge of the accounting work: Zhang Zhaofeng Chief of the accounting division: Zhong Fangliu 47 2014 Semi-annual Report of Wuxi Little Swan Company Limited. 7. Consolidated Statement of Changes in Owners’ Equity Prepared by Wuxi Little Swan Company Limited Jan.-Jun. 2014 Unit: RMB Yuan Jan.-Jun. 2014 Equity attributable to owners of the Company Item Total owners’ Less: General Paid-up capital Specific Minority interests Capital reserve treasury Surplus reserve risk Retained profit Others equity (or share capital) reserve stock reserve I. Balance at the end of the previous 632,487,764.00 1,129,431,304.91 290,958,368.49 1,859,579,931.10 -3,559,713.76 625,431,730.92 4,534,329,385.66 year Add: change of accounting policy Correction of errors in previous periods Other II. Balance at the beginning of the year 632,487,764.00 1,129,431,304.91 290,958,368.49 1,859,579,931.10 -3,559,713.76 625,431,730.92 4,534,329,385.66 III. Increase/ decrease in the period (“-” 5,321,272.68 126,612,202.95 277,987.96 34,441,881.32 166,653,344.91 means decrease) (I) Net profit 316,358,532.15 34,005,184.87 350,363,717.02 (II) Other comprehensive incomes -51,979.20 277,987.96 226,008.76 Subtotal of (I) and (II) -51,979.20 316,358,532.13 277,987.96 34,005,184.87 350,589,725.76 (III) Capital paid in and reduced by 5,373,251.88 436,696.45 5,809,948.33 owners 48 2014 Semi-annual Report of Wuxi Little Swan Company Limited. 1. Capital paid in by owners 2. Amounts of share-based 5,373,251.88 436,696.45 5,809,948.33 payments recognized in owners’ equity 3. Others (IV) Profit distribution -189,746,329.20 -189,746,329.20 1. Appropriations to surplus reserves 2. Appropriations to general risk provisions 3. Appropriations to owners (or -189,746,329.20 -189,746,329.20 shareholders) 4. Other (V) Internal carry-forward of owners’ equity 1. New increase of capital (or share capital) from capital public reserves 2. New increase of capital (or share capital) from surplus reserves 3. Surplus reserves for making up losses 4. Other (VI) Specific reserve 1. Withdrawn for the period 2. Used in the period 49 2014 Semi-annual Report of Wuxi Little Swan Company Limited. (VII) Other IV. Closing balance 632,487,764.00 1,134,752,577.59 290,958,368.49 1,986,192,134.05 -3,281,725.80 659,873,612.24 4,700,982,730.57 Jan.-Jun. 2013 Unit: RMB Yuan Jan.-Jun. 2013 Equity attributable to owners of the Company Item Total owners’ Less: General Paid-up capital Specific Minority interests Capital reserve treasury Surplus reserve risk Retained profit Others equity (or share capital) reserve stock reserve I. Balance at the end of the previous 632,487,764.00 1,129,409,313.71 270,617,248.93 1,656,317,300.32 -2,621,131.09 564,332,580.26 4,250,543,076.13 year Add: retrospective adjustment due to business combination under the same control Add: change of accounting policy Correction of errors in previous periods Other II. Balance at the beginning of the year 632,487,764.00 1,129,409,313.71 270,617,248.93 1,656,317,300.32 -2,621,131.09 564,332,580.26 4,250,543,076.13 III. Increase/ decrease in the period (“-” 21,991.20 20,341,119.56 203,262,630.78 -938,582.67 61,099,150.66 283,786,309.53 means decrease) (I) Net profit 413,350,079.54 61,407,620.25 474,757,699.79 (II) Other comprehensive incomes 21,991.20 -938,582.67 -916,591.47 Subtotal of (I) and (II) 21,991.20 413,350,079.54 -938,582.67 61,407,620.25 473,841,108.32 50 2014 Semi-annual Report of Wuxi Little Swan Company Limited. (III) Capital paid in and reduced by -308,469.59 -308,469.59 owners 1. Capital paid in by owners 2. Amounts of share-based payments recognized in owners’ equity 3. Others -308,469.59 -308,469.59 (IV) Profit distribution 20,341,119.56 -210,087,448.76 -189,746,329.20 1. Appropriations to surplus 20,341,119.56 -20,341,119.56 reserves 2. New increase of capital (or share capital) from surplus reserves 3. Surplus reserves for making up -189,746,329.20 -189,746,329.20 losses 4. Other (V) Internal carry-forward of owners’ equity 1. New increase of capital (or share capital) from capital public reserves 2. New increase of capital (or share capital) from surplus reserves 3. Surplus reserves for making up losses 4. Other (VI) Specific reserve 51 2014 Semi-annual Report of Wuxi Little Swan Company Limited. 1. Withdrawn for the period 2. Used in the period (VII) Other IV. Closing balance 632,487,764.00 1,129,431,304.91 290,958,368.49 1,859,579,931.10 -3,559,713.76 625,431,730.92 4,534,329,385.66 Legal representative: Fang Hongbo Person-in-charge of the accounting work: Zhang Zhaofeng Chief of the accounting division: Zhong Fangliu 8. Statement of changes in owners’ equity of the Company Prepared by Wuxi Little Swan Company Limited Jan.-Jun. 2014 Unit: RMB Yuan Jan.-Jun. 2014 Item Paid-up capital (or Less: treasury General risk Capital reserve Specific reserve Surplus reserve Retained profit Total owners’ equity share capital) stock reserve I. Balance at the end of the previous 632,487,764.00 1,291,483,360.14 278,308,224.59 1,702,750,823.87 3,905,030,172.60 year Add: change of accounting policy Correction of errors in previous periods Other II. Balance at the beginning of the year 632,487,764.00 1,291,483,360.14 278,308,224.59 1,702,750,823.87 3,905,030,172.60 III. Increase/ decrease in the period (“-” 4,286,369.13 37,379,629.10 41,665,998.23 means decrease) (I) Net profit 227,125,958.30 227,125,958.30 52 2014 Semi-annual Report of Wuxi Little Swan Company Limited. (II) Other comprehensive incomes -51,979.20 -51,979.20 Subtotal of (I) and (II) -51,979.20 227,125,958.29 227,073,979.09 (III) Capital paid in and reduced by 4,338,348.33 4,338,348.33 owners 1. Capital paid in by owners 2. Amounts of share-based 4,338,348.33 4,338,348.33 payments recognized in owners’ equity 3. Others (IV) Profit distribution -189,746,329.20 -189,746,329.20 1. Appropriations to surplus reserves 2. Appropriations to general risk provisions 3. Appropriations to owners (or -189,746,329.20 -189,746,329.20 shareholders) 4. Other (V) Internal carry-forward of owners’ equity 1. New increase of capital (or share capital) from capital public reserves 2. New increase of capital (or share capital) from surplus reserves 3. Surplus reserves for making up losses 53 2014 Semi-annual Report of Wuxi Little Swan Company Limited. 4. Other (VI) Specific reserve 1. Withdrawn for the period 2. Used in the period (VII) Other IV. Closing balance 632,487,764.00 1,295,769,729.27 278,308,224.59 1,740,130,452.97 3,946,696,170.83 Jan.-Jun. 2013 Unit: RMB Yuan Jan.-Jun. 2013 Item Paid-up capital (or Less: treasury General risk Capital reserve Specific reserve Surplus reserve Retained profit Total owners’ equity share capital) stock reserve I. Balance at the end of the previous 632,487,764.00 1,291,461,368.94 257,967,105.03 1,709,427,076.99 3,891,343,314.96 year Add: change of accounting policy Correction of errors in previous periods Other II. Balance at the beginning of the year 632,487,764.00 1,291,461,368.94 257,967,105.03 1,709,427,076.99 3,891,343,314.96 III. Increase/ decrease in the period (“-” 21,991.20 20,341,119.56 -6,676,253.12 13,686,857.64 means decrease) (I) Net profit 203,411,195.64 203,411,195.64 (II) Other comprehensive incomes 21,991.20 21,991.20 Subtotal of (I) and (II) 21,991.20 203,411,195.64 203,433,186.84 54 2014 Semi-annual Report of Wuxi Little Swan Company Limited. (III) Capital paid in and reduced by owners 1. Capital paid in by owners 2. Amounts of share-based payments recognized in owners’ equity 3. Others (IV) Profit distribution 20,341,119.56 -210,087,448.76 -189,746,329.20 1. Appropriations to surplus 20,341,119.56 -20,341,119.56 reserves 2. Appropriations to general risk provisions 3. Appropriations to owners (or -189,746,329.20 -189,746,329.20 shareholders) 4. Other (V) Internal carry-forward of owners’ equity 1. New increase of capital (or share capital) from capital public reserves 2. New increase of capital (or share capital) from surplus reserves 3. Surplus reserves for making up losses 4. Other (VI) Specific reserve 55 2014 Semi-annual Report of Wuxi Little Swan Company Limited. 1. Withdrawn for the period 2. Used in the period (VII) Other IV. Closing balance 632,487,764.00 1,291,483,360.14 278,308,224.59 1,702,750,823.87 3,905,030,172.60 Legal representative: Fang Hongbo Person-in-charge of the accounting work: Zhang Zhaofeng Chief of the accounting division: Zhong Fangliu 56 2014 Semi-annual Report of Wuxi Little Swan Company Limited. (III) Company profile Wuxi Little Swan Company Ltd. was founded as an oriented-collection company limited with the approval of Su-Ti-Gai-Sheng (1993) No. 253 document from Economic Reform Commission of Jiangsu Province. Then the Company issued 70,000,000 shares of B-share and transformed to a state-collectively–owned enterprise with the approval of (1996) No. 52 document from Jiangsu Province of the People’s Republic of China (the “PRC”), Zheng-Wei-Fa (1996) No. 14 document from China Securities Regulatory Commission of the State Council and Shen-Zheng-Ban-Han (1996) No. 4 from Shenzhen Municipal Securities Regulatory Office. And the total raised fund from this issuance of B-share totaled RMB 310 million, and the Company was formally listed in Shenzhen Stock Exchange on Jul. 1996 with the short form of stock as Little Swan B and stock code as 200418. In Mar. 1997, the Company publicly issued 60,000,000 shares of RMB ordinary share (including 9,000,000 shares of staff-share) by adopting the way of internet pricing with the approval of Zheng-Jian-Fa-Zi (1997) No. 55 from CSRC. And the total raised fund from this issuance of A-share totaled RMB 720.83 million, and the Company was formally listed in Shenzhen Stock Exchange in Mar. 1997 with the short form of stock as Little Swan A and stock code as 000418. The Company finished the Equity Division Reform Plan on 7 Aug. 2006: the Company’s A-share holders registered on the changing date of equity ownership gained 2.5 shares of consideration share from un-tradable shareholders with their every ten shares of tradable A-share. All un-tradable shareholders paid for shares consideration of shares totaling 18 million, of which they acquired shares’ rights for trading. The Company’s resolutions of Shareholders’ General Meeting for Y2007: the newly added registered capital was RMB 182,551,920, adding five shares to every ten shares basing on the total share capital of 365,103,840 shares at the end of 2007, transferring the public reserves to 182,551,920 shares with par value of RMB 1 per share, thus the added share capital totaled RMB 182,551,920. According to the resolutions of the 4th Session of the Sixth Board of Directors and the 1st Provisional Shareholders General Meeting in 2010, having approved by China Securities Regulatory Commission (SFC license [2010] 1577), the company launched directional add-issuance of 84,832,004 A shares to buy 69.47% of the shares of Hefei Royalstar Washing Machine Manufacture Co., Ltd from its shareholder Midea Electric Appliances Co., Ltd. Par value per share is RMB 1, and the issue price is RMB8.63 per share. This add-issuance increased the share capital by RMB 84,832,004. After approved by CSRC through [2013]1014 document, Midea Group had split off as well as consolidated and combined the original controller GD Midea Holding on 18 Sep. 2013. After the consolidation and combination, Midea Group inherited and undertook the whole rights and obligations of the whole assets and liabilities etc of GD Midea Holding as the reminder enterprise and had finished the relevant registration procedures of shares transfer on 31 Dec. 2013. As of 31 Dec. 2013, registered capital of the company is RMB 632,487,764, among which the restricted exchange-traded A shares are 3,689,890 shares, accounting for 0.583% of the whole shares; the unrestricted exchange-traded A shares are 437,762,002 shares, accounting for 69.213%; and the unrestricted exchange-traded B shares are 191,035,872 shares, account for 30.204% of the whole shares. Registered Address: No. 18, Changjiang South Road, National High-tech Industrial Development Zone, Wuxi Office Address: No. 18, Changjiang South Road, Wuxi, Jiangsu Province Structure of the company: Share-holding Company The Company belongs to household appliances so the main business scope is as follows: manufacture and sales as well as after-sale service of household appliances, industrial ceramics, environmental dry-cleaning equipment, cleaning mechanical equipment, subsequent finishing equipment and accessory; cleaning service; machinery processing; import and export business of “Little Swan” or agent products and technologies (excluding the products or technology restricted to operate, export or import in China); technical service for household appliances; contracting foreign engineering in international bidding (operate with effective certificate) Parent company: GD MIDEA HOLDING CO.,LTD. Ultimate controller: Mr. He Xiangjian The financial statements were approved and authorized for issue by the board of directors on the date of 7 Aug. 2014. 57 2014 Semi-annual Report of Wuxi Little Swan Company Limited. IV. Main accounting policies, accounting estimates and corrections of prior accounting errors 1. Preparation basis of the financial statements The company recognizes and measures transactions occurred according to Chinese Accounting Standards – Basic standard and other related accounting standards, prepares the financial statements based on accrual accounting and the underlying assumption of going concern. 2. Statement of compliance with Enterprise accounting standards The financial statements of the company comply with the requirements of Accounting Standards; the company's financial position, operating results, cash flows and other relevant information are truly and completely disclosed in the financial statements. 3. Accounting period The company's accounting year is from 1st January to 31st December for each calendar year. 4. Recording currency The recording currency of the company is Renminbi 5. Accounting processing method of business combination under the same control and not under the same control (1) The business combinations which are under the same control The assets and liabilities that the combining party obtains in a business combination shall be measured on the basis of their carrying amount in the combined party on the combining date. As for the balance between the carrying amount of the net assets obtained by the combining party and the carrying amount of the consideration paid by it (or the total par value of the shares issued), the additional paid-in capital shall be adjusted. If the additional paid-in capital is not sufficient to be offset, the retained earnings shall be adjusted. Relevant expenses because of the combination, including audit fee, evaluation fee, legal service charge, etc. shall be reckoned into current profits and losses. But handing charges, commissions from issuing equity securities or bonds because of the Company combination shall be reckon into shareholder’s equities or initial measurement cost of liabilities, (2) The business combinations which are not under the same control The acquirer shall recognize the initial cost of combination under the following principles: When business combination is achieved through a single exchange transaction, the cost of a business combination is the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity securities issued by the acquirer, in exchange for control of the acquiree; For the business combination involved more than one exchange transaction, the cost of the combination is the aggregate cost of the individual transactions; All direct expenses related to the combination paid by the acquirer, including the auditor fee, evaluation expense, legal service expense, etc will be recorded into the profit and loss of the current period. The acquirer shall recognize the difference that the combination costs are over the fair value of the identifiable net assets obtained from acquiree as goodwill; if the combination costs are less than the fair value of the identifiable net assets obtained from acquiree, the acquirer shall reexamine the measurement of the fair values of the identifiable assets, liabilities and contingent liabilities obtained from the acquiree as well as the combination costs; and then after the reexamination, the result is still the same, the difference shall be recorded in the profit and loss of the current period. 6. Preparation method of consolidated financial statements (1) Preparation methods for consolidated financial statements The combination scope of the consolidated financial statement will be determined on the basis of the actual control. 58 2014 Semi-annual Report of Wuxi Little Swan Company Limited. The consolidated financial statements will be subject to the No. 33 Enterprise Accounting Standards –Consolidated Financial Statement. In preparing the consolidated financial statements, all key accounts and transactions between the company and subsidiaries, subsidiaries and subsidiaries will be offset. The net assets of merged subsidiaries that are attributable to the minority of shareholder equities will be separately listed in the shareholder equities of consolidated financial statements In case the accounting policies and accounting periods of subsidiaries differ from those of parent company, the financial statements of subsidiaries will be adjusted. For those subsidiary acquired not under the same control, the Company has made relevant adjustment in the subsidiary’ financial statement according to the fair value of identifiable net assets; for those subsidiary acquired under the same control, when preparing the consolidated financial statements, the reporting subject after combination is considered to operate since the ultimate controller carried out control, and adjusted the opening balance of consolidated balance sheet as well as the relevant items in the consolidated statements. 7. Recognition criterion of cash and cash equivalent For the purposes of the cash flow statement, cash refers to all cash in hand and all deposits which are readily available for payment. Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 8. Foreign currency transactions and translations (1) Foreign currency All foreign currency transactions during the period have been translated in to RMB at the spot exchange rate issued by The People’s Bank of China on the transaction date. The foreign currency conversions and any transactions involved foreign currency conversions have been translated in to RMB at the actually used exchange rate during the transaction process. On the balance sheet date, the company treats the foreign currency monetary items and foreign currency non-monetary items according to the following provisions: The foreign currency monetary assets and liabilities items have been translated at the spot exchange rate issued by The People’s Bank of China on the balance sheet date. The exchange difference arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange rate at the time of initial recognition shall be recorded in the exchange difference in the current period. Of which, the exchange difference arising from those foreign currency borrowings specifically for the construction of fixed assets shall be treated by the principle for capitalization of borrowing cost; and the exchange difference happened during the handling period shall be recorded as handling charges; other cost shall be recorded as current financial expenses. A foreign currency non-monetary item measured at the historical costs shall still be translated at the spot exchange rate by The People’s Bank of China on the transaction date, of which the amount of functional currency shall not be changed; the foreign currency non-monetary items measured at their fair values have been translated at the spot exchange rate issued by The People’s Bank of China on the recognition date for the fair value, the exchange difference thereupon shall be considered as changes in fair value, and recorded into gains and losses of the current period. (2) Translation of foreign currency financial statements The asset and liability items in the balance sheet about the overseas businesses of the company have been translated at the spot exchange rate on the balance sheet date. Among the owner’s equity items, except for the items as “undistributed profits”, other items have been translated at the spot exchange rate at the time when they are incurred. The income and expense items in the profit statement have been translated at an exchange rate which is approximate to the spot exchange rate of the transaction date. The differences arising from the translation of foreign currency financial statements in compliance with the aforesaid items have been presented separately under the owner’s equities of the balance sheets. Foreign currency cash flows and the cash flows of foreign subsidiaries have been translated at an exchange rate which is approximate to the spot exchange rate at the time when the cash flows 59 2014 Semi-annual Report of Wuxi Little Swan Company Limited. incurred. The differences arising from fluctuations in exchange have been presented separately in the statement of cash flows. 