意见反馈 手机随时随地看行情

公司公告

皖美菱B:2017年半年度报告(英文版)2017-08-10  

						                 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017




HEFEI MEILING CO., LTD.

  Semi-Annual Report 2017




        August 2017
                                                             HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017




          Section I. Important Notice, Contents and Paraphrase

     Board of Directors, Supervisory Committee, all directors, supervisors and senior executives of
Hefei Meiling Co., Ltd. (hereinafter referred to as the Company) hereby confirm that there are no
any fictitious statements, misleading statements, or important omissions carried in this report, and
shall take all responsibilities, individual and/or joint, for the reality, accuracy and completion of the
whole contents.

    Mr. Li Wei, person in charge of the Company, Mr. Zhang Xiaolong, person in change of
accounting work and Mr. Luo Bo, person in charger of accounting organ (accountant in charge)
hereby confirm that the Financial Report of 2017 Semi-Annual Report is authentic, accurate and
complete.

     The Company did not have directors, supervisors and senior executives of the Company could
not guarantee the reality, accuracy and completion of the whole contents or have objections.

   All the directors attended the board meeting on deliberating the Report on site and by
communication.

     Modified audit opinions notes

     □ Applicable    √ Not applicable

     The financial report of 2017 semi-annual report has not been audited by CPA

     Risk warning of the forward-looking statements with future planning involved in semi-annual
report

     √ Applicable   □Not applicable

     Concerning the forward-looking statements with future planning involved in the Report, they
do not constitute a substantial commitment for investors, investors and the person concerned should
maintain adequate risk awareness, furthermore, differences between the plans, forecast and
commitments should be comprehended. Investors are advised to exercise caution of investment
risks.

     Investors are advised to read the full text of semi-annual report, and pay particular attention to
the following risk factors.

     More details about the possible risks and countermeasures in the operation of the Company are
described in the report ―X. Risks and countermeasures‖ of ―Section IV Discussion and Analysis of
the Operation‖, investors are advised to read the relevant content.




                                                    1
                                                       HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



    Securities Times, China Securities Journal, Hong Kong Commercial Daily and Juchao Website
(www.cninfo.com.cn) are the media for information disclosure for year of 2017 that appointed by
the Company. All public information under the name of the Company disclosed on the above said
media and website shall prevail, and investors are advised to exercise caution.

    Does the Company need to comply with disclosure requirements of the special industry: No

    Profit distribution pre-plan or capitalizing of common reserves pre-plan deliberated by the
Board in the semi-annual period

    □Applicable √Not applicable

     The Company has no plans of cash distribution, bonus shares and capitalizing of common
reserves either.

    Directors and senior executives of the Company respectively signed Written Confirmation
Opinions for 2017 Semi-Annual Report.

    Supervisory Committee of the Company formed Written Examination Opinions for 2017
Semi-Annual Report.




                                               2
                                                                              HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017




                                                        Contents




Section I. Important Notice, Contents and Paraphrase .......................................................... 1

Section II Company Profile and Main Finnaical Indexes....................................................... 5

Section III Summary of Company Business ............................................................................ 9

Section IV Discussion and Analysis of the Operation ........................................................... 14

Section V. Important Events .................................................................................................... 41

Section VI. Changes in Shares and Particulars about Shareholders ................................... 81

Section VII. Preferred Stock .................................................................................................... 88

Section VIII. Particular about Directors, Supervisors and Senior Executives ................... 89

Section IX Corporate Bond ..................................................................................................... 91

Section X. Financial Report ..................................................................................................... 92

Section XI Documents available for Reference.................................................................... 233




                                                                 3
                                                                     HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017




                                                  Paraphrase
                  Items                      Refers to                          Contents
Company, the Company or Meiling
                                Refers to HEFEI MEILING CO., LTD
Electric
Sichuan Changhong         or   controlling
                                             Refers to Sichuan Changhong Electric Co., Ltd.
shareholder
Changhong Group                              Refers to Sichuan Changhong Electronics Holding Group Co., Ltd.

Hong Kong Changhong                          Refers to CHANGHONG (HK) TRADING LIMITED

Meiling Group                                Refers to Hefei Meiling Group Holdings Limited
Industry Investment Group                    Refers to Hefei Industry Investment Holding (Group) Co., Ltd.
Shine Wing                                   Refers to Shine Wing Certified Public Accountants (LLP)
Changhong Air-conditioner                    Refers to Sichuan Changhong Air-conditioner Co., Ltd.
Zhongke Meiling                              Refers to Zhongke Meiling Cryogenic Technology Co., Ltd.
Jiangxi Meiling                              Refers to Jiangxi Meiling Electric Appliance Co., Ltd.
Changhong Ridian                             Refers to Guangdong Changhong Ridian Technology Co., Ltd.
Zhongshan Changhong                          Refers to Zhongshan Changhong Electric Co., LTD
Changmei Technology                          Refers to Changmei Technology Co., Ltd.
Huayi Compressor                             Refers to Huayi Compressor Co., Ltd.
Meiling CANDY                                Refers to Meiling CANDY Washing Machine Co., Ltd.
Candy Group                                  Refers to Candy Hoover Group S.r.l.
CSRC                                         Refers to China Securities Regulatory Commission
                                                         China Securities Regulatory Commission, Anhui Province
Anhui Securities Bureau                      Refers to
                                                         Securities Regulatory Bureau
SSE                                          Refers to Shenzhen Stock Exchange




                                                            4
                                                                 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017




           Section II Company Profile and Main Finnaical Indexes

        I. Company profile

                                                   MEILINGDIANQI,
Short form of the stock                                                   Stock code         000521, 200521
                                                   WANMEILING-B
Short form of the Stock after changed (if
                                                                            N/A
applicable)
Stock exchange for listing                                       Shenzhen Stock Exchange
Name of the Company (in Chinese)                                  合肥美菱股份有限公司
Short form of the Company (in Chinese)                                   美菱电器
Foreign name of the Company (if applicable)                      HEFEI MEILING CO.,LTD.
Abbr. of English name of the Company (if
                                                                           HFML
applicable)
Legal representative                                                       Li Wei

        II. Person/Way to contact

                                 Secretary of the Board                      Rep. of security affairs
 Name                                     Li Xia                                    Zhu Wenjie
                          No. 2163, Lianhua Road, Economic and       No. 2163, Lianhua Road, Economic and
 Contact add.
                           Technology Development Zone, Hefei         Technology Development Zone, Hefei
 Tel.                               0551-62219021                                 0551-62219021
 Fax.                               0551-62219021                                 0551-62219021
 e-mail                            lixia@meiling.com                        wenjie.zhu@meiling.com

        III. Others
        1. Way of contact
        Whether registrations address, offices address and codes as well as website and email of the
Company changed in reporting period or not
        □ Applicable √ Not applicable
        Registrations address, offices address and codes as well as website and email of the Company
has no change in reporting period, found more details in Annual Report 2016.
        2. Information disclosure and preparation place
        Whether information disclosure and preparation place changed in reporting period or not
        □ Applicable √ Not applicable



                                                       5
                                                                     HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



       The newspaper appointed for information disclosure, website for semi-annual report publish
 appointed by CSRC and preparation place for semi-annual report have no change in reporting
 period, found more details in Annual Report 2016.
       3. Other relevant information
       Whether other relevant information has changed in reporting period or not
       √Applicable □Not applicable
       Being deliberated and approved by 33rd meeting of 8th BOD held on 21 July 2017, Mr. Li Wei
 was selected as chairman of the 8th BOD of the Company with office term same as the BOD’s. And
 according to the regulation of Article 8 of Article of Association, chairman of the Company is the
 legal representative of the Company.

       IV. Main accounting data and financial indexes
       Whether it has retroactive adjustment or re-statement on previous accounting data or not
       □Yes √No
                                                                                             Increase/decrease in
                                             Current period       Same period of last year
                                                                                               this report y-o-y
Operating income (RMB)                         8,517,794,193.10         6,866,631,262.68                   24.05%
Net profit attributable to shareholders
                                                  92,075,039.77           109,992,701.28                   -16.29%
of the listed company(RMB)
Net profit attributable to shareholders
of the listed company after deducting             66,905,338.98            90,801,654.71                   -26.32%
non-recurring gains and losses(RMB)
Net cash flow arising from operating
                                                 484,230,697.91           871,689,504.89                   -44.45%
activities(RMB)
Basic earnings per share (RMB/Share)                     0.0881                    0.1440                  -38.82%
Diluted   earnings       per     share
                                                         0.0881                    0.1440                  -38.82%
(RMB/Share)
                                                                                                 1.33percent point
Weighted average ROE                                      1.79%                    3.12%
                                                                                                            down
                                                                                              Increase/decrease in
                                          End of current period      End of last period       this report-end over
                                                                                             that of last period-end
Total assets (RMB)                            16,689,509,751.32        12,507,567,310.84                   33.44%
Net assets attributable to shareholder
                                               5,119,376,181.33         5,095,160,291.91                     0.48%
of listed company (RMB)

      Note: the earnings per share calculated at same period of last year were based on total shares of 763,739,205,




                                                          6
                                                                      HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



and the Company offering 280,858,676 common shares (A-stock) by privately placement in October 2016, total
shares capital of the Company goes to 1,044,597,881 shares. Therefore, the earnings per shares calculated in the
period were based on total shares of 1,044,597,881.

     V. Accounting data difference under domestic and foreign accounting standards
     1.Difference of the net profit and net assets disclosed in financial report, under both IAS
(International Accounting Standards) and Chinese GAAP (Generally Accepted Accounting
Principles)
     □ Applicable      √ Not applicable
     The Company has no difference of the net profit and net assets disclosed in financial report,
under both IAS (International Accounting Standards) and Chinese GAAP (Generally Accepted
Accounting Principles) in reporting period.
     2. Difference of the net profit and net assets disclosed in financial report, under both
foreign accounting rules and Chinese GAAP (Generally Accepted Accounting Principles)
     √ Applicable    □Not applicable
                                                                                                              In RMB

                            Net profit attributable to shareholders     Net assets attributable to shareholders of
                                      of listed company                              listed company
                            Current Period         Last Period              Period-end            Period-begin
Chinese GAAP                92,075,039.77        109,992,701.28          5,119,376,181.33      5,095,160,291.91
Items and amount adjusted by foreign accounting rules
Foreign accounting rules    92,075,039.77        109,992,701.28          5,119,376,181.33      5,095,160,291.91
     The Company had no difference of the net profit or net assets disclosed in financial report,
under either foreign accounting rules or Chinese GAAP (Generally Accepted Accounting Principles)
in the period.
     3. Reasons for the differences of accounting data under accounting rules in and out of
China
     √ Applicable    □Not applicable
     The ―Notice of Relevant Issues of Audit for Company with Domestically Foreign Shares
Offering‖ was issued from CSRC dated 12 September 2007, since the day issuing, cancel the
previous ―dual audit‖ requirement for companies who offering domestically listed foreign shares
(B-share enterprise) while engaging securities practice qualification CPA for auditing. The
Company did not compile financial report under foreign accounting rules since 2007, the financial
report of the Company is complying on the ―Accounting Standard for Business Enterprise‖ in China,
and therefore, there are no differences of accounting data under accounting rules in and out of



                                                         7
                                                                    HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



China at period-end.

        VI. Items and amounts of extraordinary profit (gains)/loss
        √Applicable □ Not applicable

                                                                                                        In RMB
                            Item                                   Amount                       Note
                                                                                  Found         more       in
Gains/losses from the disposal of non-current asset
                                                                                  ―Non-operating income and
(including the write-off that accrued for impairment of            -11,095,591.69
                                                                                  expenditure‖, ―Investment
assets)
                                                                                  income‖
Governmental subsidy reckoned into current
gains/losses (not including the subsidy enjoyed in quota                            Found         more       in
                                                                    22,490,062.54
or ration according to national standards, which are                                ―Non-operating income‖
closely relevant to enterprise’s business)
Held transaction financial asset, gains/losses of changes
of fair values from transaction financial liabilities, and
investment gains from disposal of transaction financial
                                                                                    Found more in ―Gains from
asset, transaction financial liabilities and financial asset       -10,359,085.30
                                                                                    changes of fair value‖
available for sales, exclude the effective hedging
business relevant with normal operations of the
Company
                                                                                  Found         more      in
Other non-operating income and expenditure except for
                                                                       643,883.35 ―Non-operating income and
the aforementioned items
                                                                                  expenditure‖
Gain/losses items qualified definition of the                                       Found          more       in
                                                                    26,817,170.85
non-recurring gains/losses                                                          ―Investment income‖
Less: impact on income tax                                           3,129,349.31 --
Impact on minority shareholders’ equity (post-tax)                    197,389.65 --
Total                                                               25,169,700.79                --
        Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on
Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary
Profit/loss, and the items defined as recurring profit (gain)/loss according to the lists of
extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for
Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, explain reasons
        □Applicable √Not applicable
        The Company has no items defined as recurring profit (gain)/loss according to the lists of
extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for
Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, in the period


                                                               8
                                                           HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017




                  Section III Summary of Company Business

     I. Main businesses of the Company in the reporting period

     Does the Company need to comply with disclosure requirements of the special industry:No

    The Company is one of China's major electric appliance manufacturers, possesses four major
domestic manufacturing bases in Hefei, Mianyang, Jingdezhen and Zhongshan, and two overseas
manufacturing bases in Indonesia and Pakistan, covering the full product line including ice,
washing, air, kitchen and bath, small household appliances and others, at the same time, the
company enters into the fresh e-business, bio-medical and other new industrial fields.

      Over the past 30 years, the company has always been adhering to the "independent innovation,
created in China", elaborately building the core competitiveness of enterprises by technological
innovation and product innovation. The company has set up the first RoHS public testing center in
Anhui Province, the state-level enterprise technology center and the top-end R & D team, so that
Meiling can continue to achieve breakthrough results in the variable frequency, energy saving,
frost-free, cryogenic, intelligence and other fields.

     In recent years, with the rapid development of Internet, cloud computing, big data and a new
generation of information technology, the intelligence of home appliance industry has become the
future development direction. Faced with the new changes in the industry development, the
company puts forward the "Double Three One Core" strategy; "One Core" is intelligence. Under the
guidance of "intelligent" strategy, in 2014, the company released CHiQ refrigerator with "cloud
image recognition" as the core and CHiQ air conditioner based on "human state perception"
technology; in 2015, the company began to implement the "Intelligent Life Project" to explore new
path for the enterprise development; in 2016, the company launched the first "Intelligent Home
Eco-circle Plan" in the global white goods industry and brought out the world's first
temperature-zone free custom-made Internet of Things refrigerator (the second generation ―Space
Intelligence" CHiQ refrigerator) and the world's first user free custom-made intelligent air steward
(CHiQ intelligent air steward) to accelerate the implementation of intelligent strategy. At the same
time, the company successfully raised 1.57 billion Yuan of funds in the capital market by the
non-public offering of shares which were mainly used in three key platforms including Meiling
intelligent manufacturing, intelligent research and development and intelligent life. Three platforms
integrate with each other and work together to boost Meiling to achieve the transformation of
―intelligent gene‖ from the most basic level, and provide strong supports for the company’s
development and intelligent transformation. In future, with the help of ―Intelligent Home Eco-circle
Plan‖, Meiling will really transform from the integration of single industry chain to the integration



                                                  9
                                                                         HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



      of eco-development. At present, the company has basically completed the industrial layout for
      comprehensive white goods. With the landing of a series of CHiQ intelligent products, continuous
      rising proportion of variable frequency products, diversified layout of product lines, and
      construction of fresh business platform in Meiling intelligent life O2O community, the company is
      gradually improving the home Internet layout, accelerating the intelligent process of household
      appliances, forming the "hardware + service" dual growth engine, driving the transformation and
      upgrading of the company’s profit model, exploring new value-added pattern for the home
      appliance enterprise services, meeting new pattern of industry competition, and achieving its own
      sustained and stable development.

          In reporting period, main income of the Company coming from refrigerator (freezer), air
      conditioner, washing machine, small home appliances and kitchen & toilet products etc., total
      amounting to 8,133.4198 million Yuan, a 95.49% of the operating income

              II. Major changes in main assets

              1. Major changes in main assets

                   Major assets                                      Note of major changes

       Equity assets                       No major changes.
       Fixed assets                        No major changes.
       Intangible assets                   No major changes.
                                           The parent company’s intelligent manufacturing project and relocation
       Construction in progress
                                           expansion of Zhongke Meiling

              2. Main overseas assets

              √ Applicable    □Not applicable

                                                                                                                       Whether
                                                                                                       Foreign assets
               Reason for                        Operati                                                                 exist
 Content of                                              Control measure to ensure                     accounted for
                  the         Asset size Location on                                      Income                      significant
   assets                                                  the security of assets                       net assets of
               formation                          mode                                                                impairme
                                                                                                       the Company
                                                                                                                        nt risk
                                                          Details of risks control
                                                          measures have been
60% equity
                                                          disclosed by the Company
of           Investment
                        US$ 7.44                          by way of announcement
Changhong establishme                   Pakistan Sales                                    943,832.83           0.91%         N
                        million                           on appointed media (No.
Ruba Trading nt
                                                          2011-028, No. 2011-032,
Company
                                                          No. 2014-023, No.
                                                          2014-026, No. 2016-027and



                                                               10
                                                                     HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



                                                       No. 2016-032) on 28 May
                                                       2011, 19 April 2014 and 25
                                                       March 2016 respectively
                                                      Details of risks control
                                                      measures have been
40% equity
                                                      disclosed by the Company
of
              Investment                              by way of announcement
Changhong                 US$ 6.524            Manuf
              establishme             Pakistan        on appointed media (No.        -253,047.79         0.57%        N
Ruba Electric             million              acture
              nt                                      2011-028, No. 2011-032,
Company(Pri
                                                      No. 2014-023 and No.
vate)Ltd.
                                                      2014-026) on 28 May 2011
                                                      and 19 April 2014
100% equity                                            Details of risks control
of                                    KELAP            measures have been
CHANGHO                               A                disclosed by the Company
            Investment
NG                      US$ 6         GADIN            by way of announcement
            establishme                        Sales                                -2,704,602.28        0.32%        N
MEILING                 million       G, JKT,          on appointed media (No.
            nt
ELECTRIC                              Indonesi         2016-027 and No.
INDONESIA                             a                2016-032) on 25 March
. PT                                                   2016
Other notes   N/A

              III. Core Competitiveness Analysis

              Does the Company need to comply with disclosure requirements of the special industry: No

              1. Brand capacity

            The Company is one of the famous home appliances manufacturers in the PRC, owns several
       product lines such as refrigerator, freezing box and air conditioner. Meiling trademark is listed as
       one of the most valuable brands in China and is the well-known trademarks national-wide. The
       trademark ―Athena‖ in refrigerator, freezer (services) of the Company was recognized as the
       famous mark in Anhui Province. The Company released CHiQ intelligent first and second
       generation refrigerator, AC and intelligent air steward in succession since 2014. And creating a
       high-end intelligent brand image around the plan of ―Wisdom Home Ecosystem‖ for opening a
       white intelligence era. While in order to enhance the brand image and further expand the market
       influence of the brand, the company held a conference for "New LOGO release and offline of the
       10th million set of frequency conversion products" in October 2015, comprehensively updated
       LOGO "                   ", and launched the new brand proposition of "Meiling, let the good come".
       Along with the release of new LOGO, Meiling will also implement a brand strategy of "Good
       Trilogy", including the direct sensory experience of ―experience the good", the spirit soul
       enjoyment of ―enjoy the good‖, and the lifestyle faith of ―believe in the good‖.



                                                          11
                                                          HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



    By our efforts to rebuild our brand, Meiling will realize a young, international and professional
brand image. Through gradual construction of the ideas of Wonderful Start Point, Wonderful Life
Circle and Wonderful Ecology Circle, Meiling has become a people-oriented artist specializing in
white appliances, a smarter scientific expert and a more reliable house keeper.

     2. Product capacity

     In more than 30 years, the company has been focusing on the refrigeration industry, has
developed a variety of different types of refrigerator products that lead the industry development
trend, including two-door and multi-door Athena series of high-end refrigerators, top-level
energy-saving refrigerators with daily power consumption of only 0.23 degrees, CHiQ refrigerator
taking "cloud image recognition 'technology as the core, and 2nd generation-CHiQ refrigeration,
which can realized the space change along with the food requirements with human-oriented
characteristics.

      The Company owned advanced development and quality assurance systems, and received
certification of ISO9001, ISO14001 and OHSAS18001 from domestic and overseas authorities. The
products of the Company have good quality and reliable capacities. As for technology development,
the Company owned national technology centers, and advanced core technologies in energy-saving,
air cooling, intelligence and copious cooling. As for product development, combine with technology
development trend and characteristics of demand from upgrades in consumers, the Company, put
more efforts on products planning. In 2017, continues to expand the development of medium&high
quality products, including CHiQ intellectual products, inverter products, air patenting, multi zone
and large volume, the product has obvious upgrade in structures.

      As for the air conditioning products, the Company adheres to the technical strategy by taking
intelligence and variable frequency as the core, intensively studies the human state perception
technology and intelligent interactive technology, focuses on completing the research and
development of intelligent voice recognition technology and productization, successively releases
the first generation of CHiQ air conditioner based on "human state perception" technology and
CHiQ intelligent air steward that can automatically change air.

     The Company continues to adhere to the intelligent and variable frequency products, and
promote the Company's products to continuously transform to high end by boosting the follow-up
research and development, promotion and technology updates of intelligent and variable frequency
products. Meanwhile, the company improves the manufacturing efficiency and product quality,
reduces product costs and enhances product competitiveness by comprehensively implementing
intelligent upgrading and rebuilding to all production lines. In addition, the company improves the
home appliance product line through the layout of kitchen and bath and small household appliances
and has initially completed the layout for integrated white goods. Meanwhile, based on "Intelligent
Home Eco-circle" plan and taking the existing products as the core, the company will enhance the



                                                 12
                                                            HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



R&D, manufacturing, sales and collaboration capabilities of integrated white goods, and provide
users with a set of intelligent white goods system solutions.

     3. Operation capacity

     The Company conducted benchmark management to improve its basic management level. In
specific, efficiency enhancement has been made in areas of personnel, money and materials, trying
to continuously enhance the internal management. A performance review and sharing system has
been established with clear target and quantity index based on performance and layered incentive
sharing system, thus to inspire the internal production capacity. Under the mainline of value chain
management, the Company continued to carry out value creation and improve its competitiveness.
Its ability to prevent risks has been also strengthened through continuous improvement of internal
control system.

     4. Marketing ability

     The Company has established a relatively complete sales network and service system, among
them, the domestic sales channels emphasizing online and offline collaboration and integration,
through the business operation mode system construction (target management, value chain
management, sales promotion, product mix and channel strategy, etc.) and promotion, the pace of
business in the period constantly tends to be benign, has a balanced development in chain,
wholesale, e-commerce and other channels, and the product competitiveness has been improved; the
overseas market has been strengthened by increasing the investments in overseas marketing
organizations, research and development bases and production bases, we cooperate with world-wide
well-known appliance brand dealer and distributor, optimized client’s structure and enhance product
structure, the Company has been actively develop the overseas market, and the products have been
exported to more than 130 countries and regions.




                                                  13
                                                           HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017




          Section IV Discussion and Analysis of the Operation

     1. Summary

     In 2017, under the international macro-environment of ups and downs in global economic
recovery and global overproduction, China's economic upward momentum and downward pressure
are still in a weak equilibrium state, and there are still many uncertainties in economic
development. In this context, in the first half of 2017, the domestic appliance industry has been
facing many factors, such as cost increase in raw materials, saturation in terminal market,
increased regulation in real estate, and upgrading of energy efficiency standard, etc.. In the new
normal of home appliances, the competition in home-appliance industry becomes increasingly
fierce; innovation and breakthrough becomes the key to make the company bigger and stronger.

      In the first half of 2017, under the strategic guidance of ―Meiling Dream‖ and ―Double Three
One Core‖, the company insisted on the operating principle of ―product leading, marketing force,
manufacturing breakthrough, mechanism protection‖, overcame the negative factors such as weak
increase in macro economy and continuous decline in industry market with the joint efforts of all
staff, the domestic refrigerator sales outperformed the industry market, the e-commerce business
greatly increased, the market position of export refrigerators (freezers) has been consolidated; air
conditioning industry had a rapid growth; washing machine rapidly developed; kitchen and bath
and small appliances also had a rapid growth. In first half of 2017, the Company has achieved
operating income of RMB 8.518 billion, an increase of 24.05% on a year-on-year basis; net profit
attributable to the parent company of RMB 92.0750 million, a decrease of 16.29% on a
year-on-year basis.

     II. Main Business Analysis

     (I) Overview

     Shows no difference with the summary disclosed in Report of the Board of Director

     □Yes √No

     1. Summary

     In first half of 2017, refrigerator and freezer business achieved revenue of approximately
RMB 3.712 billion,5.71% increased on a y-o-y basis; air-conditioning business achieved revenue
of approximately RMB 3.831 billion,48.55% up y-o-y; washing machine business achieve revenue
around RMB 0.227 billion, with year-on-year growth of 5.93 %; other business of small home
appliance and kitchen & toilet products have revenue approximately as RMB 0.363 billion with


                                                  14
                                                          HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



9.94% up y-o-y. At the same time, revenue from exportation gains RMB 2.12 billion, a y-o-y
growth of 29.63%.

     2. Progress of the Company's development strategy and business plan during the
reporting period

     During the reporting period, in accordance with the development strategy and 2017 operating
principles, the Company has deployed the annual business plan, arranged the production and
management, and carried out the following activities:

     (1) Product leading:

    During the reporting period, the company continued to focus on ―intelligent and variable
frequency strategy‖ and carry out the product upgrading, in the first half year, the sales of
intelligent refrigerator increased by 1.1 percent point compared with the same period of last year,
and the sales of inverter refrigerator increased by 16.8 percent point compared with the same
period of last year, both achieved the expected goal.

     In technical research, the company adhered to the fundamental research upgrade of core
technology, maintained the existing technological superiority, expanded the innovation and
upgrading in technology field, broke through the differentiation, and led the industry benchmark.
Among them: in the inverter core technology, further optimized and upgraded, reduced the cost of
inverter technology, enhanced product competitiveness, and maintained the industry advanced
level; in the simulation supporting technology, obviously promoted the product performance by
CFD air duct design capacity building; in the energy-saving key technology, maintained the
optimal design capabilities in refrigeration system, focused on the new national standard to carry
out the research on ―integrated efficiency optimization program of refrigeration system‖, and
achieved fruitful results in integration research on CFD technology and evaporator refrigeration
system, and effectively promoted the research and development of low-cost new energy-saving
refrigerator.

     (2) Marketing force:

     During the reporting period, the company's domestic refrigerator and washing machine sales
outperformed the industry market, the market position has been further consolidated and enhanced.
From the offline market sales, CMM’s data showed the retail sales of refrigerator industry
declined by 1.23% on a year-on-year basis, but the retail sales of the company's refrigerator rose
by 2.17% on a year-on-year basis; the retail sales of air-conditioning industry rose by 14.75% on a
year-on-year basis, while the retail sales of the company's air-conditioning rose by 8.86% on a
year-on-year basis; the retail sales of washing machine industry rose by 0.25% on a year-on-year
basis, while the retail sales of the company's washing machine greatly rose by 15.45% on a



                                                 15
                                                                   HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



year-on-year basis.

      From the online sales, AVC (All View Cloud) data showed that the company’s online
refrigerator and air conditioning sales have further enlarged the results. Among them, the retail
sales of refrigerator industry rose by 64.04% on a year-on-year basis, and the retail sales of the
company’s refrigerator rose by 93.05% on a year-on-year basis; the retail sales of air-conditioning
industry rose by 128.79% on a year-on-year basis, while the retail sales of the company’s
air-conditioning rose by 91.95% on a year-on-year basis.

      As for the export business, the company's refrigerator and air-conditioning product lines have
continued to maintain a rapid growth like a few years ago. According to the customs data and
statistics, the amount of exports of refrigerator industry rose by 19.75% on a year-on-year basis,
and the company's amount of exports rose by 17.45% on a year-on-year basis; the amount of
exports of air conditioning industry rose by 2.23% on a year-on-year basis, while the amount of
exports of the company's air conditioning rose by 15.87% on a year-on-year basis, and achieved
good development.
     (3) Manufacturing breakthrough:

      During the reporting period, the intelligent manufacturing, efficient production line project in
Jiangxi Province, large refrigerator efficiency enhancing project, recruit upgrade projects and other
projects advanced in an orderly manner, which overall pulled the improvement of manufacturing
efficiency.
     (4) Mechanism protection:

     During the reporting period, the company further implemented the incentive mechanism to
activate the team, constantly explored the team potential and enhanced the competitiveness of the
company by implementing the medium and long term performance incentive plan and
continuously promoting the operation activation plan and other multilevel, multiform incentive
sharing.

      In the talent mechanism, the company continued to promote the 100 people echelon project to
select and train all kinds of key employees; in the innovation mechanism, brought the innovative
spirit and fault-tolerant mechanism into the relevant management system; in the accountability
mechanism, confirmed the main idea of accountability system construction, sorted out the key
and core system of main business process, and defined the accountability subject and assess the
specific objectives; in the benchmarking mechanism, 32 projects have been proposed and
promoted after assessment by establishing working mechanism during the reporting period.