9. Financial instruments (1) Classification of financial assets Based on the investment purpose and economic essence, the company classifies the financial assets into the following four categories: transactional financial assets, financial assets available for sale, account receivables and held-to-maturity investments. The company has divided its financial liabilities into one category measured at fair value with variations accounted into current profit and loss and another category measured at the post-amortization costs. (2) Recognition basis and measurements for financial instruments Transactional financial assets are measured at fair value with variations of fair value accounted into current income account; financial assets available for sale are measured at fair value with the variations accounted into shareholders' equity; account receivables and held-to-maturity investments are measured at the post-amortization costs. (3) Recognition and Accounting Method for Transfer of Financial Assets The term "transfer of a financial asset" refers to the company’s (the transferor's) transferring or delivering a financial asset to a party other than the issuer of the financial asset (the transferee). Transfer of a financial asset could be the whole asset or part of it. It includes the following two cases: The Company transfers the right to another party for receiving the cash flow of the financial asset; and; The Company transfers the financial asset to another party, but maintains the right to receive the cash flow of the financial asset and undertakes the obligation to pay the cash flow it receives to the final recipient. Where the Company has transferred nearly all of the risks and rewards related to the ownership of the financial asset or part of this asset to the transferee, it shall stop recognizing the financial asset or part of this asset. The difference arising from the sum of consideration received from the transfer and the book value of this asset should be accounted into the profit and loss. If it retained nearly all of the risks and rewards related to the ownership of the financial asset, it shall not stop recognizing all or part of the financial asset, and the consideration received shall be recorded as the financial liability. Where the Company does not transfer or retain nearly all of the risks and rewards related to the ownership of a financial asset, but it does not give up its control over the financial asset, it shall, according to the extent of its continuous involvement in the transferred financial asset, recognize the related financial asset and recognize the relevant liability accordingly. (4) Recognition Conditions for Termination of Financial Liabilities Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the financial liability be terminated in all or partly. (5) Recognition of Financial Assets and Financial Liabilities In the active market, the quoted prices of the Company for the financial assets it holds or the financial liabilities it plans to assume shall be the present actual offer; where there is no available offer or charge for a financial asset or financial liability, , the enterprise shall adopt the market quoted price of the latest transaction or market quoted price after adjustment in latest transaction to determine the fair value of the said financial asset or financial liability, except for there is clear evidence proving that the said market quoted price is not fair value. Where there is no active market for a financial instrument, the enterprise concerned shall adopt value appraisal techniques to determine its fair value. The value appraisal techniques mainly include the prices adopted by the parties, who are familiar with the condition, in the latest market transaction upon their own free will, the current fair value obtained by referring to other financial instruments of the same essential nature. (6) Withdrawal of Impairment Provision for Financial Assets (excluding Accounts Receivable) The Company shall carry out an inspection, on the balance sheet date, on the carrying amount of the financial assets other than transactional financial assets. Where there is any objective evidence proving that such financial asset has been impaired, an impairment provision shall be made. An impairment test shall be made on the financial assets with significant single amounts. If any 60 2014 Semi-annual Report of Wuxi Little Swan Company Limited. objective evidence shows that it has been impaired, the impairment-related losses shall be recognized and shall be recorded into the profits and losses of the current period. With regard to the financial assets with insignificant single amounts, an independent impairment test may be carried out, or they may be included in a combination of financial assets with similar credit risk features so as to carry out an impairment-related test. The expression "objective evidence proving that the financial asset has been impaired" refers to the actually incurred events which, after the financial asset is initially recognized, have an impact on the predicted future cash flow of the said financial asset that can be reliably measured by the enterprise. The objective evidences that can prove the impairment of a financial asset shall include: A serious financial difficulty occurs to the issuer or debtor; The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the payment of interests or the principal, etc.; The creditor makes any concession to the debtor which is in financial difficulties due to economic or legal factors, etc. The debtor will probably become bankrupt or carry out other financial reorganizations; The financial asset can no longer continue to be traded in the active market due to serious financial difficulties of the issuer; It is impossible to identify whether the cash flow of a certain asset within a certain combination of financial assets has decreased or not. But after making an overall appraisal according to the public data available, it is found that the predicted future cash flow of the said combination of financial assets has indeed decreased since it was initially recognized and such decrease can be measured, for example, the ability of the debtor of the said combination of financial assets worsens gradually, the unemployment rate of the country or region where the debtor is situated increases, the prices of the region where the guaranty is situated are obviously dropping, or the industrial sector concerned is in slump, etc.; Any seriously disadvantageous change has occurred to technical, market, economic or legal environment, etc. wherein the debtor operates its business, which makes the investor of an equity instrument unable to take back its investment; Where the fair value of the equity instrument investment drops significantly or not contemporarily; Other objective evidences showing the impairment of the financial asset. Where a financial asset measured on the basis of post-amortization costs is impaired, the impairment losses shall be the balance between the carrying amount of the said financial asset and the current value of the predicted future cash flow discounted at the original actual rate. Where any financial asset measured on the basis of post-amortization costs is recognized as having suffered from any impairment loss, if there is any objective evidence proving that the value of the said financial asset has been restored, and it is objectively related to the events that occur after such loss is recognized, the impairment-related losses as originally recognized shall be reversed and be recorded into the profits and losses of the current period. However, the reversed carrying amount shall not be any more than the post-amortization costs of the said financial asset on the day of reverse under the assumption that no provision is made for the impairment. Where an available-for-sale financial asset is impaired, the accumulative losses arising from the decrease of the fair value of the owner’s equity which was directly included shall be transferred out and recorded into the profits and losses of the current period. 10. Recognition and Withdrawal Method for Bad-debt Provisions for Accounts Receivable (1) Provisions for Bad-debt Accounts Receivable with a significant single amount The accounts receivable whose individual amount accounts for over 10% Definition or amount criteria for an account (including 10%) of accounts receivable balance at the end of this period or receivable with a significant single amount amount of the individual account receivable which is greater than RMB 10 millions (and including 10 millions); the other receivable whose individual 61 2014 Semi-annual Report of Wuxi Little Swan Company Limited. amount accounts for over 10% (including 10%) of other receivables balance at the end of this period or amount of the individual other receivable which is greater than RMB 5 millions (and including 5 millions). For the individually significant receivables, the impairment test is carried on Making individual bad-debt provisions for accounts individually; the Company withdraws provision for impairment loss for the receivable with a significant single amount amount which is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows. (2) Accounts receivable for which bad-debt provisions are made on the group basis Group name Withdraw method Basis for recognition of group As for account receivables with a significant single amount, together with single testing account receivables before impairment, shall be Group 1: Aging group Aging analysis divided into several groups. Calculation shall be made according to the balance of the account receivables groups in the period-end to define impairment loss and withdraw provision for bad debts. Group 2: Accounts receivable within Other methods Accounts receivable within the scope of consolidated statements the scope of consolidated statements In the groups, those adopting aging analysis method to withdraw bad debt provision: √Applicable □Inapplicable Aging Provision rate for Accounts Receivable (%) Provision rate for Other Receivables (%) Within 1 year (including 1 year) 5.00% 5.00% From 1-2 years 10.00% 10.00% From 2-3 years 30.00% 30.00% Over 3 years 50.00% 50.00% Over 5 years 100.00% 100.00% In the groups, those adopting balance percentage method to withdraw bad debt provision: □Applicable √Inapplicable In the groups, those adopting other methods to withdraw bad debt provision: □Applicable √Inapplicable (3) Accounts receivable with an insignificant single amount but for which the bad debt provision is made independently Account receivable with big credit risk because of company liquidation of clients, litigation Reason for bad debt provision Account receivable with an aging over 3 years (deductive significant single account receivable). The bad-debt provision is recognized impairment loss and made according to the difference Withdrawal method between the present value of the account’s future cash flows and the account’s carrying amount. 62 2014 Semi-annual Report of Wuxi Little Swan Company Limited. 11. Inventory (1) Category of Inventory Inventories are those under the Company’s possession for the purpose of selling, in the process of production, or materials and goods used in production process or providing of services, including raw materials, low-value consumables, and products in process, stock merchandises (finished goods) and consigned goods. (2) Pricing method for distributed inventories Method: Weighted average method Inventories are measured at cost when procured, including purchase cost, processing cost, and other costs. Actual costs are recognized at weight average when delivered. (3) Recognition basis of net realizable value of inventories and withdrawal method for impairment provision of inventories On the balance sheet date, inventories are accounted depending on which is lower between the cost and the net realizable value. At overall verification of inventories at the end of year, when the net realizable value is lower than the cost, provisions for impairment of inventories shall be drawn. Provisions for impairment of inventories shall be accounted according to the difference between the cost of individual inventory items and the net realizable value. Including: for inventories such as finished products, goods or materials which will be directly sold, in the normal operation, the realizable net value will be the balance of estimated selling price less sales expenses and relative taxations; For those inventories need further processing, in the normal operation, the realizable net value will be the balance of estimated sales price less costs to make it finished, less estimated sales expenses, and less relative taxation. On the balance sheet date, inventories with contract prices will be determined for realizable value separately from those without contract prices. Where certain items of inventory have similar purposes or end uses and relate to the same product line produced and marketed in the same geographical area, and therefore cannot be practicably evaluated separately from other items in that product line, costs and net realizable values of those items may be determined on an aggregate basis. For large quantity and low value items of inventories, cost and net realizable value are determined based on categories of inventories. (4) Inventory system of inventories Inventory system: Perpetual inventory system The Company uses perpetual inventory system. Inventories are checked periodically and the gains and losses from inventory checking are accounted into current gain/loss account. (5) Amortization method of low-value consumption goods and packages Low-value consumption goods Amortization method: one time method Packages Amortization method: one time method 12. Long-term equity investment (1) Recognition for long-term equity investment The initial cost of the long-term equity investment formed in the merger of the Company shall be recognized in accordance with the ways of gaining: ① For the merger of enterprises under the same control, it shall, on the date of merger, regard the share of the book value of the owner's equity of the merged enterprise as the initial investment cost of the long-term equity investment; the difference between the acquisition cost and the initial investment cost of the long-term equity investment shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. Relevant expenses because of the combination, including audit fee, evaluation fee, legal service charge, etc. shall be reckoned into current profits and losses. But handing charges, commissions from issuing equity securities or bonds because of the Company combination shall be reckon into shareholder’s equities or initial measurement cost of liabilities. ② For the merger of enterprises not under the same control, the initial cost of long-term equity investment is the fair value of assets paid, equity bonds issued, or liabilities undertaken by the Company. The identifiable assets and liabilities undertaken (including contingent liabilities) of merged party shall be measured by the fair value without considering the amount attributable to minority interest. Where the cost of a business combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net 63 2014 Semi-annual Report of Wuxi Little Swan Company Limited. assets, the difference shall be recognized as goodwill. Where the cost of combination is less than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, after reassessment, the difference shall be recognized in consolidated income statement. Relevant expenses because of the combination, including audit fee, evaluation fee, legal service charge, etc. shall be reckoned into current profits and losses. But handing charges, commissions from issuing equity securities or bonds because of the Company combination shall be reckon into shareholder’s equities or initial measurement cost of liabilities. ③ The initial cost of a long-term equity investment obtained by other ways A. The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall be the fair value of the equity securities issued. B. The initial cost of a long-term equity investment of an investor shall be the value stipulated in the investment contract or agreement except the unfair value stipulated in the contract or agreement. C. Long-term equity investment is acquired by exchange of non-monetary assets, if this transaction has commercial substance, the fair values of these swap-out assets will be deemed as the initial investment cost of swap-in long-term equity investment; if the non-currency asset exchange does not have commercial substance, the carrying amount of these swap-out assets will be deemed as the initial investment cost of swap-in long-term equity investment. F. The initial cost of a long-term equity investment obtained by recombination of liabilities shall be recognized as the fair value of the long-tern equity investment. (2) Subsequent measurement and recognition of gains and losses ① Adopting cost method for investment in subsidiaries The subsidiary is the equity investment held by the Company, on which the Company can carry out control. If the Company holds more than 50% equity of an entity, or the Company holds less than 50% equity but has actual control on such entity, then the entity can be considered as the subsidiary of the Company. ② Adopting equity method for investment on joint ventures or associated enterprises Joint venture is the equity investment held by the Company, which can carry out joint control over an invested entity with other joint ventures; associated enterprise is the equity investment held by the Company, which can have significant influence over an invested entity. If the Company held 20% to 50% equity of an entity, and have not actual control on such entity, or the Company holds less than 20% equity of the entity but have not significant influence on such entity, then the entity will be the Company’s joint venture or associated enterprise. The investing enterprise shall, on the ground of the fair value of all identifiable assets of the invested entity when it obtains the investment, recognize the attributable shares of the net profits and losses of the invested entity after it adjusts the net profits of the invested entity. If the accounting policies and accounting periods adopted by the invested entity are different from those adopted by the investing enterprise, an adjustment shall be made to the financial statements of the invested entity in accordance with the accounting policies and accounting periods of the Company and recognize the investment profits or losses. Where any change is made to the owner's equity other than the net profits and losses of the invested entity, the book value of the long-term equity investment shall be adjusted and be included in the owner's equity. ③ The long-term equity investment existing no control, joint control or significant influence by the Company The long-term equity investment without quotation in the active market and its fair value can’t be reliably measured, which shall be measured by cost method. The long-term equity investment with quotation in the active market or its fair value can be reliably measured, which is listed under the item of available-for-sale financial assets and measured by fair value, whose change in fair value shall be recorded into owners’ equity. (3) Recognition basis of jointly control and significant influence in invested units Common control to investee is the mutual control of investors over an economic action basing on a contract, only effective when it is agreed by all of the investors who have the share of control on the financial and business control power. Significant influences to investee mean an entity has the power to participate in the decision making of another, but cannot dominate individually or jointly with other parties. (4) Impairment test method and withdrawal method for impairment provision At period-end, if evidence showing that impairment occurred on the long-term equity investment, the recoverable amount shall be estimated. When the recoverable amount of the long-term equity investment is lower than the book value, asset impairment provision should be withdrawn in accordance with the difference between the recoverable amount and the book value is recognized. As for long-term equity investment without quotation in the active market and its fair value can’t be reliably measured, the balance of its carrying amount lower than the current value of the future cash flow of similar financial assets capitalized according to the returns ratio of the market at the same time shall be recognized as impairment losses and be recorded into the profits and losses of the current 64 2014 Semi-annual Report of Wuxi Little Swan Company Limited. period. Once impairment loss of the long-term equity investment, excluding available-for-sale financial assets, is recognized, it will not be switched back in following fiscal terms, while the impairment loss of available-for-sale financial assets can be switched back, while the said impairment provision can be written back through equity accounts. 