     (II) Year-on-year changes of main financial data
                                                                                                       In RMB
              Current period    Same period of last        Y-o-y                     Reasons for changes




                                                      16
                                                                           HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



                                                    year          increase/d
                                                                    ecrease
Operation revenue           8,517,794,193.10   6,866,631,262.68      24.05%                              --
Operation cost              6,996,226,048.85   5,432,461,687.10      28.79%                              --
Sales expenses              1,140,172,032.08   1,075,647,750.60       6.00%                              --
Administrative
                             222,533,091.74     175,964,420.95       26.46%                              --
expenses
Financial cost               -33,454,482.67     -39,699,342.16       15.73%                              --
                                                                               Taxable income declined on a y-o-y basis in the
Income tax expense             9,439,557.86      18,816,185.98     -49.83%
                                                                               period
R&D expenses                 184,681,025.99     207,876,418.69     -11.16%                               --
Net cash flow
                                                                               Commodity purchased increased and note payable on
arising from                 484,230,697.91     871,689,504.89     -44.45%
                                                                               due on a y-o-y growth in the period
operation activities
Net cash flow
                                                                               The principal paid for entrust financing increased in
arising from                 -564,891,050.65    374,877,700.49 -250.69%
                                                                               the period on a y-o-y basis
investment activities
Net cash flow
                                                                               Short-term loans from parent company increased on a
arising from                 911,251,695.82     682,926,101.22       33.43%
                                                                               y-o-y basis
financing activities
Net increase of cash                                                           Same reason as ―Net cash flow arising from
                             823,360,098.63    1,941,723,175.47    -57.60%
and cash equivalent                                                            investment activities‖
                                                                               The note receivable did not expire temporarily at
Note receivable             2,511,715,429.41   1,421,429,723.73      76.70%
                                                                               period-end increased
                                                                               The credit sales increased on a y-o-y basis in the
Account receivables         2,048,332,541.11   1,118,960,552.49      83.06%
                                                                               period
                                                                           The account paid in advance at period, for bidding
Account     paid       in                                                  the plants and office and land use right under the
                             289,836,060.91     134,706,488.38     115.16%
advance                                                                    name of Anhui Dongwei Solar Energy Technology
                                                                           Co., Ltd.
                                                                               The export rebates increased without received in the
Other receivables             68,537,511.44      39,553,919.44       73.28%
                                                                               period and the petty cash increased in the period
                                                                               The inventory increased with the y-o-y growth of
Inventory                   2,582,538,614.47   1,974,526,734.86      30.79%
                                                                               sales volume
                                                                           The long-term fixed time deposit from subsidiary
Non-current assets
                              46,133,664.00      12,625,340.00     265.41% Zhongshan Changhong, were re-classified to
due within one year
                                                                           non-current assets due within one year at period-end
Financial       assets
                              31,000,000.00      17,000,000.00       82.35% More investment for Hongyun Fund in the Period
available for sale




                                                              17
                                                                        HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



                                                                         The parent company’s intelligent manufacturing
Construction        in
                          148,626,411.17     107,037,409.95       38.85% project and construction of relocation and expansion
progress
                                                                         revamp from Zhongke Meiling
Development                                                                More investment for research and development in the
                           73,961,222.33      45,023,750.60       64.27%
expenditure                                                                period
Long-term
                                                                           The long-term assets to be amortized increased from
amortization                2,583,106.23       1,132,075.48      128.17%
                                                                           subsidiary Sichuan Air-Conditioner in the period
expenses
Other     non-current
                                       -      34,615,630.00 -100.00% Same as ―Non-current assets due within one year‖
assets
                                                                           Parent company’s short-term loans increased in the
Short-term loans         1,432,622,701.07    288,343,724.73      396.85%
                                                                           period
Financial    liability
measured by fair
value and whose                                                            Changes of fair value of forward foreign exchange
                            9,671,394.08         559,249.58 1629.35%
change is recorded                                                         contract in the period
in current gains and
losses
                                                                           The note payable did not expire temporarily at
Note payable             4,573,857,981.57   2,635,051,740.30      73.58%
                                                                           period-end increased
                                                                           Material purchasing increased with the growth of
Account payable          3,168,053,679.32   2,331,899,310.82      35.86%
                                                                           procurement scale in the period
                                                                         The salary and year-end bonus and performance
Wages payable             103,531,061.56     189,592,039.00      -45.39% incentive fund, which were accrual last year, are paid
                                                                         in the period
                                                                           Payable VAT at period-end increased over that of
Taxes payable              85,377,009.73      59,849,032.13       42.65%
                                                                           year-beginning for the selling seasons
                                                                           Interest of loan payable are paid by parent company
Interest payable              708,602.61       1,617,352.01      -56.19%
                                                                           in the period
                                                                           Dividend issued in the period, and some of the
Dividend payable           16,972,722.88       2,545,801.23      566.69%
                                                                           shareholders are not withdrawing yet
Other          account                                                     Other payables which were not paid temporary
                          812,770,528.06     622,580,323.43       30.55%
payable                                                                    increased at period-end
                                                                         The long-term loans are due for payment, which were
Non-current liability
                           59,718,504.77     272,202,590.10      -78.06% re-classified as non-current liability due within one
due within one year
                                                                         year
                                                                           Parent company’s long-term loans increased in the
Long-term loans           253,460,000.00      38,908,788.00      551.42%
                                                                           period
                                                                           The government specific fund are paid by subsidiary
Special payable               980,000.00       1,400,000.00      -30.00%
                                                                           Zhongshan Changhong, in line with the joint



                                                            18
                                                                              HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



                                                                                 development agreement, which are not accepted
                                                                                 temporary
Other
                                                                                 Changes of the foreign currency rates from overseas’
comprehensive                   938,467.33          3,474,546.95       -72.99%
                                                                                 subsidiary
income
                                                                                 Same of the subsidiary earns in the period and
Minority interests           98,755,957.79         70,921,198.01        39.25%
                                                                                 purchasing minority from some of the subsidiaries
Changing income of                                                               Losses from fair value changes in forward foreign
                           -10,359,085.30          -1,278,570.21 -710.21%
fair value                                                                       exchange contract
                                                                                 Income from entrust financing received in the period
Investment income            23,593,349.66          4,153,090.95       468.09%
                                                                                 increased on a y-o-y basis
Investment income
on        affiliated
                             -3,226,328.17           -833,210.42 -287.22% Joint venture has a y-o-y losses in the period
company and joint
venture
Non-operating                                                                    Losses from assets disposal for relocation from
                             11,455,300.63          1,818,874.18       529.80%
expenditure                                                                      subsidiary Mianyan Refrigeration
Income               of
non-current      assets      11,359,875.16          1,545,129.64       635.21% Same as ―Non-operating expenditure‖
disposal
Minority
                                                                                 Some of the non-wholly-owned subsidiary earns on a
shareholders’    gains       6,019,661.62            -69,054.44 8817.27%
                                                                                 y-o-y basis in the period
and losses

                 (III)Major changes on profit composition or profit resources in reporting period

                 □ Applicable √ Not applicable

                 No major changes on profit composition or profit resources occurred in reporting period

                 (IV) Constitution of main business
                                                                                                                   In RMB
                                                                                     Increase or   Increase or       Increase or
                                                                                     decrease of   decrease of      decrease of
                                                                        Gross         operating   operating cost    gross profit
                           Operating revenue   Operating cost
                                                                      profit ratio revenue over     over same         ratio over
                                                                                   same period of period of last    same period
                                                                                      last year       year           of last year
    According to industries
    Manufacture       of
    household              8,133,419,814.85 6,646,020,504.49             18.29%           22.58%          27.16%          -2.94%
    appliances
    According to products




                                                                 19
                                                                          HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



Refrigerators,
                    3,712,357,454.31 3,021,413,721.30                18.61%             5.71%           14.39%           -6.18%
freezers
Air conditioning    3,830,599,287.94 3,157,180,107.27                17.58%            48.55%           49.09%           -0.30%
Washing machine       227,162,009.50         177,357,302.38          21.92%             5.93%            1.43%            3.45%
Small appliances
                      264,195,096.38         229,232,770.78          13.23%            37.13%           31.73%            3.55%
& kitchen & bath
Others                 99,105,966.72           60,836,602.76         38.61%            -28.08%         -48.69%           24.65%
According to region
Domestic            6,013,436,261.57 4,647,630,149.87                22.71%            20.27%           23.50%           -2.02%
Foreign             2,119,983,553.28 1,998,390,354.62                 5.74%            29.63%           36.57%           -4.78%

           III. Analysis of the non-main business

           √ Applicable    □Not applicable
                                                                                                                     In RMB

                                               Ratio in total
                             Amount                                            Note                   Whether be sustainable
                                                  profit
 Investment income          23,593,349.66              21.94% Income from financial services                     N
                                                              Loss from fair value changes of
 Changes in fair
                           -10,359,085.30               9.63% the forward foreign exchange                       N
 value
                                                              contract
                                                                 Receivable bad debt accruals
 Asset impairment           45,493,272.74              42.31%                                                    N
                                                                 increased in the period
 Non-operating                                                   Government grants received in the
                            23,491,147.85              21.85%                                                    N
 income                                                          period
                                                              Losses from assets disposal for
 Non-operating
                            11,455,300.63              10.65% relocation   from     subsidiary                   N
 expense
                                                              Mianyan Refrigeration

           IV. Assets and liability

           1. Major changes of assets composition
                                                                                                                 In RMB
                       End of current period            Same period of last year
                                        Ratio in                            Ratio in     Ratio
                                                                                                    Notes of major changes
                           Amount         total            Amount             total     changes
                                         assets                              assets
                                                                                                   Total assets at period-end
 Monetary fund      4,918,185,647.77        29.47% 4,136,998,121.62           35.19%      -5.72%
                                                                                                   increased on a y-o-y basis

 Account            2,048,332,541.11        12.27% 1,950,050,884.81           16.59%      -4.32% No major changes



                                                                20
                                                                         HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



      receivable
      Inventory           2,582,538,614.47    15.47% 1,591,370,410.84       13.54%      1.93% No major changes
     Investment real
                             12,871,340.33      0.08%     13,679,922.44      0.12%     -0.04% No major changes
     estate
      Long-term
      equity                 90,247,745.70      0.54%     78,801,651.30      0.67%     -0.13% No major changes
      investment
      Fix assets          1,214,541,611.12      7.28% 1,250,350,428.82      10.64%     -3.36% No major changes
      Construction in
                            148,626,411.17      0.89%     67,818,577.71      0.58%      0.31% No major changes
      progress
      Short-term
                          1,432,622,701.07      8.58%    718,762,164.03      6.11%      2.47% No major changes
       loans
      Long-term
                            253,460,000.00      1.52%     50,290,088.80      0.43%      1.09% No major changes
      loans

                2. Assets and liability measured by fair value

                √ Applicable □ Not applicable
                                                                                                             In RMB
                                                          Accumulati Devaluatio Amount
                                          Changes of fair
                                                          ve changes       n of      of   Amount
                          Amount at the        value                                                 Amount in the
        Items                                             of fair value withdrawi purchas of sale in
                         beginning period gains/losses in                                            end of period
                                                            reckoned ng in the e in the the period
                                            this period
                                                           into equity   period    period
Financial assets
1. Financial assets
measured by fair
value and whose
change is recorded in
                      12,060,213.30 -1,246,940.80                                                     10,813,272.50
current gains and
losses(excluding
derivative financial
assets)
2. Derivative
financial assets
3. Financial assets
available for sale
Subtotal of financial
                         12,060,213.30 -1,246,940.80                                                  10,813,272.50
assets
Investment real estate




                                                              21
                                                                          HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



Productive biological
asset
Other
Total                   12,060,213.30 -1,246,940.80                                                    10,813,272.50
Financial liabilities      559,249.58    9,112,144.50                                                   9,671,394.08

             Whether there have major changes on measurement attributes for main assets of the Company
        in report period or not

               □ Yes    √No

               3. Assets right restricted ended as reporting period

             Ended as the reporting period, the Company has no major assets been closed down, detain,
        freeze or pledge and guarantee

               V. Investment

               1. Overall situation

               √ Applicable □ Not applicable
                                              Investment in the same period of last
          Investment in the reporting (RMB)                                                     Changes
                                                          year ( RMB)
                                199,413,900                           140,650,000                              41.78%

               2. The major equity investment obtained in the reporting period

               √ Applicable □ Not applicable




                                                               22
                                                                                                     HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017


                                                                                                                                                                      In RMB

                                                                                                                                                          Date of
                                                 Meth                    Capit               Term                                                Whet
                                                                   Share                                      Status as of Expect    Current             disclosure    Index of disclosure
  Name of                                         od of Amount of          al                 of   Type of                                         her
                     Principal business                            holdi         Partners                     the balance    ed    investment                (if         (if applicable
  investee                                       invest investment       sourc              invest products                                      litigat
                                                                    ng                                         sheet date return profit and loss
                                                  ment                     es                ment                                                  ion applicable               )
                                                                                                                                                             )
               R&D, sales and after-sale
Meiling
               services of washing               Newl                                                         Contributes                                           www.cninfo.com.cn
CANDY                                                                  Owne                   Washing                        Not
               machines; own and operate         y                          Candy Hoover 20-                  30 million                                            Juchao Website:
Washing                                                 90,000,000 60% d                      machine                     applica     -56,041.83    N     2017-3-30
               all types of goods and            establ                     Group S.r.l  year                 Yuan in the                                           www.cninfo.com.cn(
Machine                                                                fund                    etc.                           ble
               technology import & export        ished                                                        period                                                No.: 2017-010 )
Co., Ltd.
               business
              Manufacturing and sales of
              the following:
              air-conditioner, air cooler, air
              purifier, heat pump, new
              wind system equipment,
              electric heater, electric fan,
                                                                                                Home
Zhongshan refrigerators and freezers,            Newl                       Zhuhai Samyou                                                                           www.cninfo.com.cn
                                                                       Owne                     appliances Contributes    Not
Hongyou       water heating, water filter,       y                          Environmental Long                                                                      Juchao Website:
                                                        24,000,000 60% d                        as          0 Yuan in  applica                --      N   2017-3-14
Electric Co., humidifier, clothes dryer,         establ                     Technology    -term                                                                     www.cninfo.com.cn(
                                                                       fund                     air-conditi the period     ble
Ltd.          dehumidifier, air water            ished                      Co., Ltd.                                                                               No.: 2017-006 )
                                                                                                oner etc.
              machine, electric fireplace,
              kitchen appliance and tools
              as well as refrigerating unit
              and home appliances; sales
              of electric raw/auxiliary
              materials, electrical parts;



                                                                                            23
                                                                                                  HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

             goods and technology import
             & export business
                                                                        Sichuan
                                                                        Hongyun
                                                                        Venture Equity
                                                                        Investment
                                                                        Management
                                                                        Co., Ltd., State
                                                                        Development &
                                                                        Investment
             Venture business: act on
                                                                        Corp., Sichuan
             behalf of institution or
                                                                        Technology                         Contributes
             individuals as other venture
                                                                        Transfer Center,                   14 million
             firms in a venture business;
Sichuan                                                                 Sichuan                            Yuan in the
             investment advisory            Capit                                                                                                               www.cninfo.com.cn
Hongyun                                                            Owne Changhong                          period,        Not
             business; providing venture    al                                           8-   Not                                                               Juchao Website:
New – G IT                                         40,000,000 16% d    Electric Co.,                      invested 26 applica            --       N 2015-08-12
             management services for        incre                                        year applicable                                                        www.cninfo.com.cn(
Venture                                                            fund Ltd., Chengdu                      million         ble
             venture; participate in        ment                                                                                                                No.: 2015-035 )
Capital Fund                                                            Tianfu                             Yuan
             establishing a venture
                                                                        Innovation                         accumulativ
             business and management
                                                                        Equity                             ely.
             consulting organ for the
                                                                        Investment
             venture
                                                                        Fund Center
                                                                        (Limited
                                                                        Partner),
                                                                        Sichuan
                                                                        Changhong
                                                                        Jiahua Digital
                                                                        Technology
                                                                        Co., Ltd.
Changmei     Development, production        Stock   46,320,000 92.64 Owne Management     20-   Fresh food In reporting    Not       -450.13        N 2016-11-26 www.cninfo.com.cn


                                                                                         24
                                                                                          HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

Technology and sales of computer          rights              %d    team of      year e-commer period,     applica                                      Juchao Website:
Co., Ltd.  hardware & software,           assig                fund Changmei          ce       transfer        ble                                      www.cninfo.com.cn(
           technology development,        ning                      Technology                 2.64%                                                    No.: 2016-068 )
           production and sales of                                                             equity (not
           internet of Things                                                                  funded by
           equipment, development and                                                          part of the
           maintenance of E-commerce                                                           no-core
           software, information                                                               employees),
           service, technical transfer                                                         Contributes
           and services of the internet,                                                       528,000
           domestic AD designing,                                                              Yuan in the
           production, agencies and                                                            period, and
           release, sales of prepackaged                                                       18.528
           food, dairy products, general                                                       million
           merchandise, alcohol,                                                               Yuan funded
           beverage and agricultural                                                           accumulativ
           products, crop planting,                                                            ely
           self-support goods and
           technology import and
           export business.(except
           items prohibited or restricted
           by laws and regulations)
Guangzhou
             Commodity wholesale
Changhong
             trading (except for the
Trade Co.,                                Newl                                                    Contributes                                           www.cninfo.com.cn
             licensed commodities);                               Owne                                           Not
Ltd.                                      y                                      Long Not         one million                                           Juchao Website:
             goods import & export                 1,000,000 100% d    N/A                                    applica    -25,239.22        N 2016-11-26
Guangzhou                                 establ                                 -term applicable Yuan in the                                           www.cninfo.com.cn(
             business (exclusive                                  fund                                            ble
Changhong                                 ished                                                   period                                                No.: 2016-068 )
             monopoly commodities);
Trade Co.,
             technology import & export
Ltd.


                                                                                 25
                                                                                           HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017


Zhongshan
Hongling
Trade                                    Newl                                                      Contributes                                           www.cninfo.com.cn
                                                                  Owne                                            Not
Co.,Ltd.     Domestic trading; goods and y                                        Long Not         0.6 million                                           Juchao Website:
                                                   1,000,000 100% d    N/A                                     applica   -231,100.18        N 2016-11-26
Zhongshan    technology import & export establ                                    -term applicable Yuan in the                                           www.cninfo.com.cn(
                                                                  fund                                             ble
Hongling                                 ished                                                     period                                                No.: 2016-068 )
Trade Co.,
Ltd.
                                                                                                                  Not
Total                    --               --     202,320,000   --   --       --    --       --         --      applica   -312,831.36   --         --             --
                                                                                                                   ble




                                                                                  26
                                                 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017




3. The major non-equity investment doing in the reporting period

√ Applicable □ Not applicable




                                        27
                                                                                                   HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017


                                            Industr
                                                                 Accrued
                                               y                                                                       Accrued       Reasons for
                                                    Investment    Actual
                           Inves   Fixed    involve                                                                    Realized     not Reaching
                                                    Amount in Investment Capita
                           tment   Invest     d in                                                                    Income up      the Planned               Disclosed Index (if
      Project Name                                     this     Amount up   l            Project       Anticipated                                Disclosed
                           Meth    ments     Invest                                                                   to the End    Schedule and                      any)
                                                     Reporting to the End Sourc         Schedule        Income                                   Date (if any)
                             od    or not     ment                                                                   of Reporting    Anticipated
                                                      Period   of Reporting e
                                            Project                                                                     Period         Income
                                                                  Period
                                               s
                                                                                                  The     intelligent
                                                                                                  production line
                                                                                                  for one million
1 million sets of                           Home                                                                      Project   is
                                                                                                  sets             of
environmental and                           applian                                                                   under
                                                                                                  environmental
energy saving                               ce                                      Complete                          planning                                 www.cninfo.com.c
                           Self-                                            Self-o                and                              Not            2017-3-14
refrigerator intelligent         Yes        manufa    18,700,000 18,700,000        8.92% of total                     during the                               n
                           built                                            wned                  energy-saving                    Applicable
production line                             cturing                                investment                         reporting                                ( Announcement
                                                                            Funds                 refrigerators shall
construction project                        industr                                                                   period, no                               No. 2017-006)
                                                                                                  be formed after
(Note 1)                                    y                                                                         income yet.
                                                                                                  this project being
                                                                                                  put into operation



                                                                                       The         The production
                                              Home                                company          capacity of 2 Project      is
                                            applian                               successfully     million sets of under
 2 million sets of
                                            ce                             Self-o bade for the automatic             planning    Not                         www.cninfo.com.c
automatic washing          Self-                                                                                                                  2017-3-30,
machines production        built
                                 Yes        manufa 134,585,900 134,585,900 wned plant,     office washing machine during the applicable           2017-4-14
                                                                                                                                                             n (Announcement
                                            cturing                        Funds building and shall be formed reporting                                      No. 2017-010, No.
base project (Note 2)
                                            industr                               land use rights after this project period, no                              2017-024)
                                            y                                     under        the being put into income yet.
                                                                                  name of Anhui operation


                                                                                         28
                                                                                            HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

                                                                            Dongwei Solar
                                                                            Technology
                                                                            Co., Ltd. from
                                                                            the     judicial
                                                                            sale with its
                                                                            own funds of
                                                                            RMB134,585,
                                                                            900,         the
                                                                            project        is
                                                                            under planning
                                                                            at present


Total                     --     --     --   153,285,900 153,285,900   --          --                       --          --      --           --       --

            Note 1: In order to meet the increasing market demands, make up for the insufficient capacity, enhance the operating efficiency of the
        company's production line, and further promote the company's intelligent manufacturing process, the 28th meeting of the company's 8th Board
        of Directors approved and agreed the company’s subsidiary Jiangxi Meiling Electric Appliance Co., Ltd. (Hereinafter referred to as ―Jiangxi
        Meiling‖) to invest RMB 209,600,000 to build 1 million sets of environmental and energy saving refrigerator intelligent production line
        construction project, meanwhile, in order to ensure the smooth implementation of this investment and construction project, agreed the company
        to increase capital of RMB 200 million to Jiangxi Meiling for investing in this project. See details on ―Securities Times‖, ―China Securities
        Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that the company disclosed in the form of announcement (Announcement
        No. 2017-006) on March 14, 2017. At present, this project is going well, plant construction and equipment procurement are underway.

             Note 2: According to the company's strategic development plan, combined with the company's business needs, and in order to make up for
        the insufficient research and manufacturing capacity of washing machine industry so as to meet the market demands, the 29th meeting of the
        company's 8th Board of Directors approved and agreed the company’s to invest no more than RMB 371,210,000 in the construction of the 2
        million sets of automatic washing machines production base project. In addition, the 29th meeting of the company's 8th Board of Directors
        approved and agreed the company to successfully bid for the plant and office building (covering an area of 86,087.65 square meters) and land
        use rights (covering an area of 116,233.61 square meters) under the name of Anhui Dongwei by public auction organized by the court with its

                                                                                 29
                                                                                  HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017


own funds of RMB134,585,900, and use the plant and land as the washing machine production base for construction. See details on ―Securities
Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that the company disclosed in the form of
announcement (Announcement No. 2017-010, No. 2017-024) on March 30, 2017 and April 14, 2017. The project construction is still under
planning at present. In order to launch the self-built washing machine manufacturing base project as soon as possible and find a suitable place
for the project implementation, after the field research, assessment and analysis, the company has agreed to participate in the judicial sale of the
plant, office building and land use rights under the name of Anhui Dongwei Solar Technology Co., Ltd. (Hereinafter referred to as ―Anhui
Dongwei‖) that Shushan District People's Court of Hefei City published on the website of Hefei Public Resource Trading Center with its own
funds of no more than RMB158,085,900, and participated in this bidding in accordance with legal procedures. The company finally received
the Execution Ruling in Writing (No. (2016)W0104Z009) issued by Shushan District People's Court of Hefei City on April 12, 2017. At present,
the company is actively handling the procedures related to assets transfer in accordance with the Execution Ruling in Writing issued by Shushan
District People's Court of Hefei City.




                                                                         30
                                                    HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017




4. Financial assets investment

(1) Securities investment

□ Applicable √ Not applicable

The Company had no securities investment in the reporting period.

(2) Derivative investment

√ Applicable □ Not applicable




                                           31
                                                                                                                          HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017




                                                                                                                                                                                        In 10 thousand Yuan

                                                                                                                                                        Amount of                             Ratio of
                                                                                                                                                        reserve for                          investment
                  Relate Whether
                                                                                                     Investment        Amount         Amount sales in devaluation       Investment           amount at            Actual
                     d     related                     Initial
   Operator                             Type                          Start date      End date       amount at     purchased in the    the reporting        of          amount at         period-end in net   gains/losses in
                  relatio trade or                  investment
                                                                                                    period-begin   reporting period       period       withdrawing      period-end          assets of the         period
                  nship      not
                                                                                                                                                            (if                             Company at
                                                                                                                                                        applicable)                          period-end

                                     Forward
Financial                            foreign
                  N/A     No                          63,230.44    2016-6-8          2018-6-26        37,890.69        146,171.07        83,257.22           -             100,081.32             19.55%              723.22
institution                          exchange
                                     contract

Total                                                63,230.44           --              --          37,890.69       146,171.07          83,257.22          -           100,081.32                 19.55%           723.22
Capital resource(if applicable)                   Owned fund

Lawsuit involved (if applicable)                  Not applicable

Disclosure date for approval from the Board
                                                  2017-3-30
for investment of derivatives (if applicable)

Disclosure date for approval from board of
shareholders for investment of derivatives (if 2017-5-4
applicable)

                                                  1. Market risk: domestic and international economic situation changes may lead to exchange rate fluctuations, forward foreign exchange transactions are under certain
Risk analysis and controlling measures for        market risk. Forward foreign exchange business is aiming to reducing impact on corporate profits by foreign exchange settlement and sale prices, exchange rate
derivatives holdings in the Period (including fluctuations. The Company will follow up the exchange fluctuation, on the basis of target rate determined from the business, relying on the research of the foreign currency
but not limited to market risk, liquidity risk,   exchange rates, combined with prediction of consignments, and burdening ability to price variations due to exchange rate fluctuations, then determine the plan of forward
credit risks, operation risk and law risks etc.) foreign exchange contracts, and make dynamic management to the business, to ensure reasonable profit level.
                                                  2. Liquidity risk: all foreign exchange transactions are based on a reasonable estimate of the future import and export business, to meet the requirements of the trade




                                                                                                              32
                                                                                                                          HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

                                                authenticity. In addition, forward foreign exchange transactions are processed with bank credit, will not affect liquidity of company funds.
                                                3. Bank default risk: if cooperative banks collapse within the contract time, the Company will not be able to transact the original foreign exchange contracts with contract
                                                price, which leads the risk of income uncertainty. So the Company chose Bank of China, Agricultural Bank of China, Industrial and Commercial Bank of China, China
                                                Construction Bank and other Chinese Banks and part of the larger foreign Banks (such as Deutsche Bank, UOB, Overseas Chinese Bank, HSBC, etc.) to conduct the
                                                trading of foreign exchange capital. These banks share a solid strength and management whose failure and the risk of loss may bring to the Company is very low.
                                                4. Operational risk: improper operation of the person in charge of forward foreign exchange transactions may cause related risk also. The Company has formulated related
                                                management system which defines the operation process and responsibility to prevent and control risks.
                                                5. The legal risks: unclear terms based in contract signed with banks for related transactions may lead legal risks when forward foreign exchange transactions are
                                                processing. The Company will strengthen legal review, and choose good bank to carry out this kind of business as to risk control.

Invested derivative products have changes in The Company determines fair value in accordance with the Chapter VII ―Determination of Fair Value‖ carried in the Accounting Standards for Business Enterprises No.22 -
market price or fair value in the Period, as Recognition and Measurement of Financial Instruments. Fair-value is basically obtained according to prices offered by bank and other pricing services. While fair-value of
for analysis of the fair value of derivatives, derivatives is mainly obtained according to the balance between prices given by outstanding contracts and forward prices given by contracts signed during the reporting
disclosed specific applied methods and period with bank. The differences are identified as trading financial assets and liabilities. During the reporting period, forward foreign exchange contracts and losses of the
correlation assumption and parameter setting Company is RMB 7.2322 million.

Specific principle of the accounting policy
and calculation for derivatives in the Period
                                                Not applicable
compared with last period in aspect of major
changes

                                                Upon inspection, the independent directors of the Company believes that: during the reporting period, the Company carried out its foreign exchange forward deals in strict
                                                compliance with the standardized operation guidelines for listed issuer on main board (2015 amended) issued by Shenzhen Stock Exchange, the Articles of Association,
                                                Authorization Management of the Company, Management System in relating to Foreign Exchange Forward Deals of Hefei Meiling Co., Ltd., and these deals were
                                                conducted within the aut horization scope under general meeting and board meeting. The Company conducts no foreign exchange transactions on the purpose of getting
Special opinion on derivative investment and
                                                profit only, all of the forward foreign exchange transactions are operates based on normal operating and production, which is relying on specific business operations with
risk control by independent directors
                                                purpose of avoiding the preventing the risks in exchange rate. The forward foreign exchange transactions of the Company are beneficial to prevent the exchange risks
                                                exposed by import and export business and thus met its requirement for operation development. There was no speculative operation, no break of relevant rules and
                                                regulations and relevant business was conducted under corresponding decision-making procedures. Interests of the Company and entire shareholders, especially minority
                                                shareholders, were not prejudiced.




                                                                                                              33
                                                    HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017




VI. Sales of major assets and equity

1. Sales of major assets

□ Applicable √ Not applicable

The Company had no sales of major assets in the reporting period.

2. Sales of major equity

□ Applicable √ Not applicable




                                           34
                                                                                          HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017


           VII. Analysis of main holding company and stock-jointly companies

           √ Applicable □ Not applicable

           (I) Particular about main subsidiaries and stock-jointly companies net profit over 10%
                                                                                                                                                      In RMB

                                                            Register
 Company name       Type      Main business     Industry                  Total assets       Net Assets      Operating revenue    Operating profit    Net profit
                                                             capital
                             Research and
Zhongke Meiling              development,
Cryogenic                  manufacturing and Manufact
                Subsidiary                                  68,150,000   226,577,616.47    115,862,492.11       60,567,937.18       2,936,293.64      2,968,339.70
Technology Co.,            sales of ultra-low uring
Ltd.                          temperature
                                 freezer
Jiangxi Meiling
                           Manufacturing of
Electric                                     Manufact
                Subsidiary refrigeration and                50,000,000   610,043,716.32     88,495,146.09      340,298,917.37          223,238.07     1,883,499.28
Appliance  Co.,                              uring
                                freezer
Ltd.
Mianyang
                              Manufacturing of
Meiling                                         Manufact
                   Subsidiary refrigeration and            100,000,000   151,479,226.93     93,466,447.72       82,194,556.20      -2,862,555.47     -4,531,208.61
Refrigeration Co.,                              uring
                                   freezer
Ltd.
Sichuan                            R&D,
Changhong                    manufacturing and Manufact
                  Subsidiary                               200,000,000 3,526,134,410.37    577,588,200.20 2,781,737,556.72         33,535,396.53     36,882,767.44
Air-conditioner              domestic sales of uring
Co., Ltd.                     air-conditioner
                                   R&D,
Zhongshan
                             manufacturing and Manufact
Changhong         Subsidiary                               184,000,000 1,597,637,700.67    231,496,283.85 1,384,285,987.97        -12,543,826.48 -14,522,841.05
                             domestic sales of uring
Electric Co., LTD
                              air-conditioner


                                                                                 35
                                                                                        HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

Hefei     Meiling
Electric
                               Sales of white
Appliance         Subsidiary                    Sales     55,000,000   278,321,076.78 -266,636,231.93        802,402,320.20      41,454,464.99   41,789,074.03
                                   goods
Marketing Co.,
Ltd
Hefei   Meiling
                               Sales of white
Group Holdings Subsidiary                       Sales     80,000,000 1,006,170,550.42     85,757,235.04 1,476,038,071.44          3,629,197.39    2,860,990.99
                                   goods
Limited
Changmei                     E-business of    Fresh foo
Technology Co., Subsidiary    agricultural     d e-com    50,000,000   12,091,268.44       7,723,134.41         9,131,880.78     -4,860,660.93   -4,858,959.95
Ltd.                       products and fresh    merce
                                 R&D,
Guangdong                  manufacturing and
Changhong                   sales of kitchen
                                              Manufact
Ridian          Subsidiary      and toilet                83,000,000   248,987,291.99    113,175,193.72      208,290,529.53       4,394,461.91    4,057,326.42
                                                 uring
Technology Co.,              products, small
Ltd.                        home appliances
                           and water purifier




                                                                             36
                                                                      HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017




        (II) Notes of holding and shareholding companies

        √ Applicable □ Not applicable
                                  The method of
                                   obtaining and
       Company Name                  handling            The influence to the whole production and performance
                                subsidiaries during
                                 the report period
                                                      Co-invested and established with Candy Group on April 27,
                                                      2017, mainly takes charge of the production, research and
                                                      development, and sales of washing machine products, which
                                                      is conducive to improving the comprehensive competitiveness
                                                      of the company's washing machine products. The company
                                                      will make full use of the production capacity, product
Meiling CANDY Washing
                                Investment            development capabilities, sales channels, manufacturing scale
Machine Co., Ltd.
                                                      and quality control and other advantages that the company
                                                      and Candy Group have in washing machine so as to rapidly
                                                      lay out the washing machine market, expand the product
                                                      market shares of Meiling brand and Candy brand, and
                                                      enhance the company's profitability and comprehensive
                                                      competitiveness.
                                                      Established on May 11, 2017, mainly engaged in research and
                                                      development, and sales of air-conditioning products, which is
Zhongshan Hongyou Electric                            conducive to enhancing the competitiveness                of
                                Investment
Co., Ltd.                                             air-conditioning products, further optimizing the product
                                                      structure, and expanding the overseas business development
                                                      of air-conditioning.
Guangzhou Changhong Trade                             Minor effect on the overall production and operation and
                                Investment
Co., Ltd.                                             performance of the company
Zhongshan Hongling Trade                              Minor effect on the overall production and operation and
                                Investment
 Co.,Ltd.                                             performance of the company
Xi’an Meizhilai Electric                             Minor effect on the overall production and operation and
                                Clearing off
Appliance Marketing Co., Ltd.                         performance of the company

        Notes of holding and shareholding companies: Nil

        VIII. Structured vehicle controlled by the Company

        □ Applicable √ Not applicable

        IX. Prediction of business performance from January – September 2016

       Estimation on accumulative net profit from the beginning of the year to the end of next report
  period to be loss probably or the warning of its material change compared with the corresponding



                                                           37
                                                           HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



period of the last year and explanation on reason

     □ Applicable √ Not applicable

     X. Risks and countermeasures

     (1) risks and countermeasures

     In the 2017, faced with the more intense competition in home appliance market and other
objective factors, the enterprise will have worse survival environment. In the future, the company
will face the weak macroeconomic growth, severe industry situation, intensifying competition,
rising costs, new business models and the impact of Internet era and other risks.