13. Investment real estate Investment real estate is measured according to the initial cost. Cost of real estate purchased from outside includes purchasing price, tax, and other expenses directly related to the real estate; cost of real estate constructed by the Company itself is constructed by the essential costs to make the real estate usable. Investment properties invested by investors are booked at the value according to the investment contract, whereas when the contract value is not fairly acceptable, it will be booked at the fair value. The company employs the cost mode to make a follow-up measurement on the investment properties, while employs the straight method to calculate the depreciation and amortization during the estimated useful life. And the house property is depreciated by 20 years (adopt the lower one between the legal useful life and the predicted useful life), while the landed property is amortized by 50 years (legal useful life). The withdrawal method of the impairment provision for investment properties is in accordance with the relevant withdrawal method of fixed assets. 14. Fixed assets (1) Recognition of fixed assets Fixed assets is defined as the tangible assets which are held for the purpose of producing goods, providing services, lease or for operation & management, and have more than one year of service life, whose relevant economic interest is likely to flow into the Company. Except for the fixed assets which is still using after being fully depreciated, the Company withdraws depreciation of all the fixed assets with a method of straight-line depreciation. (2) Recognition basis and pricing method for fixed assets acquired under finance lease Where a lease of fixed asset satisfies one or more of the following criteria, it shall be recognized as a finance lease: ① The ownership of the leased asset is transferred to the lessee when the term of lease expires; ② The Company has the option to buy the leased asset at a price which is expected to be far lower than the fair value of the leased asset at the date when the option becomes exercisable. Thus, on the lease beginning date, it can be reasonably determined that the option will be exercised; ③ Even if the ownership of the asset is not transferred, the lease term covers the major part of the use life of the leased asset; ④ In the case of the lessee, the present value of the minimum lease payments on the lease beginning date amounts to substantially all of the fair value of the leased asset on the lease beginning date; ⑤ The leased assets are of a specialized nature that only the Company can use them without making major modifications. For the fixed asset leased by financial lease, on the lease beginning date, the Company shall record the lower one of the fair value of the leased asset and the present value of the minimum lease payments on the lease beginning date as the entering value in an account, recognize the amount of the minimum lease payments as the entering value in an account of long-term account payable, and treat the balance between the recorded amount of the leased asset and the long-term account payable as unrecognized financing charges. The initial direct costs such as commissions, attorney's fees and traveling expenses, stamp duties directly attributable to the leased item incurred during the process of lease negotiating and signing the leasing agreement shall be recorded in the asset value of the current period. The unrecognized financing charge shall be amortized to each period during the lease term at the actual rate. The depreciation method of fixed assets acquired under finance lease is consistent with that for the Company’s fixed assets. If the Company can reasonably confirm that it will obtain the ownership of leased asset at the end of lease term, the leased asset shall be depreciated during the useful life of the leased asset. If the Company cannot reasonably confirm that it will obtain the ownership of leased asset at the end of lease term, the leased asset shall be depreciated during shorter of the useful life of the leased asset and the lease term. 65 2014 Semi-annual Report of Wuxi Little Swan Company Limited. (3) Depreciation method of various fixed assets Categories Estimated useful life (years) Residual value (%) Annual depreciation rate (%) Houses & buildings 20-35 years 5.00% 2.71-4.75% Machineries 10-15 year 5.00% 6.33-9.50% Electronic equipment 3-5 year 5.00% 19%-31.67% Vehicles 5 year 5.00% 19% (4) Impairment test method and withdrawal method for impairment provision of fixed assets The Company checks the fixed asset at the period end, if it has the following situations, then the Company shall check the recoverable amount to judge whether such asset has been impaired. Where its recoverable amount is lower than its book value, the Company shall, basing on the difference between the recoverable amount and the relevant book value, make the provision for the impairment of the assets. When withdrawing the impairment provision for a single asset, and if it is difficult to do so, it shall determine the recoverable amount of the group assets on the basis of the asset group to which the asset belongs. Once the impairment loss was recognized, it will not be switched back in coming fiscal terms. ① The current market price of assets falls, and its decrease is obviously higher than the expected drop over time or due to the normal use; ② The assets have become obsolete or have been damaged substantially; ③ The expected usage mode of an asset has significant adverse change, such as the asset becomes idle, or the Company plans to discontinue or to reorganize the business of the asset, or dispose of an asset before the previously expected date, etc., which cause adverse impact on the Company; ④ The economic, technological or legal environment in which the enterprise operates, or the market where the assets is situated will have any significant change in the current period or in the near future, which will cause adverse impact on the enterprise; ⑤ The market interest rate or any other market investment return rate at the same period has risen in the current period, and thus the discount rate of the enterprise for calculating the expected future cash flow of the assets will be affected, which will result in great decline of the recoverable amount of the assets; ⑥ Any evidence in the internal report of the enterprise shows that the economic performance of the assets have been or will be lower than the expected performance, for example, the net cash flow created by assets or the operating profit (or loss) realized is lower (higher) than the excepted amount, etc.; ⑦ Other evidence indicates that the impairment of assets has probably occurred. 15. Construction in Progress (1) Categories of construction in process Construction in progress is accounted according to projects approval classification and defined project costs in compliance with actual expenses. Self-operating project is calculated according to direct materials, direct wages and direct construction fees, etc; contract project is calculated according to payable project costs; plant engineering is calculated according to the value of the installation equipment, installation fee and project test run. Costs of construction in progress contains borrowing costs which should be capitalized and exchange gains and losses. (2) Standards and time of transferring construction in process into fixed asset Construction in progress is transferred to fixed assets by project budget, construction cost or actual project cost when the project is substantially ready for its intended use, and made provision for depreciation from the next month. Then the Company shall adjustment on the difference caused by the original value of fixed assets after finishing the final account. (3) Impairment test method and withdrawal method for impairment provision of construction in process 66 2014 Semi-annual Report of Wuxi Little Swan Company Limited. At the end of the year, the Company shall assess the overall construction in progress, if there is evidence providing that the value of project was impaired, the Company shall estate the recoverable amount, and make the provision for the impairment loss in accordance with the balance of the project’s recoverable amount lower than its book value. Once any loss of asset impairment is recognized, it shall not be switched back in the future accounting periods. 16. Borrowing costs (1) Recognition principles for capitalization of borrowing costs The borrowing costs shall include interest on borrowings, amortization of discounts or premiums on borrowings, ancillary expenses, and exchange balance on foreign currency borrowings. The Company’s borrowing costs, caused by occupying the special borrowings or general borrowings to gain the fixed assets, investment properties, and inventories that need one year or more than one year’s acquisition or construction, shall be capitalized, and recorded in the cost of relevant assets. Other borrowing costs shall be recognized as expense upon their occurrence, and recorded into current profits and losses. The relevant borrowing expenses start to be capitalized when all of the followings are satisfied: 1 The capital expenditures have incurred; 2 The borrowing costs have incurred; 3 The acquisition and construction activities that are necessary to bring the asset to its expected usable condition have commenced. (2) Capitalization period of borrowing costs The borrowing costs caused by acquiring or constructing fixed assets, investment properties and inventories, which meet the above capitalization conditions and happened before the assets reaching expected useful status or available-for-sale status, shall be recorded into costs of assets. Capitalization of borrowing costs shall be suspended during periods in which the acquisition or construction is interrupted abnormally, and the interruption period is three months or longer. These borrowing costs shall be recognized directly in profit or loss during the current period until the acquisition or construction activities resume again; Capitalization of borrowing costs ceases when the qualifying asset being acquired or constructed is substantially ready for its intended use. Subsequent borrowing costs shall be directly recorded into current finance expense upon occurrence. (3) Period for suspending capitalization of borrowing costs Provided assets which meet the condition of capitalization in acquisition and construction or manufacture occur abnormal continuous interruption over 3 months, capitalization of borrowing expenses shall be suspended. During the interruption period, borrowing expenses are defined as costs reckoned into current gains and losses until the restart of assets acquisition and construction or manufacture activities. Provided assets which meet the condition of capitalization in acquisition and construction or manufacture and which reach the standard of expected usage stage or salable stage, capitalization of borrowing expenses shall continue. Assets meet the condition of capitalization in acquisition and construction or manufacture and reach the standard of expected usage stage or salable stage, capitalization of borrowing expenses shall suspended. (4) Calculation method of capitalized amount of borrowing costs To the extent that funds are borrowed specifically for the purpose of acquiring & constructing or producing a qualifying asset, the to-be-capitalized amount of interests shall be determined in light of the actual interests incurred of the specially borrowed loan at the present period minus the income of interests earned on the unused borrowing loans as a deposit in the bank or as a temporary investment. To the extent that funds are borrowed generally and used for the purpose of acquiring & constructing or producing a qualifying asset, the Company shall calculate and determine the to-be-capitalized amount of interest from the general borrowing by multiplying the weighted average asset disbursement of the part of the accumulative asset disbursements minus the general borrowing by the capitalization rate of the general borrowing used. The capitalization rate shall be calculated and determined in light of the weighted average interest rate of the general borrowing. 17. Intangible assets 67 2014 Semi-annual Report of Wuxi Little Swan Company Limited. (1) Pricing method of intangible assets The intangible assets refer to the land-use right, patent, non-patent technology and software. Intangible assets purchased are booked at the actual cost to purchase and relative expenses. Intangible assets inputted by investors are booked at the contract or agreement price, but if the contract or agreement price is not fairly acceptable, it will be booked at fair value. Intangible assets is acquired by exchange of non-monetary assets, if this transaction has commercial substance, the fair values of these swap-out assets will be deemed as the initial investment cost of intangible assets; if the non-currency asset exchange does not have commercial substance, the carrying amount of these swap-out assets will be deemed as the initial investment cost of intangible assets. Intangible asset is acquired by debt reorganization, which shall be recognized by the fair value. Expenditures for the self-researched and developed intangible asset incurred during its research phase shall be recognized as current profits and losses upon its occurrence. Expenditures incurred during the development phase shall be recognized as an intangible asset if, and only if, the Company can demonstrate all of the following: ① It is feasible technically to finish intangible assets for use or sale; ② It is intended to finish and use or sell the intangible assets; ③ There is a potential market for the products manufactured by applying the intangible assets or there is a potential market for the intangible assets itself ④ It is able to finish the development of the intangible assets, and able to use or sell the intangible assets, with the support of sufficient technologies, financial resources and other resources; ⑤ The development expenditures of the intangible assets can be reliably measured. ⑥ The use of the intangible products cycle is more than 1 year. (2) Estimated useful life of intangible assets with limited useful life Item Estimated useful life Basis Land usage right Beneficial years Straight-line method Years stimulated in contract or beneficial Non-patented technology Straight-line method years (3) Withdrawal of impairment provision of intangible assets The Company shall carry out impairment test on intangible assets without certain useful life, such as trade mark, at year-end. And the Company shall estimate its recoverable amount and make the provision for impairment loss of such intangible asset by the balance of the recoverable amount lower than its book value. The Company shall check the other intangible assets at the year-end, where there is any evidence indicating a possible impairment of assets, the Company shall estimate the recoverable amount, and make provision for impairment losses of such intangible asset in accordance with the balance of the recoverable amount lower than the book value. Once intangible asset impairment losses are recognized, they will not be written back in successive fiscal periods. ① It has been replaced by other new technologies, and significantly decreased its ability to create economic interests for the company; ② The price fell sharply in current period, and is not expected to increase in its remaining amortization period; ③ Over the time limit of legal protection, but still has some use-value; Other facts that prove the assets actually impaired. (4) Criteria of dividing the research phase and development phase of internal R&D project The term “research” refers to undertaking of collecting relevant materials, conducting market research on the basis of planned 68 2014 Semi-annual Report of Wuxi Little Swan Company Limited. investigation, which means the research project has received approval from the Board of Directors or relevant management level. The term "development" refers to the application of research achievements and other knowledge to a certain plan or design, prior to the commercial production or use, so as to produce any new material, device or product, or substantially improved material, device and product. (5) Calculation of the expenditures of internal R&D project Expenditures of internal R&D project in researching stage shall be reckoned into current gains and losses; expenditures of internal R&D project in developing stage which meet the conditions as following are referred to as intangible assets, otherwise it shall be reckoned into current gains and losses: ① Completing the intangible asset in order to enable it to be used or sold or technically feasible; ② Having the intention to complete the intangible asset and use or sale; ③ The way intangible asset producing economic benefit, including providence of making the products produced by the intangible asset or the intangible assets in the market. Intangible asset which is used internally shall be proved its feasibility; ④ having enough support from technology, financial resources and other resources to complete the development of the intangible asset, and enabling to sale or use the intangible asset. ⑤ Expenditures of the intangible asset in developing stage can be definitely calculated. The expenses which are reckoned into gains and losses in the period-begin are not longer defined as assets. Expenses which are capitalized in developing stage shall be marked in balance sheet as developing expenditure, and transferred into intangible assets when the project reaches the stage of usage. 