     Faced with the above risks, on the one hand, the company will raise awareness of risk
prevention and make layout in product, technology, and market ahead of time. Along with the
smooth implementation of intelligent manufacturing, intelligent research and intelligent life, the
company’s products are transforming to high end and intelligence, the company will insist on the
intelligent and variable frequency product strategy, at the same time, enrich the product lines and
build a comprehensive home appliance enterprise. On the other hand, under the leadership of the
board of directors and the guideline of ―Meiling Dream‖, the company will carry out the guideline
for management of ―product leading, marketing force, manufacturing breakthrough, mechanism
protection‖, take globalization as a platform to continue to promote technological innovation, and
improve the product competitiveness from quality, high end and fashion technology by promoting
the manufacturing efficiency and technological level; speed up the online and offline channel
integration by improving the offline terminal marketing capacity of domestic sales and breaking
through the weak regional market; actively and positively explore the private brand construction in
overseas markets, and accelerate the pace of overseas merger and acquisition; give full play to the
driving force of internal system changes and management mechanism innovation, and activate the
team independent innovation power so as to provide mechanism guarantee for the company’s
sustainable and healthy development.

     (ii) Business plan in the next half year

     Under the guidelines of strategic planning, in the second half of 2017, the company will
continue to focus on the ―product leading, marketing force, manufacturing breakthrough,
mechanism protection‖ to carry out business and management work and achieve the company's
healthy and sustainable development. Aiming at the deficiencies and risks in the first half year, the
company's industrial units need to accomplish following work:

     1. Refrigerator (Freezer)

     Continue to adhere to the intelligence and variable frequency two core product strategies. In
the intelligence aspect, speed up the development and upgrading of a new generation of intelligent




                                                    38
                                                          HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



product, and implement the company's intelligent strategy; in the variable frequency aspect,
strengthen the standardization of variable frequency products; expand the cost advantages and
technology leadership, enhance the competitiveness of variable frequency products; promote the
high-end and intelligent upgrading of the company's product structure, and drive the company's
industrial transformation and upgrading; at the same time, improve the manufacturing efficiency
and product quality, reduce the product costs and enhance the product competitiveness by fully
implementing intelligent upgrading and rebuilding to the production lines.

     The domestic market takes frequency leading, intelligent pilot, multi-door becoming stronger,
back to back getting bigger, air-cooling jump start as the thinking, makes reasonable planning,
promote the products’ combination ability, and enhance the domestic sales capacity by adjusting
the product structure. Overseas markets should adhere to the brand structure of ―own brands +
OEM / ODM‖, enhance product quality, expand sales scale, maintain sustainable competitiveness,
and promote internationalization process; improve the additional value of medium-end products by
promoting the industrial design and differentiation strategy; speed up the development of high-end
products and market introduction, improve profitability and consolidate the cooperation with
strategic customers.

    2. Air conditioning

     Continue to take the opportunities of industry development and industry competition pattern
adjustment, take market planning as a leader, increase R & D investment, integrate supply chain
resources, improve efficiency, and steadily develop traditional business; orderly lay out emerging
businesses, strengthen the promotion of central air conditioning business, further strengthen the
in-depth cooperation with MIUI and other enterprises, expand ODM / OEM business, and actively
seek increment; actively explore new business models, promote O2O, promote online and offline
business balance development; increase the scale of export business, control costs, and increase
incomes; fully integrate the air conditioning manufacturing resources in Mianyang and Zhongshan,
complete manufacturing upgrades and intelligent transformation, and provide guarantee for
business development.

    3. Washing machine

    On the one hand, strengthen the construction of the core stores of retail channel, continue to
promote and speed up the progress of new products, protect the supply of new products, ensure the
sales demand, and achieve balanced development of market; on the one hand, strengthen the
communication and coordination with Candy Group, and launch front loading washing machine
suitable for Chinese market, improve product quality, and control product costs. In addition,
accelerate the promotion of top loading washing machine and the development of production line
by introducing professionals.

    4. Small appliances



                                                39
                                                           HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



     Develop e-commerce channels, supplement and enrich the existing online products; in the
offline market, make in-depth maintenance and expansion to the existing and newly opened
channel customers, establish promotion models by investment attraction channels to drive the
outlet sales of traditional channels; continue to improve the intelligent products camp, enrich the
intelligent product models of common internet of things, and develop the high-end intelligent
products with automatic speech recognition and screen, and continue to promote the development
of small appliance product lines.

     5. Bio-medical care

     As the platform for the comprehensive development of bio-medical industry and the
company’s subsidiary listed on new three board, in the second half of 2017, Zhongke Meiling will
continue to implement the strategy of ―diversification of related industries‖, steadily expand the
cold chain storage business and complete the family health industry technical reserves based on the
existing cold storage business, and timely expand its own business lines.

     6. Intelligent life new business model

      Continue to promote the investment project ―intelligent life project‖ and build Meiling
intelligent life O2O community fresh business platform with steady operating strategy. Rely on the
company’s advantages in intelligent and refrigeration fields to promote the layout in intelligent
terminal and refrigeration self pick-up cabinet; the direct sales business of fresh food focus on
regionalization and localization, intensify the superior products and the resource integration
capabilities of supply chain; gradually integrate the regional and national brand enterprises
entering business and continue to promote the construction of intelligent life O2O service platform
based on the intelligent terminal and fresh e-commerce business. The goal of the company is to
transform to ―equipment + service‖ model by means of food management, provide exploration for
the intelligent transformation of refrigerator, help the company to move towards high-frequency
service sales from low-frequency hardware sales, form the "hardware + service" double growth
engine, and drive the transformation and upgrading of the company’s profit model.

     The above business plan and business objectives do not represent the listed company’s profit
forecast of 2017, whether it can be achieved depends on the changes in market condition, the
efforts of management team and other factors, there are a lot of uncertainties, investors should pay
special attention to it.




                                                 40
                                                                 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017




                                   Section V. Important Events

          I. AGM and extraordinary general meeting

          1. AGM held in the period
                                 Participati
                                  on ratio
   Meeting           Type                      Holding date     Disclosure date                Index
                                    for
                                 investors
                                                                                 Juchao Website
                Annual general                                                   (www.cninfo.com.cn), Resolution
2016 AGM                            30.73%           2017-5-4           2017-5-5
                meeting                                                          Notice of AGM of 2016 (Notice
                                                                                 No.: 2017-031)
First                                                                            Juchao Website
Extraordinary   Extraordinary                                                    (www.cninfo.com.cn), Resolution
General         General             30.36%          2017-6-20          2017-6-21 Notice of First Extraordinary
Meeting of      Meeting                                                          General Meeting of 2017 (Notice
2017                                                                             No.: 2017-041)

          2. Request for extraordinary general meeting by preferred stockholders with rights to
   vote

          □ Applicable √ Not applicable

          II. Profit distribution plan and capitalizing of common reserves in the period

          □ Applicable √ Not applicable

       There are no cash dividend, bonus and capitalizing of common reserves carried out in the
   semi-annual

        III. Commitments that the company, shareholders, actual controller, offeror, directors,
   supervisors, senior management or other related parties have fulfilled during the reporting
   period and have not yet fulfilled by the end of reporting period

          □ Applicable √ Not applicable

        There are no commitments that the company, shareholders, actual controller, offeror, directors,
   supervisors, senior management or other related parties have fulfilled during the reporting period
   and have not yet fulfilled by the end of reporting period.

          IV. Appointment and non-reappointment (dismissal) of CPA

          Whether the semi-annual financial report had been audited


                                                         41
                                                             HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



     □Yes √ No

     The semi-annual report was not audited

   V. Explanation on “Qualified Opinion” from CPA by the Board and Supervisory
Committee

     □ Applicable √ Not applicable

     VI. Explanation from the Board for “Qualified Opinion” of last year’s

     □ Applicable √ Not applicable

     VII. Bankruptcy reorganization

     □ Applicable √ Not applicable

     No bankruptcy reorganization in Period.

     VIII. Lawsuits

     1. Material lawsuits and arbitration

     □ Applicable √ Not applicable

     No material lawsuits and arbitration in the reporting

     2. Other lawsuits

     √ Applicable □ Not applicable

     To maintain the independence and integrity of "Meiling" trademark and trade name, the
company has launched a series of litigation and arbitration related to "Meiling" trademark, please
see 2014 first quarter report, 2014 semi-annual report, the 2014 annual report disclosed
respectively on April 19, 2014, August 12, 2014, and March 26, 2014 for the relevant progress. Up
to now, Hefei Meiling Household Appliances Co., Ltd., Hefei Meiling Environmental Protection
Equipment Technology Co., Ltd., Hefei Meiling Purifying Equipment Technology Co., Ltd., Hefei
Meiling Electrical Appliances Co., Ltd., Hefei Meiling Cabinet Electrical Appliance Co., Ltd.,
Hefei Meiling Vehicle Industry Co., Ltd., Hefei Meiling Intelligent Technology Co., Ltd. (former
Hefei Meiling Communication Technology Co., Ltd., which changed its business name as Hefei
Meiling Intelligent Technology Co., Ltd. by themselves, the Company is pursue legal
responsibility by the law) have had no right to use "Meiling" trademark.

     At present, only the kitchen ventilator, cooker, water heater, water purifiers and household
electrical appliances manufactured and sold by the Company and its wholly-owned subsidiary -
Guangdong Changhong Ridian Technology Co., Ltd. are the company's regular products, any other
small household appliances using same or similar trademark as our company or using the trade




                                                  42
                                                          HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



name similar to the Company’s name are the Company’s products. In view of the infringement to
the Company’s trademark and trade name, false propaganda and unfair competition in the market,
the Company has carried out many ways including administrative reports, criminal investigation
and civil litigation to fight against infringement and counterfeiting behavior in the whole country.

     IX. Penalty and rectification

     □ Applicable √ Not applicable

     No penalty and rectification for the Company in reporting period.

     X. Integrity of the company and its controlling shareholders and actual controllers

     □ Applicable √ Not applicable

     During the reporting period, the Company and the controlling shareholders and the actual
controllers have had good reputation, and there is no large amount due unliquidated debt sentenced
by the court.

    XI. Implementation of the company’s stock incentive plan, employee stock ownership
plan or other employee incentives

     √ Applicable   □ Not applicable

     Implementation for annual performance incentive fund

    On August 9, 2012 and August 28, 2012, the Company considers the adoption of "Hefei
Meiling annual performance incentive fund implementation plan" (hereinafter referred to as ""
stimulus "") on the 16th meeting of the 7th board of directors and the 2012-second provisional
shareholders meeting. Details were disclosed on information disclosure media appointed by the
Company as "Securities Times", "Chinese Securities Daily", "Hong Kong Commercial Daily" and
the Juchao network (www.cninfo.com.cn) on August 10, 2012 and August 29th in the form of
announcement (No.: 2012-028, No.:2012-035).

     1. Implementation about 2012, 2013 and 2014 performance incentive fund provision and
distribution plan

     See details in " Implementation about 2012, 2013 and 2014 performance incentive fund
provision and distribution plan" in "XV Implementation of the company's stock incentive plan,
employee stock ownership plan, or other employee incentive measures" in "Section V Significant
Events" of the company's "2016 Annual Report" disclosed on March 30, 2017.

     2. The implementation of provision and allocation program of 2016 annual performance
incentive funds

     According to the ―Incentive Plan‖ approved by the company, the audited operating results and



                                                 43
                                                           HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



actual operation of the company in 2016 have met the requirements for awarding the annual
performance incentive funds. The company held the 29th meeting of the 8the Board of Directors
and the 15th meeting of the 8th Board of Supervisors and the Annual General Meeting of
Shareholders of 2016 on March 28, 2017 and May 4, 2017, the independent directors made
independent opinions, and the benefited directors abstained from voting, the meetings considered
and approved the ―Proposal on the Provision for the Company's 2016 Annual Performance
Incentive Funds‖. In addition, the company held the 32nd meeting of the 8th Board of Directors,
the 17th meeting of the 8th Board of Supervisors, and the first extraordinary general meeting of
shareholders in 2017 on June 2, 2017 and June 20, 2017, the independent directors made
independent opinions, and the benefited directors abstained from voting, the meetings considered
and approved the ―Allocation Plan for the Company's 2016 Annual Performance Incentive Funds‖,
the details are as follows:

    (1) Incentive range and number of people: 39 eligible objects (senior management, middle
management, core technical staff and the core backbone staff).

     (2) Source of funds: withdraw performance incentive funds of RMB 24,182,200 by 10% of
the audited net profits attributable to shareholders of listed companies in 2016, and allocate RMB
23.63 million of the withdrawn incentive funds to 39 incentive objects (senior management,
middle management, core technical staff and the core backbone staff) whom conform to national
laws and regulations and the requirements of ―Incentive Plan‖. The incentive objects purchase the
Company’s stock by their received performance incentive funds (after paying the relevant tax) plus
no less than 30% of their annual total remuneration (annual total remuneration except for the
performance incentive funds and after paying the corresponding income tax and five social
insurances and housing fund) through the open market.

     (3) Shareholding situation: According to the provisions of ―Incentive Plan‖ approved by the
company, in the premise of conforming to the listing rules of the Shenzhen Stock Exchange and
other applicable Chinese laws and regulation, the incentive objects promise to purchase the
Company’s stock through the open market within 60 working days (The time shall be postponed in
case of a period that the regulator requires the Company’s stock cannot be trade) after receiving the
performance incentive funds. As of the disclosure date of this report, this incentive plan is still in
progress.

     (4) Changes in equity interests arising from disposal shares due to incentive objects: aim at
shares purchased by incentive objects without disposal during the reporting period.

     (5) Commitment on restricted holding shares: according to the regulations of ―Incentive Plan‖
and the commitment of all incentive objects, the Company’ shares purchased by them shall not be
reduced by any market approach in the next year from the date of purchase, but the holding shares
can be reduced by 50% after the second year according to the laws and regulations, and the



                                                  44
                                                         HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



remaining 50% can be reduced after the third year according to the laws and regulations. In
addition, some directors, supervisors and senior executives among the incentive objects promise to
handle the shares in accordance with the relevant management methods of the Company Law, the
Securities Law, and the Company’s Shares Held by the Directors, Supervisors and Senior
Management of List Company and the Shares’ Change Management Rules, including but not
limited to: during the term of office, the annual transfer of shares shall not exceed 25% of the
Company’s shares held by oneself; cannot sell the Company’s share within 6 months after the
purchase or repurchase within six months after the sale; cannot transfer the company’s shares
within six months after dimission.

     See details on ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial
Daily‖ and www.cninfo.com.cn that the company disclosed in the form of announcement
(Announcement No. 2017-010, No. 2017-011, No. 2017-015, No. 2017-031, No. 2017-035, No.
2017-036, No. 2017-037, No. 2017-041) on March 30, 2017, May 5, 2017, June 3, 2017, and June
21, 2017.

    3. Share holding and reduction of the company’s performance incentive objects

     As of June 30, 2017, all incentive objects held a total of 10,079,679 shares, accounting for
0.9649% of the company’s general capital, of which 8,746,547 shares of A share, accounting for
approximately 0.8373% of the company’s general capital, 1,333,132 shares of B share, and
accounting for about 0.1276% of the company’s general capital. Some 2012 and 2013 annual
performance incentive objects (not directors, supervisors or senior management) have totally
reduced share of 3,477,477 shares from September 2014 to the end of the this reporting period,
accounting for approximately 0.3329% of the company’s general capital, and reduced holding of
222,900 shares in this reporting period.

    XII. Major related transaction

    1. Related transaction with routine operation concerned

    √ Applicable □ Not applicable

    (1) Related transaction with routine operation concerned




                                                45
                                                                                                                 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017




                                                                                                                                       Whet
                                                                                                                                        her
                                                                                                                            Trading    over
                                                                                                                                                           Availab
                                                                                                     Related     Proport     limit      the
                                                                                      Related                                                   Clearing
                                           Type of                                                 transaction     ion in                                    le      Date of
Seri                                                   Content of        Pricing    transaction                             approve    appro    form for
         Related                           related                                                   amount       similar
                         Relationship                    related         principl   price (in 10                                                 related   similar   disclosur        Index of disclosure
 al       party                            transac                                                    (in 10     transact   d (in 10    ved
                                                       transaction          e        thousand                                                   transact
                                             tion                                                   thousand        ions                                   market       e
                                                                                       Yuan)                                thousan    limite      ion
                                                                                                      Yuan)         (%)
                                                                                                                                                            price
                                                                                                                            d Yuan)    d or
                                                                                                                                        not
                                                                                                                                       (Y/N)
                                                     Electric melting,
                                                                                                                                                Spot                             Juchao
       Sichuan         Controlling         Commo            resistors,                                                                                               30 March
                                                                                                                                                exchang                          Website(www.cninfo.com.cn)
       Changhong       shareholder and     dity         integrated       Marketi                                                                                     2017; 5
 1                                                                                     20,358.26     20,358.26     2.82%     26,000      N      e, Bank      --                  Notice No.: 2017-010,
       Electric Co.,   ultimate            purchas           circuit     ng price                                                                                    May
                                                                                                                                                acceptan                         1017-011, 2017-013 and
       Ltd.            controller          ed        accessory, color                                                                                                2017
                                                                                                                                                ce                               2017-031
                                                     masterbatch
                       Other enterprise
                                                                                                                                                Spot                             Juchao
                       control under the   Commo                                                                                                                     30 March
       Huayi                                                                                                                                    exchang                          Website(www.cninfo.com.cn)
                       same controlling    dity                          Marketi                                                                                     2017; 5
 2     Compressor                                    Compressor etc.                   22,954.46     22,954.46     3.18%     60,000      N      e, Bank      --                  Notice No.: 2017-010,
                       shareholder and     purchas                       ng price                                                                                    May
       Co., Ltd.                                                                                                                                acceptan                         1017-011, 2017-013 and
                       ultimate            ed                                                                                                                        2017
                                                                                                                                                ce                               2017-031
                       controller
                       Other enterprise                                                                                                         Bank
       Sichuan                                                                                                                                                                   Juchao
                       control under the   Commo                                                                                                and                  30 March
       Changhong                                                                                                                                                                 Website(www.cninfo.com.cn)
                       same controlling    dity      Plastic products    Marketi                                                                commerc              2017; 5
 3     Mold Plastic                                                                    32,589.07     32,589.07     4.51%     52,000      N                   --                  Notice No.: 2017-010,
                       shareholder and     purchas   etc.                ng price                                                               e                    May
       Tech. Co.,                                                                                                                                                                1017-011, 2017-013 and
                       ultimate            ed                                                                                                   acceptan             2017
       Ltd.                                                                                                                                                                      2017-031
                       controller                                                                                                               ce




                                                                                                       46
                                                                                                        HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

                  Other enterprise                                                                                                Bank
                                                                                                                                                                Juchao
    Sichuan       control under the   Commo                                                                                       and                30 March
                                                                                                                                                                Website(www.cninfo.com.cn)
    Changhong     same controlling    dity      Door shell,        Marketi                                                        commerc            2017; 5
4                                                                             15,533.97   15,533.97      2.15%    27,000    N                  --               Notice No.: 2017-010,
    Jijia Fine    shareholder and     purchas   baseboard etc.     ng price                                                       e                  May
                                                                                                                                                                1017-011, 2017-013 and
    Co., Ltd.     ultimate            ed                                                                                          acceptan           2017
                                                                                                                                                                2017-031
                  controller                                                                                                      ce
                  Other enterprise                                                                                                Bank
    Sichuan                                                                                                                                                     Juchao
                  control under the   Commo                                                                                       and                30 March
    Changhong                                   Packing case,                                                                                                   Website(www.cninfo.com.cn)
                  same controlling    dity                         Marketi                                                        commerc            2017; 5
5   Package                                     printed matter                 5,360.60    5,360.60      0.74%     8,000    N                  --               Notice No.: 2017-010,
                  shareholder and     purchas                      ng price                                                       e                  May
    Printing                                    etc.                                                                                                            2017-011, 2017-013 and
                  ultimate            ed                                                                                          acceptan           2017
    Co., Ltd.                                                                                                                                                   2017-031
                  controller                                                                                                      ce
    Sichuan       Other enterprise
                                                                                                                                                                Juchao
    Changhong     control under the   Commo                                                                                                          30 March
                                                                                                                                  Bank                          Website(www.cninfo.com.cn)
    Precision     same controlling    dity      Printed board      Marketi                                                                           2017; 5
6                                                                               748.78      748.78       0.10%     8,000    N     acceptan     --               Notice No.: 2017-010,
    Electronics   shareholder and     purchas   components etc.    ng price                                                                          May
                                                                                                                                  ce                            2017-011, 2017-013 and
    Tech. Co.,    ultimate            ed                                                                                                             2017
                                                                                                                                                                2017-031
    Ltd.          controller
                  Other enterprise
    Sichuan                                                                                                                                                     Juchao
                  control under the   Commo                                                                                                          30 March
    Changhong                                                                                                                     Spot                          Website(www.cninfo.com.cn)
                  same controlling    dity      Power supply,      Marketi                                                                           2017; 5
7   New Energy                                                                     0.71          0.71    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
                  shareholder and     purchas   battery            ng price                                                                          May
    Technology                                                                                                                    e                             2017-011, 2017-013 and
                  ultimate            ed                                                                                                             2017
    Co., Ltd.                                                                                                                                                   2017-031
                  controller
                  Other enterprise
                                                                                                                                                                Juchao
                  control under the   Commo                                                                                                          30 March
    081                                                                                                                           Spot                          Website(www.cninfo.com.cn)
                  same controlling    dity                         Marketi                                                                           2017; 5
8   Electronic                                  Transformer etc.                235.55      235.55       0.03%     4,000    N     exchang      --               Notice No.: 2017-010,
                  shareholder and     purchas                      ng price                                                                          May
    Group                                                                                                                         e                             2017-011, 2017-013 and
                  ultimate            ed                                                                                                             2017
                                                                                                                                                                2017-031
                  controller



                                                                                            47
                                                                                                     HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

                   Other enterprise
                                                                                                                                                             Juchao
     Guangdong     control under the   Commo                                                                                                      30 March
                                                                                                                               Spot                          Website(www.cninfo.com.cn)
     Changhong     same controlling    dity      Foam pieces       Marketi                                                                        2017; 5
9                                                                              663.79     663.79      0.09%     8,000    N     exchang      --               Notice No.: 2017-010,
     Electronics   shareholder and     purchas   etc.              ng price                                                                       May
                                                                                                                               e                             2017-011, 2017-013 and
     Co., Ltd.     ultimate            ed                                                                                                         2017
                                                                                                                                                             2017-031
                   controller
     Sichuan
                   Other enterprise
     Changhong                                                                                                                 Spot                          Juchao
                   control under the   Commo                                                                                                      30 March
     Intelligent                                                                                                               exchang                       Website(www.cninfo.com.cn)
                   same controlling    dity                        Marketi                                                                        2017; 5
10   Manufacturi                                 Hand piece                     86.44      86.44      0.01%     4,000    N     e, Bank      --               Notice No.: 2017-010,
                   shareholder and     purchas                     ng price                                                                       May
     ng                                                                                                                        acceptan                      2017-011, 2017-013 and
                   ultimate            ed                                                                                                         2017
     Technology                                                                                                                ce                            2017-031
                   controller
     Co., Ltd.
                   Other enterprise
     Sichuan                                                                                                                   Spot                          Juchao
                   control under the   Commo                                                                                                      30 March
     Changhong                                   Sheet metal                                                                   exchang                       Website(www.cninfo.com.cn)
                   same controlling    dity                        Marketi                                                                        2017; 5
11   Xinrui                                      parts, plastic               4,901.96   4,901.96     0.68%     7,000    N     e, Bank      --               Notice No.: 2017-010,
                   shareholder and     purchas                     ng price                                                                       May
     Technology                                  parts etc.                                                                    acceptan                      2017-011, 2017-013 and
                   ultimate            ed                                                                                                         2017
     Co., Ltd                                                                                                                  ce                            2017-031
                   controller
                   Other enterprise
     Sichuan                                                                                                                                                 Juchao
                   control under the   Commo                                                                                                      30 March
     Zhiyijia                                                                                                                  Spot                          Website(www.cninfo.com.cn)
                   same controlling    dity      Electronic        Marketi                                                                        2017; 5
12   Network                                                                      0.92        0.92    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
                   shareholder and     purchas   products          ng price                                                                       May
     Technology                                                                                                                e                             2017-011, 2017-013 and
                   ultimate            ed                                                                                                         2017
     Co., Ltd.                                                                                                                                               2017-031
                   controller
                   Other enterprise                                                                                                                          Juchao
                                       Commo                                                                                                      30 March
     Sichuan       control under the                                                                                           Spot                          Website(www.cninfo.com.cn)
                                       dity      Electric          Marketi                                                                        2017; 5
13   Huafeng       same controlling                                               1.40        1.40    0.00%     4,000    N     exchang      --               Notice No.: 2017-010,
                                       purchas   appliance parts   ng price                                                                       May
     Corp. Group   shareholder and                                                                                             e                             2017-011, 2017-013 and
                                       ed                                                                                                         2017
                   ultimate                                                                                                                                  2017-031



                                                                                         48
                                                                                                         HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

                     controller




                                                                                                                                   Spot
                     Other enterprise                                                                                              exchang
     Sichuan                                                                                                                                                     Juchao
                     control under the   Commo                                                                                     e, Bank            30 March
     Changhong                                      Printed boards,                                                                                              Website(www.cninfo.com.cn)
                     same controlling    dity                          Marketi                                                     and                2017; 5
14   Electronic                                     transformers,                 2,403.23   2,403.23     0.33%     4,000    N                  --               Notice No.: 2017-010,
                     shareholder and     purchas                       ng price                                                    commerc            May
     Products                                       etc.                                                                                                         2017-011, 2017-013 and
                     ultimate            ed                                                                                        e                  2017
     Co., Ltd.                                                                                                                                                   2017-031
                     controller                                                                                                    acceptan
                                                                                                                                   ce
                                                                                                                                   Spot
                     Other enterprise                                                                                              exchang
                                                                                                                                                                 Juchao
     Sichuan         control under the   Commo                                                                                     e, Bank            30 March
                                                                                                                                                                 Website(www.cninfo.com.cn)
     ilink           same controlling    dity       Internet access    Marketi                                                     and                2017; 5
15                                                                                 434.57     434.57      0.06%     4,000    N                  --               Notice No.: 2017-010,
     Technology      shareholder and     purchas    module             ng price                                                    commerc            May
                                                                                                                                                                 2017-011, 2017-013 and
     Co., Ltd.       ultimate            ed                                                                                        e                  2017
                                                                                                                                                                 2017-031
                     controller                                                                                                    acceptan
                                                                                                                                   ce
                     Other enterprise
     Sichuan                                                                                                                                                     Juchao
                     control under the   Commo                                                                                                        30 March
     Changhong                                                                                                                     Spot                          Website(www.cninfo.com.cn)
                     same controlling    dity       Digital module     Marketi                                                                        2017; 5
16   Education                                                                        5.03        5.03    0.00%     4,000    N     exchang      --               Notice No.: 2017-010,
                     shareholder and     purchas    component          ng price                                                                       May
     Technology                                                                                                                    e                             2017-011, 2017-013 and
                     ultimate            ed                                                                                                           2017
     Co., Ltd.                                                                                                                                                   2017-031
                     controller
                                                    Information                                                                    Spot                          Juchao
     Sichuan         Controlling                                                                                                                      30 March
                                         Accept     system services,                                                               exchang                       Website(www.cninfo.com.cn)
     Changhong       shareholder and                                   Marketi                                                                        2017; 5
17                                       the        marketing fees,                816.50     816.50      0.94%     5,000    N     e, Bank      --               Notice No.: 2017-010,
     Electric Co.,   ultimate                                          ng price                                                                       May
                                         services   repair fees,                                                                   acceptan                      2017-011, 2017-013 and
     Ltd.            controller                                                                                                                       2017
                                                    shared service                                                                 ce                            2017-031



                                                                                             49
                                                                                                          HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

                                                  fees




     Sichuan
                                                                                                                                                                  Juchao
     Changhong     Controlling                                                                                                                         30 March
                                       Accept                                                                                       Spot                          Website(www.cninfo.com.cn)
     Electronics   shareholder and                                   Marketi                                                                           2017; 5
18                                     the        Shuttle fee                        2.30          2.30    0.00%     4,000    N     exchang      --               Notice No.: 2017-010,
     Holding       ultimate                                          ng price                                                                          May
                                       services                                                                                     e                             2017-011, 2017-013 and
     Group Co.,    controller                                                                                                                          2017
                                                                                                                                                                  2017-031
     Ltd.
                   Other enterprise
     Sichuan                                                                                                                        Spot                          Juchao
                   control under the                                                                                                                   30 March
     Changhong                         Accept     Transportation,                                                                   exchang                       Website(www.cninfo.com.cn)
                   same controlling                                  Marketi                                                                           2017; 5
19   Minsheng                          the        storage, loading              25,148.50   25,148.50     29.02%    55,000    N     e, Bank      --               Notice No.: 2017-010,
                   shareholder and                                   ng price                                                                          May
     Logistics                         services   and unloading                                                                     acceptan                      2017-011, 2017-013 and
                   ultimate                                                                                                                            2017
     Co., LTD                                                                                                                       ce                            2017-031
                   controller
     Sichuan
                   Other enterprise
     Service                                                                                                                        Spot                          Juchao
                   control under the                                                                                                                   30 March
     Exp.                              Accept     After-sales                                                                       exchang                       Website(www.cninfo.com.cn)
                   same controlling                                  Marketi                                                                           2017; 5
20   Appliance                         the        maintenance fee                7,391.89    7,391.89      8.53%    20,000    N     e, Bank      --               Notice No.: 2017-010,
                   shareholder and                                   ng price                                                                          May
     Service                           services   etc.                                                                              acceptan                      2017-011, 2017-013 and
                   ultimate                                                                                                                            2017
     Chain Co.,                                                                                                                     ce                            2017-031
                   controller
     Ltd.
                   Other enterprise
                                                                                                                                                                  Juchao
     Sichuan       control under the                                                                                                                   30 March
                                       Accept                                                                                       Spot                          Website(www.cninfo.com.cn)
     Hongxin       same controlling               Software usage     Marketi                                                                           2017; 5
21                                     the                                         63.20       63.20       0.07%     5,000    N     exchang      --               Notice No.: 2017-010,
     Software      shareholder and                fee                ng price                                                                          May
                                       services                                                                                     e                             2017-011, 2017-013 and
     Co., Ltd.     ultimate                                                                                                                            2017
                                                                                                                                                                  2017-031
                   controller