18. Amortization method of long-term deferred expenses The Company recognizes all expenses which have occurred during the period but shall be amortized beyond one year (excluding one year), including expenses of molds and technical guide, etc. The Company amortizes long-term deferred expenses using straight-line method according to relevant beneficial periods or its usage life if there are, otherwise, amortizes in five years. 19. Estimated liabilities (1) Criteria of estimated liabilities When responsibilities occurred in connection to contingent issues, and all of the following conditions are satisfied, they are recognized as estimated liability in the balance sheet: ① This responsibility is a current responsibility undertaken by the Company; ② Execution of this responsibility may cause financial benefit outflow from the Company; ③ Amount of the liability can be reliably measured. (2) Measurement of estimated liabilities Estimated liabilities are initially measured at the best estimation on the expenses to exercise the current responsibility, and with considerations to the relative risks, uncertainty, and periodic value of currency. When the periodic value of currency is with major influence, then the best estimation will be determined at the discount of future cash outflow. The book value of estimated liability is revised on the balance sheet date, and adjustment will be made to reflect current best estimation. 20. Share-based payment and equity instruments (1) Categories of share-based payment Share-based payment is divided into payment based on equity and cash. (2) Recognition method of fair value of equity instruments As for equity instrument such as option in active market, the Company determines its fair value in accordance to the offer in active market. As for equity instrument such as option in inactive market, the Company determines its fair value by valuation technique, including referring to the prices of the market trade used recently by all parties who know well of the situation and trade by voluntary, 69 2014 Semi-annual Report of Wuxi Little Swan Company Limited. referring to the recently fair value of other financial instruments which are essentially the same, discount cash flow method and options pricing model etc. (3) Recognition basis of the best estimate of the vested equity instruments On every balance sheet date in the waiting period, the company shall reason out the best course to estimate according to the newly information of the vested employee variation and revise the amounts of expected vested equity instruments. On vested days, the amounts of final expected vested equity instruments shall comply with actual vested amounts. 21. Revenue (1) Criteria for recognition time of revenue from sale of goods When all of the following conditions are satisfied, the sales of goods are recognized as sales income according to the contract amount received or receivable from the buyer: ① Main risks and rewards attached to the ownership of the goods have been transferred to the buyer; ② No succeeding power of administration or effective control is reserved which are usually attached to ownership; ③ Amount received can be reliably measured; ④ Related financial benefit may inflow to the Company; ⑤ Relative costs, occurred or will occur, can be reliably measured; ⑥ When collection of contract payment is by differed way, and practically with financing characters, sales income shall be recognized at the fair value of the receivable contract amount. (2) Recognition basis of revenue from transferring use rights of assets Income is recognized when the financial benefit in connection with the demising of asset using rights was received and the amount can be reliably measured. (3) Recognition basis of revenue from rendering labor services Revenue from rendering labor services can be determined only when the general revenues and costs of services can be definitely calculated, economic benefits relating to trading can flow into the Company, the degree of the completion of labor services can be determined. (4) Recognition basis and method for the schedule of contracted project when recognizing the revenue from providing labor services and construction contract by percentage-of-completion method Labor services which begin and finish in the same accounting year shall be determined its revenues upon the completion of the services; Labor services which begin and finish not in the same accounting year shall be determined its revenues by percentage-of-completion method if the outcome of services can be reliably valued on the balance sheet date. The Company measures the completion progress (percentage-of-completion) in accordance with the proportion of the costs incurred against the estimated total costs. 22. Government grants (1) Types Government grant is monetary assets and non-monetary assets the Company gets from government for free, excluding capital invested by government as owner. Government grants contain subsidiaries relating to assets and revenue. (2) Accounting policy Government grants that are obtained by enterprises used for purchase or construction, or forming the long-term assets by other ways belongs to the government subsidies pertinent to assets; government subsides except those pertinent to assets belongs to the government subsidies pertinent to income. The government subsidies pertinent to assets shall be recognized as deferred income, equally distributed within the useful lives of the relevant assets, and included in the current profits and losses. 70 2014 Semi-annual Report of Wuxi Little Swan Company Limited. The government subsidies pertinent to incomes shall be treated respectively in accordance with the circumstances as follows: ① Those subsidies used for compensating the related future expenses or losses of the Company shall be recognized as deferred income and shall included in the current profits and losses during the period when the relevant expenses are recognized; ② Those subsidies used for compensating the related expenses or losses incurred to the Company shall be directly included in the current profits and losses Government subsidies should be confirmed and measured according to the actual amount to the account when practically receiving the accounts. Only when there is unambiguous evidence indicates the subsidy is appropriated according to the fixed quota standards and there is unambiguous evidence indicates that it meet with the relevant conditions stipulated by financial support policy and is estimated to receive the financial support funds, could confirm and measure it according to the amounts receivable. 23. Deferred income tax assets and liabilities (1) Recognition basis of deferred income tax assets Pursuant to the discrepancies between the book value of assets and liabilities and the tax basis, deferred income tax assets shall be defined by applicable rate during the period of expected withdrawal of the assets or repayment of the liabilities. On the balance sheet date, if enough evidences prove that the taxable income amounts that maybe probably obtained in the future periods may be used to deduct the deductible temporary differences, they will be confirmed as the deferred income tax assets that have not been confirmed in the previous accounting periods. On the balance sheet date, the book value of the deferred income tax assets would be re-checked. If the taxable income amounts that may probably not be obtained in the future periods to deduct benefits of deferred income tax assets, the book value of the deferred income tax assets shall be written down. When it is probable to gain enough taxable income amounts, the write-downs shall be retrieved. (2) Recognition basis of deferred income tax liabilities Pursuant to the discrepancies between the book value of assets and liabilities and the tax basis, deferred income tax assets shall be defined by applicable rate during the period of expected withdrawal of the assets or repayment of the liabilities. 24. Hedging accounting The term " hedging" refers to one or more hedging instruments which are designated by the company for avoiding the risks of foreign exchange, interest rate, commodity price, stock price, credit and etc., and which is expected to make the changes in fair value or cash flow of hedging instrument(s) to offset all or part of the changes in the fair value or cash flow of the hedged item. The "hedged items" refer to items which make the company faced with changes in fair value or cash flow and are designated as the hedged objectives. For a hedging which satisfies all the following conditions, the company will deal with it through the hedging accounting method. ① At the commencement of the hedging, the company shall specify the hedging relationship formally and prepare a formal written document on the hedging relationship, risk management objectives and the strategies of hedging. ② The hedging expectation is highly efficient and meets the risk management strategy, which is confirmed for the hedging relationship by the company at the very beginning. ③ For a cash flow hedging of forecast transaction, the forecast transaction shall be likely to occur and shall make the company faced to the risk of changes in cash flow, which will ultimately affect the profits and losses. ④ The effectiveness of hedging can be reliably measured. ⑤ The hedging is highly effective in the accounting period in which the hedging relationship is designated. 25. Changes in main accounting policies and estimates Were the main accounting policies or estimates changed during the reporting period? √ Yes □ No The withdrawal proportion of the bad debt provision of the creditor’s rights receivables and the accounting estimates of the 71 2014 Semi-annual Report of Wuxi Little Swan Company Limited. depreciation life of the fixed assets changed in the reporting period. (1) Change of accounting estimates Were the main accounting estimates changed during the reporting period? √ Yes □ No Specific explanation Unit: RMB Yuan The content and reasons of the changes of Name of the Influenced Approval process accounting estimates influenced report item amount For maintain the consistency between the According to the relevant regulations of Securities accounting policy and the accounting Law, Shenzhen Stock Exchange Listing Rules, estimates of the controlling shareholders, Guidance No. 7 on the Information Disclosure and for strengthen the anti-risk power of the Work of the Listed Companies of Shenzhen Stock Company itself, the Company changed the Exchange—Accounting Policy and Accounting withdrawal proportion of the bad debt Estimates Alternation and Articles of Income statement provision of the creditor’s rights receivables Associations, the alternation of the accounting and the accounting estimates of the estimates had executed through reviewal and depreciation life of the fixed assets approval by the Board of Directors and Board of according to the relevant regulations of Supervisors of the Company and the Independent Accounting Standards for Business Directors issued independent advice on the Enterprises. matter. For the details of the above accounting estimates changes, please refer to the announcement disclosed on www.cninfo.com.cn of the Company on 7 Mar. 2014. V. Taxation 1. Main taxes and tax rate Category of taxes Tax basis Tax rate Balance of output tax of taxation revenue after VAT 17% deducting input tax. Business tax Taxation revenue 5% Urban maintenance and construction tax Payable circulating tax amount 7% Corporate income tax Payable income tax amount 25% or 15% Education Surcharge Payable circulating tax amount 5% Flood Control Security Fund Operating revenue 0.1% or 0.06% Levee fee Circulating tax amount 2% The income tax rates adopted by each subsidiary and branch factory 2. Tax preference and official documents The Company and its subsidiaries Hefei Media Washing Machine Co., Ltd., Wuxi Little Swan GE Co., Ltd., Wuxi Filin Electronics 72 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Co., Ltd. and Jingzhou Little Swan Sanjin Electrical Appliances Co., Ltd. got “High Technology Enterprises Certificate” respectively in March 2009, November 2008, March 2009, May 2009 and November 2011 with certificate number respectively GR200932000077, GR200834000011, GR200932000078, GR200932000397 and GR201142000211. The Company and its subsidiaries Hefei Media Washing Machine Co., Ltd., Wuxi Little Swan GE Co., Ltd., Wuxi Filin Electronics Co., Ltd. have expired 3 years and passed the reexamination, obtaining reexamination certificates respectively in June 2012, October 2011, May 2012, August 2012 with certificate number respectively GF201232000096, GF201134000043, GF201232000077, GF201232000673. According to Circular of the State Administration of Taxation on the Issues concerning the Administration of Enterprise Income Tax Deduction and Exemption (Guo-Shui-Fa [2008] No. 111 document) and Circular of the State Administration of Taxation on the Issues concerning Hi-tech Enterprise Paying Corporate Income Tax in 2008 (Guo-Shui-Han [2008] No. 985), the Company and its subsidiary, Hefei Royalstar Water Industry Facilities Co., Ltd., and Wuxi Little Swan GE Co., Ltd. as well as Wuxi Filin Electronics Co., Ltd. were approved to enjoy income tax rate 15%. Certificate No. GF201134000043 of Hefei Media Washing Machine Co., Ltd. had expired at the end of Y2013, and had applied for new high-tech enterprise again, which was in the approval procedure. Each index of the Company was met with the application standards, so the income tax expense was still calculated according to 15% of the income tax rate. 73 2014 Semi-annual Report of Wuxi Little Swan Company Limited. VI. Business combination and consolidated financial statements 1. Subsidiaries (1) Subsidiaries obtained by establishment and investment Unit: RMB Yuan Balance of parent company’s equity after deducting the The The Actual amount Other Included in Deductible difference that loss Registered Business Registered Business proportion proportion Minority Subsidiaries Type of investments essential consolidated minority of minority interests place nature capital scope of holding of voting interest at the period-end investment statement interests exceed equity shares rights obtained by minority shareholders Wuxi Little Swan Manufacture General Electric Holding Producti of washing Wuxi 28,000,000.00 19,600,000.00 70.00% 70.00% Yes 43,448,957.00 Appliances Co., subsidiaries on machine and Ltd. dryers Manufacture Wuxi Filin of computer Holding Producti USD control Electronics Co., Wuxi 25,630,294.47 73.00% 73.00% Yes 85,356,866.98 subsidiaries on 3,624,600.00 components Ltd. for washing machine Manufacture Wuxi Little Swan Holding Producti Wuxi 49,679,500.00 and sale of 37,259,780.00 99.91% 99.91% Yes -38,128,999.72 Washing Machine subsidiaries on commercial 74 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Co., Ltd. washing machine , dryers and spare parts Wuxi Meitian Holding USD Sales of Refrigerator Wuxi Trading 24,840,000.00 75.00% 75.00% Yes subsidiaries 4,000,000.00 refrigerator Market Co., Ltd. Jiangsu Little Sales of Swan Marketing Holding 419,500,000.0 household Wuxi Trading 417,794,000.00 99.63% 99.63% Yes -81,851,346.36 and Sales Co., subsidiaries 0 electrical appliances Ltd. Import & Wuxi Little Swan Import Holding export of Import & Export Wuxi & 65,000,000.00 electric 57,500,000.00 88.46% 88.46% Yes -15,266,022.30 subsidiaries machine Co., Ltd Export products Little Swan Wholly-own International Investm USD ed Singapore Investment 34,052,500.00 100.00% 100.00% Yes (Singapore) Co., ent 5,000,000.00 subsidiary Ltd. Note: Wuxi Little Swan Washing Machine Co. Ltd. had written off on 15 Jul. 2014. (2) Subsidiaries obtained by business combination under same control Unit: RMB Yuan 75 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Balance of parent Included company’s equity Actual amount The The in after deducting the Other Deductible Register Business Business of investments proportion proportion consolid difference that loss of Subsidiaries Type Registered capital essential Minority interest minority ed place nature scope at the of holding of voting ated minority interests investment interests period-end shares rights statemen exceed equity t obtained by minority shareholders Little Swan Wholly- (Jingzhou) Manufacture owned Producti Electronic Jingzhou 11,070,200.00 of washing 11,869,400.00 100.00% 100.00% Yes subsidiar on Appliances Co., machines y Ltd. Hefei Media Holding Producti USD Manufacture Washing Machine Hefei of washing 830,962,300.00 69.47% 69.47% Yes 528,933,955.18 subsidiar on 135,520,000.00 machines Co., Ltd. ies Hefei Midea Holding Manufacture Washing Machine Producti subsidiar Hefei 20,000,000.00 of washing 18,000,000.00 90.00% 90.00% Yes 2,133,833.08 Manufacture Co., on ies machines Ltd. 76 2014 Semi-annual Report of Wuxi Little Swan Company Limited. 2. Explanation on changes in consolidated scope Explanation on changes in consolidated scope: The subsidiary Tianjin Little Swan Washing Machine Co., Ltd. had been written off on 28 Jan. 2014 and not included in the consolidation scope since the date. √ Applicable □ Inapplicable 3. Main entities which are newly included into or are not included into consolidation scope during the reporting period The subsidiaries, special purpose entities and the operation entities which formed the control rights through methods such as entrusted operation or lease etc. Unit: RMB Yuan Net profits from the year-begin to Name Disposal of the daily net assets the disposal date Tianjin Little Swan Washing Machine Co., Ltd. 191,467,411.60 -100.00 4. Exchange rates of major items in financial statements for foreign entities The exchange rates of the major items in financial statements for foreign entities included in the consolidation financial statements of the reporting period are: for assets and liabilities, using the spot exchange rate on the balance sheet date with USD 1 dollar at the period-end converted into RMB 6.1528. For the entitlement programs of the owners (except for the retained profits items), using the spot exchange rate when obtained and for the income statement as well as the cash flow statement, using the approximate exchange rate within the year, which means USD 1 dollar is converted to RMB 6.1431. VII. Notes on major items in consolidated financial statements of the Company 1. Monetary funds Unit: RMB Yuan Closing balance Opening balance Item Amount in Exchange Amount in Exchange RMB amount RMB amount foreign currency rate foreign currency rate Cash: -- -- 8,158.18 -- -- 21,277.15 RMB -- -- 8,158.18 -- -- 21,277.15 Bank deposit: -- -- 2,114,614,996.65 -- -- 1,558,183,589.38 RMB -- -- 2,062,208,224.21 -- -- 1,495,172,481.08 USD 8,408,703.00 6.1528 51,737,067.80 10,072,251.52 6.0969 61,409,510.29 EUR 79,777.92 8.3946 669,703.73 190,238.29 8.4189 1,601,597.14 JPY 15.00 0.060815 0.91 15.00 0.057771 0.87 77 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Other monetary funds: -- -- 50,671,950.96 -- -- 59,168,221.97 RMB -- -- 46,619,468.31 -- -- 56,125,194.49 USD 658,640.40 6.1528 4,052,482.65 499,110.61 6.0969 3,043,027.48 Total -- -- 2,165,295,105.79 -- -- 1,617,373,088.50 2. Trading financial assets (1) Trading financial assets Unit: RMB Yuan Item Closing fair value Opening fair value Derivative financial assets 1,486,950.00 15,016,740.00 Total 1,486,950.00 15,016,740.00 3. Notes receivable (1) Category of notes receivable Unit: RMB Yuan Category Closing balance Opening balance Bank acceptance bill 2,376,741,559.62 2,449,770,225.41 Total 2,376,741,559.62 2,449,770,225.41 (2) Notes transferred to accounts receivable because drawer of the notes fails to execute the contract or agreement, and undue notes endorsed to other parties at the end of the period Undue notes endorsed to other parties by the Company Unit: RMB Yuan Issuing entity Date of issuance Expiring date Amount Remark Suning Yunshang Group Co., Ltd. Procurement 17 Apr. 2014 17 Oct. 2014 10,000,000.00 Center Suning Yunshang Group Co., Ltd. Procurement 17 Apr. 2014 17 Oct. 2014 10,000,000.00 Center Suning Yunshang Group Co., Ltd. Procurement 17 Apr. 2014 17 Oct. 2014 7,087,627.41 Center Ningbo Yongning Suning Yunshang Trading Co., 17 Jan. 2014 17 Jul. 2014 6,803,424.56 Ltd. Xiamen Xiangyu Trading Supply Chain Co., Ltd. 26 Feb. 2014 26 Aug. 2014 5,000,770.00 Total -- -- 38,891,821.97 -- 4. Accounts receivable (1) Accounts receivable listed by categories Unit: RMB Yuan Category Closing balance Opening balance 78 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Book balance Bad debt provision Book balance Bad debt provision Amount Proportion Amount Proportion Amount Proportion Amount Proportion Accounts receivable for which bad debt provisions are made on the group basis Group 1: Aging group 869,491,640.31 98.64% 44,133,950.81 5.08% 819,724,441.69 97.94% 41,980,309.37 5.12% Group 2: Account receivable within the scope of consolidated sheet Subtotal of group 869,491,640.31 98.64% 44,133,950.81 5.08% 819,724,441.69 97.94% 41,980,309.37 5.12% Accounts receivable with insignificant single amount and 12,011,214.28 1.36% 12,011,214.28 100.00% 17,241,527.92 2.06% 17,241,527.92 100.00% individually withdrawn bad debt provision Total 881,502,854.59 -- 56,145,165.09 -- 836,965,969.61 -- 59,221,837.29 -- Accounts receivable with significant single amount and individually withdrawn bad debt provision □Applicable √Inapplicable In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision: √Applicable □Inapplicable Unit: RMB Yuan Closing balance Opening balance Aging Book balance Provision for bad Book balance Provision for bad Amount Proportion debts Amount Proportion debts Within 1 year Including: -- -- -- -- -- -- Subtotal of within 1 865,881,546.48 99.58% 43,294,077.12 813,679,130.91 99.26% 40,683,956.54 year 1-2 years 2,851,779.12 0.33% 285,177.91 4,906,952.28 0.60% 490,695.24 2-3 years 3,401.36 0.00% 1,020.41 115,910.66 0.01% 23,182.13 Over 3 years 402,475.95 0.05% 201,237.97 599,930.94 0.07% 359,958.56 Over 5 years 352,437.40 0.04% 352,437.40 422,516.90 0.05% 422,516.90 Total 869,491,640.31 -- 44,133,950.81 819,724,441.69 -- 41,980,309.37 In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision □Applicable √Inapplicable In the groups, accounts receivable adopting other methods to withdraw bad debt provision □Applicable √Inapplicable Other closing individually insignificant but provisions for bad debts individually accounts receivable: √Applicable □Inapplicable 79 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Unit: RMB Yuan Bad debt Withdrawal Reason for Content of accounts receivable Book balance provision proportion withdrawal Difficult to AVEST 317,931.17 317,931.17 100.00% withdraw Difficult to CNPEC 853,104.00 853,104.00 100.00% withdraw Difficult to Chongqing Taizheng (Group) Co., Ltd. 851,500.00 851,500.00 100.00% withdraw Difficult to Chongqing R&F Property Development Co., Ltd. 1,675,800.00 1,675,800.00 100.00% withdraw Chongqing Zhongcheng Property Development Co., Difficult to 1,655,000.00 1,655,000.00 100.00% Ltd. withdraw 61 Households of Hunan Huitang Hot Spring Difficult to 6,657,879.11 6,657,879.11 100.00% Huatian City Real Estate Co., Ltd. etc withdraw Total 12,011,214.28 12,011,214.28 -- -- (2) Accounts receivable reversed or collected in the reporting period Unit: RMB Yuan Recognition basis Reversed or collected Reversed or Reversed or Content of accounts receivable of original bad amount of the accrued collected reason collected amount debt provision bad debt provision Foshan Shunde Midea Nuantong Equipment Sales Negotiated Difficult to 0.30 0.30 Co., Ltd. collection withdraw CNOOC Energy Technology & Services-Catering Negotiated Difficult to 57,662.50 57,662.50 & Support Services Co., Ltd. collection withdraw Negotiated Difficult to CNPE 150,500.00 107,500.00 collection withdraw Chongqing Wanzhou Wanda Hotel Management Negotiated Difficult to 303,092.00 187,569.00 Co., Ltd. collection withdraw Hunan Huitang Hot Spring Huatian City Real Negotiated Difficult to 1,272,000.00 260,000.00 Estate Co., Ltd. collection withdraw Negotiated Difficult to Tangshan Wanda Investment Real Estate Co., Ltd. 531,488.00 472,116.00 collection withdraw Negotiated Difficult to Hangzhou Xixi Investment Development Co., Ltd. 745,584.30 521,909.01 collection withdraw Negotiated Difficult to Chongqing Taizheng (Group) Co., Ltd. 1,851,500.00 1,000,000.00 collection withdraw 80 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Headquarters of Hangzhou Xihu Xixi Wetland Negotiated Difficult to 1,427,004.00 1,427,004.00 Comprehensive Protection Project collection withdraw Negotiated Difficult to CNPEC 2,367,588.00 1,514,484.00 collection withdraw Total -- -- 8,706,419.10 -- (3) Information of top 5 accounts receivable Unit: RMB Yuan The relationship Name of entity with the Amount Aging Proportion Company MIDEA ELECTRIC TRADING Retailer 289,064,145.28 Within 1 year 32.79% SINGAPORE)CO.PTE.LTD Suning Yunshang Group Co., Ltd. Procurement Retailer 99,922,892.06 Within 1 year 11.34% Center Kunming Midea Refrigeration Product Sales Co., Retailer 24,617,486.49 Within 1 year 2.79% Ltd. Jilin Media Refrigeration Product Sales Co., Ltd. Retailer 24,293,337.75 Within 1 year 2.76% Xi’an Guomei Electrical Appliance Co., Ltd. Retailer 15,912,699.98 Within 1 year 1.81% Total -- 453,810,561.56 -- 51.49% (4) The amounts due from related parties Unit: RMB Yuan Name of entity The relationship with the Company Amount Proportion MIDEA ELECTRIC TRADING Shareholder controlling company 289,064,145.28 32.79% SINGAPORE)CO.PTE.LTD PT. MIDEA PLANET INDONESIA Shareholder controlling company 801,605.24 0.09% MIDEA SCOTT&ENGLISH ELECTRONIICS Shareholder controlling company 7,845,232.18 0.89% SDN.BHD MIDEA CONSUMER ELECTRIC (VIETNAM) Shareholder controlling company 844,303.34 0.10% CO.,LTD Total -- 298,555,286.04 33.87% 5. Other accounts receivable (1) Other accounts receivable disclosed by type: Unit: RMB Yuan 81 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Closing balance Opening balance Provision for doubtful Provision for doubtful Category Book balance Book balance debts debts Amount Proportion Amount Proportion Amount Proportion Amount Proportion Other accounts receivable that provisions for bad debts by group Group 1: Aging group 29,203,534.86 100.00% 3,645,918.41 12.48% 29,105,439.83 100.00% 2,941,915.70 10.11% Group 2: Other account receivable with in the scope of consolidated sheet Subtotal of group 29,203,534.86 100.00% 3,645,918.41 12.48% 29,105,439.83 100.00% 2,941,915.70 10.11% Total 29,203,534.86 -- 3,645,918.41 -- 29,105,439.83 -- 2,941,915.70 -- Explanation of the category of other accounts receivable Other closing accounts receivable that is individually significant and provisions for bad debts individually. □Applicable √Inapplicable In the group, other accounts receivable that provision for bad debts by aging analysis: √Applicable □Inapplicable Unit: RMB Yuan Period-end Period-begin Aging Book balance Provision for bad Book balance Provision for bad Amount Proportion debts Amount Proportion debts Within 1 year Including: Subtotal of within 1 year 11,241,866.26 38.49% 562,093.31 24,970,133.06 85.79% 1,248,506.66 1-2 years 14,541,464.65 49.79% 1,454,146.47 1,442,035.00 4.95% 144,203.50 2-3 years 762,052.00 2.61% 228,615.60 208,868.00 0.72% 41,773.60 Over 3 years 2,514,177.83 8.61% 1,257,088.92 2,442,429.65 8.39% 1,465,457.82 Over 5 years 143,974.12 0.49% 143,974.12 41,974.12 0.15% 41,974.12 Total 29,203,534.86 -- 3,645,918.41 29,105,439.83 -- 2,941,915.70 In the group, other accounts receivable those provisions for bad debts by balance percentage: □Applicable √Inapplicable In the group, other accounts receivable those provisions for bad debts by other methods: □Applicable √Inapplicable Other closing individually insignificant but provisions for bad debts individually accounts receivable □Applicable √Inapplicable 82 2014 Semi-annual Report of Wuxi Little Swan Company Limited. (2) Information of top five other accounts receivable Unit: RMB Yuan Relationship with Name of entity Amount Aging Proportion of the total the Company MIIT Government sector 13,138,701.10 Within 2 years 44.99% Wang Ruiqun Company personnel 2,588,000.00 Within 1 year 8.86% Wuxi China Resources Natural Gas Co., Ltd. Cooperator 1,212,830.80 Within 1 year 4.15% Fiscal Treasury payment center of Hefei Hi Government sector 1,000,000.00 3 to 4 years 3.42% gh-Tech Industry Development Zone Zhejiang Tmall Technology Co., Ltd. Cooperator 924,391.72 Within 1 year 3.17% Total -- 18,863,923.62 -- 64.59% 6. Prepayment (1) List by aging analysis: Unit: RMB Yuan Closing balance Opening balance Aging Amount Proportion Amount Proportion Within 1 year 159,627,528.25 97.83% 130,792,399.39 92.86% 1 to 2 years 2,978,949.72 1.83% 5,434,937.53 3.86% 2 to 3 years 563,642.94 0.35% 4,614,587.14 3.28% Total 163,170,120.91 -- 140,841,924.06 -- (2) Information of the top 5 prepayment Unit: RMB Yuan Relationship Reason for Name of entity with the Amount Aging unsettled Company Yanshan Operating Dept. of Sinopec Chemical Sales Advance material Supplier 57,792,070.00 Within 1 year Company Limited payment East China Chemical Sales of PetroChina Company Advance material Supplier 28,528,050.00 Within 1 year Limited payment Advance material Ningbo Midea Joint Supplies Co., Ltd. Supplier 15,845,206.76 Within 1 year payment Shanghai Shabo Basis Trade & Commerce Co., Ltd. Supplier 11,325,600.00 Within 1 year Advance material 83 2014 Semi-annual Report of Wuxi Little Swan Company Limited. payment Advance electric Anhui Power Company Hefei Power Supply Company Supplier 6,580,086.42 Within 1 year charge Total -- 120,071,013.18 -- -- 7. Inventory (1) Category Unit: RMB Yuan Closing balance Opening balance Item Impairment of Impairment of Book balance Book value Book balance Book value inventories inventories Raw materials 43,663,080.32 1,464,472.25 42,198,608.07 43,399,847.13 3,610,554.47 39,789,292.66 Construction 15,007,996.51 15,007,996.51 10,469,267.54 10,469,267.54 contract assets Inventory goods 561,274,873.94 37,217,367.34 524,057,506.60 785,045,416.69 37,162,138.31 747,883,278.38 Total 619,945,950.77 38,681,839.59 581,264,111.18 838,914,531.36 40,772,692.78 798,141,838.58 (2) Impairment of inventories Unit: RMB Yuan Decrease Category Opening balance Increase Closing balance Reversal Written off Raw materials 3,610,554.47 2,146,082.22 1,464,472.25 Inventory goods 37,162,138.31 55,229.03 37,217,367.34 Total 40,772,692.78 55,229.03 2,146,082.22 38,681,839.59 8. Other current assets Unit: RMB Yuan Item Closing balance Opening balance Bank financing 1,942,370,000.00 1,780,000,000.00 Deferred expense-module 17,257,280.92 11,288,539.62 Total 1,959,627,280.92 1,791,288,539.62 84 2014 Semi-annual Report of Wuxi Little Swan Company Limited. 9. Available-for-sale financial assets (1) Information of available-for-sale financial assets Unit: RMB Yuan Item Closing fair value Opening fair value Available-for-sale equity instruments 251,664.00 312,816.00 Total 251,664.00 312,816.00 In the reporting period, the Company reclassified the held-to-maturity investment into available-for-sale financial assets, a total of RMB0.00 was reclassified, which takes 0% of total matured investment before reclassification. 10. Investment to joint ventures and associated enterprises Unit: RMB Yuan Percentage Voting Total Net profit of holding percentage operation Total closing Total closing Net closing of the Name of investee shares of of the revenue of the assets liabilities assets reporting the Company in reporting period Company investee period I. Joint ventures II. Associated enterprises Guangzhou Attend Logistics 20.00% 20.00% 20,208,753.70 4,263,771.47 15,944,982.23 8,833,062.79 98,901.84 Co., Ltd. 11. Long-term equity investment (1) List of long-term equity investment Unit: RMB Yuan With draw Explanation n for impa Cash indifference Share irme bonus Voting s between Impair Accoun Initial holding nt in the Opening Increase/d percenta the share ment Investee ting investment Closing balance percenta prov report balance ecrease ge in holding provisi method cost ge in ision ing investee percentage on investee in perio and voting the d percentage repo in investee rting peri 85 2014 Semi-annual Report of Wuxi Little Swan Company Limited. od Guangzh ou Attend Equity 2,000,000.00 3,169,148.88 19,847.57 3,1-188,996.45 20.00% 20.00% Logistics method Co., Ltd. Suzhou People's Cost 150,000.00 150,000.00 150,000.00 Shopping method Mall Bank of Cost Jiangsu 1,100,000.00 1,210,000.00 1,210,000.00 method Co., Ltd. Inner Mongolia Baotou Cost 50,000.00 50,000.00 50,000.00 Departme method nt Store Co., Ltd. Total -- 3,300,000.00 4,579,148.88 19,847.57 4,598,996.45 -- -- -- 12. Investment property (1) Investment property calculated by cost Unit: RMB Yuan Decrease in this Item Opening book value Increase in this period Closing book value period I. Total of original book value 30,936,720.15 30,936,720.15 1. Property and building 25,586,926.80 25,586,926.80 2. Land using right 5,349,793.35 5,349,793.35 II. Total of accumulated depreciation 8,893,877.76 505,145.66 9,399,023.42 and amortization 1. Property and building 7,003,618.26 451,647.75 7,455,266.01 2. Land using right 1,890,259.50 53,497.91 1,943,757.41 III. Total of the net book value of the 22,042,842.39 -505,145.66 21,537,696.73 investment real estate 1. Property and building 18,583,308.54 -451,647.75 18,131,660.79 2. Land using right 3,459,533.85 -53,497.91 3,406,035.94 IV. Total of accruing amount of the 12,576,065.29 12,576,065.29 investment real estate impairment 86 2014 Semi-annual Report of Wuxi Little Swan Company Limited. provision 1. Property and building 12,576,065.29 12,576,065.29 IV. Total of book value of real estate 9,466,777.10 -505,145.66 8,961,631.44 investment 1. Property and building 6,007,243.25 -451,647.75 5,555,595.50 2. Land using right 3,459,533.85 -53,497.91 3,406,035.94 13. Fixed assets (1) Fixed assets Unit: RMB Yuan Opening book Decrease in the Closing book Item Increase in the reporting period balance reporting period balance I. Total original book value 1,741,335,928.35 22,886,697.42 27,239,278.42 1,736,983,347.35 Including: Property and 815,100,557.69 1,932,811.43 723,116.23 816,310,252.89 building Machineries 804,141,462.70 14,286,868.02 19,506,735.88 798,921,594.84 Vehicles 26,559,949.77 1,132,307.72 1,585,949.92 26,106,307.57 Electronic equipments and 95,533,958.19 5,534,710.25 5,423,476.39 95,645,192.05 other Opening book Increase in Withdrawal in Decrease in the Closing book -- balance reporting period reporting period reporting period balance II. Accumulated 537,806,930.26 66,946,085.42 19,619,298.91 585,133,716.77 depreciation Including: Property and 140,533,670.34 17,598,916.42 93,767.10 158,038,819.66 building Machineries 315,766,343.75 35,378,377.19 13,481,424.63 337,663,296.31 Vehicles 14,408,730.42 4,900,144.71 1,150,943.83 18,157,931.30 Electronic equipments and 67,098,185.75 9,068,647.10 4,893,163.35 71,273,669.50 other Opening book Closing book -- -- balance balance III. The net book value of 1,203,528,998.09 -- 1,151,849,630.58 fixed assets Including: Property and 674,566,887.35 -- 658,271,433.23 building Machineries 488,375,118.95 -- 461,258,298.53 Vehicles 12,151,219.35 -- 7,948,376.27 Other equipment 28,435,772.44 -- 24,371,522.55 IV. Total impairment 9,284,711.23 -- 20,498,454.29 87 2014 Semi-annual Report of Wuxi Little Swan Company Limited. provision Including: Property and 4,550,556.97 -- 3,906,896.14 building Machineries 4,074,257.81 -- 16,094,122.63 Vehicles 271,413.75 -- 138,534.16 Electronic equipments and 388,482.70 -- 358,901.36 other V. Total book value of fixed 1,194,244,286.86 -- 1,131,351,176.29 assets Including: Property and 670,016,330.38 -- 654,364,537.09 building Machineries 484,300,861.14 -- 445,164,175.90 Vehicles 11,879,805.60 -- 7,809,842.11 Electronic equipments and 28,047,289.74 -- 24,012,621.19 other Depreciation amount of this reporting period was RMB 66,946,085.42; original value of RMB 0.000 was transferred into fixed assets from construction project. 14. Construction in progress (1) Construction in progress Unit: RMB Yuan Closing balance Opening balance Item Impairment Book Impairment Book balance Book value Book value provision balance provision T1451633001 drum SCOTT line overhaul 2,184,273.62 2,184,273.62 under constructionT1451633001 Injection molding machine overhaul 773,638.20 773,638.20 Total 2,957,911.82 2,957,911.82 15. Intangible assets (1) Intangible assets Unit: RMB Yuan Increase in the reporting Decrease in the Item Opening balance Closing balance period reporting period I. Total original book value 258,801,275.07 168,420.00 258,969,695.07 Land use right 254,629,820.51 254,629,820.51 Non-patent technology 1,992,000.00 1,992,000.00 Software, etc. 2,179,454.56 168,420.00 2,347,874.56 II. Accumulative 39,355,742.20 2,893,989.24 42,249,731.44 amortization Land use right 35,908,646.36 2,739,231.85 38,647,878.21 Non-patent technology 1,992,000.00 1,992,000.00 88 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Software, etc. 1,455,095.84 154,757.39 1,609,853.23 III. Total net book value of 219,445,532.87 -2,725,569.24 216,719,963.63 intangible assets Land use right 218,721,174.15 -2,739,231.85 215,981,942.30 Non-patent technology Software, etc. 724,358.72 13,662.61 738,021.33 Land use right Non-patent technology Software, etc. Total book value of 219,445,532.87 -2,725,569.24 216,719,963.63 intangible assets Land use right 218,721,174.15 -2,739,231.85 215,981,942.30 Non-patent technology Software, etc. 724,358.72 13,662.61 738,021.33 Amortization was of RMB2,893,989.24 in the reporting period. 16. Long-term amortization expense Unit: RMB Yuan Amortization Reason for other Item Opening balance Increase Other decrease Closing balance balance decrease Module 4,796,970.60 2,399,857.56 5,156,395.93 2,040,432.23 IT consultant 2,048,522.86 470,000.00 1,168,024.44 1,350,498.42 expense Improvement of 302,342.28 226,756.68 75,585.60 lease expense Total 7,147,835.74 2,869,857.56 6,551,177.05 3,466,516.25 -- 17. Deferred tax assets and liabilities (1) Deferred tax assets and liabilities are not listed as the net value after offset Confirmed deferred tax assets and liabilities Unit: RMB Yuan Item Closing amount Opening amount Deferred income tax assets: Provision for assets impairment 16,084,674.12 16,382,981.18 Remuneration and dismiss expense 5,234,689.32 5,760,927.08 Withdrawal expense 189,652,304.86 135,295,945.42 Internal unrealized profit 5,694,551.24 10,451,805.07 89 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Estimated liabilities 1,524,367.93 1,696,578.54 Deferred income (government subsidy) 77,550.00 85,290.00 Investment differences 1,317,443.38 1,317,443.38 Subtotal 219,585,580.85 170,990,970.67 Deferred income tax liabilities: Estimated value of trading financial instruments, 223,042.50 2,252,511.00 derivative financial instruments Fair value changes on available-for-sale financial 22,704.60 31,877.40 assets that recognized into capital reserves Subtotal 245,747.10 2,284,388.40 Lists of deferred tax assets and liabilities unrecognized Unit: RMB Yuan Item Closing amount Opening amount Deductible temporary differences 29,467,415.77 15,798,136.82 Deductible losses 27,511,181.44 75,366,221.20 Total 56,978,597.21 91,164,358.02 Notes of taxable differences and deductible differences between projects Unit: RMB Yuan Amount Item Closing Opening Item of taxable differences Changes in the fair value -Tradable financial assets 1,486,950.00 15,016,740.00 Changes in the fair value - Available-for-sale 151,364.00 212,516.00 financial assets Subtotal 1,638,314.00 15,229,256.00 Item of deductible differences Preparation for the impairment of assets 107,231,160.84 109,219,874.55 Payment and dismissal costs 34,897,928.81 38,406,180.54 Accrued expenses 1,264,348,699.05 901,972,969.48 Internal unrealized profits 37,963,674.94 69,678,700.46 Anticipation liabilities 10,162,452.89 11,310,523.59 Deferred income (government subsidies) 517,000.00 568,600.00 Investment differences 8,782,955.88 8,782,955.88 Subtotal 1,463,903,872.41 1,139,939,804.50 90 2014 Semi-annual Report of Wuxi Little Swan Company Limited. 