                                                                                              50
                                                                                                     HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

                    Other enterprise
                                                                                                                                                             Juchao
     Guangdong      control under the                                                                                                             30 March
                                        Accept                                                                                 Spot                          Website(www.cninfo.com.cn)
     Changhong      same controlling               Security service   Marketi                                                                     2017; 5
22                                      the                                      30.86    30.86       0.04%     5,000    N     exchang      --               Notice No.: 2017-010,
     Electronics    shareholder and                charge             ng price                                                                    May
                                        services                                                                               e                             2017-011, 2017-013 and
     Co., Ltd.      ultimate                                                                                                                      2017
                                                                                                                                                             2017-031
                    controller
                    Other enterprise
                                                                                                                                                             Juchao
     Sichuan        control under the                                                                                                             30 March
                                        Accept     Maintenance                                                                 Spot                          Website(www.cninfo.com.cn)
     Jiahong        same controlling                                  Marketi                                                                     2017; 5
23                                      the        fee, business                 23.66    23.66       0.03%     4,000    N     exchang      --               Notice No.: 2017-010,
     Industrial     shareholder and                                   ng price                                                                    May
                                        services   activity fee                                                                e                             2017-011, 2017-013 and
     Co., Ltd.      ultimate                                                                                                                      2017
                                                                                                                                                             2017-031
                    controller
                    Other enterprise
     Sichuan                                                                                                                                                 Juchao
                    control under the                                                                                                             30 March
     Changhong                          Accept                                                                                 Spot                          Website(www.cninfo.com.cn)
                    same controlling               Business           Marketi                                                                     2017; 5
24   Internationa                       the                                       8.31        8.31    0.01%     4,000    N     exchang      --               Notice No.: 2017-010,
                    shareholder and                activity fee       ng price                                                                    May
     l Hotel Co.,                       services                                                                               e                             2017-011, 2017-013 and
                    ultimate                                                                                                                      2017
     Ltd.                                                                                                                                                    2017-031
                    controller
                    Other enterprise
                                                                                                                                                             Juchao
     CHANGHO        control under the                                                                                                             30 March
                                        Accept                                                                                 Spot                          Website(www.cninfo.com.cn)
     NG(HK)TR       same controlling                                  Marketi                                                                     2017; 5
25                                      the        Sales expense                 23.75    23.75       0.03%     5,000    N     exchang      --               Notice No.: 2017-010,
     ADINGLIM       shareholder and                                   ng price                                                                    May
                                        services                                                                               e                             2017-011, 2017-013 and
     ITED           ultimate                                                                                                                      2017
                                                                                                                                                             2017-031
                    controller
     Sichuan        Other enterprise
                                                                                                                                                             Juchao
     Changhong      control under the                                                                                                             30 March
                                        Accept                                                                                 Spot                          Website(www.cninfo.com.cn)
     Internationa   same controlling                                  Marketi                                                                     2017; 5
26                                      the        Plane ticket                   3.13        3.13    0.00%     4,000    N     exchang      --               Notice No.: 2017-010,
     l Travel       shareholder and                                   ng price                                                                    May
                                        services                                                                               e                             2017-011, 2017-013 and
     Service Co.,   ultimate                                                                                                                      2017
                                                                                                                                                             2017-031
     Ltd.           controller



                                                                                         51
                                                                                                     HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

                    Other enterprise
     Sichuan                                                                                                                                                 Juchao
                    control under the                                                                                                             30 March
     Changhong                          Accept     Property fee and                                                            Spot                          Website(www.cninfo.com.cn)
                    same controlling                                  Marketi                                                                     2017; 5
27   Property                           the        maintenance                   38.62    38.62       0.04%     4,000    N     exchang      --               Notice No.: 2017-010,
                    shareholder and                                   ng price                                                                    May
     Service Co.,                       services   cost                                                                        e                             2017-011, 2017-013 and
                    ultimate                                                                                                                      2017
     Ltd.                                                                                                                                                    2017-031
                    controller
                    Other enterprise
                                                                                                                                                             Juchao
     Sichuan        control under the                                                                                                             30 March
                                        Accept     Laboratory                                                                  Spot                          Website(www.cninfo.com.cn)
     Hongwei        same controlling                                  Marketi                                                                     2017; 5
28                                      the        technical                     20.67    20.67       0.02%     5,000    N     exchang      --               Notice No.: 2017-010,
     Technology     shareholder and                                   ng price                                                                    May
                                        services   service fee                                                                 e                             2017-011, 2017-013 and
     Co., Ltd.      ultimate                                                                                                                      2017
                                                                                                                                                             2017-031
                    controller
                    Other enterprise
     Sichuan                                                                                                                                                 Juchao
                    control under the                                                                                                             30 March
     Zhiyijia                           Accept                                                                                 Spot                          Website(www.cninfo.com.cn)
                    same controlling               After-sale         Marketi                                                                     2017; 5
29   Network                            the                                      15.59    15.59       0.02%     5,000    N     exchang      --               Notice No.: 2017-010,
                    shareholder and                service            ng price                                                                    May
     Technology                         services                                                                               e                             2017-011, 2017-013 and
                    ultimate                                                                                                                      2017
     Co., Ltd.                                                                                                                                               2017-031
                    controller
                    Other enterprise
                                                                                                                                                             Juchao
     Lejiayi        control under the                                                                                                             30 March
                                        Accept                                                                                 Spot                          Website(www.cninfo.com.cn)
     Chain          same controlling                                  Marketi                                                                     2017; 5
30                                      the        Advertising fees               2.26        2.26    0.00%     5,000    N     exchang      --               Notice No.: 2017-010,
     Managemen      shareholder and                                   ng price                                                                    May
                                        services                                                                               e                             2017-011, 2017-013 and
     t Co., Ltd.    ultimate                                                                                                                      2017
                                                                                                                                                             2017-031
                    controller
                    Other enterprise
     Sichuan                                                                                                                                                 Juchao
                    control under the                                                                                                             30 March
     Changhong                          Accept                                                                                 Spot                          Website(www.cninfo.com.cn)
                    same controlling               Communication      Marketi                                                                     2017; 5
31   Network                            the                                       0.57        0.57    0.00%     5,000    N     exchang      --               Notice No.: 2017-010,
                    shareholder and                expenses           ng price                                                                    May
     Technology                         services                                                                               e                             2017-011, 2017-013 and
                    ultimate                                                                                                                      2017
     Co., Ltd.                                                                                                                                               2017-031
                    controller



                                                                                         52
                                                                                                      HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

     Sichuan
                     Other enterprise
     Changhong                                                                                                                                                Juchao
                     control under the                                                                                                             30 March
     Intelligent                         Accept                                                                                 Spot                          Website(www.cninfo.com.cn)
                     same controlling               Engineering       Marketi                                                                      2017; 5
32   Manufacturi                         the                                      19.66    19.66       0.02%     4,000    N     exchang      --               Notice No.: 2017-010,
                     shareholder and                maintenance fee   ng price                                                                     May
     ng                                  services                                                                               e                             2017-011, 2017-013 and
                     ultimate                                                                                                                      2017
     Technology                                                                                                                                               2017-031
                     controller
     Co., Ltd.
                     Other enterprise
                                                                                                                                                              Juchao
     Sichuan         control under the                                                                                                             30 March
                                         Accept                                                                                 Spot                          Website(www.cninfo.com.cn)
     Changhong       same controlling               Plastic           Marketi                                                                      2017; 5
33                                       the                                       0.18        0.18    0.00%     5,000    N     exchang      --               Notice No.: 2017-010,
     Jijia Fine      shareholder and                processing fee    ng price                                                                     May
                                         services                                                                               e                             2017-011, 2017-013 and
     Co., Ltd.       ultimate                                                                                                                      2017
                                                                                                                                                              2017-031
                     controller
                                                                                                                                Spot                          Juchao
     Sichuan         Controlling                                                                                                                   30 March
                                         Accept     Water,                                                                      exchang                       Website(www.cninfo.com.cn)
     Changhong       shareholder and                                  Marketi                                                                      2017; 5
34                                       fuel and   electricity and              695.05   695.05       0.10%     8,000    N     e, Bank      --               Notice No.: 2017-010,
     Electric Co.,   ultimate                                         ng price                                                                     May
                                         power      gas fees                                                                    acceptan                      2017-011, 2017-013 and
     Ltd.            controller                                                                                                                    2017
                                                                                                                                ce                            2017-031
                     Other enterprise
                                                                                                                                                              Juchao
     Guangdong       control under the              Water,                                                                                         30 March
                                         Accept                                                                                 Spot                          Website(www.cninfo.com.cn)
     Changhong       same controlling               electricity and   Marketi                                                                      2017; 5
35                                       fuel and                                 49.88    49.88       0.01%     8,000    N     exchang      --               Notice No.: 2017-010,
     Electronics     shareholder and                compressed air    ng price                                                                     May
                                         power                                                                                  e                             2017-011, 2017-013 and
     Co., Ltd.       ultimate                       cost                                                                                           2017
                                                                                                                                                              2017-031
                     controller
                     Other enterprise
                                                                                                                                                              Juchao
     Sichuan         control under the                                                                                                             30 March
                                         Accept                                                                                 Spot                          Website(www.cninfo.com.cn)
     Jiahong         same controlling               Water and         Marketi                                                                      2017; 5
36                                       fuel and                                  0.48        0.48    0.00%     4,000    N     exchang      --               Notice No.: 2017-010,
     Industrial      shareholder and                electricity fee   ng price                                                                     May
                                         power                                                                                  e                             2017-011, 2017-013 and
     Co., Ltd.       ultimate                                                                                                                      2017
                                                                                                                                                              2017-031
                     controller



                                                                                          53
                                                                                                            HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

                     Other enterprise
     Sichuan                                                                                                                                                        Juchao
                     control under the                                                                                                                   30 March
     Changhong                           Accept                                                                                       Spot                          Website(www.cninfo.com.cn)
                     same controlling               Water and          Marketi                                                                           2017; 5
37   Property                            fuel and                                      1.09          1.09    0.00%     4,000    N     exchang      --               Notice No.: 2017-010,
                     shareholder and                electricity fee    ng price                                                                          May
     Service Co.,                        power                                                                                        e                             2017-011, 2017-013 and
                     ultimate                                                                                                                            2017
     Ltd.                                                                                                                                                           2017-031
                     controller
                                                                                                                                      Spot                          Juchao
     Sichuan         Controlling                                                                                                                         30 March
                                                                                                                                      exchang                       Website(www.cninfo.com.cn)
     Changhong       shareholder and     Sales of                      Marketi                                                                           2017; 5
38                                                  Air-conditioner               84,180.47   84,180.47      9.88%   130,000    N     e, Bank      --               Notice No.: 2017-010,
     Electric Co.,   ultimate            goods                         ng price                                                                          May
                                                                                                                                      acceptan                      2017-011, 2017-013 and
     Ltd.            controller                                                                                                                          2017
                                                                                                                                      ce                            2017-031
     Sichuan
                                                                                                                                                                    Juchao
     Changhong       Controlling                                                                                                                         30 March
                                                                                                                                      Spot                          Website(www.cninfo.com.cn)
     Electronics     shareholder and     Sales of                      Marketi                                                                           2017; 5
39                                                  Food                             99.47       99.47       0.01%     8,000    N     exchang      --               Notice No.: 2017-010,
     Holding         ultimate            goods                         ng price                                                                          May
                                                                                                                                      e                             2017-011, 2017-013 and
     Group Co.,      controller                                                                                                                          2017
                                                                                                                                                                    2017-031
     Ltd.
                     Other enterprise                                                                                                 Bank
                                                                                                                                                                    Juchao
     Sichuan         control under the                                                                                                and                30 March
                                                    Outside                                                                                                         Website(www.cninfo.com.cn)
     Changhong       same controlling    Sales of                      Marketi                                                        commerc            2017; 5
40                                                  processing                     3,774.84    3,774.84      0.44%     7,000    N                  --               Notice No.: 2017-010,
     Jijia Fine      shareholder and     goods                         ng price                                                       e                  May
                                                    materials                                                                                                       2017-011, 2017-013 and
     Co., Ltd.       ultimate                                                                                                         acceptan           2017
                                                                                                                                                                    2017-031
                     controller                                                                                                       ce
                     Other enterprise
     Sichuan                                                                                                                                                        Juchao
                     control under the                                                                                                                   30 March
     Changhong                                      Color                                                                             Bank                          Website(www.cninfo.com.cn)
                     same controlling    Sales of                      Marketi                                                                           2017; 5
41   Mold Plastic                                   Masterbatch,                   5,503.42    5,503.42      0.65%    17,000    N     acceptan     --               Notice No.: 2017-010,
                     shareholder and     goods                         ng price                                                                          May
     Tech. Co.,                                     plastic particle                                                                  ce                            2017-011, 2017-013 and
                     ultimate                                                                                                                            2017
     Ltd.                                                                                                                                                           2017-031
                     controller




                                                                                                54
                                                                                                           HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

                   Other enterprise
                                                                                                                                     Spot                          Juchao
     Lejiayi       control under the                                                                                                                    30 March
                                                  Refrigerator,                                                                      exchang                       Website(www.cninfo.com.cn)
     Chain         same controlling    Sales of                       Marketi                                                                           2017; 5
42                                                washing                          173.06      173.06       0.02%     8,000    N     e, Bank      --               Notice No.: 2017-010,
     Managemen     shareholder and     goods                          ng price                                                                          May
                                                  machine                                                                            acceptan                      2017-011, 2017-013 and
     t Co., Ltd.   ultimate                                                                                                                             2017
                                                                                                                                     ce                            2017-031
                   controller
                   Other enterprise
                                                                                                                                                                   Juchao
     PT.CHANG      control under the                                                                                                                    30 March
                                                  Air conditioning                                                                   Spot                          Website(www.cninfo.com.cn)
     HONGELE       same controlling    Sales of                       Marketi                                                                           2017; 5
43                                                maintenance                         0.49          0.49    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
     CTRICIND      shareholder and     goods                          ng price                                                                          May
                                                  spare parts                                                                        e                             2017-011, 2017-013 and
     ONESIA        ultimate                                                                                                                             2017
                                                                                                                                                                   2017-031
                   controller
                   Other enterprise
                                                                                                                                                                   Juchao
     CHANGHO       control under the                                                                                                                    30 March
                                                                                                                                     Spot                          Website(www.cninfo.com.cn)
     NG(HK)TR      same controlling    Sales of   Refrigerator, air   Marketi                                                                           2017; 5
44                                                                               24,741.31   24,741.31      2.90%    45,000    N     exchang      --               Notice No.: 2017-010,
     ADINGLIM      shareholder and     goods      conditioner         ng price                                                                          May
                                                                                                                                     e                             2017-011, 2017-013 and
     ITED          ultimate                                                                                                                             2017
                                                                                                                                                                   2017-031
                   controller
                   Other enterprise
                                                                                                                                                                   Juchao
     CHANGHO       control under the                                                                                                                    30 March
                                                                                                                                     Spot                          Website(www.cninfo.com.cn)
     NGELECT       same controlling    Sales of                       Marketi                                                                           2017; 5
45                                                Refrigerator                     847.30      847.30       0.10%     8,000    N     exchang      --               Notice No.: 2017-010,
     RIC(AUST      shareholder and     goods                          ng price                                                                          May
                                                                                                                                     e                             2017-011, 2017-013 and
     RALIA)        ultimate                                                                                                                             2017
                                                                                                                                                                   2017-031
                   controller
                   Other enterprise
                                                                                                                                                                   Juchao
     Sichuan       control under the                                                                                                                    30 March
                                                                                                                                     Spot                          Website(www.cninfo.com.cn)
     Hongwei       same controlling    Sales of   Food,               Marketi                                                                           2017; 5
46                                                                                    8.95          8.95    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
     Technology    shareholder and     goods      Air-conditioner     ng price                                                                          May
                                                                                                                                     e                             2017-011, 2017-013 and
     Co., Ltd.     ultimate                                                                                                                             2017
                                                                                                                                                                   2017-031
                   controller



                                                                                               55
                                                                                                      HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

                   Other enterprise
     Sichuan                                                                                                                    Spot                          Juchao
                   control under the                                                                                                               30 March
     Changhong                                                                                                                  exchang                       Website(www.cninfo.com.cn)
                   same controlling    Sales of   Refrigerator, air   Marketi                                                                      2017; 5
47   Minsheng                                                                    108.76   108.76       0.01%     8,000    N     e, Bank      --               Notice No.: 2017-010,
                   shareholder and     goods      conditioner         ng price                                                                     May
     Logistics                                                                                                                  acceptan                      2017-011, 2017-013 and
                   ultimate                                                                                                                        2017
     Co., LTD                                                                                                                   ce                            2017-031
                   controller
     Sichuan
                   Other enterprise
     Service                                                                                                                    Spot                          Juchao
                   control under the                                                                                                               30 March
     Exp.                                                                                                                       exchang                       Website(www.cninfo.com.cn)
                   same controlling    Sales of   Maintenance         Marketi                                                                      2017; 5
48   Appliance                                                                   559.66   559.66       0.07%     8,000    N     e, Bank      --               Notice No.: 2017-010,
                   shareholder and     goods      parts               ng price                                                                     May
     Service                                                                                                                    acceptan                      2017-011, 2017-013 and
                   ultimate                                                                                                                        2017
     Chain Co.,                                                                                                                 ce                            2017-031
                   controller
     Ltd.
     Sichuan       Other enterprise
                                                                                                                                                              Juchao
     Changhong     control under the                                                                                                               30 March
                                                                                                                                Spot                          Website(www.cninfo.com.cn)
     Gerun         same controlling    Sales of                       Marketi                                                                      2017; 5
49                                                Waste materials                759.82   759.82       0.09%     8,000    N     exchang      --               Notice No.: 2017-010,
     Renewable     shareholder and     goods                          ng price                                                                     May
                                                                                                                                e                             2017-011, 2017-013 and
     Resources     ultimate                                                                                                                        2017
                                                                                                                                                              2017-031
     Co., Ltd.     controller
                   Other enterprise
                                                                                                                                                              Juchao
     Hefei         control under the                                                                                                               30 March
                                                                                                                                Bank                          Website(www.cninfo.com.cn)
     Changhong     same controlling    Sales of                       Marketi                                                                      2017; 5
50                                                Packing box                      2.11        2.11    0.00%     8,000    N     acceptan     --               Notice No.: 2017-010,
     Industrial    shareholder and     goods                          ng price                                                                     May
                                                                                                                                ce                            2017-011, 2017-013 and
     Co., Ltd.     ultimate                                                                                                                        2017
                                                                                                                                                              2017-031
                   controller
                   Other enterprise                                                                                                                           Juchao
                                                                                                                                                   30 March
     Sichuan       control under the                                                                                            Spot                          Website(www.cninfo.com.cn)
                                       Sales of                       Marketi                                                                      2017; 5
51   Huafeng       same controlling               Air-conditioner                  0.26        0.26    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
                                       goods                          ng price                                                                     May
     Corp. Group   shareholder and                                                                                              e                             2017-011, 2017-013 and
                                                                                                                                                   2017
                   ultimate                                                                                                                                   2017-031



                                                                                          56
                                                                                                           HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

                   controller




                                                                                                                                     Spot
                   Other enterprise                                                                                                  exchang
     Sichuan                                                                                                                                                       Juchao
                   control under the              Refrigerator, air                                                                  e, Bank            30 March
     Zhiyijia                                                                                                                                                      Website(www.cninfo.com.cn)
                   same controlling    Sales of   conditioner,        Marketi                                                        and                2017; 5
52   Network                                                                     98,589.85   98,589.85     11.57%   250,000    N                  --               Notice No.: 2017-010,
                   shareholder and     goods      washing             ng price                                                       commerc            May
     Technology                                                                                                                                                    2017-011, 2017-013 and
                   ultimate                       machine                                                                            e                  2017
     Co., Ltd.                                                                                                                                                     2017-031
                   controller                                                                                                        acceptan
                                                                                                                                     ce
                   Other enterprise
                                                                                                                                                                   Juchao
     Sichuan       control under the                                                                                                                    30 March
                                                                                                                                     Spot                          Website(www.cninfo.com.cn)
     Changhong     same controlling    Sales of                       Marketi                                                                           2017; 5
53                                                Food                                5.97          5.97    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
     Property      shareholder and     goods                          ng price                                                                          May
                                                                                                                                     e                             2017-011, 2017-013 and
     Co., Ltd.     ultimate                                                                                                                             2017
                                                                                                                                                                   2017-031
                   controller
                   Other enterprise
     Sichuan                                                                                                                                                       Juchao
                   control under the                                                                                                                    30 March
     Changhong                                                                                                                       Spot                          Website(www.cninfo.com.cn)
                   same controlling    Sales of                       Marketi                                                                           2017; 5
54   Network                                      Food                                8.71          8.71    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
                   shareholder and     goods                          ng price                                                                          May
     Technology                                                                                                                      e                             2017-011, 2017-013 and
                   ultimate                                                                                                                             2017
     Co., Ltd.                                                                                                                                                     2017-031
                   controller
     Sichuan       Other enterprise
                                                                                                                                                                   Juchao
     Changhong     control under the                                                                                                                    30 March
                                                                                                                                     Spot                          Website(www.cninfo.com.cn)
     Intelligent   same controlling    Sales of                       Marketi                                                                           2017; 5
55                                                Food                                0.36          0.36    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
     Health        shareholder and     goods                          ng price                                                                          May
                                                                                                                                     e                             2017-011, 2017-013 and
     Technology    ultimate                                                                                                                             2017
                                                                                                                                                                   2017-031
     Co., Ltd.     controller




                                                                                               57
                                                                                                     HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

                    Other enterprise
     Sichuan                                                                                                                                                 Juchao
                    control under the                                                                                                             30 March
     Changhong                                                                                                                 Spot                          Website(www.cninfo.com.cn)
                    same controlling    Sales of                     Marketi                                                                      2017; 5
56   Property                                      Air-conditioner                2.05        2.05    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
                    shareholder and     goods                        ng price                                                                     May
     Service Co.,                                                                                                              e                             2017-011, 2017-013 and
                    ultimate                                                                                                                      2017
     Ltd.                                                                                                                                                    2017-031
                    controller
                    Other enterprise
                                                                                                                                                             Juchao
     Sichuan        control under the                                                                                                             30 March
                                                                                                                               Spot                          Website(www.cninfo.com.cn)
     Huanyu         same controlling    Sales of                     Marketi                                                                      2017; 5
57                                                 Food                          12.10    12.10       0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
     Industrial     shareholder and     goods                        ng price                                                                     May
                                                                                                                               e                             2017-011, 2017-013 and
     Co. Ltd.       ultimate                                                                                                                      2017
                                                                                                                                                             2017-031
                    controller
                    Other enterprise
     Sichuan                                                                                                                   Spot                          Juchao
                    control under the                                                                                                             30 March
     Changhong                                     Sheet metal                                                                 exchang                       Website(www.cninfo.com.cn)
                    same controlling    Sales of                     Marketi                                                                      2017; 5
58   Xinrui                                        parts, plastic                 1.89        1.89    0.00%     8,000    N     e, Bank      --               Notice No.: 2017-010,
                    shareholder and     goods                        ng price                                                                     May
     Technology                                    parts etc.                                                                  acceptan                      2017-011, 2017-013 and
                    ultimate                                                                                                                      2017
     Co., Ltd                                                                                                                  ce                            2017-031
                    controller
                    Other enterprise
                                                                                                                                                             Juchao
                    control under the                                                                                                             30 March
                                                                                                                               Spot                          Website(www.cninfo.com.cn)
     OrionPDPC      same controlling    Sales of                     Marketi                                                                      2017; 5
59                                                 Refrigerator                 961.52   961.52       0.11%     8,000    N     exchang      --               Notice No.: 2017-010,
     o.,ltd         shareholder and     goods                        ng price                                                                     May
                                                                                                                               e                             2017-011, 2017-013 and
                    ultimate                                                                                                                      2017
                                                                                                                                                             2017-031
                    controller
     Sichuan        Other enterprise
                                                                                                                                                             Juchao
     Changhong      control under the                                                                                                             30 March
                                                                                                                               Spot                          Website(www.cninfo.com.cn)
     Intelligent    same controlling    Sales of                     Marketi                                                                      2017; 5
60                                                 Food                           1.12        1.12    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
     Manufacturi    shareholder and     goods                        ng price                                                                     May
                                                                                                                               e                             2017-011, 2017-013 and
     ng             ultimate                                                                                                                      2017
                                                                                                                                                             2017-031
     Technology     controller



                                                                                         58
                                                                                                   HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

     Co., Ltd.




     Mianyang       Other enterprise
                                                                                                                                                           Juchao
     Technology     control under the                                                                                                           30 March
                                                                                                                             Spot                          Website(www.cninfo.com.cn)
     Town Big       same controlling    Sales of                     Marketi                                                                    2017; 5
61                                                 Food                         0.29        0.29    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
     Data           shareholder and     goods                        ng price                                                                   May
                                                                                                                             e                             2017-011, 2017-013 and
     Technology     ultimate                                                                                                                    2017
                                                                                                                                                           2017-031
     Co., Ltd.      controller
                    Other enterprise
                                                                                                                                                           Juchao
     BVCH           control under the                                                                                                           30 March
                                                                                                                             Spot                          Website(www.cninfo.com.cn)
     Optronics      same controlling    Sales of                     Marketi                                                                    2017; 5
62                                                 Food                         1.28        1.28    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
     (Sichuan)      shareholder and     goods                        ng price                                                                   May
                                                                                                                             e                             2017-011, 2017-013 and
     Co., Ltd.      ultimate                                                                                                                    2017
                                                                                                                                                           2017-031
                    controller
                    Other enterprise
     Sichuan                                                                                                                                               Juchao
                    control under the                                                                                                           30 March
     Changhong                                                                                                               Spot                          Website(www.cninfo.com.cn)
                    same controlling    Sales of                     Marketi                                                                    2017; 5
63   Electronic                                    Food                         9.04        9.04    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
                    shareholder and     goods                        ng price                                                                   May
     Products                                                                                                                e                             2017-011, 2017-013 and
                    ultimate                                                                                                                    2017
     Co., Ltd.                                                                                                                                             2017-031
                    controller
                    Other enterprise
     Sichuan                                                                                                                                               Juchao
                    control under the                                                                                                           30 March
     Changhong                                                                                                               Spot                          Website(www.cninfo.com.cn)
                    same controlling    Sales of                     Marketi                                                                    2017; 5
64   Group                                         Food                         1.59        1.59    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
                    shareholder and     goods                        ng price                                                                   May
     Finance Co.,                                                                                                            e                             2017-011, 2017-013 and
                    ultimate                                                                                                                    2017
     Ltd.                                                                                                                                                  2017-031
                    controller
     Sichuan        Other enterprise                                                                                         Bank               30 March   Juchao
                                        Sales of                     Marketi
65   Changhong      control under the              Air-conditioner              1.76        1.76    0.00%     8,000    N     acceptan     --    2017; 5    Website(www.cninfo.com.cn)
                                        goods                        ng price
     Package        same controlling                                                                                         ce                 May        Notice No.: 2017-010,



                                                                                       59
                                                                                                    HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

     Printing       shareholder and                                                                                                              2017       2017-011, 2017-013 and
     Co., Ltd.      ultimate                                                                                                                                2017-031
                    controller
                    Other enterprise
                                                                                                                                                            Juchao
     Sichuan        control under the                                                                                                            30 March
                                                                                                                              Spot                          Website(www.cninfo.com.cn)
     Changhong      same controlling    Sales of   Air-conditioner   Marketi                                                                     2017; 5
66                                                                              35.17    35.17       0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
     Battery Co.,   shareholder and     goods      component         ng price                                                                    May
                                                                                                                              e                             2017-011, 2017-013 and
     Ltd            ultimate                                                                                                                     2017
                                                                                                                                                            2017-031
                    controller
                    Other enterprise
     Sichuan                                                                                                                                                Juchao
                    control under the                                                                                                            30 March
     Changhong                                                                                                                Spot                          Website(www.cninfo.com.cn)
                    same controlling    Sales of                     Marketi                                                                     2017; 5
67   Education                                     Air-conditioner               1.63        1.63    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
                    shareholder and     goods                        ng price                                                                    May
     Technology                                                                                                               e                             2017-011, 2017-013 and
                    ultimate                                                                                                                     2017
     Co., Ltd.                                                                                                                                              2017-031
                    controller
                    Other enterprise
                                                                                                                                                            Juchao
                    control under the                                                                                                            30 March
     081                                                                                                                      Spot                          Website(www.cninfo.com.cn)
                    same controlling    Sales of                     Marketi                                                                     2017; 5
68   Electronic                                    Air-conditioner               4.46        4.46    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
                    shareholder and     goods                        ng price                                                                    May
     Group                                                                                                                    e                             2017-011, 2017-013 and
                    ultimate                                                                                                                     2017
                                                                                                                                                            2017-031
                    controller
                    Other enterprise
     Guangyuan                                                                                                                                              Juchao
                    control under the                                                                                                            30 March
     Changhong                                                                                                                Spot                          Website(www.cninfo.com.cn)
                    same controlling    Sales of                     Marketi                                                                     2017; 5
69   Electronic                                    Air-conditioner              39.05    39.05       0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
                    shareholder and     goods                        ng price                                                                    May
     Technology                                                                                                               e                             2017-011, 2017-013 and
                    ultimate                                                                                                                     2017
     Co., Ltd.                                                                                                                                              2017-031
                    controller
     Sichuan        Other enterprise                                                                                          Spot               30 March   Juchao
                                        Sales of                     Marketi
70   Ilink          control under the              Air-conditioner              19.22    19.22       0.00%     8,000    N     exchang      --    2017; 5    Website(www.cninfo.com.cn)
                                        goods                        ng price
     Technology     same controlling                                                                                          e                  May        Notice No.: 2017-010,



                                                                                        60
                                                                                      HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

     Co., Ltd.    shareholder and                                                                                                  2017       2017-011, 2017-013 and
                  ultimate                                                                                                                    2017-031
                  controller
                  Other enterprise
     Sichuan                                                                                                                                  Juchao
                  control under the                                                                                                30 March
     Changhong                                                                                                  Spot                          Website(www.cninfo.com.cn)
                  same controlling    Sales of          Marketi                                                                    2017; 5
71   Innovation                                  Food              0.02        0.02    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
                  shareholder and     goods             ng price                                                                   May
     Investment                                                                                                 e                             2017-011, 2017-013 and
                  ultimate                                                                                                         2017
     Co., Ltd.                                                                                                                                2017-031
                  controller
                  Other enterprise
                                                                                                                                              Juchao
     Guangyuan    control under the                                                                                                30 March
                                                                                                                Spot                          Website(www.cninfo.com.cn)
     Hongcheng    same controlling    Sales of          Marketi                                                                    2017; 5
72                                               Food              0.10        0.10    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
     Industrial   shareholder and     goods             ng price                                                                   May
                                                                                                                e                             2017-011, 2017-013 and
     Co., Ltd.    ultimate                                                                                                         2017
                                                                                                                                              2017-031
                  controller
                  Other enterprise
     Sichuan                                                                                                                                  Juchao
                  control under the                                                                                                30 March
     Changhong                                                                                                  Spot                          Website(www.cninfo.com.cn)
                  same controlling    Sales of          Marketi                                                                    2017; 5
73   Solar                                       Food              0.12        0.12    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
                  shareholder and     goods             ng price                                                                   May
     Technology                                                                                                 e                             2017-011, 2017-013 and
                  ultimate                                                                                                         2017
     Co., Ltd.                                                                                                                                2017-031
                  controller
                  Other enterprise
     Sichuan                                                                                                                                  Juchao
                  control under the                                                                                                30 March
     Changhong                                                                                                  Spot                          Website(www.cninfo.com.cn)
                  same controlling    Sales of          Marketi                                                                    2017; 5
74   Electronic                                  Food              0.42        0.42    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
                  shareholder and     goods             ng price                                                                   May
     Technology                                                                                                 e                             2017-011, 2017-013 and
                  ultimate                                                                                                         2017
     Co., Ltd.                                                                                                                                2017-031
                  controller
     Sichuan      Other enterprise                                                                              Spot               30 March   Juchao
                                      Sales of          Marketi
75   Hongxin      control under the              Food              0.62        0.62    0.00%     8,000    N     exchang      --    2017; 5    Website(www.cninfo.com.cn)
                                      goods             ng price
     Software     same controlling                                                                              e                  May        Notice No.: 2017-010,