18. Notes of preparation for the impairment of assets Unit: RMB Yuan Book value at the Decrease in the period Increase in the Book value at the Item opening of the period Reversal Written off end of the period period 1. Provision for bad debts 62,163,752.99 10,433,166.25 12,805,835.75 59,791,083.49 2. Inventory falling price re 40,772,692.78 55,229.03 2,146,082.22 38,681,839.59 serves 3. The investment real estate 12,576,065.29 12,576,065.29 impairment provision 4. Fixed assets impairment 9,284,711.23 13,737,437.77 2,523,694.71 20,498,454.29 provision Total 124,797,222.29 24,225,833.05 12,805,835.75 4,669,776.93 131,547,442.66 19. Short-term borrowing (1) The classification of short-term borrowing Unit: RMB Yuan Item Closing amount Opening amount Debt of honor 50,117,340.00 Total 50,117,340.00 20. Notes payable Unit: RMB Yuan Category Closing amount Opening amount Bank acceptance 868,240,658.99 385,673,110.34 Total 868,240,658.99 385,673,110.34 The amount due of next accounting period is RMB 868,240,658.99. 21. Accounts payable (1) Accounts payable Unit: RMB Yuan Item Closing amount Opening amount Within 1 year 3,050,363,216.49 2,670,837,986.87 1 to 2 years 26,290,927.95 45,299,711.81 91 2014 Semi-annual Report of Wuxi Little Swan Company Limited. 2 to 3 years 30,869,764.59 22,284,494.89 3 to 5 years 36,180,695.40 17,047,547.93 Over 5 years 13,668,783.78 12,576,353.96 Total 3,157,373,388.21 2,768,046,095.46 22. Deposit received (1) Deposit received Unit: RMB Yuan Item Closing amount Opening amount Within 1 year 389,903,766.85 980,920,518.26 1 to 2 years 16,578,457.31 44,922,372.19 2 to 3 years 7,095,067.96 5,916,412.68 3 to 5 years 13,242,062.59 8,434,917.26 Over 5 years 12,716,564.71 17,758,377.13 Total 439,535,919.42 1,057,952,597.52 23. Payroll payable Unit: RMB Yuan Book value at the opening Book value at the end of Item Increase in the period Decrease in the period of the period the period I. Salary, bonus, 137,431,309.36 246,418,485.31 282,972,639.93 100,877,154.74 allowance, subsidy II. Employee welfare 8,043,769.84 14,146,210.98 17,516,916.03 4,673,064.79 III. Social insurance 7,670,870.72 52,670,189.60 47,614,618.85 12,726,441.47 IV. Housing fund 6,451,718.24 11,156,760.07 11,209,397.25 6,399,081.06 V. Redemption for terminations of labor 43,366,596.83 8,370,442.31 14,535,249.04 37,201,790.10 contract VI. Others 4,359,354.93 3,928,892.46 4,994,678.67 3,293,568.72 Total 207,323,619.92 336,690,980.73 378,843,499.77 165,171,100.88 RMB 0.00 is the amounts in arrears in the payroll payable. The labor union budget and employee education budget is RMB 3,293,568.72, and the non-monetary benefits are RMB0.00, as well as the compensation for terminating the labor contract is RMB 37,201,790.10. 92 2014 Semi-annual Report of Wuxi Little Swan Company Limited. 24. Taxes payable Unit: RMB Yuan Item Closing amount Opening amount Value-added tax 23,794,975.52 26,109,122.01 Consumption tax 360,000.00 360,000.00 Business tax 190,476,604.21 137,640,615.34 Corporate income tax 1,916,633.99 649,936.36 Personal income tax 2,459,493.70 6,945,372.39 Urban maintenance and construction tax 3,356,209.46 3,807,332.62 Property tax 1,681,437.66 3,105,747.40 Land use tax 494,204.11 599,259.73 Stamp tax 2,124,202.04 4,986,066.76 Education surtax 12,314,603.00 11,974,697.00 Other 7,042,346.52 3,025,706.95 Total 246,020,710.21 199,203,856.56 25. Dividends payable Unit: RMB Yuan Reason of unpaid over one Name of entity Closing amount Opening amount year Other restricted legal person 4,088,128.36 3,740,152.33 Did not cash shareholder Total 4,088,128.36 3,740,152.33 -- 26. Other accounts payable (1) Other accounts payable Unit: RMB Yuan Item Closing amount Opening amount Within 1 year 24,913,188.78 34,703,583.02 1 to 2 years 6,370,703.99 4,046,107.47 2 to 3 years 3,022,338.47 2,886,513.66 3 to 5 years 5,138,486.28 7,209,641.43 Over 5 years 710,023.65 1,175,248.08 Total 40,154,741.17 50,021,093.66 93 2014 Semi-annual Report of Wuxi Little Swan Company Limited. 27. Estimated liabilities Unit: RMB Yuan Item Opening amount Increase in the period Decrease in the period Closing amount Product quality assurance 11,310,523.59 1,148,070.70 10,162,452.89 Total 11,310,523.59 1,148,070.70 10,162,452.89 Notes: The washing machines produced by subsidiary of the company, Wuxi Little Swan General Electric Co., Ltd., are mainly sold to the United States and other foreign markets. Overseas sale of these washing machines involves the two kinds of risks:1) The insurance company may only afford an insufficient compensation when the quality problems take place, and 2) there is a risk of liability for damages when the failure rate is higher than FCR stipulated in the contract with General Electric Company. As of 30 Jun. 2014, the company has a risk loss of RMB 10,162,500 for the sold products. 28. Account payable special funds Unit: RMB Yuan Increase in the Decrease in the Item Opening amount Closing amount Notes period period Relocation compensation 2,073,957.30 1,710,000.00 3,783,957.30 Total 2,073,957.30 1,710,000.00 3,783,957.30 -- Notes: The account payable special funds at the end of the period owns to the needs of urban planning. Wuxi New District Xin’an Street Relocation Office had replaced land with the Company’s holding subsidiary, Wuxi Feiling Electronics Co., Ltd., and at the same time made up for the original buildings on the land. 29. Other non-current liabilities Unit: RMB Yuan Item Book value at the end of the period Book value at the opening of the period Deferred income 517,000.00 568,600.00 Total 517,000.00 568,600.00 Liabilities project involving government subsidies Unit: RMB Yuan Subsidies newly Non-operating Related to Closing Item Opening balance increased in this income recorded Other changes assets/related to balance period in this period income Subsidies of substation 277,400.00 25,200.00 252,200.00 Related to assets reformation Special guide subsidies of modern 291,200.00 26,400.00 264,800.00 Related to assets service industry development 94 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Total 568,600.00 51,600.00 517,000.00 -- 30. Share capital Unit: RMB Yuan Increase/Decrease (+/-) Opening Capitalization Closing Issuing new amount Bonus shares of public Other Subtotal amount shares reserves Total shares 632,487,764.00 632,487,764.00 31. Capital reserves Unit: RMB Yuan Item Opening amount Increase in the period Decrease in the period Closing amount Capital premium (share 1,055,182,718.57 1,055,182,718.57 capital premium) Other capital reserve 39,179,385.00 39,179,385.00 Gains and losses from fair value 180,638.60 51,979.20 128,659.40 changes Equity investment preparation 1,638,562.74 1,638,562.74 Share-based payment 33,250,000.00 5,373,251.88 38,623,251.88 Total 1,129,431,304.91 5,373,251.88 51,979.20 1,134,752,577.59 Notes: The amount increased in this period is RMB 5,373,251.88, which is the Midea Group’s stock payment to the middle and high-level staffs of the Company, The amount decreased in this period is RMB 51,979.2, which is the change of gains and losses of fair value of available-for-sale financial assets this year. 32. Surplus reserves Unit: RMB Yuan Item Opening amount Increase in the period Decrease in the period Closing amount Statutory surplus reserves 290,958,368.49 290,958,368.49 Total 290,958,368.49 290,958,368.49 33. Retained profits Unit: RMB Yuan Item Amount Withdrawal or distributed proportion Opening balance of retained profits before adjustments 1,859,579,931.10 -- 95 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Opening balance of retained profits after adjustments 1,859,579,931.10 -- Add: Net profit attributable to owners of the Company 316,358,532.13 -- Dividend of common stock payable 189,746,329.20 Closing retained profits 1,986,192,134.05 -- List of adjustment of opening retained profits: 1) RMB0.00 opening retained profits was affected by retrospective adjustment conducted according to the Accounting Standards for Business Enterprises and relevant new regulations. 2) RMB0.00 opening retained profits was affected by changes on accounting policies. 3) RMB0.00 opening retained profits was affected by correction of significant accounting errors. 4) RMB0.00 opening retained profits was affected by changes in combination scope arising from same control. 5) RMB0.00 opening retained profits was affected totally by other adjustments. Notes: as for IPO companies, if the accumulated profits were enjoyed by new and original shareholders according to the resolutions made at the shareholders’ general meeting before public offering, the Company shall explain clearly; if the accumulated profits were distributed before public offering and enjoyed by the original shareholders according to the resolutions made at the shareholders’ general meeting, the Company shall clearly disclose the audited profits of dividends payable enjoyed by the original shareholders. 34. Revenue and Cost of Sales (1) Revenue and Cost of Sales Unit: RMB Yuan Item Reporting period Same period of last year Sales of main business 4,557,126,125.99 3,687,450,129.55 Other operating income 416,930,894.57 310,774,206.76 Cost of sales 3,655,315,076.59 3,005,810,911.14 (2) Main business (Classified by industry) Unit: RMB Yuan Reporting period Same period of last year Industry Revenue of sales Costs of sales Revenue of sales Costs of sales Home appliances 4,557,126,125.99 3,280,741,426.30 3,687,450,129.55 2,726,631,893.14 Total 4,557,126,125.99 3,280,741,426.30 3,687,450,129.55 2,726,631,893.14 (3) Main business (Classified by product) Unit: RMB Yuan Reporting period Same period of last year Product Revenue of sales Costs of sales Revenue of sales Costs of sales Washing machine 4,557,126,125.99 3,280,741,426.30 3,687,450,129.55 2,726,631,893.14 Total 4,557,126,125.99 3,280,741,426.30 3,687,450,129.55 2,726,631,893.14 (4) Main business (Classified by area) Unit: RMB Yuan 96 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Reporting period Same period of last year Area Revenue of sales Costs of sales Revenue of sales Costs of sales Domestic 3,568,465,105.73 2,382,803,528.64 2,872,344,515.78 1,983,874,080.54 Other countries 988,661,020.26 897,937,897.66 815,105,613.77 742,757,812.60 Total 4,557,126,125.99 3,280,741,426.30 3,687,450,129.55 2,726,631,893.14 (5) The revenue of sales from the top five customers Unit: RMB Yuan Customer Main business revenue Proportion of total business revenue (%) MIDEA ELECTRIC TRADING SINGAPORE)CO.PTE.LTD 676,907,927.34 13.61% Suning Yunshang Group Co., Ltd., Suning Procurement Center 399,698,023.79 8.04% Beijing Jingdong Century Information Technology Co ., Ltd 125,369,962.89 2.52% Guizhou Midea Refrigeration Product Marketing Co., Ltd. 109,166,797.72 2.19% PAKSHOMA COMPANY 63,556,770.56 1.28% Total 1,374,699,482.30 27.64% 35. Business tax and surtax Unit: RMB Yuan Calculation and payment Item Reporting period Same period of last year standard Business tax 322,440.93 5,000.00 Urban maintenance and construction 17,347,782.20 15,156,953.78 tax Education surtax 13,510,445.80 10,795,662.43 Total 31,180,668.93 25,957,616.21 -- 36. Selling expenses Unit: RMB Yuan Item Reporting period Same period of last year Employee compensation 73,992,301.57 76,234,924.20 Transportation and handling charges 155,628,481.76 130,242,382.58 Travel expense 13,073,313.35 12,797,757.82 Rental expense 18,647,338.57 32,455,094.80 Installation expense 48,998,580.73 48,906,375.12 97 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Spare part expense 21,676,208.69 14,295,051.53 Maintenance expense 46,371,434.61 39,098,324.93 Advertisement, sales promotional 308,607,736.97 169,723,315.28 expense Others 21,876,757.65 16,212,871.50 Total 708,872,153.90 539,966,097.76 37. Administration expense Unit: RMB Yuan Item Reporting period Same period of last year Employee compensation 82,621,273.67 64,056,529.49 Depreciation 14,187,273.51 11,377,056.42 Utility bills 4,129,792.72 3,688,956.75 Quality loss 1,417,018.85 5,826,771.54 Building taxes 4,592,771.25 5,896,626.16 Product certification fee 1,541,366.30 572,756.78 Share-based payment 5,809,948.33 Others 95,783,440.06 81,673,493.54 Total 210,082,884.69 173,092,190.68 38. Financial expense Unit: RMB Yuan Item Reporting period Same period of last year Interest expense 2,431,394.70 1,760,399.50 Less: interest income 9,196,425.25 6,020,314.35 Add: exchange loss -4,461,581.30 22,963,618.21 Handling charge 1,326,782.99 1,439,394.38 Total -9,899,828.86 20,143,097.74 39. Gains and losses from changes in fair value Unit: RMB Yuan Source Reporting period Same period of last year Trading financial assets -13,529,790.00 10,584,660.00 Total -13,529,790.00 10,584,660.00 98 2014 Semi-annual Report of Wuxi Little Swan Company Limited. 40. Investment income (1) Investment income Unit: RMB Yuan Item Reporting period Same period of last year Long-term equity investment income accounted by 50,000.00 cost method Long-term equity investment income accounted by 19,847.57 53,125.03 equity method Investment income received from holding of trading 3,946,180.00 4,654,180.00 financial assets Others 52,412,042.89 33,824,376.41 Total 56,378,070.46 38,581,681.44 (2) Long-term equity investment income accounted by equity method Unit: RMB Yuan Name of investee Reporting period Same period of last year Reason for increase/decrease Attend Logistics Co,. Ltd 19,847.57 53,125.03 Total 19,847.57 53,125.03 -- 41. Impairment losses Unit: RMB Yuan Item Reporting period Same period of last year I. Bad debts losses -2,372,669.49 4,006,859.24 II. Inventory falling price losses 55,229.03 9,719,492.09 III. fixed assets impairment losses 13,737,437.77 Total 11,419,997.31 13,726,351.33 42. Non-operating revenue (1) Non-operating revenue Unit: RMB Yuan Included in the amount of the non- Item Reporting period Same period of last year recurring gains and losses of the cu rrent period 99 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Gains from fixed assets deposition 497,193.03 4,258,090.27 497,193.03 Gains from debt restructuring 1,688,200.34 1,688,200.34 Government grants 6,454,141.22 7,073,551.50 6,454,141.22 Penalty income 205,112.93 4,054,332.64 205,112.93 Others 2,769,562.28 2,264,920.80 2,769,562.28 Total 11,614,209.80 17,650,895.21 11,614,209.80 (2) List of government grants Unit: RMB Yuan Whether belong to Reporting Same period of Related to assets/ related to Item non-current gains period last year income and losses VAT refund upon collection 3,240,786.67 2,708,323.50 Related to income Yes Foreign trade promoting rewards 1,715,200.00 1,364,082.00 Related to income Yes Subsidy on export letter of credit 500,000.00 1,623,000.00 Related to income Yes Patent grants and subsidy for new 173,500.00 116,646.00 Related to income Yes products subsidy for equipment investment 51,600.00 300,000.00 Related to income Yes Special guide funding of provincial 2,100.00 26,400.00 Related to income Yes modern service industry development Intellectual property advantage 200,000.00 Related to income Yes enterprises subsidies Subsidies for AICA of export products 200,000.00 Related to income Yes Social security reward for talent policies 125,786.55 Related to income Yes Production efficiency and advanced 110,000.00 Related to income Yes statistical awards Dr. Subsidies 75,000.00 Related to income Yes Special subsidies for R&D 50,168.00 Related to income Yes Industrial design Taihu Lake award 10,000.00 Related to income Yes Government grants of foreign trade and economic cooperation for regional 262,000.00 Related to income Yes development Industrial design relocate subsidy 500,000.00 Related to income Yes Award of cleaner production 100,000.00 Related to income Yes projects Other 73,100.00 Related to income Yes 100 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Total 6,454,141.22 7,073,551.50 -- -- 43. Non-operating expenses Unit: RMB Yuan Included in the amount of the non-recurring Item Reporting period Same period of last year gains and losses of the current period Including: Loss on disposal of fixed assets 1,475,989.61 3,189,776.67 1,475,989.61 Penalty expense 90,201.32 361,628.40 90,201.32 Donation expense 896,062.50 896,062.50 Local fees (flood prevention and security funds 1,744,406.84 2,539,111.79 etc.) Others 541,578.39 1,341,975.08 541,578.39 Total 4,748,238.66 7,432,491.94 3,003,831.82 44. Income tax expense Unit: RMB Yuan Item Reporting period Same period of last year Current income tax expense accounted by tax and relevant 117,060,681.30 48,833,267.58 regulations Adjustment of income tax -50,624,078.71 -5,840,915.65 Total 66,436,602.59 42,992,351.93 45. Calculation procedure of basic earnings per share and diluted earnings per share Item No. Reporting period Same period of last year Net profit attributable to common 1 shareholders of the Company(NP) 316,358,532.13 220,961,466.94 Non-recurring gains and losses of net profit attributable to common 2 shareholders of the Company after 43,860,535.03 34,252,100.32 deducting influence on income tax Net profit attributable to common shareholders of the Company after 3=1-2 deducting non-recurring gains and 272,497,997.10 186,709,366.62 losses Total shares as at 30 Jun. 2012 4 632,487,764.00 632,487,764.00 101 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Additional shares increased due to capital reserves converted to shares 5 or distribution of dividends, etc. in - - reporting period Additional shares due to issuance of new share or debts converted 6 - - into shares, etc. in reporting period The number of months from the next month when increasing shares 7 due to issuance of new share or - - debts converted into shares, etc. Reduced shares due to buy-back 8 business etc. in reporting period - - The number of months from the 9 next month when reducing shares - - Number of shares reduced in 10 reporting period - - Number of months in reporting 11 period 6.00 6.00 Weighted average of common 12=4+5+6×7÷11-8×9÷11-10 shares issued outside(Ⅰ) 632,487,764.00 632,487,764.00 Weighted average of common shares issued outside adjusted for 13 632,487,764.00 632,487,764.00 merger under common control(Ⅱ) Basic earnings per share(Ⅰ) 14=1÷13 0.50 0.35 Basic earnings per share(Ⅱ) 15=3÷12 0.43 0.30 Diluting potential common share 16 interests recognized as expenses - - Income tax rate 17 15% 15% Transformation expense 18 - - Amount of shares increased by transforming or exercising of 19 company bond, subscription - - certificate, or share option Diluted EPS(Ⅰ) 20=[1+(16-18)×(1-17)]÷(13+19) 0.50 0.35 Diluted EPS(Ⅱ) 21=[3+(16-18)×(1-17)]÷(12+19) 0.43 0.30 102 2014 Semi-annual Report of Wuxi Little Swan Company Limited. 