                                                                          61
                                                                                                     HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

     Co., Ltd.      shareholder and                                                                                                               2017       2017-011, 2017-013 and
                    ultimate                                                                                                                                 2017-031
                    controller
                    Other enterprise
                                                                                                                                                             Juchao
     Sichuan        control under the                                                                                                             30 March
                                                                                                                               Spot                          Website(www.cninfo.com.cn)
     Hongcheng      same controlling    Sales of                      Marketi                                                                     2017; 5
76                                                 Food                           0.75        0.75    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
     Real Estate    shareholder and     goods                         ng price                                                                    May
                                                                                                                               e                             2017-011, 2017-013 and
     Co., Ltd.      ultimate                                                                                                                      2017
                                                                                                                                                             2017-031
                    controller
                    Other enterprise
     Sichuan                                                                                                                                                 Juchao
                    control under the                                                                                                             30 March
     Changhong                                                                                                                 Spot                          Website(www.cninfo.com.cn)
                    same controlling    Sales of   Air-conditioner,   Marketi                                                                     2017; 5
77   New Energy                                                                  64.70    64.70       0.01%     8,000    N     exchang      --               Notice No.: 2017-010,
                    shareholder and     goods      Food               ng price                                                                    May
     Technology                                                                                                                e                             2017-011, 2017-013 and
                    ultimate                                                                                                                      2017
     Co., Ltd.                                                                                                                                               2017-031
                    controller
                    Other enterprise
     Sichuan                                                                                                                                                 Juchao
                    control under the                                                                                                             30 March
     Changhong                                                                                                                 Spot                          Website(www.cninfo.com.cn)
                    same controlling    Sales of                      Marketi                                                                     2017; 5
78   Electronic                                    Food                           3.23        3.23    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
                    shareholder and     goods                         ng price                                                                    May
     System Co.,                                                                                                               e                             2017-011, 2017-013 and
                    ultimate                                                                                                                      2017
     Ltd.                                                                                                                                                    2017-031
                    controller
     Sichuan        Other enterprise
                                                                                                                                                             Juchao
     Changhong      control under the                                                                                                             30 March
                                                                                                                               Spot                          Website(www.cninfo.com.cn)
     Precision      same controlling    Sales of                      Marketi                                                                     2017; 5
79                                                 Food                           8.86        8.86    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
     Electronics    shareholder and     goods                         ng price                                                                    May
                                                                                                                               e                             2017-011, 2017-013 and
     Tech. Co.,     ultimate                                                                                                                      2017
                                                                                                                                                             2017-031
     Ltd.           controller
     Changhong      Other enterprise                                                                                           Spot               30 March   Juchao
                                        Sales of                      Marketi
80   Internationa   control under the              Food                           0.05        0.05    0.00%    15,000    N     exchang      --    2017; 5    Website(www.cninfo.com.cn)
                                        goods                         ng price
     l Holdings     same controlling                                                                                           e                  May        Notice No.: 2017-010,



                                                                                         62
                                                                                                  HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

     (H.K.)        shareholder and                                                                                                             2017       2017-011, 2017-013 and
     Limited       ultimate                                                                                                                               2017-031
                   controller
                   Other enterprise
                                                                                                                                                          Juchao
     Guangdong     control under the   Providi                                                                                                 30 March
                                                                                                                            Spot                          Website(www.cninfo.com.cn)
     Changhong     same controlling    ng fuel   Water and         Marketi                                                                     2017; 5
81                                                                             5.17        5.17    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
     Electronics   shareholder and     and       electricity fee   ng price                                                                    May
                                                                                                                            e                             2017-011, 2017-013 and
     Co., Ltd.     ultimate            power                                                                                                   2017
                                                                                                                                                          2017-031
                   controller
                   Other enterprise
     Sichuan                                                                                                                Spot                          Juchao
                   control under the   Providi                                                                                                 30 March
     Changhong                                                                                                              exchang                       Website(www.cninfo.com.cn)
                   same controlling    ng fuel   Water and         Marketi                                                                     2017; 5
82   Minsheng                                                                  1.08        1.08    0.00%     8,000    N     e, Bank      --               Notice No.: 2017-010,
                   shareholder and     and       electricity fee   ng price                                                                    May
     Logistics                                                                                                              acceptan                      2017-011, 2017-013 and
                   ultimate            power                                                                                                   2017
     Co., LTD                                                                                                               ce                            2017-031
                   controller
                   Other enterprise
                                                                                                                                                          Juchao
     Sichuan       control under the   Providi                                                                                                 30 March
                                                                                                                            Spot                          Website(www.cninfo.com.cn)
     Hongwei       same controlling    ng fuel   Water and         Marketi                                                                     2017; 5
83                                                                             0.01        0.01    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
     Technology    shareholder and     and       electricity fee   ng price                                                                    May
                                                                                                                            e                             2017-011, 2017-013 and
     Co., Ltd.     ultimate            power                                                                                                   2017
                                                                                                                                                          2017-031
                   controller
                   Other enterprise
     Sichuan                                                                                                                                              Juchao
                   control under the   Providi                                                                                                 30 March
     Changhong                                                                                                              Bank                          Website(www.cninfo.com.cn)
                   same controlling    ng fuel   Water and         Marketi                                                                     2017; 5
84   Device                                                                   33.34    33.34       0.00%     8,000    N     acceptan     --               Notice No.: 2017-010,
                   shareholder and     and       electricity fee   ng price                                                                    May
     Technology                                                                                                             ce                            2017-011, 2017-013 and
                   ultimate            power                                                                                                   2017
     Co., Ltd.                                                                                                                                            2017-031
                   controller
     Sichuan       Other enterprise    Providi                                                                              Bank               30 March   Juchao
                                                 Water and         Marketi
85   Changhong     control under the   ng fuel                                 1.38        1.38    0.00%     8,000    N     acceptan     --    2017; 5    Website(www.cninfo.com.cn)
                                                 electricity fee   ng price
     Jijia Fine    same controlling    and                                                                                  ce                 May        Notice No.: 2017-010,



                                                                                      63
                                                                                                    HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

     Co., Ltd.      shareholder and     power                                                                                                    2017       2017-011, 2017-013 and
                    ultimate                                                                                                                                2017-031
                    controller
                    Other enterprise
     Sichuan                                                                                                                                                Juchao
                    control under the   Providi                                                                                                  30 March
     Changhong                                                                                                                Bank                          Website(www.cninfo.com.cn)
                    same controlling    ng fuel   Water and         Marketi                                                                      2017; 5
86   Mold Plastic                                                              203.04   203.04       0.02%     8,000    N     acceptan     --               Notice No.: 2017-010,
                    shareholder and     and       electricity fee   ng price                                                                     May
     Tech. Co.,                                                                                                               ce                            2017-011, 2017-013 and
                    ultimate            power                                                                                                    2017
     Ltd.                                                                                                                                                   2017-031
                    controller
                    Other enterprise
                                                                                                                                                            Juchao
     Hefei          control under the   Providi                                                                                                  30 March
                                                                                                                              Spot                          Website(www.cninfo.com.cn)
     Changhong      same controlling    ng fuel   Water and         Marketi                                                                      2017; 5
87                                                                               0.97        0.97    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
     Industrial     shareholder and     and       electricity fee   ng price                                                                     May
                                                                                                                              e                             2017-011, 2017-013 and
     Co., Ltd.      ultimate            power                                                                                                    2017
                                                                                                                                                            2017-031
                    controller
     Sichuan        Other enterprise
                                                                                                                                                            Juchao
     Changhong      control under the   Providi                                                                                                  30 March
                                                                                                                              Spot                          Website(www.cninfo.com.cn)
     Precision      same controlling    ng fuel   Water and         Marketi                                                                      2017; 5
88                                                                                0.2         0.2    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
     Electronics    shareholder and     and       electricity fee   ng price                                                                     May
                                                                                                                              e                             2017-011, 2017-013 and
     Tech. Co.,     ultimate            power                                                                                                    2017
                                                                                                                                                            2017-031
     Ltd.           controller
     Sichuan
                    Other enterprise
     Service                                                                                                                                                Juchao
                    control under the   Providi                                                                                                  30 March
     Exp.                                                                                                                     Spot                          Website(www.cninfo.com.cn)
                    same controlling    ng fuel   Water and         Marketi                                                                      2017; 5
89   Appliance                                                                   0.23        0.23    0.00%     8,000    N     exchang      --               Notice No.: 2017-010,
                    shareholder and     and       electricity fee   ng price                                                                     May
     Service                                                                                                                  e                             2017-011, 2017-013 and
                    ultimate            power                                                                                                    2017
     Chain Co.,                                                                                                                                             2017-031
                    controller
     Ltd.




                                                                                        64
                                                                                                      HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

                    Other enterprise
                                                                                                                                                              Juchao
     Sichuan        control under the   Rent to                                                                                                    30 March
                                                                                                                                Bank                          Website(www.cninfo.com.cn)
     Changhong      same controlling    the       Plants,             Marketi                                                                      2017; 5
90                                                                                26.07    26.07       0.35%     5,000    N     acceptan     --               Notice No.: 2017-010,
     Jijia Fine     shareholder and     related   travelling crane    ng price                                                                     May
                                                                                                                                ce                            2017-011, 2017-013 and
     Co., Ltd.      ultimate            party                                                                                                      2017
                                                                                                                                                              2017-031
                    controller
                    Other enterprise
     Sichuan                                                                                                                                                  Juchao
                    control under the   Rent to   Plants,                                                                                          30 March
     Changhong                                                                                                                  Bank                          Website(www.cninfo.com.cn)
                    same controlling    the       apartment,          Marketi                                                                      2017; 5
91   Mold Plastic                                                                111.74   111.74       1.48%     5,000    N     acceptan     --               Notice No.: 2017-010,
                    shareholder and     related   equipment           ng price                                                                     May
     Tech. Co.,                                                                                                                 ce                            2017-011, 2017-013 and
                    ultimate            party     machinery                                                                                        2017
     Ltd.                                                                                                                                                     2017-031
                    controller
                    Other enterprise
     Sichuan                                                                                                                    Spot                          Juchao
                    control under the   Rent to   Part of the                                                                                      30 March
     Changhong                                                                                                                  exchang                       Website(www.cninfo.com.cn)
                    same controlling    the       office rental,      Marketi                                                                      2017; 5
92   Minsheng                                                                     52.47    52.47       0.70%     5,000    N     e, Bank      --               Notice No.: 2017-010,
                    shareholder and     related   warehousing         ng price                                                                     May
     Logistics                                                                                                                  acceptan                      2017-011, 2017-013 and
                    ultimate            party     lease                                                                                            2017
     Co., LTD                                                                                                                   ce                            2017-031
                    controller
     Sichuan
                    Other enterprise
     Service                                                                                                                                                  Juchao
                    control under the   Rent to                                                                                                    30 March
     Exp.                                                                                                                       Spot                          Website(www.cninfo.com.cn)
                    same controlling    the                           Marketi                                                                      2017; 5
93   Appliance                                    Apartment                       10.65    10.65       0.14%     5,000    N     exchang      --               Notice No.: 2017-010,
                    shareholder and     related                       ng price                                                                     May
     Service                                                                                                                    e                             2017-011, 2017-013 and
                    ultimate            party                                                                                                      2017
     Chain Co.,                                                                                                                                               2017-031
                    controller
     Ltd.
     Sichuan        Other enterprise                                                                                            Spot                          Juchao
                                        Rent to                                                                                                    30 March
     Changhong      control under the                                                                                           exchang                       Website(www.cninfo.com.cn)
                                        the       Warehousing         Marketi                                                                      2017; 5
94   Xinrui         same controlling                                               1.69        1.69    0.02%     8,000    N     e, Bank      --               Notice No.: 2017-010,
                                        related   leasing, forklift   ng price                                                                     May
     Technology     shareholder and                                                                                             acceptan                      2017-011, 2017-013 and
                                        party                                                                                                      2017
     Co., Ltd       ultimate                                                                                                    ce                            2017-031



                                                                                          65
                                                                                                   HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

                   controller




                   Other enterprise
                                                                                                                                                           Juchao
     Hefei         control under the   Rent to                                                                                                  30 March
                                                                                                                             Spot                          Website(www.cninfo.com.cn)
     Changhong     same controlling    the                          Marketi                                                                     2017; 5
95                                               Apartment                      8.77        8.77    0.12%     5,000    N     exchang      --               Notice No.: 2017-010,
     Industrial    shareholder and     related                      ng price                                                                    May
                                                                                                                             e                             2017-011, 2017-013 and
     Co., Ltd.     ultimate            party                                                                                                    2017
                                                                                                                                                           2017-031
                   controller
     Sichuan       Other enterprise
                                                                                                                                                           Juchao
     Changhong     control under the   Rent to                                                                                                  30 March
                                                                                                                             Bank                          Website(www.cninfo.com.cn)
     Precision     same controlling    the                          Marketi                                                                     2017; 5
96                                               Apartment                      1.57        1.57    0.02%     5,000    N     acceptan     --               Notice No.: 2017-010,
     Electronics   shareholder and     related                      ng price                                                                    May
                                                                                                                             ce                            2017-011, 2017-013 and
     Tech. Co.,    ultimate            party                                                                                                    2017
                                                                                                                                                           2017-031
     Ltd.          controller
                   Other enterprise
                                                                                                                                                           Juchao
     BVCH          control under the   Rent to                                                                                                  30 March
                                                                                                                             Spot                          Website(www.cninfo.com.cn)
     Optronics     same controlling    the                          Marketi                                                                     2017; 5
97                                               Freight elevator               5.25        5.25    0.07%     5,000    N     exchang      --               Notice No.: 2017-010,
     (Sichuan)     shareholder and     related                      ng price                                                                    May
                                                                                                                             e                             2017-011, 2017-013 and
     Co., Ltd.     ultimate            party                                                                                                    2017
                                                                                                                                                           2017-031
                   controller
                   Other enterprise
                                                                                                                                                           Juchao
     Guangdong     control under the   Rent to                                                                                                  30 March
                                                                                                                             Spot                          Website(www.cninfo.com.cn)
     Changhong     same controlling    the       Part of the        Marketi                                                                     2017; 5
98                                                                              5.96        5.96    0.08%     5,000    N     exchang      --               Notice No.: 2017-010,
     Electronics   shareholder and     related   office rental      ng price                                                                    May
                                                                                                                             e                             2017-011, 2017-013 and
     Co., Ltd.     ultimate            party                                                                                                    2017
                                                                                                                                                           2017-031
                   controller
     Sichuan       Other enterprise    Rent to                                                                               Spot               30 March   Juchao
                                                                    Marketi
99   Changhong     control under the   the       Plant                         46.35    46.35       0.62%     5,000    N     exchang      --    2017; 5    Website(www.cninfo.com.cn)
                                                                    ng price
     Device        same controlling    related                                                                               e                  May        Notice No.: 2017-010,



                                                                                       66
                                                                                                     HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

      Technology     shareholder and     party                                                                                                    2017       2017-011, 2017-013 and
      Co., Ltd.      ultimate                                                                                                                                2017-031
                     controller
                     Other enterprise
                                                                                                                                                             Juchao
      Sichuan        control under the   Rent to                                                                                                  30 March
                                                                                                                               Spot                          Website(www.cninfo.com.cn)
      Hongwei        same controlling    the                          Marketi                                                                     2017; 5
100                                                Plant                          3.52        3.52    0.05%     5,000    N     exchang      --               Notice No.: 2017-010,
      Technology     shareholder and     related                      ng price                                                                    May
                                                                                                                               e                             2017-011, 2017-013 and
      Co., Ltd.      ultimate            party                                                                                                    2017
                                                                                                                                                             2017-031
                     controller
      Sichuan
                                         Rent                                                                                                                Juchao
      Changhong      Controlling                                                                                                                  30 March
                                         from                                                                                  Spot                          Website(www.cninfo.com.cn)
      Electronics    shareholder and                                  Marketi                                                                     2017; 5
101                                      the       Shops                          3.66        3.66    0.05%     4,000    N     exchang      --               Notice No.: 2017-010,
      Holding        ultimate                                         ng price                                                                    May
                                         related                                                                               e                             2017-011, 2017-013 and
      Group Co.,     controller                                                                                                                   2017
                                         party                                                                                                               2017-031
      Ltd.
                     Other enterprise
      Sichuan                            Rent                                                                                                                Juchao
                     control under the                                                                                                            30 March
      Changhong                          from                                                                                  Spot                          Website(www.cninfo.com.cn)
                     same controlling                                 Marketi                                                                     2017; 5
102   Property                           the       Plant and office              92.15    92.15       1.22%     4,000    N     exchang      --               Notice No.: 2017-010,
                     shareholder and                                  ng price                                                                    May
      Service Co.,                       related                                                                               e                             2017-011, 2017-013 and
                     ultimate                                                                                                                     2017
      Ltd.                               party                                                                                                               2017-031
                     controller
                     Other enterprise
                                         Rent                                                                                                                Juchao
      Guangdong      control under the                                                                                                            30 March
                                         from                                                                                  Spot                          Website(www.cninfo.com.cn)
      Changhong      same controlling              The staff          Marketi                                                                     2017; 5
103                                      the                                      3.57        3.57    0.05%     5,000    N     exchang      --               Notice No.: 2017-010,
      Electronics    shareholder and               dormitory          ng price                                                                    May
                                         related                                                                               e                             2017-011, 2017-013 and
      Co., Ltd.      ultimate                                                                                                                     2017
                                         party                                                                                                               2017-031
                     controller
      Chengdu        Other enterprise    Rent                                                                                  Spot               30 March   Juchao
                                                                      Marketi
104   Changhong      control under the   from      Office                        16.48    16.48       0.22%     5,000    N     exchang      --    2017;      Website(www.cninfo.com.cn)
                                                                      ng price
      Electronic     same controlling    the                                                                                   e                  5 May      Notice No.: 2017-010,



                                                                                         67
                                                                                                         HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

      Technology      shareholder and     related                                                                                                     2017       2017-011, 2017-013 and
      Co., Ltd.       ultimate            party                                                                                                                  2017-031
                      controller
                                          Rent                                                                                     Spot                          Juchao
      Sichuan         Controlling                                                                                                                     30 March
                                          from                                                                                     exchang                       Website(www.cninfo.com.cn)
      Changhong       shareholder and                                  Marketi                                                                        2017; 5
105                                       the       Plant and office                59.45      59.45      0.79%     5,000    N     e, Bank      --               Notice No.: 2017-010,
      Electric Co.,   ultimate                                         ng price                                                                       May
                                          related                                                                                  acceptan                      2017-011, 2017-013 and
      Ltd.            controller                                                                                                                      2017
                                          party                                                                                    ce                            2017-031
                                                                                                                                   Spot                          Juchao
      Sichuan         Controlling         Purchas                                                                                                     30 March
                                                                                                                                   exchang                       Website(www.cninfo.com.cn)
      Changhong       shareholder and     ing       Information        Marketi                                                                        2017; 5
106                                                                                   2.50        2.50    0.02%     5,000    N     e, Bank      --               Notice No.: 2017-010,
      Electric Co.,   ultimate            fixed     system             ng price                                                                       May
                                                                                                                                   acceptan                      2017-011, 2017-013 and
      Ltd.            controller          assets                                                                                                      2017
                                                                                                                                   ce                            2017-031
      Sichuan
                      Other enterprise
      Changhong                                                                                                                    Spot                          Juchao
                      control under the   Purchas                                                                                                     30 March
      Intelligent                                                                                                                  exchang                       Website(www.cninfo.com.cn)
                      same controlling    ing       Reform of          Marketi                                                                        2017; 5
107   Manufacturi                                                                 1,362.92   1,362.92    10.51%     4,000    N     e, Bank      --               Notice No.: 2017-010,
                      shareholder and     fixed     production line    ng price                                                                       May
      ng                                                                                                                           acceptan                      2017-011, 2017-013 and
                      ultimate            assets                                                                                                      2017
      Technology                                                                                                                   ce                            2017-031
                      controller
      Co., Ltd.
                      Other enterprise
                                                                                                                                                                 Juchao
      Sichuan         control under the   Purchas                                                                                                     30 March
                                                                                                                                   Spot                          Website(www.cninfo.com.cn)
      Hongxin         same controlling    ing       Information        Marketi                                                                        2017; 5
108                                                                                189.55     189.55      1.46%     5,000    N     exchang      --               Notice No.: 2017-010,
      Software        shareholder and     fixed     system etc.        ng price                                                                       May
                                                                                                                                   e                             2017-011, 2017-013 and
      Co., Ltd.       ultimate            assets                                                                                                      2017
                                                                                                                                                                 2017-031
                      controller
      Sichuan         Other enterprise    Purchas                                                                                                     30 March   Juchao
                                                                                                                                   Spot
      Hongcheng       control under the   ing       Plant              Marketi                                                                        2017; 5    Website(www.cninfo.com.cn)
109                                                                                368.89     368.89      2.84%     4,000    N     exchang      --
      Constructio     same controlling    fixed     construction       ng price                                                                       May        Notice No.: 2017-010,
                                                                                                                                   e
      n               shareholder and     assets                                                                                                      2017       2017-011, 2017-013 and



                                                                                             68
                                                                                                                         HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

        Engineering    ultimate                                                                                                                                                                  2017-031
        Co., Ltd.      controller


                       Other enterprise
                                                                                                                                                                                                 Juchao
        Sichuan        control under the     Purchas                                                                                                                                30 March
                                                                                                                                                           Spot                                  Website(www.cninfo.com.cn)
        Hongcheng      same controlling      ing        Plant              Marketi                                                                                                  2017; 5
110                                                                                               50.94         50.94      0.39%        4,000       N      exchang         --                    Notice No.: 2017-010,
        Real Estate    shareholder and       fixed      construction       ng price                                                                                                 May
                                                                                                                                                           e                                     2017-011, 2017-013 and
        Co., Ltd.      ultimate              assets                                                                                                                                 2017
                                                                                                                                                                                                 2017-031
                       controller
Total                                                                           --            -           363,840.31         -           -          -          --          --           --                      --
Detail of sales return with major amount involved                          --
                                                                           1. It is estimated that the related transaction amount resulted by purchasing goods (including door shell and plastic products etc.) and accepting fuel
                                                                           and power from Sichuan Changhong and its subsidiary by the Company for year of 2017 was RMB 1250 million at most (tax-excluded), actually
                                                                           RMB 784,042,600 occurred in reporting period.
                                                                           2. It is estimated that the related transaction amount resulted by purchasing goods (including compressor purchased etc.) from Huayi Compressor
                                                                           and its subsidiary by the Company for year of 2017 was RMB 600 million at most (tax-excluded), actually RMB 229,544,600 occurred in reporting
                                                                           period.
                                                                           3. It is estimated that the related transaction amount resulted by purchasing or selling equipment, software, maintenance and spare parts and molds
                                                                           etc. from Sichuan Changhong and its subsidiary by the Company for year of 2017 was RMB 50 million at most (tax-excluded), actually RMB
Report the actual implementation of the daily related transactions which   1,920,500 occurred in reporting period
  were projected about their total amount by types during the reporting    4. It is estimated that the related transaction amount resulted by purchasing goods from and providing fuel and power to Sichuan Changhong and
                         period (if applicable)                            its subsidiary by the Company for year of 2017 was RMB 4720 million at most (tax-excluded), actually RMB 2,198,890,100 occurred in reporting
                                                                           period
                                                                           5. It is estimated that the related transaction amount resulted by purchasing compressed air, accepting energy, power and service from Huayi
                                                                           Compressor and its subsidiary by the Company for year of 2017 was RMB 650,000 at most (tax-excluded), actually RMB 0 occurred in reporting
                                                                           period
                                                                           6. It is estimated that the related transaction amount resulted by leasing business from Sichuan Changhong and its subsidiary by the Company for
                                                                           year of 2017 was RMB 50 million at most (tax-excluded), actually RMB 3,518,500 occurred in reporting period
                                                                           7. It is estimated that the related transaction amount from domestic finished goods logistic business outsourcing and transportation, storage, loading
                                                                           and unloading to Sichuan Changhong Minsheng Logistic Co., Ltd. by the Company for year of 2017 was RMB 550 million at most (tax-excluded),



                                                                                                              69
                                                                                                                HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

                                                                 actually RMB 251,485,000 occurred in reporting period


                                                                 8. It is estimated that the related transaction amount from after sales service of domestic goods outsourcing to Sichuan Service Exp. Appliance
                                                                 Service Chain Co., Ltd. by the Company for year of 2017 was RMB 200 million at most (tax-excluded), actually RMB 73,918,900 occurred in
                                                                 reporting period.
                                                                 9. It is estimated that the related transaction amount resulted by accepting other service and labor service etc. or providing other service and labor
                                                                 service etc. to Sichuan Changhong and its subsidiary by the Company for year of 2017 was RMB 50 million at most (tax-excluded), actually RMB
                                                                 9,735,800 occurred in reporting period
                                                                 10. It is estimated that the related transaction amount resulted by selling goods from Sichuan Changhong Electronics Holding Group and its
                                                                 subsidiary by the Company for year of 2017 was RMB 80 million at most (tax-excluded), actually RMB 8,939,500 occurred in reporting period.
                                                                 11. It is estimated that the related transaction amount resulted by purchasing goods and receiving labor services, fuel power, leasing and purchasing
                                                                 equipment etc. from Sichuan Changhong Electronics Group and its subsidiary by the Company for year of 2017 was RMB 110 million at most
                                                                 (tax-excluded), actually RMB 76,407,600 occurred in reporting period.
Reasons for major differences between trading price and market
                                                                 Not applicable
reference price




                                                                                                    70
                                                                                HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017




                (2) Related transactions with Changhong Finance Company

              The resolution of the 18th meeting of the 8th Board of Directors and the 1st Extraordinary
        Shareholders' General Meeting of 2016 that the company held on March 18, 2016, April 16, 2016
        approved and agreed the company to continue carry out the financial service cooperation with
        Sichuan Changhong Group Finance Co., Ltd. (hereinafter referred to as ―Changhong Finance
        Company‖) and sign a triennial Financial Service Agreement. In accordance with the agreement,
        Changhong Finance Company shall provide a series of financial services such as deposit and loan
        in its business scope according to the requirements of the Company and its subsidiaries. The
        related transactions between the company and its subsidiaries and Changhong Finance Company
        from the beginning of the year to the end of the reporting period are as follows:

              As of June 30, 2017, the Company and its subsidiaries have carried out deposit, opening of
        bills and notes discounted businesses with Changhong Finance Company. The Company and its
        subsidiaries had balances of deposits of RMB 1,905,236,221.16 in Changhong Finance Company,
        accounting for 29.05% of the balance of deposits absorbed by Changhong Finance Company,
        which was less than 30%, the balance of notes was RMB 1,179,397,608.68 and the notes
        discounted balance was RMB1,315,380,817.24. Details are as follows:



                                                                                                               In RMB/CNY
                                                                                                                             Interest and
                         Balance at
       Item                               Increase in the year            Decrease in the year       Ending balance       commission charge
                         year-begin
                                                                                                                           received or paid

I. Savings in

Changhong Group        1,908,842,163.20    10,826,995,162.70                10,830,601,104.74         1,905,236,221.16       15,976,164.79
Finance Company

II. Borrowings

from Changhong
                                                                                                                      -
Group Finance
Company

1.Short-term loans                    -                          -                               -                    -                       -

2.Long-term loans                     -                          -                               -                    -                       -

III. Other financial
                                                                                                                      -
business

1.notes drawing         544,374,441.19       1,238,581,673.56                  603,558,506.07         1,179,397,608.68          283,104.31

2.notes discounted      565,252,574.29       1,231,248,889.55                  481,120,646.60         1,315,380,817.24       11,944,312.93




                                                                     71
                                                          HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



    According to the regulation of Information Disclosure Business Memorandum No. 2 -
Transactions and Related Transactions of the Shenzhen Stock Exchange, the company issued the
Risk Continuous Assessment Report About Sichuan Changhong Group Finance Co., Ltd. for the
deposit, loan and other financial services that the company carried out with Changhong Finance
Company during the reporting period, and disclosed at www.cninfo.com.cn on August 10, 2017.

    2. Related transactions by assets acquisition and sold

    □ Applicable √ Not applicable

    There are no related transactions by assets acquisition and sold in the period

    3. Material related transaction of jointly foreign investment

    □ Applicable √ Not applicable

    The Company has no material related transaction of jointly foreign investment occurred in
reporting period-end.

    4. Connect of related liability and debt

    √ Applicable □ Not applicable

    Whether has non-operational contact of related liability and debts or not

    □ Yes √No

    No non-operational contact of related liability or debts in Period

    5. Other related transactions

    □ Applicable √ Not applicable

    Nil

    XIII. Non-business capital occupying by controlling shareholders and its related parties

    □ Applicable √ Not applicable

    No non-business capital occupied by controlling shareholders and its related parties in Period.

    XIV. Significant contract and implementations

    1. Entrust, contract and leasing

    (1) Entrust

    □ Applicable √ Not applicable

    No entrust in Period.




                                                 72
                                                                             HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



          (2) Contract

          □ Applicable √ Not applicable

          No contract in Period.

          (3) Leasing

          √ Applicable □ Not applicable

          Operational leasing of the Company please found more details in ―investment real estate‖,
    ―fixed assets‖, ―Lease of related party‖ and ―Rent of related party‖ in Note of Financial Statement.

       Gains/losses to the Company from projects that reached over 10% in total profit of the
    Company in reporting period

          □ Applicable √ Not applicable

          No gains or losses to the Company from projects that reached over 10% in total profit of the
    Company in reporting period.

          2. Material guarantee

          √ Applicable □ Not applicable

          (1) Guarantee

         During the reporting period, the guarantees that the company provides for its wholly-owned
    and holding subsidiaries are for the loans generated by supporting their production and operation,
    the guaranty type is assurance; the guarantees that the company and subsidiaries provide for the
    distributors are to provide joint liability guarantees for the high quality distributors conforming to
    certain conditions within the line of credit of designated banks, the E-bank acceptance bills opened
    under this line of credit are all used for the distributors to pay the purchase payment for goods to
    the Company and subsidiaries, aiming to promote the company’s channel business development,
    strengthen the good cooperative relationship between the company and the downstream
    distributors, and effectively stimulate the company and its subsidiaries’ sales growth.

         Up to June 30, 2017, the company has granted credit to the guarantees of some wholly-owned
    and holding subsidiaries, in addition to the wholly-owned subsidiary Changhong Air-conditioner,
    other subsidiaries have actual guarantee; meanwhile, the company and its subsidiaries have granted
    credit to the guarantees of some high quality distributors, the balance of guarantees is within the
    line of credit. The external guarantees of the Company and subsidiaries are as follows:

                                                                                                            In 10 thousand Yuan
                   Particulars about the external guarantee of the Company (Barring the guarantee for subsidiaries)
Name of the    Related Announcement    Guarantee        Actual date of        Actual                        Guarant Complete Guarantee
                                                                                          Guarantee type
 Company           disclosure date       limit        happening (Date of     guarantee                      ee term implement for related




                                                                 73
                                                                                    HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



    guaranteed                                              signing agreement)         limit                                  ation or       party
                                                                                                                                 not
                     Notice No.:
                     2015-038,No.: 2015-040
                     and No.: 2015-064 on 29
                     August 2015 and 23
Dealer of Hefei                                                                                    Joint liability   One
                     December 2015                 20,000        29 Sept. 2016        1,229.81                               N           N
Meiling Co., Ltd.                                                                                  guaranty          year
                     Notice No.: 2016-068,
                     2016-072, 2016-077 on
                     26 Nov. 2016 and 14
                     Dec.:

                     Notice No.:
                     2015-038,No.: 2015-040
                     and No.: 2015-064 on 29
Dealer of Sichuan
                     August 2015 and 23
Changhong                                                                                          Joint liability   One
                     December 2015                 20,000         14 Oct. 2016            583.04                             N           N
Air-conditioner                                                                                    guaranty          year
                     Notice No.: 2016-068,
Co., Ltd.
                     2016-072, 2016-077 on
                     26 Nov. 2016 and 14
                     Dec.

                                                                                   Total actual occurred external
Total approving external guarantee in report
                                                                                 0 guarantee in report period                                1,812.85
period (A1)
                                                                                   (A2)

                                                                                   Total actual balance of
Total approved external guarantee at the end
                                                                            40,000 external guarantee at the end                               533.16
of report period ( A3)
                                                                                   of report    period (A4)

                                                Guarantee between the Company and the subsidiaries
                                                                                                                              Complete
   Name of the                                                 Actual date of        Actual                                            Guarantee
                         Related Announcement   Guarantee                                                            Guarant implement
    Company                                                 happening (Date of      guarantee       Guarantee type                     for related
                             disclosure date      limit                                                              ee term ation or
   guaranteed                                               signing agreement)        limit                                               party
                                                                                                                                not
                     Notice No.: 2015-003,
                                                   55,000                                 17,000 Joint liability     One
                     2015-007, 2015-015 on                        30 Dec. 2015                                               Y           N
                                                                                   (note 2) guaranty               year
                     26 Mar. 2015 and 18 Apr.

                                                                                                   Joint liability   One
                     Notice No.: 2016-027,                         5 Aug. 2016             5,000                             N           N
                                                                                                   guaranty          year
                     2016-031, 2016-046 on         56,500
Zhongshan
                                                                                                   Joint liability   One
Changhong            25 Mar. 2016 and 5 May                       28 Oct. 2016             5,000                             N           N
                                                                                                   guaranty          year
Electric Co., LTD
                                                                                                   Joint liability   One
                                                                  24 Feb. 2017             6,000                             N           N
                     30 March 2017; 5 May                                                          guaranty          year
                     2017 ; Notice No.:
                                                   70,000                                          Joint liability   One
                     2017-010, 2017-014,                          22 Jan. 2017             5,500                             N           N
                                                                                                   guaranty          year
                     2017-031
                                                                   1 Mar. 2017            20,000 Joint liability     One     N           N




                                                                       74
                                                                                      HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



                                                                                                     guaranty          year

                                                                                                     Joint liability   One
                                                                  23 Jun. 2017              10,000                             N         N
                                                                                                     guaranty          year

                                                                                                     Joint liability   One
                     Notice No.: 2016-027,                        5 May 2016                 4,500                             N         N
                                                                                                     guaranty          year
                     2016-031, 2016-046 on        8,500
Guangdong                                                                                            Joint liability   One
                     25 Mar. 2016 and 5 May                       1 Sept. 2016               2,000                             N         N
Changhong Ridian                                                                                     guaranty          year
Technology Co.,      30 March 2017; 5 May
Ltd.                 2017; Notice No.:                                                               Joint liability   One
                                                 10,500           13 Jun. 2017               2,000                             N         N
                     2017-010, 2017-014,                                                             guaranty          year
                     2017-031

Zhongke Meiling      30 March 2017; 5 May                                                            Joint liability   One
                                                                 16 Feb. 2017                2,000                             N         N
Cryogenic            2017; Notice No.:                                                               guaranty          year
                                                  6,000
Technology Co.,      2017-010, 2017-014,                                                             Joint liability   One
                                                                   23 Jun. 2017              1,000                             N         N
Ltd.                 2017-031                                                                        guaranty          year

Sichuan              30 March 2017; 5 May
Changhong            2017; Notice No.:
                                                 30,000              -                      -                 -           -        -           -
Air-conditioner      2017-010, 2017-014,
Co., Ltd.            2017-031

                                                                                     Total amount of actual
Total amount of approving guarantee for                                              occurred guarantee for
                                                                          116,500                                                              63,000
subsidiaries in report period (B1)                                                   subsidiaries in report period
                                                                                     (B2)

                                                                                     Total balance of actual
Total amount of approved guarantee for
                                                                                     guarantee for subsidiaries at
subsidiaries at the end of reporting period                               181,500                                                              63,000
                                                                                     the end of reporting period
(B3)
                                                                                     (B4)

                                                Guarantee of the subsidiaries for the subsidiaries
                                                                                                                                Complete
   Name of the                                                Actual date of           Actual                                            Guarantee
                      Related Announcement    Guarantee                                                                Guarant implement
    Company                                                happening (Date of         guarantee       Guarantee type                     for related
                          disclosure date       limit                                                                  ee term ation or
   guaranteed                                              signing agreement)           limit                                               party
                                                                                                                                  not
            --                   --              --                 --                      --                --          --       --         --

                                                                                     Total amount of actual
Total amount of approving guarantee for                                              occurred guarantee for
                                                                                --                                                                 --
subsidiaries in report period (C1)                                                   subsidiaries in report period
                                                                                     (C2)

                                                                                     Total balance of actual
Total amount of approved guarantee for
                                                                                     guarantee for subsidiaries at
subsidiaries at the end of reporting period                                     --                                                                 --
                                                                                     the end of reporting period
(C3)
                                                                                     (C4)




                                                                         75
                                                                                      HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



Total amount of guarantee of the Company( total of three abovementioned guarantee)
                                                                                    Total amount of actual
Total amount of approving guarantee in report
                                                                            116,500 occurred guarantee in report                  64,812.85
period (A1+B1+C1)
                                                                                    period (A2+B2+C2)
                                                                                    Total balance of actual
Total amount of approved guarantee at the
                                                                            221,500 guarantee at the end of report                63,533.16
end of report period (A3+B3+C3)
                                                                                    period (A4+B4+C4)
Ratio of actual guarantee (A4+B4+C4) in net assets of the Company                                                                  12.41%
Including:

Amount of guarantee for shareholders, actual controller and its related parties(D)                                                         0
The debts guarantee amount provided for the guaranteed parties whose
                                                                                                                                       51,500
assets-liability ratio exceed 70% directly or indirectly(E)
Proportion of total amount of guarantee in net assets of the Company exceed
                                                                                                                                           0
50%(F)
Total amount of the aforesaid three guarantees(D+E+F)                                                                                  51,500

Explanations on possibly bearing joint and several liquidating responsibilities for
                                                                                      N/A
undue guarantees (if applicable)

Explanations on external guarantee against regulated procedures (if applicable)       N/A


             The above guarantees are all wholly-owned and holding subsidiaries of the Company.
        Production and operation of these wholly-owned and holding subsidiaries was normal with no
        overdue unpaid loans and guarantee risk is controllable. During the reporting period, the highest
        level of security the Company provided amounted to 1165 million Yuan by the approval, the actual
        amount of guarantee is 630 million Yuan. The highest level of security the Company and
        subsidiaries provided outside amounted to 400 million Yuan by the approval, the actual amount of
        guarantee is 18.1285 million Yuan. At the end of the reporting period, the practical guarantee
        balance amounted to 635.3316 million Yuan, accounting for the Company’s latest net assets ratio
        of 12.41%.

               Explanation on guarantee with composite way: Nil

               (2) Guarantee outside against the regulation

               □Applicable √Not applicable

               No guarantee outside against the regulation in Period.


               4. Other material contracts

               √Applicable □Not applicable

             (1)On 21 March 2017, the Company signed the Strategic Cooperation Framework Agreement
        (hereinafter referred to as Cooperation Agreement) with Italy Candy Hoover Group S.r.l. and
        Candy S.p.A.(together named as Candy Group). Both parties followed the principles of strategic




                                                                          76
                                                            HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



win-win and giving full play to the synergistic effects of products and resources, and planned to
establish strategic partnership in refrigerator (freezer), washing machine business areas by friendly
negotiation, expand market together, promote brands, and maximize the commercial value and
social value. See details on ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong
Commercial Daily‖ and www.cninfo.com.cn that the company disclosed in the form of
announcement (Announcement No. 2017-007) on March 21, 2017.

     (2)The resolution of the 29th meeting of the company’s 8th Board of Directors approved and
agreed the subsidiary Hefei Meiling Nonferrous Metal Products Co., Ltd. (hereinafter referred to
as ―Meiling Nonferrous Metal‖) to cooperate with Hefei Vanke Real Estate Co., Ltd. (hereinafter
referred to as ―Hefei Vanke Real Estate‖) for a land parcel (land area of 34.68 acres, land status is
industrial land, land certificate No. is DGY2014 No.4119) which is located at Liaoyuan Road East,
Feidong County, Hefei City and held by Meiling Nonferrous Metal, and both parties shall sign the
Project Cooperation Contract for the Land of Feidong County Meiling Nonferrous Metal Company.
Meiling Nonferrous Metal shall invest this industrial land as capital and Hefei Vanke Real Estate
shall invest in cash to establish a project company, the ratio of investments of both parties are
respectively 99% and 1%, once the project company obtains the approval (no objection in the
publicity period ) for the upgrading and reconstruction of this project from Hefei Feidong Land
Management Committee and signs the supplemental agreement about state-owned land transfer
contract with Feidong Land and Resources Bureau, Meiling Nonferrous Metal shall transfer 99%
stock rights of the project company to Hefei Vanke Real Estate, and the transfer price is about
RMB 48.65 million. See details on ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong
Commercial Daily‖ and www.cninfo.com.cn that the company disclosed in the form of
announcement (Announcement No. 2017-010, No.2017-018) on March 30, 2017.

     XV. Explanation on other significant events

     1. Fulfill the precise social responsibility for poverty alleviation

     The Company has no precise social responsibility for poverty alleviation in the period and has
no follow-up plan either

     2. Major environment protection

     The listed Company and its subsidiary whether belongs to the key sewage units released from
environmental protection department: Nil

     XVI. Explanation on other significant events

     √ Applicable □ Not applicable

     (i) On February 27, 2017, the company received a written notice from the controlling
shareholder Sichuan Changhong Electric Co., Ltd. (hereinafter referred to as ―Sichuan




                                                   77
                                                            HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



Changhong‖), Sichuan Changhong is intended to take part of A share of the Company and the its
fruits (including capital reserve into equity, stock dividend, bonus shares, dividends, etc.) as the
subject for non-public offering of exchangeable bonds. See details on ―Securities Times‖, ―China
Securities Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that the company
disclosed in the form of announcement (Announcement No. 2017-004) on February 28, 2017.

     (ii) The resolution of the 29th meeting of the company’s 8th Board of Directors and the
2016 Annual General Meeting of Shareholders approved and agreed the subsidiaries to carry out
the forward exchange fund transaction business from July 1, 2017 to June 30, 2018, the business
transaction balance should not exceed USD 550 million, the single business delivery period should
be no longer than 1 year. See details on ―Securities Times‖, ―China Securities Journal‖, ―Hong
Kong Commercial Daily‖ and www.cninfo.com.cn that the company disclosed in the form of
announcement (Announcement No. 2017-010, No. 2017-017, No. 2017-031) on March 30, 2017
and May 5, 2017.

     (iii) The resolution of the 29th meeting of the company’s 8th Board of Directors approved and
agreed the company to apply for bank note pool special credit line of maximum RMB 300 million
to China Merchants Bank Co., Ltd. Hefei Branch, the credit time limit was one year, and the credit
variety was mainly used in bank note pool special business by adopting endorsement for bill
pledge. See details on ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial
Daily‖ and www.cninfo.com.cn that the company disclosed in the form of announcement
(Announcement No. 2017-010, No. 2017-019) on March 30, 2017.

     (iv) On March 28 and May 4, 2017, the resolution of the 29th meeting of the company’s 8th
Board of Directors, the 15th meeting of the 8th Board of Supervisors and the 2016 Annual General
Meeting of Shareholders approved the Company’s 2016 Annual Profit Allocation Plan, at the same
time, the company’s independent directors made independent recognition opinions on the plan,
considering the interests of shareholders and company's long-term development needs, agreed the
company to take the total capital of 1,044,597,881 shares up to December 31, 2016 as the base and
distribute cash dividend of RMB 0.6 (including tax) per 10 shares to all shareholders, totally
distribute cash dividend of RMB 62,675,872.86 (including tax, cash bonus accounts for 29.06% of
the profits available for distribution that the parent company achieves in the current year). After the
distribution, the total share capital of the company remained unchanged, the remaining
accumulated undistributed profit of the parent company was RMB 893,663,321.15, and the
remaining undistributed profit was carried forward to the afterwards year for distribution.

     On May 27, 2017, the company disclosed the 2016 annual profit distribution plan
implementation announcement, implemented the above-mentioned profit distribution plan. See
details on ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖ and
www.cninfo.com.cn that the company disclosed in the form of announcement (Announcement No.
2017-010, No. 2017-031, No.2017-033) on March 30, May 4, and May 27, 2017.


                                                   78
                                                          HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



     (v) During the reporting period, the company received the Notice of Acceptance of
Registration (ZSXZ No. [2017]SCP212) issued by National Association of Financial Market
Institutional Investors (hereinafter referred to as the ―Investor Association‖), the Investor
Association accepted the company’s registration for super short-term financing bond. See details
on ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖ and
www.cninfo.com.cn that the company disclosed in the form of announcement (Announcement No.
2016-068, No. 2016-073, No. 2016-077, No. 2017-046) on November 26, 2016, December 14,
2016, and July 13, 2017.

     (vi) On May 25, 2017, the company received the Letter About Increasing the Holding of
Circulating Shares of Meiling from the controlling shareholder Sichuan Changhong Electric Co.,
Ltd. (hereinafter referred to as ―Sichuan Changhong‖), Sichuan Changhong and its persons acting
in concert planed to increase the holding of the Company’s issued circulating shares through
secondary market, the ratio of increased holding of shares didn’t exceed 1% of the Company’s
general capital. See details on ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong
Commercial Daily‖ and www.cninfo.com.cn that the company disclosed in the form of
announcement (Announcement No. 2017-032) on May 26, 2017. During the reporting period,
Sichuan Changhong and its persons acting in concert Changhong (Hong Kong) Trading Co., Ltd.
Have directly and indirectly increased the holding of the Company’s circulating B-shares of
2,299,574 shares through the secondary market, accounting for 0.22% of the Company’s general
capital. As of June 30, 2017, Changhong (Hong Kong) Trading Co., Ltd. totally held the
Company’s B-shares of 27,465,397 shares, accounting for 2.63% of the Company’s general capital.

     XVII. Major event of the subsidiary

     √ Applicable □ Not applicable

     (i) The resolution of the 28th meeting of the company’s 8th Board of Directors approved and
agreed the company’s subsidiary Jiangxi Meiling Electric Appliance Co., Ltd. (Hereinafter referred
to as ―Jiangxi Meiling‖) to invest RMB206.60 million to build one million environmental and
energy saving refrigerator intelligent production line project. At the same time, in order to ensure
the smooth implementation of this investment and construction projects, agreed the company to
increase capital of RMB 200 million to Jiangxi Meiling for the project investment. See details on
―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖ and
www.cninfo.com.cn that the company disclosed in the form of announcement (Announcement No.
2017-006) on March 14, 2017.

     (ii) The resolution of the 28th meeting of the company’s 8th Board of Directors approved and
agreed the company’s subsidiary Zhongshan Changhong Electric Co., Ltd. (Hereinafter referred to
as ―Zhongshan Changhong‖) to jointly establish Zhongshan Hongyou Heating and Ventilation
Equipment Co., Ltd. (Tentative name, and ultimately subject to the name approved by the



                                                 79
                                                         HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



industrial and commercial bureau) with Zhuhai Samyou Environmental Technology Co., Ltd.
(Hereinafter referred to as ―Samyou Environmental‖) that has superior resources of R & D,
technology, channels and overseas customers in the industry, with registered capital of RMB 40
million, of which Zhongshan Changhong invested RMB 24 million of its owned funds, while
Samyou Environmental invested RMB 16 million of its owned funds. See details on ―Securities
Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that
the company disclosed in the form of announcement (Announcement No. 2017-006) on March 14,
2017.

     (iii) The resolution of the 29th meeting of the company’s 8th Board of Directors approved and
agreed the company to co-invest and establish Meiling Candy Washing Machine Co., Ltd. with
Candy Hoover Group S.r.l. (Hereinafter referred to as ―Candy Group‖) with registered capital of
RMB150 million, of which the company invested RMB 90 million in cash and Candy Group
invested RMB 60 million in cash. See details on ―Securities Times‖, ―China Securities Journal‖,
―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that the company disclosed in the form
of announcement (Announcement No. 2017-010) on March 30, 2017.




                                                 80
                                                                                    HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017




           Section VI. Changes in Shares and Particulars about Shareholders

                 I. Changes in Share Capital

                 (I) Changes in Share Capital
                                                                                                                       In Share
                                    Before the Change                  Increase/Decrease in the Change (+, -)             After the Change
                                                                        Bon      Capitaliz
                                                               New
                                                   Proporti              us      ation of                                              Proporti
                                   Amount                     shares                           Others       Subtotal    Amount
                                                     on                 shar       public                                                 on
                                                              issued
                                                                         es       reserve

I. Restricted shares                290,301,746    27.79%          0         0           0     155,625       155,625    290,457,371     27.81%

1. State-owned shares                         0     0.00%          0         0           0              0          0               0     0.00%

2.       State-owned      legal
                                     70,793,625     6.78%          0         0           0              0          0     70,793,625      6.78%
person’s shares

3. Other domestic shares            218,508,272    20.92%          0         0           0     155,625       155,625    218,663,897     20.94%

Including: Domestic legal
                                    215,820,073    20.66%          0         0           0    -122,958      -122,958    215,697,115     20.65%
person’s shares
Domestic natural person’s
                                      2,688,199     0.26%          0         0           0     278,583       278,583      2,966,782      0.29%
shares

4. Foreign shares                       999,849     0.09%          0         0           0              0          0        999,849      0.09%

Including:     Foreign    legal
                                              0     0.00%          0         0           0              0          0               0     0.00%
person’s shares
Foreign      natural   person’s
                                        999,849     0.09%          0         0           0              0          0        999,849      0.09%
shares
II. Unrestricted shares             754,296,135    72.21%          0         0           0    -155,625      -155,625    754,140,510     72.19%

1. RMB Ordinary shares              592,431,984    56.71%          0         0           0    -155,625      -155,625    592,276,359     56.69%

2.    Domestically        listed
                                    161,864,151    15.50%          0         0           0              0          0    161,864,151     15.50%
foreign shares

3. Overseas listed foreign
                                              0     0.00%          0         0           0              0          0               0     0.00%
shares

4. Others                                     0     0.00%          0         0           0              0          0               0     0.00%

                                                    100.00
III. Total shares                  1,044,597,881                   0         0           0              0          0   1,044,597,881     100%
                                                         %


                 1. Reasons for share changed

                 √ Applicable □ Not applicable

                 (1) In reporting period, the new director of the 8th BOD Mr. Teng Guangsheng holds 117,600



                                                                        81
                                                                                    HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



     shares of the Company, and the shares are lock for trading in relevant regulations since he serves
     director of the Company in reporting period.

         (2) In reporting period, former staff supervisor Mr. Shang Wen leaves his position without six
     months, the 269,700 shares of the Company hold by Mr. Shang will not be transfer in 6 months.

               2. Approval of share changed

               □ Applicable √ Not applicable

               3. Ownership transfer of share changed

               √   Applicable □ Not applicable

               In reporting period, among the restricted shares, the 122,958 shares held by former Tangshan
     Dongkuang Hardware Wholesale Company are transfer to Zhang Yong.

          4. Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets
     per share attributable to common shareholders of Company in latest year and period

               □ Applicable √ Not applicable

          5. Other information necessary to disclose for the Company or need to disclosed under
     requirement from security regulators

               □ Applicable √ Not applicable

               (II) Changes of restricted shares

               √ Applicable □ Not applicable
                                                                                                                         In Share
                                                   Restricted
                                                    Shares
                    Opening        Shares                             Ending
                                                   Increased                         Restricted
Shareholders         shares      released in                          shares                                       Date for released
                                                      In                              reasons
                    restricted     Period                            restricted
                                                      the
                                                    Period

                                                                                                    On February 28, 2017, the staff who no
                                                                                                    longer served as employee supervisor of the
                                                                                                    Company for personal reasons cannot transfer
                                                                                                    the Company’s stock within 6 months after
                                                                                  Share lockup in
                                                                                                    leaving his post, see details on ―III The
Shang Wen             202,275                  -            67,425     269,700    senior
                                                                                                    commitments that the company’s actual
                                                                                  executives
                                                                                                    controller,   shareholders,   related   parties,
                                                                                                    acquirers and the company have fulfilled
                                                                                                    during the reporting period and or have not
                                                                                                    yet fulfilled up to the end of the reporting




                                                                        82
                                                                          HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



                                                                                           period‖ of ―Section V Important Matters‖ if
                                                                                           the stock held by this staff has other
                                                                                           restrictions.



                                                                                           As the directors of the company, 25% of the
                                                                                           Company’s stock held by them can be lifted
                                                                                           the restrictions each year, at the same time,
                                                                                           see details on ―III The commitments that the
                                                                     Share lockup in       company’s actual controller, shareholders,
    Teng
                         -               -        88,200    88,200   senior                related parties, acquirers and the company
 Guangsheng
                                                                     executives            have fulfilled during the reporting period and
                                                                                           or have not yet fulfilled up to the end of the
                                                                                           reporting period‖ of ―Section V Important
                                                                                           Matters‖ if the stock held by them has other
                                                                                           restrictions.

  Tangshan
                                                                     Transfer
 Dongkuang
                                                                     restricted shares
  Hardware        122,958        122,958               -         -                         9 May 2017
                                                                     to natural person
  Wholesale
                                                                     Zhang Yong
  Company

                                                                     Transfer        the
                                                                     restricted shares
                                                                     of       Tangshan
                                                                     Dongkuang
                                                                     Hardware
                                                                     Wholesale
 Zhang Yong              -               -      122,958    122,958                         After relevant restriction procedures done
                                                                     Company,
                                                                     restricted      for
                                                                     trading due to
                                                                     the           legal
                                                                     commitment of
                                                                     shares reform

Total             325,233        122,958        278,583    480,858            --                                 --


              II. Security offering and listing

              □ Applicable √ Not applicable

              III. Amount of shareholders of the Company and particulars about shares holding

                                                                                                                        In share
                                                                     Total preference shareholders
Total common shareholders in reporting
                                                             66,201 with voting rights recovered at                                     0
period-end
                                                                     end of reporting period (if




                                                            83
                                                                                        HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



                                                                                     applicable)

                          Particulars about shares held above 5% by common shareholders or top 10 common shares holding

                                                                                                                                             Number of
                                                                                                                                                share
                                                                    Total common                       Amount of        Amount of
                                                           Proporti                                                                         pledged/froze
                                            Nature of        on of shareholders at Changes in        restricted         un-restricted
                                                                                                                                                    n
       Full name of Shareholders
                                           shareholder      shares the end of report report period common shares       common shares
                                                             held                                                                           State
                                                                        period                          held                held                        Amo
                                                                                                                                              of
                                                                                                                                                        unt
                                                                                                                                            share

Sichuan Changhong Electric Co., State-owned
                                                           22.47%      234,705,968                 0     69,877,638        164,828,330             --     --
Ltd.                                      legal person

Hefei Industry Investment Holding State-owned
                                                            4.58%       47,823,401                 0               0        47,823,401             --     --
(Group) Co., Ltd.                         legal person

Changhong (Hong Kong) Trading Foreign legal
                                                            2.63%       27,465,397       2,299,574                 0        27,465,397             --     --
Company Limited(note 1)                 person

Ping      An    Annuity       Insurance
                                          Domestic non
Company of China, Ltd. – Ping An
                                          state-owned       2.26%       23,613,595                 0     23,613,595                     0          --     --
Pension Ruifu private placement
                                          corporate
No.1 Assets Management Products

Golden Ergle- SPD-U Trust-U Trust Domestic non
JinYue No.4 Collected Asset Trust state-owned               2.26%       23,613,595                 0     23,613,595                     0          --     --
Plan                                      corporate

                                          Foreign
CAO SHENGCHUN                                               1.32%       13,823,183         280,976                 0        13,823,183             --     --
                                          natural person

                                          Domestic non
Ping       An       UOB-Ping        An
                                          state-owned       1.20%       12,522,361                 0     12,522,361                     0          --     --
Bank-Guohai Securities Co., Ltd.
                                          corporate

Ping An Bank – Ping An UOB Domestic non
Dingtai     Flexible     Mix     Stock state-owned          1.20%       12,522,361                 0     12,522,361                     0          --     --
Investment Fund                           corporate

Caitong         Fund-           Ningbo
                                          Domestic non
Bank-Haitong        Xingtai    (Anhui)
                                          state-owned       1.03%       10,733,452                 0     10,733,452                     0          --     --
Emerging Industry Investment Fund
                                          corporate
(Limited Partnership)

                                          Domestic non
National Social Security Funds-504 state-owned              0.94%        9,838,998                 0      9,838,998                     0          --     --
                                          corporate

                                          Domestic non
Harvest Fund- Ping An Bank-
                                          state-owned       0.94%        9,838,998                 0      9,838,998                     0          --     --
Huaxia Asset Management Co., Ltd.
                                          corporate




                                                                            84
                                                                                         HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



Strategy investors or general legal person becomes
top 10 shareholders due to rights issued (if                                                      Not applicable
applicable)

                                                         Among the above shareholders, Changhong (Hong Kong) Trade Co., Ltd. is the wholly-owned
                                                         subsidiary of Sichuan Changhong Electronic Co., Ltd.; there existed no associated relationship
                                                         or belong to the concerted actors as specified in the Measures for the Administration of
                                                         Information Disclosure of Shareholder Equity Changes of Listed Companies among Sichuan
                                                         Changhong Electronic Co., Ltd., Changhong (Hong Kong) Trade Co., Ltd. and other top 8
                                                         shareholders; and top ten shareholders with unrestricted subscription;
                                                         " Ping An UOB-Ping An Bank-Guohai Securities Co., Ltd. " and " Ping An Bank – Ping An
Explanation on associated relationship among the         UOB Dingtai Flexible Mix Stock Investment Fund " have subscribed the products managed
aforesaid shareholders                                   by Ping An Dahua Fund Management Co., Ltd. in the Company's non-public offering of
                                                         shares in 2016; "―National Social Security Funds-504 ‖和―Harvest Fund- Ping An Bank-
                                                         Huaxia Asset Management Co., Ltd. ‖ have subscribed the products managed by Harvest Fund
                                                         Management Co., Ltd. in the Company's non-public offering of shares in 2016. The company
                                                         neither knows whether there is any association among other shareholders, nor knows whether
                                                         other shareholders belong to the persons acting in concert that is stipulated in the
                                                         ―Administrative Measures on Information Disclosure of Changes in Shareholding of Listed
                                                         Companies‖.

                                      Particular about top ten common shareholders with un-restrict shares held

                                                          Amount of unrestricted common shares                           Type of shares
                Shareholders’ name
                                                                    held at end of Period                           Type                        Amount

Sichuan Changhong Electric Co., Ltd.                                                    164,828,330        RMB ordinary shares                  164,828,330

Hefei Industry Investment Holding (Group) Co.,
                                                                                         47,823,401        RMB ordinary shares                   47,823,401
Ltd.

Changhong      (Hong     Kong)   Trading       Company                                                  Domestically listed foreign
                                                                                         27,465,397                                              27,465,397
Limited                                                                                                            shares

                                                                                                        Domestically listed foreign
CAO SHENGCHUN                                                                            13,823,183                                              13,823,183
                                                                                                                   shares

                                                                                                        Domestically listed foreign
NORGES BANK                                                                                 4,546,432                                             4,546,432
                                                                                                                   shares

China Securities Finance Corporation Limited                                                4,362,500      RMB ordinary shares                    4,362,500

ICBC- Dongfanghong New Dynamic Flexible
                                                                                            4,180,694      RMB ordinary shares                    4,180,694
Mixed Investment Funds

                                                                                                        Domestically listed foreign
Long Qinfang                                                                                3,352,737                                             3,352,737
                                                                                                                   shares

CMB- Dongfanghong JD Big Data Flexible Mixed
                                                                                            3,248,586      RMB ordinary shares                    3,248,586
Investment Fund

China Industrial International Trust Limited –
                                                                                            2,924,398      RMB ordinary shares                    2,924,398
Xingxiang Progress No.1 Securities Capital Trust




                                                                             85
                                                                                HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



Plan

                                                  Among the above shareholders, Changhong (Hong Kong) Trade Co., Ltd. is the wholly-owned
                                                  subsidiary of Sichuan Changhong Electronic Co., Ltd.; there existed no associated relationship
                                                  or belong to the concerted actors as specified in the Measures for the Administration of
Expiation on associated relationship or consistent Information Disclosure of Shareholder Equity Changes of Listed Companies among Sichuan
actors within the top 10 un-restrict shareholders and Changhong Electronic Co., Ltd., Changhong (Hong Kong) and other top 8 shareholders; and
between top 10 un-restrict shareholders and top 10 top ten shareholders with unrestricted subscription; as the Company has not known whether
shareholders                                      there exists any business relationship among the other shareholders with unrestricted
                                                  subscription or they belong to the concerted actors as specified in the Measures for the
                                                  Administration of Information Disclosure of Shareholder Equity Changes of Listed
                                                  Companies.

Explanation on top ten common shareholders
                                                  Not applicable
involving margin business (if applicable)


            Note 1: At end of the reporting period, the person acting in concert with controlling
       shareholder Sichuan Changhong-- Changhong (Hong Kong) Trading Company Limited, holds
       B-stock of the Company as 27,465,397 shares, among which, 387,600 shares are held through
       Philip Securities (H.K.) Co., Ltd.

            Note 2: In the above table, "the shareholding situation of the shareholders hold more than 5%
       of shares or the top ten shareholders" is subject to the data on stock transfer books provided by
       China Securities Depository and Clearing Corporation Limited Shenzhen Branch, during the
       reporting period, 7 issuing objects including Sichuan Changhong Electric Co., Ltd. , Ping An Dahua
       Fund Management Co., Ltd., Golden Eagle Fund Management Co., Ltd., Harvest Fund
       Management Co., Ltd., Ping An Endowment Insurance Co., Ltd., Rongtong Fund Management Co.,
       Ltd., and Caitong Fund Management Co., Ltd. have subscribed the company’s non-public offering
       of shares in 2016, and these shares are all restricted shares. For the number of subscribed shares of
       the above-mentioned 7 issuing objects and the allocated products of other 6 issuing objects except
       for Sichuan Changhong, see details on the ―Issuing report and listing announcement summary on
       the non-public offering of shares of Hefei Meiling Co., Ltd.‖ (Announcement No. 2016-057) which
       the company has disclosed on the designated information disclosure media "Securities Times",
       "China Securities Journal", "Hong Kong Commercial Daily" and www.cninfo.com.cn on October
       13, 2016.