46. Other comprehensive income Unit: RMB Yuan Item Reporting period Same period of last year 1. Profits/(losses) from available-for-sale financial assets -61,152.00 -44,688.00 Less: Effects on income tax generating from available-for-sale -9,172.80 -6,703.20 financial assets Subtotal -51,979.20 -37,984.80 2. Converted amount of foreign currency financial statements 277,987.96 -531,706.86 Subtotal 277,987.96 -531,706.86 Total 226,008.76 -569,691.66 47. Notes of Cash Flow Statement (1) Other cash received relevant to operating activities Unit: RMB Yuan Item Amount Penalty income 205,112.93 Subsidy on income, etc. 3,138,606.39 Interest income from normal bank deposit 9,196,425.25 Actual rent received from operating lease 652,675.00 Other cash income from non-operation 2,510,568.41 Total 15,703,387.98 (2) Other cash paid relevant to operating activities Unit: RMB Yuan Item Amount Sales expense paid in reporting period 488,083,830.35 Administration expense paid in reporting period 111,480,111.74 Handling charges for financial expense in reporting period 1,326,782.99 Others 11,526,696.57 Total 612,417,421.65 48. Appendix of Cash Flow Statement (1) Appendix of Cash Flow Statement Unit: RMB Yuan Item Reporting period Same period of last year 1. Reconciliation of net profit to net cash flows generated from operating -- -- 103 2014 Semi-annual Report of Wuxi Little Swan Company Limited. activities Net profit 350,363,717.00 235,920,464.23 Add: Provision for impairment of assets 11,419,997.31 13,726,351.33 Depreciation of fixed assets, of oil-gas assets, of productive biological assets 67,451,231.08 61,997,041.15 Amortization of intangible assets 2,893,989.24 2,886,528.31 Amortization of long-term deferred expense 6,551,177.05 13,664,749.38 Losses on disposal of property, plant and equipment, intangible assets and other -591,204.60 -1,068,313.60 long-term assets (gains: negative) Losses from changes in fair value (gains: negative) 13,529,790.00 -10,584,660.00 Financial expense (gains: negative) 656,433.57 Investment loss (gains: negative) -56,378,070.46 -38,581,681.44 Decrease in deferred income tax assets (gains: negative) -48,594,610.18 -7,428,614.62 Increase in deferred income tax liabilities (decrease: negative) -2,029,468.50 1,587,699.00 Decrease in inventory (gains: negative) 218,968,580.59 287,313,554.77 Decrease in accounts receivable from operating activities (gains: negative) 34,104,953.91 577,251,722.96 Increase in payables from operating activities (decrease: negative) 276,875,259.82 -205,562,545.65 Net cash flows generated from operating activities 875,221,775.83 931,122,295.82 II. Investing and financing activities that do not involving -- -- cash receipts and payment: III. Net increase in cash and cash equivalents -- -- Closing balance of cash 2,114,623,154.82 1,441,520,820.65 Less: Opening balance of cash 1,558,204,866.53 1,293,126,217.00 Net increase in cash and cash equivalents 556,418,288.29 148,394,603.65 (2) Particulars about gain or disposal of subsidiary and other business entities Unit: RMB Yuan Appendix information Reporting period Same period of last year I. Information about gain subsidiary and other business entities -- -- II. Information about disposal of subsidiary and other business entities -- -- 1.Cash and cash equivalents of disposal of subsidiary and other business 38,977.14 entities Less:Cash and cash equivalents held by subsidiary and other business 38,977.14 entities (3) Composition of cash and cash equivalents Unit: RMB Yuan Item Closing amount Opening amount 104 2014 Semi-annual Report of Wuxi Little Swan Company Limited. I. Cash 2,114,623,154.82 1,558,204,866.53 Including: cash in hand 8,158.18 21,277.15 Bank deposit can be used for payment at any time 2,114,614,996.65 1,558,183,589.38 II. Closing balance of cash and cash equivalents 2,114,623,154.82 1,558,204,866.53 XIII. Relationship and Related Party Transactions 1. Particulars about the parent company Proportion Proportions Ultimat s of parent of parent e Name of Relati Enterp Legal company’s company’s Regist Business Registered controll Organization parent ons-hi rise represen shareholdi voting right ration nature capital er of the code company p nature tative ng to the to the place compan company company y (%) (%) Manufacture, sales Joint Fosha Midea Parent and after sale He stock n, Fang Group Co., compa service of household 1,686,323,389 40.08% 40.08% Xiangji 72247334-4 compa Guang Hongbo Ltd ny appliances and its an ny dong equipments Note: According to the 2013 profits allocation preplan of Midea Group, the Midea Group transferred capital reserve to all shareholders up to15 shares for every 10 shares, after the completion of bonus share, the registered capital increased to RMB 4,215,808,472. As of the disclosure date of the report, the profits allocation has been completed; however, the industrial and commercial registration change is still in process. 2. Particulars about the subsidiaries Register Sharehol Voting ed Registrat Legal ding to right to Relationsh Business Business capital( Organizatio Name of subsidiaries ion represen the the ip type nature RMB n code place tative compan company thousand y (%) (%) Yuan) Limited Wholly-o Wuxi Little Swan General Electric liability Yin Producti wned Wuxi 2,800 70.00% 70.00% 76355342-0 Appliances Co. , Ltd. compan Bitong on subsidiary y Wholly-o Limited Yin Producti 362.46 Wuxi Filin Electronics Co. , Ltd. wned liability Wuxi 73.00% 73.00% 74815875-6 Bitong on (dollars) subsidiary compan 105 2014 Semi-annual Report of Wuxi Little Swan Company Limited. y Limited Wholly-o Wuxi Little Swan Washing Machine liability Chai Producti wned Wuxi 4,967.95 99.91% 99.91% 60792331-1 Co. , Ltd. compan Xinjian on subsidiary y Limited Wholly-o Wuxi Meitian Refrigerator Market liability Chai 400(doll wned Wuxi Trading 75.00% 75.00% 71490141-7 Co., Ltd. compan Xinjian ars) subsidiary y Limited Wholly-o Jiangsu Little Swan Marketing and liability Chai wned Wuxi Trading 41,950 99.63% 99.63% 73330538-9 Sales Co. , Ltd. compan Xinjian subsidiary y Limited Wholly-o Import Wuxi Little Swan Import & Export liability Yin wned Wuxi & 6,500 88.46% 88.46% 13600714-8 Co. , Ltd compan Bitong subsidiary Export y Limited Wholly-o Little Swan International liability Singapor Investm 500(doll wned 100.00% 100.00% (Singapore) Co., Ltd. compan e ent ars) subsidiary y Limited Wholly-o Little Swan (Jingzhou) Electronic liability Yin Producti wned Jingzhou 1,107.02 100.00% 100.00% 72614223-5 Appliances Co., Ltd. compan Bitong on subsidiary y Limited Wholly-o Hefei Midea Washing Machine Co., liability Yin Producti 13,552(d wned Hefei 69.47% 69.47% 14906761-7 Ltd. compan Bitong on ollars) subsidiary y Limited Wholly-o Hefei Midea Washing Machine liability Yin Producti wned Hefei 2,000 90.00% 90.00% 67423819-7 Manufacture Co., Ltd. compan Bitong on subsidiary y Note:Wuxi Little Swan Washing Machine Co. , Ltd. has been cancelled on July 15, 2014. 3. Information on co-operated or joint operated of the Company Legal Proportion Relati Business Registrat Business Registered Proportion of Organizatio Item represen of holding onshi Type ion place scope capital voting rights (%) n code tative shares (%) p 1. Co-operated 2.Joint operated Attend Logistics Co. Limited Guangzh Ye Logistics 10,000,000. 20.00% 20.00% Assoc 72993557-2 106 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Ltd. liability ou Weilong services 00 iates company 4. Other related parties of the Company Name of the parties Relationship Organization code Midea Group Co., Ltd Company controlling shareholder 72247334-4 Under control of controlling shareholder Midea Group Finance Co., Ltd 55912326-3 of the Company Under control of controlling shareholder Little Swan (Jingzhou) Electronic Appliances Co., Ltd. 70696333-5 of the Company Under control of controlling shareholder Hefei Midea Materail Supply Co.,Ltd 55183611-1 of the Company Under control of controlling shareholder Hefei Midea Refrigerator Co., Ltd 14906759-6 of the Company Under control of controlling shareholder Hefei Hua Ling Share Holding Co. , Ltd. 61031550-1 of the Company Under control of controlling shareholder MIDEA ELECTRIC TRADING(SINGAPORE)CO.PTE.LTD of the Company Holding shares of controlling PT. MIDEA PLANET INDONESIA shareholder of the Company Holding shares of controlling MIDEA SCOTT&ENGLISH ELECTRONIICS SDN.BHD shareholder of the Company Under control of controlling shareholder MIDEA CONSUMER ELECTRIC (VIETNAM) CO.,LTD of the Company Under control of family member close Hefei Bainian Molding Technology Co., Ltd. 66293360-0 to the actual controller Foshan Shunde District Bainian Technology Development Co., Under control of controlling shareholder 70807868-X Ltd. of the Company Foshan Shunde District Bainian Tongchuang Plastic Industrial Under control of controlling shareholder 79462671-7 Co., Ltd. of the Company Under control of controlling shareholder Ningbo Annto Logistics Co. Ltd. 57051088-9 of the Company Under control of controlling shareholder Huai'an Welling Motor Manufacturing Co., Ltd. 75968160-6 of the Company Under control of controlling shareholder Hubei Midea Refrigerator Co., Ltd. 70696333-5 of the Company Under control of controlling shareholder Wuhu Bainian Technology Development Co., Ltd. 75096265-5 of the Company Annto Logistics Co. Ltd. Under control of controlling shareholder 71992943-5 107 2014 Semi-annual Report of Wuxi Little Swan Company Limited. of the Company Under control of controlling shareholder Guangdong Midea Refrigeration Equipment Co., Ltd 72547107-X of the Company Under control of controlling shareholder Ningbo Midea United Material Supply Co., Ltd 56701636-1 of the Company 5. Related party transactions (1) Purchase of goods, services received among the related-party Unit: RMB Yuan Amount of this period Amount of last period Pricing Proportion Content of Proportion in principle of in Name of company related transactions related Amount transactions Amount transaction of the same parties of the same kind kind Logistics serv Ningbo Annto Logistics Co. Ltd. Market price 37,152,578.97 1.15% 48,196,839.91 1.93% ice Material Hubei Midea Refrigerator Co. Ltd. Market price 770,148.67 0.02% 5,437,926.04 0.22% purchase Electrical Huai'an Welling Motor Manufacturing Machine& Market price 191,827,058.83 5.95% 188,867,242.92 7.56% Co., Ltd. Material purchase Hefei Midea Materials Supply Co., Material Market price 79,038,575.14 2.45% 157,245,794.25 6.30% Ltd. purchase Ningbo Midea United Material Material Market price 114,393,353.84 3.55% Supply Co., Ltd purchase Hefei Hua Ling Share Holding Co. , Material Market price 40,259.03 0.00% Ltd. purchase Annto Logistics Share Holdings Co. Logistics Market price 88,989.25 0.00% 645,694.94 0.03% Ltd. service Guangdong Midea Environment Material Market price 4,288,888.90 0.13% Appliances Co. Ltd. purchase Hefei Bainian Molding Technology Material Market price 48,789,326.26 1.95% Co., Ltd. purchase Hefei Huitong Energy-saving Material Market price 43,917,322.82 1.76% Materials Co., Ltd. purchase Total 432,816,946.64 13.42% 493,100,147.11 19.75% 108 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Sales of goods, services provided among the related-party Unit: RMB Yuan Amount of this period Amount of last period Pricing Proportion Content of Proportion in principle of in Name of company related transactions related Amount transactions Amount transaction of the same parties of the same kind kind Hefei Bainian Molding Technology Market price 16,666,419.17 0.42% Co., Ltd. Hefei Midea Refrigerator Co., Ltd Market price 28,879.20 0.00% Huai'an Welling Motor Market price 51,192.77 0.00% 64,330.59 0.00% Manufacturing Co., Ltd. Sales of MIDEA ELECTRIC TRADING Sales of washing 676,907,927.34 13.61% 517,236,107.28 12.94% (SINGAPORE)CO.PTE.LTD materials machines Hefei Huitong Energy-saving Sales of Sales of 8,051,388.90 0.20% Materials Co., Ltd. materials materials Hefei Hua Ling Share Holding Co. , Sales of Sales of 330,788.91 0.01% Ltd. materials materials Sales of PT. MIDEA PLANET INDONESIA washing Market price 2,055,545.17 0.04% 6,816,739.22 0.17% machines Sales of MIDEA SCOTT&ENGLISH washing Market price 12,553,510.03 0.25% 7,439,098.97 0.19% ELECTRONIICS SDN.BHD machines Sales of MIDEA CONSUMER ELECTRIC washing Market price 816,211.03 0.02% (VIETNAM) CO.,LTD machines Total 692,384,386.35 13.92% 556,633,752.25 13.92% (2) Details of property transfer and debt restructuring between related parties Unit: RMB Yuan Pricing Amount of Amount of last period decision-m current period Type of Content of aking Proportion in Related party related related Proportion in procedure similar transaction transaction Amount similar Amount of related transactions transactions (%) transaction (%) Handan Midea Refrigeration Asset transf Sales of Market 840,577.60 5.01% 109 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Equipment Co., Ltd. erring equipment price Wuhu Bainian Technology Asset Sales of Market 2,293,061.0 13.65% Development Co., Ltd. transferring equipment price 7 Foshan Shunde District Bainian Asset Sales of Market 1,361,792.3 8.11% Technology Development Co., Ltd. transferring equipment price 5 Foshan Shunde District Bainian Market Asset Sales of 3,249,127.4 Tongchuang Plastic Industrial Co., price 19.35% transferring equipment 7 Ltd. 7,744,558.4 Total 46.11% 9 6. Amount due to/from related parties Receivable from the related parties Unit: RMB Yuan Closing amount Opening amount Item Name of related parties Provision for bad Provision for bad Book balance Book balance debts debts Accounts rece MIDEA ELECTRIC TRADING 289,064,145.28 14,453,207.26 216,980,362.32 10,802,299.01 ivable (SINGAPORE)CO.PTE.LTD Accounts MIDEA SCOTT&ENGLISH 7,845,232.18 392,261.61 10,020,687.97 125,393.20 receivable ELECTRONILCS SDN.BHD Accounts rece PT MIDEA PLANET INDONESIA 801,605.24 40,080.26 2,507,863.97 501,034.40 ivable Accounts MIDEA CONSUMER ELECTRIC 844,303.34 42,215.17 4,651.08 232.55 receivable (VIETNAM) CO.,LTD Accounts Hefei Midea Refrigerator Co. Ltd. 1,788.06 357.61 receivable Total 298,555,286.04 14,927,764.30 229,515,353.40 11,429,316.77 Receivable in Hefei Midea Materials Supply Co., 308.96 3,074,917.50 advance Ltd. Receivable in Ningbo Midea United Material 15,845,206.76 advance Supply Co., Ltd Receivable in Ningbo Annto Logistics Co. Ltd. 16,406.87 advance Total 15,845,515.72 3,091,324.37 Payable to the related parties Unit: RMB Yuan Item Name of related parties Closing amount Opening amount 110 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Accounts Hefei Midea Materials Supply Co., Ltd. 1,339,438.80 60,510,586.85 receivable Accounts Huai'an Welling Motor Manufacturing Co., Ltd. 44,912,510.57 39,169,018.59 receivable Accounts Hefei Hua Ling Share Holding Co. , Ltd. 510,238.62 receivable Accounts Foshan Shunde District Bainian Technology Development Co., 276,400.00 276,400.00 receivable Ltd. Accounts Hefei Bainian Molding Technology Co., Ltd. 172,082.75 receivable Accounts Ningbo Annto Logistics Co. Ltd. 128,380.63 144,787.50 receivable Accounts Annto Logistics Share Holding Co. Ltd. 81,649.55 90,630.06 receivable Accounts Ningbo Midea United Material Supply Co., Ltd 1,068,111.50 receivable Accounts Hubei Midea Refrigerator Co., Ltd 291,120.87 receivable Total 47,806,491.05 101,164,865.24 Receivable MIDEA ELECTRIC TRADING(SINGAPORE)CO.PTE.LTD 1,050,573.11 56,655,613.54 in advance Receivable MIDEA SCOTT&ENGLISH ELECTRONILCS SDN.BHD 30,931.47 in advance Total 1,050,573.11 56,686,545.01 Other accounts Midea Group Co., Ltd 0.00 390,636.00 receivable Total 0.00 390,636.00 IX. Share-based payment 1. Overall of share-based payment Note to share-based payment During the reporting period, the Midea Group and the high-level management personnel and technical backbone personnel of its subsidiaries implemented stock options incentive plan and authorized the incentive personnel stock options 40.602 million According to the announcement of the Midea Group on 19 Feb 2014 and 27 May 2014, due to the demission of 12 incentive personnel before using their rights, they were no longer incentive personnel and the related stock options 657000 were written off. The stock options authorized to incentive personnel was adjusted to 39.945 million. In the year of 2013, the Midea Group distributed RMB 20 in cash for every 10 shares to all shareholders meanwhile transferred capital reserve up to 15 shares for every 10 shares. The equity 111 2014 Semi-annual Report of Wuxi Little Swan Company Limited. allocation plan had been conducted on 30 Apr. 2014, according to the stipulation of Company stock options incentive plan (draft) disclosed by the Midea Group, after the equity distribution, the stock options was adjusted to 999.8625 million. As of the disclosure date of the report, the Company and its subsidiaries in the stock options incentive plan authorized incentive personnel 6.2325 million stock options 2. Share-based payment by equity method Unit: RMB Yuan Recognition method of the authorized fair value of the equity Adjusted based on market price instruments Accumulative amount of share-base payment by equity method 38,623,251.88 in capital reserve Total amount recognized through share-base payment by equity 39,059,948.33 method 3. Service as a result of share-based payment Unit: RMB Yuan The total amount of the employee services as a result of 39,059,948.33 share-based payment X. Contingencies 1The contingent liability and its financial impact arising from unsettled litigation or arbitration Hefei Dongya Windows, Doors, Curtain Walls Decoration Co., Ltd had the project construction work contract dispute with Jiangsu Hongda Construction Group Co., Ltd and Hefei Midea Washing Machine Co., Ltd and Applied for litigation preservation from the people's court of Feixi County, Anhui Province; the subsidiary Hefei Midea Washing Machine Co., Ltd ‘s bank deposit RMB 620000 was frozen by the court. 2. The contingent liability and its financial impact arising from providing debt guarantees to other units (1) According to the subsidiary's financial requirement of the production and operation and the needs of the business development, th e company submits an application to the bank for the issuance of banker’s acceptance bills RMB709000 providing guaranteed for He fei Midea Washing Machine Co, Ltd. (2) The Company pledges a deposit of RMB 3.4732 million to the Bank of China a Ltd. Wuxi Branch for the issuance of bank acceptance bills. (3) The Company pledges a deposit of RMB 313500 to Wuxi Branch of Agricultural Bank of China Co.,Ltd. for the issuance of bank acceptance bills. XI. Commitments 1. Significant commitments As of 31, Dec, 2014, no significant commitments should be disclosed. 