               Whether the top ten ordinary shareholders of the company and the top 10 ordinary
       shareholders of unrestricted conditions have made the repurchase transactions as agreed during the
       reporting period.

               □Yes   √No

            The top ten ordinary shareholders of the company and the top 10 ordinary shareholders of
       unrestricted conditions have not made the repurchase transactions as agreed during the reporting



                                                                     86
                                                            HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



period.

     IV. Changes of controlling shareholder or actual controller

     Changes of controlling shareholder in reporting period

     □ Applicable √ Not applicable

     No change of controlling shareholder in reporting period.

     Changes of actual controller in reporting period

     □ Applicable √ Not applicable

     No changes of actual controller in reporting period.




                                                 87
                                                   HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017




                        Section VII. Preferred Stock

□ Applicable √ Not applicable

The Company had no preferred stock in the reporting period.




                                          88
                                                                        HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017




      Section VIII. Particular about Directors, Supervisors and Senior

                                                       Executives

             I. Changes of shares held by directors, supervisors and senior executive

             □ Applicable √ Not applicable

       Shares held by directors, supervisors and senior executive of the Company had no changes,
   more details can be seen in Annual Report 2016.

             II. Changes of directors, supervisors and senior executive

             √ Applicable □ Not applicable
   Name               Position            Type              Date                                   Reasons

                                                                           He did not serves as staff supervisor of the Company for
 Shang Wen         Staff supervisor   Office leaving     28 Feb. 2017
                                                                           personal reasons

                                                                           Being election by democratic election on employees
  Deng Li            Supervisor         Election         28 Feb. 2017      congress, Mr. Deng Li agreed to elected as staff
                                                                           supervisor of 8th supervisory committee of the Company

                                                                           Resigned the posts of deputy president of 8th BOD of the
                                                                           Company, director, member of strategy committee and
Xu Bangjun        Deputy president    Office leaving     24 Apr. 2017
                                                                           member of remuneration and appraisal committee due to
                                                                           personal career moves

                                                                           Mr. Teng Guangsheng was elected as non-independent
   Teng
                      Director          Election         4 May 2017        director of the Company by resolution approved by AGM
Guangsheng
                                                                           of 2016

                                                                           Resigned the posts of president of 8th BOD of the
                                                                           Company,    director,   director   member     of   strategy
 Liu Tibin            President       Office leaving     17 Jul. 2017
                                                                           committee and member of nomination committee of the
                                                                           Board due to personal career moves

                                                                           Mr. Li Wei was elected as president of 8th    BOD of the
                                                                                                                   rd
  Li Wei              President         Election         21 Jul. 2017      Company by resolution approved in 33         session of 8th
                                                                           BOD

                                                                           He resigned from Chairman of the Company for personal
  Li Wei              Chairman        Office leaving     21 Jul. 2017
                                                                           work changed

                                                                           Mr. Wu Dinggang was appointed as chairman of the
Wu Dinggang           Chairman        Appointment        21 Jul. 2017
                                                                           Company by resolution approved 33rd session of 8th BOD


             In addition, the introduction about changing the term of office of the company’s ninth session



                                                            89
                                                          HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



of the Board of Directors and the Board of Supervisors:

     The resolution of the 34th meeting of the 8th session of the Board of Directors that the
company held on August 9, 2017 approved the Proposal on the Election of Non-Independent
Directors of the 9th Session of the Board of Directors of the Company and the Proposal on the
Election of Independent Directors of the 9th Session of the Board of Directors of the Company,
according to the voting of the directors participated in the meeting, agreed to nominate Mr. Li Wei,
Mr. Wu Dinggang, Mr. Kou Huameng, Mr. Shi Qiang, Mr. Yong Fengshan and Mr. Teng
Guangsheng as the candidates for the non-independent directors of the 9th Board of Directors of the
company; and agreed to nominate Mr. Gan Shengdao, Mr. Ren Jia, and Mr. Lu Yingjin as the
candidates for the independent directors of the 9th Board of Directors of the company. On the same
day, the resolution of the 18th meeting of the 8th Board of Supervisors of the company approved the
Proposal on the Election of the 9th Board of Supervisors of the Company, according to the voting of
the supervisors participated in the meeting, agreed to nominate Mr. Shao Min, Miss. Huang Hong,
Mr. He Xintan as the candidates for the 9th Board of Supervisors.




                                                 90
                                                        HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017




                             Section IX Corporate Bond


      Whether the Company has a corporation bonds that issuance publicly and listed on stock
exchange and without due on the date when semi-annual report approved for released or fail to cash
in full on due: Nil




                                                91
                                                                  HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017




                                         Section X. Financial Report

        I. Audit reports

        Whether the semi-annual report was audited or not

        □ Yes √ No

        The semi-annual report was not audited.

        II. Financial statements

        Units in Notes of Financial Statements is RMB

1. Consolidated Balance Sheet

        Prepared by Hefei Meiling Co., Ltd.
                                                    2017-6-30
                                                                                                        In RMB
                  Item                          Closing balance                     Opening balance
Current assets:
        Monetary funds                                4,918,185,647.77                     4,058,869,234.63
        Settlement provisions
        Capital lent
     Financial liability measured
by fair value and with variation                          10,813,272.50                        12,060,213.30
reckoned into current gains/losses
        Derivative financial liability
        Notes receivable                              2,511,715,429.41                     1,421,429,723.73

        Accounts receivable                           2,048,332,541.11                     1,118,960,552.49
        Accounts paid in advance                         289,836,060.91                       134,706,488.38
        Insurance receivable
        Reinsurance receivables
     Contract      reserve           of
reinsurance receivable
        Interest receivable                                  3,229,356.48                       2,645,494.32
        Dividend receivable
        Other receivables                                 68,537,511.44                        39,553,919.44
        Purchase restituted finance
asset



                                                        92
                                                      HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



        Inventories                        2,582,538,614.47                    1,974,526,734.86
        Divided into assets held for
sale
     Non-current asset due within
                                             46,133,664.00                         12,625,340.00
one year
        Other current assets               1,867,683,272.03                    1,454,346,297.42
Total current assets                      14,347,005,370.12                   10,229,723,998.57
Non-current assets:
          Loans and payments on
behalf
        Finance asset available for
                                             31,000,000.00                         17,000,000.00
sales
        Held-to-maturity investment
     Long-term                 account
receivable
        Long-term equity investment          90,247,745.70                         81,643,631.37
        Investment property                  12,871,340.33                         13,275,631.40
        Fixed assets                       1,214,541,611.12                    1,204,093,169.72
        Construction in progress            148,626,411.17                        107,037,409.95
        Engineering material
        Disposal of fixed asset              75,846,390.89                         75,788,138.47
        Productive biological asset
        Oil and gas asset
        Intangible assets                   605,320,595.90                        613,969,271.63
    Expense on Research and
                                             73,961,222.33                         45,023,750.60
Development
        Goodwill
    Long-term expenses to be
                                                 2,583,106.23                       1,132,075.48
apportioned
        Deferred income tax asset            87,505,957.53                         84,264,603.65
        Other non-current asset                             -                      34,615,630.00
Total non-current asset                    2,342,504,381.20                    2,277,843,312.27
Total assets                              16,689,509,751.32                   12,507,567,310.84
Current liabilities:
        Short-term loans                   1,432,622,701.07                       288,343,724.73
        Loan from central bank
     Absorbing    deposit           and
interbank deposit




                                            93
                                                     HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



       Capital borrowed
     Financial liability measured
by fair value and with variation                9,671,394.08                         559,249.58
reckoned into current gains/losses
       Derivative financial liability
       Notes payable                      4,573,857,981.57                    2,635,051,740.30
       Accounts payable                   3,168,053,679.32                    2,331,899,310.82
    Accounts           received     in
                                           472,573,801.58                        390,935,440.46
advance
     Selling financial asset of
repurchase
   Commission charge               and
commission payable
       Wage payable                        103,531,061.56                        189,592,039.00
       Taxes payable                        85,377,009.73                         59,849,032.13
       Interest payable                          708,602.61                        1,617,352.01
       Dividend payable                     16,972,722.88                          2,545,801.23
       Other accounts payable              812,770,528.06                        622,580,323.43
       Reinsurance payables
       Insurance contract reserve
       Security trading of agency
       Security sales of agency
       Divided into liability held for
sale
     Non-current liabilities due
                                            59,718,504.77                        272,202,590.10
within 1 year
       Other current liabilities
Total current liabilities                10,735,857,987.23                    6,795,176,603.79
Non-current liabilities:
       Long-term loans                     253,460,000.00                         38,908,788.00
       Bonds payable
         Including: preferred stock
                   Perpetual capital
securities
       Long-term account payable
       Long-term wages payable              28,061,416.36                         29,696,403.85
       Special accounts payable                  980,000.00                        1,400,000.00




                                           94
                                                                 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



     Projected liabilities                             328,801,716.59                        331,575,430.79
     Deferred income                                   122,713,001.14                        142,919,562.49
      Deferred         income        tax
                                                            1,503,490.88                       1,809,032.00
liabilities
     Other non-current liabilities
Total non-current liabilities                          735,519,624.97                        546,309,217.13
Total liabilities                                11,471,377,612.20                        7,341,485,820.92
Owner’s equity:
     Share capital                                 1,044,597,881.00                       1,044,597,881.00
     Other equity instrument
        Including: preferred stock
                     Perpetual capital
securities
     Capital public reserve                        2,685,313,862.77                       2,687,961,060.65
     Less: Inventory shares
     Other comprehensive income                              938,467.33                        3,474,546.95
     Reasonable reserve
     Surplus public reserve                            391,029,420.33                        391,029,420.33
     Provision of general risk
     Retained profit                                   997,496,549.90                        968,097,382.98
Total owner’s equity attributable
                                                   5,119,376,181.33                       5,095,160,291.91
to parent company
     Minority interests                                 98,755,957.79                         70,921,198.01
Total owner’s equity                              5,218,132,139.12                       5,166,081,489.92
Total liabilities          and   owner’s
                                                 16,689,509,751.32                       12,507,567,310.84
equity
Legal Representative: Li Wei
Person in charge of accounting works: Zhang Xiaolong
Person in charge of accounting institute: Luo Bo

2. Balance Sheet of Parent Company

                                                                                                       In RMB
                    Item                    Closing balance                        Opening balance

Current assets:
     Monetary funds                                3,070,514,216.48                       3,071,362,771.31
     Financial liability measured
                                                        10,023,272.50                         12,060,213.30
by fair value and with variation




                                                       95
                                                    HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



reckoned into current gains/losses
       Derivative financial liability
       Notes receivable                  1,597,881,819.77                    1,053,598,721.93
       Accounts receivable               1,755,138,033.66                    1,006,701,894.37
       Account paid in advance            399,362,495.77                        106,947,474.25

        Interest receivable
       Dividends receivable
       Other receivables                   59,549,479.60                         26,742,423.95
        Inventories                      1,108,770,017.32                    1,017,090,374.81
       Divided into assets held for
sale
     Non-current assets maturing
within one year
       Other current assets              1,420,969,339.84                    1,427,283,451.40
Total current assets                     9,422,208,674.94                    7,721,787,325.32
Non-current assets:
         Available-for-sale financial
                                           31,000,000.00                         17,000,000.00
assets
       Held-to-maturity investments
        Long-term receivables
     Long-term                  equity
                                         1,025,915,752.87                       992,282,289.21
investments
        Investment property                11,095,070.97                         11,332,015.32

        Fixed assets                      837,773,087.41                        861,163,999.99

       Construction in progress            38,386,238.77                         19,478,121.20
       Project materials

       Disposal of fixed assets            43,553,207.13                         43,494,954.71

       Productive biological assets
       Oil and natural gas assets
        Intangible assets                 433,737,939.25                        430,435,091.82

       Research and development
                                               3,480,624.34                      12,797,092.26
costs
       Goodwill
        Long-term deferred expenses
       Deferred income tax assets          69,726,484.23                         69,138,686.26
       Other non-current assets



                                          96
                                                     HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



Total non-current assets                  2,494,668,404.97                    2,457,122,250.77
Total assets                             11,916,877,079.91                   10,178,909,576.09
Current liabilities:
       Short-term borrowings              1,350,912,701.07                       261,843,724.73
     Financial liability measured
by fair value and with variation                8,890,194.08                                    -
reckoned into current gains/losses
       Derivative financial liability
       Notes payable                      2,537,674,948.81                    1,734,774,950.13
       Accounts payable                   1,503,983,245.29                    1,521,019,717.86
    Accounts           received     in
                                            95,120,111.63                        104,205,506.34
advance
       Wage payable                         20,368,144.07                         57,714,577.87
       Taxes payable                        19,598,494.87                         25,677,906.64
       Interest payable                          708,602.61                        1,617,352.01
       Dividend payable                     16,972,722.88                          2,545,801.23
       Other accounts payable              560,457,483.66                        634,561,307.52
       Divided into liability held for
sale
      Non-current liabilities due
                                                8,384,965.56                     257,750,238.18
within 1 year
       Other current liabilities
Total current liabilities                 6,123,071,614.53                    4,601,711,082.51
Non-current liabilities:
       Long-term loans                     253,460,000.00                          4,751,000.00
       Bonds payable
         Including: preferred stock
                   Perpetual capital
securities
       Long-term account payable
       Long-term wages payable              28,061,416.36                         29,696,403.85
       Special accounts payable
       Projected liabilities               328,801,716.59                        331,575,430.79
       Deferred income                      60,750,408.61                         64,601,290.18
      Deferred         income      tax
                                                1,503,490.88                       1,809,032.00
liabilities
       Other non-current liabilities



                                           97
                                                              HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



Total non-current liabilities                          672,577,032.44                     432,433,156.82
Total liabilities                                  6,795,648,646.97                    5,034,144,239.33
Owners’ equity:
     Share capita                                  1,044,597,881.00                    1,044,597,881.00
     Other equity instrument
        Including: preferred stock
                     Perpetual capital
securities
     Capital public reserve                        2,753,017,007.10                    2,753,017,007.10
     Less: Inventory shares
     Other comprehensive income
     Reasonable reserve
     Surplus reserve                                   390,811,254.65                     390,811,254.65
     Retained profit                                   932,802,290.19                     956,339,194.01
Total owner’s equity                              5,121,228,432.94                    5,144,765,336.76
Total liabilities       and   owner’s
                                                 11,916,877,079.91                    10,178,909,576.09
equity
Legal Representative: Li Wei
Person in charge of accounting works: Zhang Xiaolong
Person in charge of accounting institute: Luo Bo

3. Consolidated Profit Statement

                                                                                                    In RMB
                    Item                     Current Period                        Last Period
I. Total operating income                          8,517,794,193.10                    6,866,631,262.68
Including: Operating income                        8,517,794,193.10                    6,866,631,262.68
     Interest income
     Insurance gained
   Commission     charge           and
commission income
II. Total operating cost                           8,436,805,983.05                    6,760,418,778.86
Including: Operating cost                          6,996,226,048.85                    5,432,461,687.10
     Interest expense
   Commission      charge          and
commission expense
     Cash surrender value




                                                       98
                                                     HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



    Net amount of expense of
compensation
     Net amount of withdrawal of
insurance contract reserve
       Bonus expense of guarantee
slip
       Reinsurance expense
       Operating tax and extras             65,836,020.31                         79,457,581.26
       Sales expenses                     1,140,172,032.08                    1,075,647,750.60
       Administration expenses             222,533,091.74                        175,964,420.95
       Financial expenses                  -33,454,482.67                        -39,699,342.16
       Losses of devaluation of asset       45,493,272.74                         36,586,681.11
     Add: Changing income of fair
                                           -10,359,085.30                         -1,278,570.21
value(Loss is listed with ―-‖)
      Investment income (Loss is
                                            23,593,349.66                          4,153,090.95
listed with ―-‖)
     Including: Investment income
on affiliated company and joint             -3,226,328.17                           -833,210.42
venture
      Exchange income (Loss is
listed with ―-‖)
       Other income                             1,275,937.62                                    -
III. Operating profit         (Loss is
                                            95,498,412.03                        109,087,004.56
listed with ―-‖)
       Add: Non-operating income            23,491,147.85                         21,471,702.44
         Including: Disposal gains
                                                 261,776.49                          330,833.76
of non-current asset
       Less: Non-operating expense          11,455,300.63                          1,818,874.18
          Including: Disposal loss
                                            11,359,875.16                          1,545,129.64
of non-current asset
IV. Total Profit        (Loss is listed
                                           107,534,259.25                        128,739,832.82
with ―-‖)
       Less: Income tax expense                 9,439,557.86                      18,816,185.98
V. Net profit (Net loss is listed with
                                            98,094,701.39                        109,923,646.84
―-‖)
    Net profit attributable          to
                                            92,075,039.77                        109,992,701.28
owner’s of parent company




                                           99
                                                    HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



     Minority shareholders’ gains
                                               6,019,661.62                         -69,054.44
and losses
VI. Net after-tax of            other
                                           -3,352,515.41                          2,484,848.72
comprehensive income
     Net    after-tax  of   other
comprehensive income attributable          -2,536,079.62                          1,814,457.07
to owners of parent company
         (I) Other comprehensive
income items which will not be
reclassified subsequently to profit
of loss
             1. Changes as a result
of re-measurement of net defined
benefit plan liability or asset
             2. Share of the other
comprehensive income of the
investee accounted for using equity
method which will not be
reclassified subsequently to profit
and loss
        (II) Other comprehensive
income items which will be
                                           -2,536,079.62                          1,814,457.07
reclassified subsequently to profit
or loss
               1. Share of the other
comprehensive income of the
investee accounted for using equity
method which will be reclassified
subsequently to profit or loss
               2. Gains or losses
arising from changes in fair value
of available-for-sale financial assets
               3. Gains or losses
arising from reclassification of
held-to-maturity investment as
available-for-sale financial assets
             4. The effect hedging
portion of gains or losses arising
from     cash    flow      hedging
instruments
              5.          Translation
                                           -2,536,079.62                          1,814,457.07
differences arising on translation of



                                         100
                                                                  HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



foreign    currency              financial
statements
                 6. Other
       Net after-tax        of    other                      -816,435.79                             670,391.65
 comprehensive                  income
 attributable    to            minority
 shareholders
VII. Total comprehensive income                          94,742,185.98                        112,408,495.56
      Total comprehensive income
attributable to owners of parent                         89,538,960.15                        111,807,158.35
Company
      Total comprehensive income
attributable     to      minority                            5,203,225.83                            601,337.21
shareholders
VIII. Earnings per share:
        (i) Basic earnings per share                               0.0881                                0.1440
        (ii) Diluted earnings per share                            0.0881                                0.1440
Legal Representative: Li Wei
Person in charge of accounting works: Zhang Xiaolong
Person in charge of accounting institute: Luo Bo

4. Profit Statement of Parent Company

                                                                                                          In RMB
                  Item                       Current Period                            Last Period
I. Operating income                                4,129,608,352.50                        3,770,773,163.93
        Less: Operating cost                       3,775,369,456.26                        3,160,132,227.01
             Operating tax and extras                    27,722,529.70                         38,748,885.70
             Sales expenses                            231,438,219.07                         421,077,853.44
             Administration
                                                       109,065,216.23                          77,408,287.96
expenses
             Financial expenses                        -37,206,339.33                         -31,518,036.32
             Losses of devaluation of
                                                             4,856,561.37                       9,159,976.91
asset
      Add: Changing income of
                                                       -10,927,134.88                          -1,278,570.21
fair value(Loss is listed with ―-‖)
          Investment income (Loss
                                                         29,730,083.95                         82,892,597.34
is listed with ―-‖)

           Including:       Investment                       3,105,463.66                       2,644,982.57




                                                       101
                                                 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



income on affiliated company and
joint venture
       Other income
II. Operating profit      (Loss is
                                        37,165,658.27                        177,377,996.36
listed with ―-‖)
  Add: Non-operating income                 7,418,718.98                      14,372,303.76
          Including:       Disposal
                                                       -                         269,387.27
gains of non-current asset
     Less: Non-operating expense            1,447,901.85                       1,216,566.48
         Including: Disposal loss
                                            1,443,561.25                       1,150,366.91
of non-current asset
III. Total Profit   (Loss is listed
                                        43,136,475.40                        190,533,733.64
with ―-‖)
     Less: Income tax expense               3,997,506.37                      14,915,129.58
IV. Net profit (Net loss is listed
                                        39,138,969.03                        175,618,604.06
with ―-‖)
V. Net after-tax of           other
comprehensive income
        (I) Other comprehensive
income items which will not be
reclassified subsequently to profit
of loss
             1. Changes as a result
of re-measurement of net defined
benefit plan liability or asset
             2. Share of the other
comprehensive income of the
investee accounted for using
equity method which will not be
reclassified subsequently to profit
and loss
        (II) Other comprehensive
income items which will be
reclassified subsequently to profit
or loss
             1. Share of the other
comprehensive income of the
investee accounted for using
equity method which will be
reclassified subsequently to profit
or loss



                                      102
                                                               HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



              2. Gains or losses
arising from changes in fair value
of available-for-sale financial
assets
               3. Gains or losses
arising from reclassification of
held-to-maturity investment as
available-for-sale financial assets
             4.    The       effect
hedging portion of gains or losses
arising from cash flow hedging
instruments
             5.       Translation
differences arising on translation
of foreign currency financial
statements
            6. Other
VI. Total comprehensive income                           39,138,969.03                     175,618,604.06
VII. Earnings per share:
     (i) Basic earnings per share                              0.0375                               0.2299
     (ii) Diluted earnings per
                                                               0.0375                               0.2299
share
Legal Representative: Li Wei
Person in charge of accounting works: Zhang Xiaolong
Person in charge of accounting institute: Luo Bo

5. Consolidated Cash Flow Statement

                                                                                                     In RMB
               Item                          Current Period                         Last Period
I. Cash flows arising         from
operating activities:
     Cash received from selling
commodities and providing labor                    6,755,539,540.78                      6,122,120,567.44
services
    Net increase of customer
deposit and interbank deposit
     Net increase of loan from
central bank
     Net increase of capital
borrowed from other financial



                                                       103
                                              HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



institution
     Cash received from original
insurance contract fee
     Net cash received       from
reinsurance business
     Net increase of       insured
savings and investment
     Net increase of amount from
disposal financial assets that
measured by fair value and with
variation reckoned into current
gains/losses
   Cash received from interest,
commission     charge      and
commission
     Net increase     of   capital
borrowed
     Net increase of returned
business capital
     Write-back of tax received       205,339,020.51                      183,108,861.55
    Other      cash       received
                                       16,569,072.09                       19,615,271.12
concerning operating activities
Subtotal of cash inflow arising
                                     6,977,447,633.38                   6,324,844,700.11
from operating activities
     Cash paid for purchasing
commodities and receiving labor      5,258,471,672.84                   4,321,939,929.71
service
     Net increase of customer
loans and advances
     Net increase of deposits in
central bank and interbank
     Cash paid for original
insurance contract compensation
   Cash paid for interest,
commission  charge    and
commission
    Cash paid for bonus of
guarantee slip
    Cash paid to/for staff and
                                      704,133,083.60                      644,386,641.53
workers




                                     104
                                                HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



    Taxes paid                        210,338,863.27                        168,259,449.49
    Other cash paid concerning
                                      320,273,315.76                        318,569,174.49
operating activities
Subtotal of cash outflow arising
                                     6,493,216,935.47                     5,453,155,195.22
from operating activities
Net cash flows arising from
                                      484,230,697.91                        871,689,504.89
operating activities
II. Cash flows arising       from
investing activities:
     Cash      received      from
                                     1,457,000,000.00                       500,000,000.00
recovering investment
     Cash      received      from
                                       27,800,453.69                           4,986,301.37
investment income
     Net cash received from
disposal of fixed, intangible and          2,614,755.73                          330,776.45
other long-term assets
      Net cash received from
disposal of subsidiaries and other
units
    Other      cash       received
                                       41,477,206.87                         36,389,716.67
concerning investing activities
Subtotal of cash inflow from
                                     1,528,892,416.29                       541,706,794.49
investing activities
     Cash paid for purchasing
fixed, intangible and other           239,785,175.33                         65,945,234.00
long-term assets
    Cash paid for investment         1,853,000,021.00                       100,883,860.00
     Net increase of mortgaged
loans
     Net cash received       from
subsidiaries and other       units
obtained
     Other cash paid concerning
                                            998,270.61                                      -
investing activities
Subtotal of cash outflow from
                                     2,093,783,466.94                       166,829,094.00
investing activities
Net cash flows arising from
                                      -564,891,050.65                       374,877,700.49
investing activities
III. Cash flows arising from



                                     105
                                                                HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



financing activities:
    Cash       received       from
                                                         20,000,000.00                       23,145,352.69
absorbing investment
     Including: Cash received
from       absorbing   minority
shareholders’ investment   by
subsidiaries
     Cash received from loans                      1,685,653,798.22                         797,486,045.88
    Cash received from issuing
 bonds
    Other      cash       received
                                                                      -                            3,451.80
concerning financing activities
Subtotal of cash inflow from
                                                   1,705,653,798.22                         820,634,850.37
financing activities
     Cash paid for settling debts                       737,057,083.32                       88,241,810.84
     Cash paid for dividend and
profit distributing or interest                          57,193,407.84                       49,368,745.83
paying
     Including: Dividend and
profit of minority shareholder
paid by subsidiaries
     Other cash paid concerning
                                                             151,611.24                           98,192.48
financing activities
Subtotal of cash outflow from
                                                        794,402,102.40                      137,708,749.15
financing activities
Net cash flows arising from
                                                        911,251,695.82                      682,926,101.22
financing activities
IV. Influence on cash and cash
equivalents due to fluctuation in                        -7,231,244.45                       12,229,868.87
exchange rate
V. Net increase of cash and cash
                                                        823,360,098.63                    1,941,723,175.47
equivalents
     Add: Balance of cash and
cash equivalents at the period                     3,986,098,419.76                       2,121,161,238.01
-begin
VI. Balance of cash and cash
                                                   4,809,458,518.39                       4,062,884,413.48
equivalents at the period -end
Legal Representative: Li Wei
Person in charge of accounting works: Zhang Xiaolong
Person in charge of accounting institute: Luo Bo



                                                       106
                                                           HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



6. Cash Flow Statement of Parent Company

                                                                                                  In RMB
                 Item                     Current Period                        Last Period
I. Cash flows arising from operating
activities:
     Cash received from selling
commodities and providing labor              2,847,697,427.41                       3,257,292,398.00
services
    Write-back of tax received                   97,733,874.40                          90,212,886.14
    Other cash received concerning
                                                 13,343,872.91                          11,964,243.27
operating activities
Subtotal of cash inflow arising from
                                             2,958,775,174.72                       3,359,469,527.41
operating activities
     Cash  paid      for   purchasing
commodities and      receiving labor         3,270,599,036.24                       2,456,420,547.09
service
    Cash paid to/for staff and workers          292,673,473.80                         257,679,481.30
    Taxes paid                                   39,983,393.59                          58,375,692.51
    Other cash paid         concerning
                                                111,308,401.29                         135,616,094.86
operating activities
Subtotal of cash outflow arising from
                                             3,714,564,304.92                       2,908,091,815.76
operating activities
Net cash flows arising from operating
                                               -755,789,130.20                         451,377,711.65
activities
II. Cash flows arising from investing
activities:
     Cash received from recovering
                                             1,430,000,000.00                          500,000,000.00
investment
    Cash received from investment
                                                 27,605,396.15                          80,247,614.77
income
     Net cash received from disposal of
fixed, intangible and other long-term                566,647.40                               240,112.02
assets
     Net cash received from disposal of
subsidiaries and other units
     Other cash received concerning
                                                 41,875,620.90                          28,290,477.04
investing activities

Subtotal of cash inflow from investing       1,500,047,664.45                          608,778,203.83



                                               107
                                                       HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



activities
     Cash paid for purchasing fixed,
                                            190,548,277.28                          37,238,789.69
intangible and other long-term assets
     Cash paid for investment              1,494,528,000.00                        171,250,000.00
     Net      cash    received      from
subsidiaries and other units
     Other cash        paid   concerning
                                                   998,270.61                       63,665,205.65
investing activities
Subtotal of cash outflow from investing
                                           1,686,074,547.89                        272,153,995.34
activities
Net cash flows arising from investing
                                            -186,026,883.44                        336,624,208.49
activities
III. Cash flows arising from financing
activities:
     Cash received from absorbing
investment
     Cash received from loans              1,633,110,198.22                        794,126,025.52
     Cash received from issuing bonds
     Other cash received concerning
                                            142,854,592.22                         217,115,708.21
financing activities
Subtotal of cash inflow from financing
                                           1,775,964,790.44                     1,011,241,733.73
activities
     Cash paid for settling debts           737,057,083.32                          60,135,614.84
      Cash paid for dividend and profit
                                              56,234,951.49                         48,236,007.73
distributing or interest paying
     Other cash paid          concerning
                                              35,096,664.55                         56,057,512.35
financing activities
Subtotal of cash         outflow    from
                                            828,388,699.36                         164,429,134.92
financing activities
Net cash flows arising from financing
                                            947,576,091.08                         846,812,598.81
activities
IV. Influence on cash and cash
equivalents due to fluctuation in             -4,752,741.88                         11,423,170.75
exchange rate
V. Net increase of cash and cash
                                                  1,007,335.56                  1,646,237,689.70
equivalents
     Add: Balance of cash and cash
                                           3,067,671,385.08                     1,654,499,494.28
equivalents at the period -begin




                                            108
                                                             HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017



VI. Balance of cash and          cash
                                                   3,068,678,720.64                   3,300,737,183.98
equivalents at the period -end
Legal Representative: Li Wei
Person in charge of accounting works: Zhang Xiaolong
Person in charge of accounting institute: Luo Bo




                                                       109
                                                                                                  HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017


      7. Statement of Changes in Owners’ Equity (Consolidated)

      This Period
                                                                                                                                                                            In RMB
                                                                                               This Period
                                                             Owners’ equity attributable to parent company
                                               Other
                                         equity instrument                                        Reas
        Item                                                                   Less:                                           Provisio                    Minority        Total owners’
                                               Perpetu                                   Other    onabl
                                                                             Invento                            Surplus          n of      Retained        interests          equity
                         Share capital Preferr   al          Capital reserve         comprehensive e
                                                                                ry                              reserve        general      profit
                                          ed   capital Other                            income    reser
                                                                              shares                                             risk
                                        stock securiti                                             ve
                                                 es
I. Balance at the end
                      1,044,597,881.00                        2,687,961,060.65            3,474,546.95        391,029,420.33              968,097,382.98   70,921,198.01   5,166,081,489.92
of the last year
     Add: Changes
of accounting policy
              Error
correction of the last
period
             Enterpr
ise combine under
the same control
               Other
II. Balance at the
beginning of this 1,044,597,881.00                            2,687,961,060.65            3,474,546.95        391,029,420.33              968,097,382.98   70,921,198.01   5,166,081,489.92
year
III.        Increase/
Decrease in this year                                            -2,647,197.88            -2,536,079.62                                    29,399,166.92   27,834,759.78      52,050,649.20
(Decrease is listed