112 2014 Semi-annual Report of Wuxi Little Swan Company Limited. XII. Other significant events 1. Assets and liabilities measured by fair value Unit: RMB Yuan Gains and losses of The cumulative fair Provision for Item Opening amount fair value in this value recognized in impairment in this Closing amount period equity movements period 1.Financial assets 1. Derivative financial 15,016,740.00 -13,529,790.00 1,486,950.00 assets 2. Financial assets 312,816.00 61,152.00 128,659.40 251,664.00 available for sale Total 15,329,556.00 -13,468,638.00 128,659.40 1,738,614.00 Financial liabilities 0.00 0.00 2. Financial liabilities and foreign financial liabilities Unit: RMB Yuan Gains and losses of The cumulative fair Provision for Item Opening amount fair value in this value recognized in impairment in this Closing amount period equity movements period Financial assets 1. Derivative financial 15,016,740.00 -13,529,790.00 1,486,950.00 assets Subtotal of financial 15,016,740.00 -13,529,790.00 1,486,950.00 assets Financial liabilities 0.00 0.00 0.00 XIII. Notes to the financial statements of Parent Company 1. Accounts receivable (1) Accounts receivable Unit: RMB Yuan Closing balance Opening balance Book value Provision for bad debts Book value Provision for bad debts Items Proport Proportio Proporti Proporti Amount Amount Amount Amount ion n on on Account receivable with consolidated provision for bad debt Consolidation 1: aging 381,742,210.02 76.72% 19,124,409.26 5.01% 404,535,014.38 52.60% 20,348,820.07 5.03% consolidation Consolidation 2: account 104,175,323.01 20.94% 347,260,005.38 45.16% 113 2014 Semi-annual Report of Wuxi Little Swan Company Limited. received in the range of consolidated statements Subtotal of consolidation 485,917,533.03 97.65% 19,124,409.26 3.94% 751,795,019.76 97.76% 20,348,820.07 2.71% Account receivable with 100.00 small individual amount 11,693,283.11 2.35% 11,693,283.11 100.00% 17,241,527.92 2.24% 17,241,527.92 % and provision for bad debt Total 497,610,816.14 -- 30,817,692.37 -- 769,036,547.68 -- 37,590,347.99 -- Account receivable with large individual amount and provision for bad debt at the end of period □ Applicable √ Inapplicable Account receivable in the consolidation with provision for bad debt by aging analysis method: √ Applicable □ Inapplicable Unit: RMB Yuan Closing balance Opening balance Aging Book balance Provision for bad Book balance Provision for bad Amount Proportion debts Amount Proportion debts Within 1 year Including: -- -- -- -- -- -- Subtotal of 381,031,054.70 99.81% 19,051,552.53 402,093,647.22 99.40% 20,104,682.36 within 1 year 1 to 2 years 706,801.51 0.19% 70,680.15 2,441,359.96 0.60% 244,136.00 2 to 3 years 1.60 0.00% 0.48 6.53 0.00% 1.31 Over 3 years 4,352.21 0.00% 2,176.10 0.67 0.00% 0.40 Total 381,742,210.02 -- 19,124,409.26 404,535,014.38 -- 20,348,820.07 Account receivable in the consolidation with provision for bad debt by balance percentage method: □ Applicable √ Inapplicable Account receivable in the consolidation with provision for bad debt by other method: □ Applicable √ Inapplicable Account receivable with small individual amount and provision for bad debt at the end of period √Applicable □ Inapplicable Unit: RMB Yuan Amount of bad Content of account receivable Book balance Proportion (%) Reason debt Difficult to CGNPC Engineering Co., Ltd 853,104.00 853,104.00 100.00% recover Difficult to Chongqing Taizheng Group Co., Ltd 851,500.00 851,500.00 100.00% recover Difficult to Chongqing R&F Properties Co., Ltd 1,675,800.00 1,675,800.00 100.00% recover Chongqing Zhongcheng Properties Development Co., Difficult to 1,655,000.00 1,655,000.00 100.00% Ltd recover 114 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Hunan Huitang Hot Spring Huatiancheng Properties Difficult to 6,657,879.11 6,657,879.11 100.00% Co., Ltd and such 61 portals recover Total 11,693,283.11 11,693,283.11 -- -- (2) Particulars about account receivable returned or withdrawn in the reporting period Unit: RMB Yuan Foundation to Accumulated amount Amount Reason of return confirm of provision for bad Content of account receivable returned or or withdrawal provision debt before return or withdrawn for bad debt withdrawal Estimated Foshan City Shunde District Midea HVAC Equipment Negotiated difficult to 0.30 0.30 Co., Ltd. (Stop) collection recover Estimated CNOOC Energy Technology & Services - Catering & Negotiated difficult to 57,662.50 57,662.50 Support Services Co., Ltd collection recover Estimated Negotiated China Nuclear Power Engineering Co., Ltd difficult to 150,500.00 107,500.00 collection recover Estimated Chongqing Wanzhou Wanda Hotel Management Co., Negotiated difficult to 303,092.00 187,569.00 Ltd collection recover Estimated Hunan Huitang Hot Spring Huatiancheng Properties Negotiated difficult to 1,272,000.00 260,000.00 Co., Ltd collection recover Estimated Negotiated Tangshan Wanda Investment Real Estate Co., Ltd difficult to 531,488.00 472,116.00 collection recover Estimated Negotiated Hangzhou Xixi Investment Development Co., Ltd difficult to 745,584.30 521,909.01 collection recover Estimated Negotiated Chongqing Taizheng Group Co., Ltd difficult to 1,851,500.00 1,000,000.00 collection recover Estimated Hangzhou Xihu District Xixi Welt Land Negotiated difficult to 1,427,004.00 1,427,004.00 Comprehensive Protection Project Headquarters collection recover Estimated Negotiated CGNPC Engineering Co., Ltd difficult to 2,367,588.00 1,514,484.00 collection recover Total -- -- 8,706,419.10 -- 115 2014 Semi-annual Report of Wuxi Little Swan Company Limited. (3) Top 5 companies with largest amount of account receivable Unit: RMB Yuan Proportion in total Company name Relationship Amount Years limit amount of account receivable (%) Hefei Midea Washing Machine Co., Ltd Subsidiary 96,411,504.02 Within 1 year 19.37% Suning Yunshang Group Co., LTD. Suning Non-related 84,479,958.13 Within 1 year 16.98% Purchasing Center party MIDEA ELECTRIC TRADING Non-related 42,301,936.23 Within 1 year 8.50% (SINGAPORE)CO.PTE.LTD party Kunming Midea Refregeration Equipments Non-related 17,326,247.18 Within 1 year 3.48% Sales Co., Ltd party Jilin province Midea Refregeration Non-related 14,057,381.36 Within 1 year 2.82% Equipments Sales Co., Ltd party Total -- 254,577,026.92 -- 51.15% (4) Account receivable from related parties Unit: RMB Yuan Proportion in total amount Company name Relationship Amount of account receivable (%) MIDEA ELECTRIC TRADING Holding shares of controlling 42,301,936.23 8.50% (SINGAPORE)CO.PTE.LTD shareholder of the Company MIDEA SCOTT&ENGLISH ELECTRONIICS Holding shares of controlling 228,785.78 0.05% SDN.BHD shareholder of the Company Holding shares of controlling PT. MIDEA PLANET INDONESIA 325,298.54 0.07% shareholder of the Company Hefei Midea Washing Machine Co., Ltd Subsidiary 96,411,504.02 19.37% Total -- 139,267,524.57 27.99% 2. Other receivables (1) Other receivables Unit: RMB Yuan Closing balance Opening balance Book value Provision for bad debts Book value Provision for bad debts Items Proporti Proporti Proporti Proportio Amount Amount Amount Amount on on on n Other receivables with consolidated provision for bad debt Consolidation 1: aging 22,890,885.90 22.44% 2,423,262.89 10.59% 20,350,003.60 20.45% 1,597,802.77 7.85% 116 2014 Semi-annual Report of Wuxi Little Swan Company Limited. consolidation Consolidation 2: other receivables in the range of 79,112,973.93 77.56% 79,112,973.93 100.00% 79,150,338.65 79.55% 79,150,338.65 100.00% consolidated statements Subtotal of consolidation 102,003,859.83 100.00% 81,536,236.82 79.93% 99,500,342.25 100.00% 80,748,141.42 100.00% Total 102,003,859.83 -- 81,536,236.82 -- 99,500,342.25 -- 80,748,141.42 -- Note to type of other receivables: Naught. Other receivables with large individual amount and provision for bad debt at the end of period: □Applicable √ Inapplicable Other receivables in the consolidation with provision for bad debt by aging analysis method: √ Applicable □ Inapplicable Unit: RMB Yuan Closing balance Opening balance Book balance Book balance Aging Provision for bad Provision for bad Proporti Proporti Amount debts Amount debts on on Within 1 year Including: -- -- -- -- -- -- Subtotal 9,831,062.11 42.95% 491,553.10 18,164,493.72 89.26% 908,224.69 1 to 2 years 11,264,946.91 49.21% 1,126,494.69 1,145,035.00 5.63% 114,503.50 2 to 3 years 746,052.00 3.26% 223,815.60 165,000.00 0.81% 33,000.00 Over 3 years 934,850.76 4.08% 467,425.38 833,500.76 4.10% 500,100.46 3 to 4 years 113,974.12 0.50% 113,974.12 41,974.12 0.21% 41,974.12 Over 5 years 22,890,885.90 -- 2,423,262.89 20,350,003.60 -- 1,597,802.77 Other receivables in the consolidation with provision for bad debt by balance percentage method: □ Applicable √ Inapplicable Other receivables in the consolidation with provision for bad debt by other methods: □ Applicable √Inapplicable Other receivables with small individual amount and provision for bad debt at the end of period: □ Applicable √Inapplicable (2) Top 5 companies with largest amount of other receivables Unit: RMB Yuan Proportion in total amount of Company name Relationship Amount Term account receivable (%) Ministry of Industry and Government sector 10,128,571.10 Within 1 year 9.93% Information Wang Ruiqun Staff 2,588,000.00 Within 1 year 2.54% Wuxi Huarun Gas Co., Ltd. Partner 1,212,830.80 Within 1 year 1.19% Huang Qingqing Staff 829,671.14 Within 1 year 0.81% 117 2014 Semi-annual Report of Wuxi Little Swan Company Limited. The CPC Hunan Provincial Party Committee Party Government sector 400,000.00 Within 1 year 0.39% School, Total -- 15,159,073.04 -- 14.86% 118 2014 Semi-annual Report of Wuxi Little Swan Company Limited. 3. Long-term equity investments Unit: RMB Yuan Explanations on differences Accrued Proporti Proportion between impairm Cash Amount of Initial Increase/ ons of Impairment Invested entities Method Opening amount Closing amount of voting shareholding ent dividend investment decrease sharehol provision rights (%) proportion and provisio s ding (%) voting right n proportion Guangzhou Antaida Logistical Co., Equity 2,000,000.00 3,169,148.88 19,847.57 3,188,996.45 20.00% 20.00% Ltd. method Wuxi Little Swan Import & Export Cost 57,500,000.00 57,500,000.00 57,500,000.00 88.46% 88.46% Co. , Ltd method Wuxi Little Swan Washing Machine Cost 37,259,587.50 75.00% 75.00% 37,259,587.50 Co. , Ltd. method Wuxi Meitian Refrigerator Marketing Cost 24,840,000.00 75.00% 75.00% 24,840,000.00 and Sale Co., Ltd. method Jiangsu Little Swan Marketing and Cost 417,550,000.00 417,550,000.00 417,550,000.00 99.54% 99.54% Sales Co. , Ltd. method Cost Wuxi Filin Electronics Co. , Ltd. 19,620,041.50 25,660,308.10 25,660,308.10 73.00% 73.00% method Wuxi Little Swan General Electric Cost 19,600,000.00 19,600,000.00 19,600,000.00 70.00% 70.00% Appliances Co. , Ltd. method San Jin(Jing Zhou) Electrical Cost 11,869,431.12 11,869,431.12 11,869,431.12 100.00% 100.00% 119 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Appliances Co. , Ltd. method Little Swan International(Singapore) Cost 34,052,500.00 34,052,500.00 34,052,500.00 100.00% 100.00% Co., Ltd. method Hefei Royalstar Washing Equipment Cost 830,962,252.35 830,962,252.35 830,962,252.35 69.47% 69.47% Manufacturing Co., Ltd method Tianjin Little Swan Washing Machine Cost 200,000,000.00 200,000,000.00 -200,000,000.00 0.00 100.00% 100.00% Co. , Ltd. method Suzhou People's Shopping Cost 150,000.00 150,000.00 150,000.00 Mall(100,000 shares) method Bank of Jiangsu Inc. (2,202,564 Cost 1,100,000.00 1,210,000.00 1,210,000.00 shares) method Total -- 1,656,503,812.47 1,601,723,640.45 -199,980,152.43 1,401,743,488.02 -- -- -- 62,099,587.50 Note: Wuxi Little Swan Washing Machine Co. , Ltd. had been cancelled on 15 Jul. 2017. 120 2014 Semi-annual Report of Wuxi Little Swan Company Limited. 4. Operating revenues and costs (1) Operating revenues and costs Unit: RMB Yuan Item Reporting period Same period of last year Revenue from main business 3,402,936,436.54 2,727,383,248.53 Revenue from other business 239,763,786.41 183,019,115.33 Total 3,642,700,222.95 2,910,402,363.86 Operating costs 2,718,742,930.62 2,197,383,259.40 (2) Main business (by industry) Unit: RMB Yuan Reporting period Same period of last year Industry Operating income Operating costs Operating income Operating costs Household appliances 3,402,936,436.54 2,497,703,786.49 2,727,383,248.53 2,027,184,268.86 Manufacturing Total 3,402,936,436.54 2,497,703,786.49 2,727,383,248.53 2,027,184,268.86 (3) Main business (by product) Unit: RMB Yuan Reporting period Same period of last year Product Operating income Operating costs Operating income Operating costs Washing machine 3,402,936,436.54 2,497,703,786.49 2,727,383,248.53 2,027,184,268.86 Total 3,402,936,436.54 2,497,703,786.49 2,727,383,248.53 2,027,184,268.86 (4) Main business (by region) Unit: RMB Yuan Reporting period Same period of last year Region Operating income Operating costs Operating income Operating costs Domestic 3,032,491,395.17 2,157,882,349.17 2,441,391,796.73 1,761,028,103.60 Other countries 370,445,041.37 339,821,437.32 285,991,451.80 266,156,165.26 Total 3,402,936,436.54 2,497,703,786.49 2,727,383,248.53 2,027,184,268.86 121 2014 Semi-annual Report of Wuxi Little Swan Company Limited. (5) Operating revenues of the top 5 clients of the company Unit: RMB Yuan Proportion in total Name of client Total operating revenues operating revenue (%) Suning Yunshang Group Co., LTD. Suning Purchasing Center 324,363,654.31 8.90% MIDEA ELECTRIC TRADING SINGAPORE)CO.PTE.LTD 262,458,087.19 7.21% Beijing Jingdong Century Information Technology Co., Ltd. 92,580,624.78 2.54% Guizhou Midea Refrigeration Sales Co., Ltd. 67,985,002.52 1.87% PAKSHOMA COMPANY 63,556,770.56 1.74% Total 810,944,139.36 22.26% 5. Investment income (1) Details of investment income Unit: RMB Yuan Item Reporting period Same period of last year Income from long-term equity investment calculated by cost 50,000.00 method Income from long-term equity investment calculated by 19,847.57 53,125.03 equity method Investment income from disposal of long term equity -8,513,054.48 investment Investment income gained during the period of holding 2,341,450.00 3,071,840.00 marketable financial assets Others 29,625,630.07 19,567,723.65 Total 23,473,873.16 22,742,688.68 (2) Income from long-term equity investment calculated by cost method Unit: RMB Yuan Same period of last Reason of increase/decrease in current Invested company Reporting period year period Suzhou People’s Department Store 50,000.00 Total 50,000.00 -- (3) Income from long-term equity investment calculated by equity method Unit: RMB Yuan 122 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Same period of last Reason of increase/decrease in current Invested company Reporting period year period Guangzhou Antaida Logistical Co., Ltd. 19,847.57 53,125.03 Total 19,847.57 53,125.03 -- 6. Appendix of Cash Flow Statement Unit: RMB Yuan Item Reporting period Same period of last year 1. Reconciliation of net profit to net cash flows generated from operating -- -- activities Net profit 227,125,958.29 175,420,207.11 Add: Provision for impairment of assets -5,948,475.57 2,850,533.92 Depreciation of fixed assets, of oil-gas assets, of productive biological 34,895,098.81 29,124,372.80 assets Amortization of intangible assets 1,461,305.51 1,398,648.06 Amortization of long-term deferred expense 8,753,810.65 11,994,070.95 Losses on disposal of property, plant and equipment, intangible assets and other -1,895,918.10 9,094.71 long-term assets(gains: negative) Loss from fair value change (gains: negative) 7,835,910.00 -6,513,520.00 Finance expense (gains: negative) 656,433.57 Investment loss(gains: negative) -23,473,873.16 -22,742,688.68 Decrease in deferred income tax assets(gains: negative) -28,522,173.33 -8,247,791.44 Increase in deferred income tax liabilities(decrease: negative) -1,175,386.50 977,028.00 Decrease in inventory(gains: negative) 174,934,408.77 210,786,341.44 Decrease in accounts receivable from operating activities(gains: negative) 31,340,893.17 257,042,104.21 Increase in payables from operating activities(decrease: negative) 124,904,484.60 48,743,611.37 Net cash flows generated from operating activities 550,892,476.71 700,842,012.45 II. Investing and financing activities that do not involving -- -- cash receipts and payment: III. Net increase in cash and cash equivalents -- -- Closing balance of cash 1,293,828,638.93 804,050,801.77 Less: Opening balance of cash 882,413,120.18 848,257,647.96 Add: Closing balance of cash equivalents Less: Opening balance of cash equivalents Net increase in cash and cash equivalents 411,415,518.75 -44,206,846.19 XIV. Supplementary information 1. List of non-recurring gains and losses in the period 123 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Unit: RMB Yuan Item Amount Notes Loss and gains on disposal of non-current assets (Including write-off part of -1,184,389.51 the provision for asset impairment) Governmental subsidy included in the current profits and losses(is closely related with the business event, except for the governmental subsidy that 6,454,141.22 according to the national unity standard quota or the quantitative regal assets) Gains and losses of committing others of investment or managing assets 52,412,042.89 The reversal of impairment of receivables of the individual impairment test 1,688,200.34 Income and expenses of the other operation except for the mentioned above 5,548,244.81 The other items of gains and losses conforming the definition of 1,652,425.93 non-recurring gains and losses Less:the effect of income tax -5,809,948.33 the effect of minority interest (after tax) 9,985,599.85 Loss and gains on disposal of non-current assets (Including write-off part of 6,914,582.47 the provision for asset impairment) Governmental subsidy included in the current profits and losses(is closely related with the business event, except for the governmental subsidy that 43,860,535.03 -- according to the national unity standard quota or the quantitative regal assets) The government subsidies included in the current profits and losses was the current profits and losses project, which shall be disclosed with recognition reason. □ Applicable √ Inapplicable 2. Return on equity and earnings per share Unit: RMB Yuan Weighted average return Earnings per share Profits in the reporting period on equity (%) Basic EPS Diluted EPS Net profits belonging to shareholders of common shares 7.78% 0.50 0.50 Net profits belonging to shareholders of common shares 6.70% 0.43 0.43 after deducting non-recurring profit and loss 3. Main items in the accounting statements and movements thereof Unit: RMB Ten thousand 30 Jun. 31 Dec. 2014/ 2013/ Increase/de Increase/decreas Item Reasons for movement Jan.-Jun. Jan.-Jun. crease e (%) 2014 2013 124 2014 Semi-annual Report of Wuxi Little Swan Company Limited. Operating activities net cash flows greatly Monetary capital 216,529.51 161,737.31 54,792.20 34% increased Affected by exchange rate fluctuations, Tradable financial foreign currency forward contracts fair value 148.70 1,501.67 -1,352.98 -90% assets decreased and the foreign currency forward contracts signed with the bank decreased Long-term 346.65 714.78 -368.13 -52% The mold amortization, book value decreased deferred expense Payment since the opening bank acceptance Note payable 86,824.07 38,567.31 48,256.75 125% way increased in the reporting period Receivable in Affected by the sales cycle, deferred revenue 43,953.59 105,795.26 -61,841.67 -58% advance had decreased Received relocating &rebuilding Special account 378.40 207.40 171.00 82% compensation for this issue in the reporting payable period Deferred income The book value of tradable financial assets 24.57 228.44 -203.86 -89% tax liabilities decreased Increased in line with the increase of sales Sales expense 70,887.22 53,996.61 16,890.61 31% income Financial expense -989.98 2,014.31 -3,004.29 -149% Exchange rate change, exchange loss reduced Assets 1,142.00 1,372.64 -230.64 -17% Raw material price loss reduced impairment loss Gains on the Gains on the changes in the fair value of the changes in the fair -1,352.98 1,058.47 -2,411.45 -228% foreign currency forward contracts reduced value As the increase of bank of financial products Investment 5,637.81 3,858.17 1,779.64 46% and yield rate, the income of bank financial income products increased Non-operating Gains on the disposal of fixed assets and 1,161.42 1,765.09 -603.67 -34% income penalty was less than that in last year Non-operating 474.82 743.25 -268.43 -36% Decreased in the disposal of fixed assets expenses Other Exchange rate changes and changes of comprehensive 22.60 -56.97 79.57 140% translation reserve income The net cash flow The financial products pay in cash and cash from investment -13,449.52 -60,014.40 46,564.88 78% due to recover were comparatively balance activities 125 2014 Semi-annual Report of Wuxi Little Swan Company Limited. X. Documents Available for Reference 1. Text of the Semi-annual Report 2014 with the signature of the Chairman of the Board of Directors. 2. Accounting statements with signatures and seals of the legal representative, the chief financial officer and the head of accounting. 3. Originals of all documents and announcements of the Company ever disclosed on Securities Times and Hong Kong Ta Kung Pao in the reporting period. Wuxi Little Swan Co., Ltd. Legal Representative: Fang Hongbo 5 Aug. 2014 126