                                                                                        110
                                                  HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

with ―-‖)
 (i)          Total
comprehensive                             -2,536,079.62                             92,075,039.77     5,203,225.83   94,742,185.98
income
 (ii)       Owners’
devoted           and   -2,647,197.88                                                                22,631,533.95   19,984,336.07
decreased capital
1.Common       shares
invested          by                                                                                    37,361.22        37,361.22
shareholders
2. Capital invested
by holders of other
equity instruments
3. Amount reckoned
into owners equity
with    share-based
payment

4. Other                -2,647,197.88                                                                22,594,172.73   19,946,974.85


(III)          Profit
                                                                                    -62,675,872.85                   -62,675,872.85
distribution
1. Withdrawal      of
surplus reserves
2. Withdrawal of
general      risk
provisions
3. Distribution for
owners          (or                                                                 -62,675,872.85                   -62,675,872.85
shareholders)
4. Other




                                        111
                                                                                                       HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

(IV)         Carrying
forward       internal
owners’ equity
1. Capital reserves
conversed to capital
(share capital)
2. Surplus reserves
conversed to capital
(share capital)
3. Remedying loss
with surplus reserve
4. Other
(V)        Reasonable
reserve
1. Withdrawal in the
report period
2. Usage in the report
period
(VI) Others
IV. Balance at the
end of the report 1,044,597,881.00                                2,685,313,862.77                938,467.33        391,029,420.33      997,496,549.90   98,755,957.79   5,218,132,139.12
period
      Last Year
                                                                                                                                                                         In RMB
                                                                                                    Last Period
                                                               Owners’ equity attributable to the parent Company

      Item                                       Other                           Less:              Reas                  Provisi
                                                                                           Other                                                           Minority      Total owners’
                                           equity instrument                   Invento              onabl                  on of
                         Share capital                         Capital reserve         comprehensiv       Surplus reserve         Retained profit          interests        equity
                                         Preferre Perpetu Othe                    ry                  e                   general
                                                                                         e income
                                         d stock    al     r                    shares              reser                   risk




                                                                                            112
                                                                                   HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

                                           capital                                       ve
                                           securiti
                                             es
I. Balance at the end
                          763,739,205.00              1,529,183,876.13   -2,280,500.61        367,066,994.18        817,667,480.44 36,291,435.86 3,511,668,491.00
of the last year
     Add: Changes
of accounting policy
              Error
correction of the last
period
             Enterp
rise combine under
the same control
               Other
II. Balance at the
beginning of this         763,739,205.00              1,529,183,876.13   -2,280,500.61        367,066,994.18        817,667,480.44 36,291,435.86 3,511,668,491.00
year
III.          Increase/
Decrease in this
                          280,858,676.00              1,158,777,184.52   5,755,047.56          23,962,426.15        150,429,902.54 34,629,762.15 1,654,412,998.92
year (Decrease is
listed with ―-‖)
 (i)          Total
comprehensive                                                            5,755,047.56                               220,216,680.96    1,996,589.61   227,968,318.13
income
 (ii)       Owners’
devoted          and      280,858,676.00              1,158,777,184.52                                                               32,984,351.87 1,472,620,212.39
decreased capital
1.Common shares
invested     by           280,858,676.00              1,259,874,046.76                                                               27,867,909.83 1,568,600,632.59
shareholders
2. Capital invested




                                                                         113
                                                HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

by holders of other
equity instruments
3. Amount reckoned
into owners equity
with    share-based
payment
                        -101,096,862.24
4. Other                                                                                           5,116,442.04   -95,980,420.20

(III)          Profit
                                                           23,962,426.15          -69,786,778.42   -351,179.33    -46,175,531.60
distribution
1. Withdrawal      of
                                                           23,962,426.15          -23,962,426.15                               -
surplus reserves
2. Withdrawal of
general      risk
provisions
3. Distribution for
owners          (or                                                               -45,824,352.27   -351,179.33    -46,175,531.60
shareholders)
4. Other
(IV)        Carrying
forward      internal
owners’ equity
1. Capital reserves
conversed to capital
(share capital)
2. Surplus reserves
conversed to capital
(share capital)
3. Remedying loss
with surplus reserve
4. Other




                                          114
                                                                                                     HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

(V)     Reasonable
reserve
1. Withdrawal in the
report period
2. Usage in          the
report period
(VI) Others
IV. Balance at the
end of the report 1,044,597,881.00                              2,687,961,060.65           3,474,546.95        391,029,420.33         968,097,382.98 70,921,198.01 5,166,081,489.92
period
       Legal Representative: Li Wei
       Person in charge of accounting works: Zhang Xiaolong
       Person in charge of accounting institute: Luo Bo

       8. Statement of Changes in Owners’ Equity (Parent Company)

       This Period
                                                                                                                                                                    In RMB
                                                                                                      This Period
                                                             Other
                                                       equity instrument                                        Other
              Item                                                                                   Less:
                                                                                                             comprehen Reasonabl                                    Total owners’
                                 Share capital             Perpetual            Capital reserve    Inventory                     Surplus reserve Retained profit
                                                 Preferred                                                       sive  e reserve                                       equity
                                                            capital     Other                        shares
                                                   stock                                                       income
                                                           securities
I. Balance at the end of the
                             1,044,597,881.00                                   2,753,017,007.10                                    390,811,254.65 956,339,194.01 5,144,765,336.76
last year
    Add:     Changes        of
accounting policy
              Error
correction of the last period




                                                                                           115
                                                                   HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

               Other
II. Balance at the beginning
                             1,044,597,881.00   2,753,017,007.10                                  390,811,254.65 956,339,194.01 5,144,765,336.76
of this year
III. Increase/ Decrease in
this year (Decrease is listed                                                                                       -23,536,903.82   -23,536,903.82
with ―-‖)
 (i) Total comprehensive
                                                                                                                    39,138,969.03    39,138,969.03
income
 (ii) Owners’ devoted and
decreased capital
1.Common shares invested
by shareholders
2. Capital      invested by
holders of      other equity
instruments
3. Amount reckoned into
owners      equity  with
share-based payment
4. Other
(III) Profit distribution                                                                                           -62,675,872.85   -62,675,872.85
1. Withdrawal of surplus
reserves
2. Distribution for owners
                                                                                                                    -62,675,872.85   -62,675,872.85
(or shareholders)
3. Other
(IV)     Carrying     forward
internal owners’ equity
1.       Capital   reserves
conversed to capital (share
capital)




                                                           116
                                                                                                     HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

2.      Surplus    reserves
conversed to capital (share
capital)
3. Remedying loss with
surplus reserve
4. Other
(V) Reasonable reserve
1. Withdrawal in the report
period
2. Usage in the report period
(VI) Others
IV. Balance at the end of the
                              1,044,597,881.00                                2,753,017,007.10                                      390,811,254.65 932,802,290.19 5,121,228,432.94
report period
       Last year
                                                                                                                                                                   In RMB
                                                                                                        Last period
                                                                Other
                                                          equity instrument
                                                                                                       Less:   Other
               Item                                             Perpetu                              Invento comprehen Reasonabl                                   Total owners’
                                      Share capital     Preferr   al              Capital reserve                                Surplus reserve Retained profit
                                                                                                        ry      sive   e reserve                                      equity
                                                           ed   capital Other                         shares income
                                                         stock securiti
                                                                  es
I. Balance at the end of the last
                                       763,739,205.00                             1,497,987,446.59                                  366,848,828.50 786,501,710.90 3,415,077,190.99
year
     Add: Changes of accounting
policy
               Error correction of
the last period
              Other




                                                                                         117
                                                                           HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

II. Balance at the beginning of this
                                       763,739,205.00   1,497,987,446.59                                  366,848,828.50 786,501,710.90 3,415,077,190.99
year
III. Increase/ Decrease in this year
                                       280,858,676.00   1,255,029,560.51                                   23,962,426.15 169,837,483.11 1,729,688,145.77
(Decrease is listed with ―-‖)
 (i) Total comprehensive income                                                                                             239,624,261.53    239,624,261.53
 (ii)   Owners’      devoted   and
                                       280,858,676.00   1,259,877,498.56                                                                     1,540,736,174.56
decreased capital
1.Common shares invested by
                                       280,858,676.00   1,259,874,046.76                                                                     1,540,732,722.76
shareholders
2. Capital invested by holders of
other equity instruments
3. Amount reckoned into owners
equity with share-based payment
4. Other                                                       3,451.80                                                                             3,451.80
(III) Profit distribution                                                                                  23,962,426.15    -69,786,778.42     -45,824,352.27
1. Withdrawal of surplus reserves                                                                          23,962,426.15    -23,962,426.15
2. Distribution for owners (or
                                                                                                                            -45,824,352.27     -45,824,352.27
shareholders)
3. Other
(IV) Carrying forward internal
owners’ equity
1. Capital reserves conversed to
capital (share capital)
2. Surplus reserves conversed to
capital (share capital)
3. Remedying loss with surplus
reserve
4. Other
(V) Reasonable reserve




                                                              118
                                                                                 HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017

1. Withdrawal in the report period
2. Usage in the report period
(VI) Others                                                      -4,847,938.05                                                                   -4,847,938.05
IV. Balance at the end of the report
                                       1,044,597,881.00       2,753,017,007.10                                  390,811,254.65 956,339,194.01 5,144,765,336.76
period
       Legal Representative: Li Wei
       Person in charge of accounting works: Zhang Xiaolong
       Person in charge of accounting institute: Luo Bo




                                                                    119
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

      I. Company profile

     Hefei Meiling Co., Ltd (hereinafter referred to as ―the Company‖) is an incorporated Company
established and reorganized by Hefei Meiling Refrigerator General Factory and approved on June 12 th
1992 through [WanTiGaiHanZi (1992) No.039] issued by original Mechanism Reform Committee of
Anhui Province. On August 30th 1993, through Anhui Provincial Government [Wanzhengmi (1993)
No.166] and re-examination of China Securities Regulatory Commission, the Company made first
public issue for 30 million A shares and the Company was listed on Oct. 18th, 1993 in Shenzhen Stock
Exchange. On August 13th, 1996, the Company was approved to issue 100 million B shares to investors
abroad through [ZhengWeiFa (1996) No.26] issued by China Securities Regulatory Commission. The
Company went public in Shenzhen Stock Exchange on August 28th, 1996.

     State-owned Assets Supervision & Administration Commission of the State Council approved such
transfers with Document Guozi Chanquan No.253 in 2007 Reply on Matters of Hefei Meiling Group
Holdings Company Limited Transferring Partial State-owned Ownership, Hefei Meiling Group
Holdings Company Limited (hereinafter abbreviated as Meiling Group) transferred its holding
37,852,683 shares in 82,852,683 state-owned shares of the Company to Sichuan Changhong Electronic
Group Co., Ltd (hereinafter abbreviated as Changhong Group), other 45,000,000 shares to Sichuan
Changhong Electric Co. Ltd (hereinafter abbreviated as Sichuan Changhong). On Aug 15, 2007, the
above ownerships were transferred and Cleaning Corporation Limited.

     On 27 August 2007, State-owned Assets Supervision & Administration Commission of Anhui
Provincial Government replied with Document [WGZCQH (2007) No.309] Reply on ―Related Matters
of Share Merger Reform of Meiling Co., Ltd.‖, agreed the Company’s ownership split reform plan. The
Company made consideration that non-tradable share holders deliver 1.5 shares to A share holders per
10 shares, and original Meiling Group made prepayment 3,360,329 shares for some non-tradable share
holders as consideration for split reform plan.

     On 29 May 2008, concerning 34,359,384 state-owned shares (including 3,360,329 shares paid for
other non-tradable shareholders by original Meiling Group in share reform) held by original Meiling
Group, the ―Notice of Freely Transfer of Meiling Electrics                      Equity held by Meiling
Group‖[HGZCQ(2008) No. 59] issued from                     State-owned Assets Supervision & Administration
Commission of Hefei Municipal, agrees to transfer the above said shares to Hefei Xingtai Holding
Group Co., Ltd.(―Xingtai Holding Co.,‖) for free. On 7 August 2008, the ―Reply of Transfer Freely of
Part of the Shares of Hefei Meiling Co., Ltd. held by State-owned shareholders‖ [GZCQ (2007) No. 750]
issued by SASAC, agrees the above said transferring.

     On October 29, 2008, Changhong Group Company signed Agreement on Equity Transfer of Hefei
Meiling Co., Ltd with Sichuan Changhong, in which 32,078,846 tradable A-shares with conditional
subscription of the Company (accounting for 7.76% in total shares) held by Changhong Group
Company. On 23 December 2008, ―Reply of Transfer Freely of Part of the Shares of Hefei Meiling Co.,
Ltd. held by State-owned shareholders‖ [GZCQ (2008) No. 1413] issued by SASAC agrees the above
                                                            120
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

said share transferring.

     On 24 December 2010, being deliberated and approved in 32nd Meeting of 6th Session of the Board
and 2nd Extraordinary Shareholders’ General Meeting of 2010 as well as approval of document
[ZJXP(2010) No. 1715] from CSRC, totally 116,731,500 RMB ordinary shares (A stock) were offering
privately to target investors with issue price of RMB 10.28/share. Capital collecting amounting to RMB
1,199,999,820 after issuing expenses RMB 22,045,500 deducted, net capital collected amounting to
RMB 1,177,954,320, and paid-in capital(share capital) increased RMB 116,731,500 with capital reserve
(share premium) RMB 1,061,106,088.5 increased. The increasing capital has been verified by Capital
Verification Report No.:[XYZH2010CDA6021]issued from Shinwing CPA Co., Ltd.

     On 20 June 2011, the general meeting of the Company considered and approved the 2010 profit
distribution plan, namely to distribute cash dividends of RMB0.5 (tax included) plus two shares for
every ten shares held by shareholders to all shareholders, based on the total share capital of 530,374,449
shares as of 31 December 2010. The total share capital of the Company upon profit distribution
increased to 636,449,338 shares. The capital increase was verified by Anhui Huashen Zhengda
Accounting Firm with the verification report WHSZDKYZ (2011) No.141.

     On 26 June 2012, the general meeting of the Company considered and approved the 2011 profit
distribution and capitalization of capital reserve plan, namely to distribute cash dividends of RMB0.5
(tax included) plus two shares for every ten shares to all shareholders capitalized from capital reserve,
based on the total share capital of 636,449,338 shares as of 31 December 2011. The total share capital of
the Company upon implementation of capitalization of capital reserve increased to 763,739,205 shares
from 636,449,338 shares, and was verified by Anhui Anlian Xinda Accounting Firm with the
verification report WALXDYZ (2012) No.093.

     On November 18, 2015, considered and approved by the 12th meeting of the 8th Board of Directors
of the company and the first extraordinary general meeting in 2016, and approved by the document of
China Securities Regulatory Commission [CSRC License No. (2016) 1396] ―Reply to the approval of
non-public offering of shares of Hefei Meiling Co., Ltd.‖, the company has actually raised funds of
1,569,999,998.84 Yuan          by non-public offering of no more than 334,042,553 new shares at face value
of RMB 1 Yuan per share and with issue price no less than RMB4.70 per share, after deducting the
issue costs of 29,267,276.08 Yuan , the net amount of raised funds is 1,540,732,722.76 Yuan , the
increased paid-in capital (share capital) of RMB 280,858,676.00 Yuan , increased capital reserve (share
premium)      of    1,259,874,046.76        Yuan.     This       capital   increase   has   been   verified   by   No.
[XYZH2016CDA40272]capital verification report of ShineWing Certified Public Accountants special
general partnership.

     Ended as 30 June 2017, total share capital of the Company amounting to 1,044,597,881shares with
ordinary shares in full. Among which, 881,733,881 shares of A-share accounting 84.41% in total shares
while B-share with 162,864,000 shares accounting 15.59% in total shares. Detail share capital as:
                     Type of stock                                     Quantity                     Proportion

                                                             121
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

 (I) Restricted shares                                                290,457,371                    27.81%
      1. State-owned shares
      2. State-owned legal person’s shares                            70,793,625                      6.78%
      3. Other domestic shares                                        218,663,897                     20.94%
          Including: Domestic legal person’s shares                  215,697,115                     20.65%
                   Domestic natural person’s shares                     2,966,782                     0.29%
      4. Foreign shares                                                   999,849                      0.09%
 (II) Unrestricted shares                                             754,140,510                    72.19%

      1. RMB Ordinary shares                                          592,276,359                     56.69%

      2. Domestically listed foreign shares                           161,864,151                     15.50%
      3. Overseas listed foreign shares
      4. Others
 Total shares                                                        1,044,597,881                  100.00%


     The Company belongs to the manufacture of light industry, and engaged in the production and sale of
refrigerator, freezer and air-conditioner. Unified social credit code of the Company: 9134000014918555XK;
Address: No.2163, Lianhua Road, Economy and Technology Development Zone, Hefei City; Legal
Representative: Li Wei; register capital(paid-in capital): RMB 1,044,597,881; type of company: limited
liability company(joint venture and listed of Taiwan, Hong Kong and Macau) Business Scope: Manufacture
of cooling apparatus, air-conditioner, washing machine, injection plastic machine of computer controlling,
computer heater, plastic products, packaging products and decorations. Business of self-produced products,
technology export and import-export of the raw&auxiliary materials, machinery equipment, instrument and
technology; department sales and transportation

     II. Scope of consolidated financial statement

     The Company’s consolidated financial statement included 50 subsidiaries including Sichuan Changhong
Air-Conditioner Company Limited, Zhongshan Changhong Electric Company Limited and Zhongke Meiling
Cryognic Technology Company Limited, etc. As compared to previous year, Subsidiary Meiling Candy
Washing Machine Company Limited, Zhongshan Hongling Trade Company Limited and Guangzhou
Changhong Trade Company Limited were newly included due to direct investment in this period; Subsidiary
Xi’an Meizhilai Appliances Marketing Company Limited was excluded due to liquidation.

     More detail can be seen in ―VII-Changes of consolidated scope‖ and ―VIII-Rights and interest in other
subjects‖ in the Note.

     III. Basis for preparation of financial statement

     1. Basis for preparation

     The financial statements of the Company were prepared in accordance with the actual transactions and
proceedings, and relevant regulation of Accounting Standards for Enterprise released by the Ministry of
Finance, and was on the basis of sustainable operation, and the accounting policy and estimation stated in the

                                                            122
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

―IV-Significant Accounting Policy and Accounting Estimation‖.

     2. Continuous operation

     The Company recently has a history of profitability operation and has financial resources supporting,
and prepared the financial statement on basis of going concern is reasonable.

     IV. Significant Accounting Policy and Accounting Estimation

     1. Statement on observation of accounting standards for enterprise

     The financial statement prepared by the Company applies with the requirements of Accounting Standard
for Enterprise, and reflects the financial condition, operational achievements and cash flow of the Company
effectively and completely.

     2. Accounting period

     The accounting period of the Company is the calendar date from 1 January to 31 December.

     3. Standard currency for accounting

     The Company takes RMB as the standard currency for accounting.

     4. Accountant arrangement method of business combination under common control and not under
common control

     As acquirer, the Company measures the assets and liabilities acquired through business combination
under common control at their carrying values as reflected in the consolidated financial statement of the
ultimate controller as of the combination date. Capital reserve shall be adjusted in respect of any difference
between carrying value of the net assets acquired and carrying value of the combination consideration paid.
In case that capital reserve is insufficient to offset, the Company would adjust retained earnings.

     The acquiree’s net identifiable assets, liabilities or contingent liabilities acquired through business
combination not under common control shall be measured at fair value as of the acquisition date. The cost of
combination represents the fair value of the cash or non-cash assets paid, liabilities issued or committed and
equity securities issued by the Company as at the date of combination in consideration for acquiring the
controlling power in the acquiree, together with the sum of any directly related expenses occurred during
business combination(in case of such business combination as gradually realized through various
transactions, the combination cost refers to the sum of each cost of respective separate transaction). Where
the cost of the combination exceeds the acquirer’s interest in the fair value of the acquirer’s identifiable net
assets acquired, the difference is recognized as goodwill; where the cost of combination is lower than the
acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the Company shall firstly make
further review on the fair values of the net identifiable assets, liabilities or contingent liabilities acquired as
well as the fair value of the non-cash assets portion of combination consideration or the equity securities
issued by the Company. In case that the Company finds the cost of combination is still lower than the
acquirer’s interest in the fair value of the acquiree’s identifiable net assets after such further review, the
difference is recognized in non-operating income for the current period when combination occurs.
                                                            123
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

     5. Measures on Preparation of Consolidated Financial Statements

     The Company shall put all the subsidiaries controlled and main body structured into consolidated
financial statements.

     Any difference arising from the inconformity of accounting year or accounting policies between the
subsidiaries and the Company shall be adjusted in the consolidated financial statements.

     All the material inter-company transactions, non-extraordinary items and unrealized profit within the
combination scope are written-off when preparing consolidated financial statement. Owners’ equity of
subsidiary not attributable to parent company and current net gains and losses, other comprehensive income
and total comprehensive income attributable to minority shareholders are recognized as non-controlling
interests, minority interests, other comprehensive income attributable to minority shareholders and total
comprehensive income attributable to minority shareholders in consolidated financial statement respectively.

     As for subsidiary acquired through business combination under common control, its operating results
and cash flow will be included in consolidated financial statement since the beginning of the period when
combination occurs. When preparing comparative consolidated financial statement, the relevant items in
previous year’s financial statement shall be adjusted as if the reporting entity formed upon combination has
been existing since the ultimate controller commenced relevant control.

     As for equity interests of the investee under common control acquired through various transactions
which eventually formed business combination, the Company shall supplement disclosure of the accounting
treatment in consolidated financial statement in the reporting period when controlling power is obtained. For
example, as for equity interests of the investee under common control acquired through various transactions
which eventually formed business combination, adjustments shall be made as if the current status had been
existing when the ultimate controller commenced control in connection of preparing consolidated financial
statement; in connection with preparing comparative statement, the Company shall consolidate the relevant
assets and liabilities of the acquiree into the Company’s comparative consolidated financial statement to the
extent not earlier than the timing when the Company and the acquiree are all under control of the ultimate
controller, and the net assets increased due to combination shall be used to adjust relevant items under
owners’ equity in comparative statement. In order to prevent double computation of the value of the
acquiree’s net assets, the relevant profits and losses, other comprehensive income and change of other net
assets recognized during the period from the date when the Company acquires original equity interests and
the date when the Company and the acquiree are all under ultimate control of the same party (whichever is
later) to the date of combination in respect of the long-term equity investment held by the Company before
satisfaction of combination shall be utilized to offset the beginning retained earnings and current gains and
losses in the period as the comparative financial statement involves, respectively.

     As for subsidiary acquired through business combination not under common control, its operating
results and cash flow will be included in consolidated financial statement since the Company obtains
controlling power. When preparing consolidated financial statement, the Company shall adjust the
subsidiary’s financial statement based on the fair value of the various identifiable assets, liabilities or
                                                            124
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

contingent liabilities recognized as of the acquisition date.

     As for equity interests of the investee not under common control acquired through various transactions
which eventually formed business combination, the Company shall supplement disclosure of the accounting
treatment in consolidated financial statement in the reporting period when controlling power is obtained. For
example, as for equity interests of the investee not under common control acquired through various
transactions which eventually formed business combination, when preparing consolidated financial statement,
the Company would re-measure the equity interests held in the acquiree before acquisition date at their fair
value as of the acquisition date, and any difference between the fair value and carrying value is included in
current investment income. in case that the equity interests in acquiree held by the Company before the
relevant acquisition date involves other comprehensive income at equity method and change of other owners’
equity (other than net gains and losses, other comprehensive income and profit distribution), then the equity
interests would transfer to investment gains and losses for the period which the acquisition date falls upon.
The other comprehensive income arising from change of the net liabilities or net assets under established
benefit scheme as acquiree’s re-measured such scheme is excluded.

     The transaction with non-controlling interest to dispose long-term equity investment in a subsidiary
without losing control rights over the subsidiary, the difference between the proceeds from disposal of
interests and the decrease of the shared net assets of the subsidiary is adjusted to capital premium (share
premium). In case capital reserve is not sufficient to offset the difference, retained earnings will be adjusted.

     As for disposal of part equity investment which leads to losing control over the investee, the Company
would re-measure the remaining equity interests at their fair value as of the date when the Company loses
control over the investee when preparing consolidated financial statement. The sum of consideration received
from disposal of equity interest and fair value of the remaining equity interest, less the net assets of the
original subsidiary attributable to the Company calculated based on the original shareholding proportion
since the acquisition date or the date then consolidation commences, is included in investment gains and
losses for the period when control is lost, meanwhile to offset goodwill. Other comprehensive income related
to equity interest investment in original subsidiaries is transferred into current investment gains and losses
upon lost of control.

     If the disposal of the equity investment of a subsidiary is realized through multiple transactions until
loss of control and is a package deal, the accounting treatment of these transactions should be dealt with as
one transaction of disposal of the subsidiary until loss of control. However, before the Company loses total
control of the subsidiary, the differences between the actual disposal price and the share of the net assets of
the subsidiary disposed of in every transaction should be recognized as other comprehensive income in the
consolidated financial statements, and transferred to profit or loss when losing control.

     6. Accounting treatment for joint venture arrangement and joint controlled entity

     The joint venture arrangement of the Company consists of joint controlled entity and joint venture. As
for jointly controlled entity, the Company determines the assets held and liabilities assumed separately as a
party to the jointly controlled entity, recognizes such assets and liabilities according to its proportion, and
                                                            125
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

recognizes relevant income and expense separately under relevant agreement or according to its proportion.
As for asset transaction relating to purchase and sales with the jointly controlled entity which does not
constitute business activity, part of the gains and losses arising from such transaction attributable to other
participators of the jointly controlled entity is only recognized.

     7. Cash and cash equivalents

     Cash in the cash flow statement comprises the Group’s cash on hand and deposits that can be readily
withdrawn on demand. Cash equivalents are short-term, highly liquid investments held      by the Group, that
are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in
value, including but not limited to the followings which meet the aforesaid conditions: debt investment
matured within three months upon the acquisition date, bank time deposit which can be early withdrew by
serving a notice and transferrable deposit receipt, etc. for time deposit which cannot be used for payment at
any time, it would be note recognized as cash; while if can be used for such purpose, it would be recognized
as cash. Guarantee deposit over three months in other monetary capital shall not be recognized as cash
equivalents, and those less than three months are recognized as cash equivalents.

     8. Foreign currency business and foreign currency financial statement conversion

     (1) Foreign currency business

     As for the foreign currency business, the Company converts the foreign currency amount into RMB
amount pursuant to the spot exchange rate as of the business day. As at the balance sheet date, monetary
items expressed by foreign currency are converted into RMB pursuant to the spot exchange rate as of the
balance sheet date. The conversion difference occurred is recorded into prevailing gains and losses, other
than the disclosure which is made according to capitalization rules for the exchange difference occurred from
the special foreign currency borrowings borrowed for constructing and producing the assets satisfying
condition of capitalization. As for the foreign currency non-monetary items measured by fair value, the
amount is then converted into RMB according to the spot exchange rate as of the confirmation day for fair
value. And the conversion difference occurred during the procedure is recorded into prevailing gains and
losses directly as change of fair value. As for the foreign currency non-monetary items measured by
historical cost, conversion is made with the spot exchange rate as of the business day, with no change in
RMB amount.

     (2) Conversion of foreign currency financial statement

     Spot exchange rate as of the balance sheet date is adopted for conversion of assets and liabilities in
foreign currency balance sheet; as for the items in statement of owners’ equity except for ―Undistributed
profit‖, conversion is made pursuant to the spot exchange rate of business day; income and expense items in
income statement then are also converted pursuant to the spot exchange rate of transaction day. Difference
arising from the aforementioned conversions shall be listed separately in items of owners’ equity. Spot
exchange rate as of the occurrence date of cash flow is adopted for conversion of foreign currency cash flow.
The amount of cash affected by exchange rate movement shall be listed separately in cash flow statement.

                                                            126
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

     9. Financial assets and financial liabilities

     (1) Financial assets

     1) Classification of financial assets

     In consideration of investment targets and economic essence, the Company groups the financial assets
owned by it as four categories, namely financial assets measured by fair value and whose movement is
recorded into prevailing gains and losses, held-to-maturity investment, loans and accounts receivables, as
well as financial assets available-for-sale.

     Financial assets measured by fair value and whose movement is recorded into prevailing gains and
losses represent the financial assets which are held mainly for disposal in a short time and listed as tradable
financial assets in the balance sheet.

     Held-to-maturity investment represents the non-derivative financial assets which has fixed maturity day,
fixed or available-for-confirmation recovered amount and for which the management has definite intention
and ability to hold till maturity.

     Loans and accounts receivables represent the non-derivative financial assets which have no quotation in
an active market and fixed or available-for-confirmation recovered amount.

     Financial assets available-for-sale included the non-derivative financial assets available-for-sale and the
financial assets which have not been grouped as others at the initial confirmation.

     2) Recognition and measurement for financial assts

     Financial assets, while become part of the contract of financial instrument in the Company, recognized
in balance sheet by fair value. For the financial assets which are measured by fair value and whose fair value
change is recorded into prevailing gains and losses, the relevant transaction expense arising from acquisition
is recorded into prevailing gains and losses directly, while the relevant transaction expense of other financial
assets is recorded into initial recognition amount.

     Financial assets which are measured by fair value and whose fair value change is recorded into
prevailing gains and losses, together with financial assets available-for-sale, would have follow-up
measurement according to fair value; effective interest method is adopted for loans and accounts receivables
and held-to-maturity investment which are shown in amortized cost.

     Fair value change of financial assets which are measured by fair value and whose fair value change is
recorded into prevailing gains and losses is recorded into gains and losses of fair value change; interests or
cash dividend acquired from holding assets are recognized as investment income; when disposing such assets,
the difference between their fair value and initial accounting amount is recognized as investment gains and
losses. Meanwhile, gains and losses of fair value shall be adjusted.

     Except impairment losses and exchange gains/loss from financial assets with foreign currency, variation
of the fair value for financial assets available for sale should reckon into shareholders’ equity. The variation
of fair value accumulative reckon into equity previously should transfer into current gains/losses while
                                                            127
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

recognition of this financial asset terminated. For the interest during period of holding for instrument
investment of liability available for sale based on real interest rate, and cash dividend related with instrument
investment of equity available for sale that announced by invested enterprises should reckon into current
gains/losses as investment incomes.

     3) Impairment of financial assets

     Except for the financial assets which are measured by fair value and whose fair value change is recorded
into prevailing gains and losses, the Company will make check in the carrying value of other financial assets
as at the balance sheet date. If there is objective evidence proving impairment of certain financial assets, the
Company then makes provision for impairment.

     When the financial assets calculated by amortized cost decrease in value, count and draw the provision
for impairment according to the balance between present value and book value of predicted future cash flows
(Excluding future credit losses that haven’t occurred yet.). If there is any objective evidence to indicate that
the financial assets has recovered and is objectively connected with matters occurred after confirming the
losses, the formerly confirmed impairment losses will be reversed and reckoned in current profits and losses.

     When the fair value of financial assets available for sale goes down substantially or non- transiently, the
accumulating losses previously and directly reckoned in shareholder's equity and formed due to shrinkage of
fair value will be transferred and reckoned in impairment losses. As for the debt instrument investment
available for sale with confirmed impairment losses, if its fair value rises after and it is objectively connected
with matters occurred after confirming the primary impairment losses, the formerly confirmed impairment
losses will be reversed and reckoned in current profits and losses. And the debt instrument investment
available for sale with confirmed impairment losses shall be directly reckoned in stockholder's equity if its
fair value rises after.

     4) Transfer of financial assets

     The financial assets meet one of following requirements will be terminated recognition: ① The contract
rights of collecting cash flow of the financial assets is terminated; ②The financial assets has already been
transferred, and the Company has transferred almost all risks and remunerations of financial assets ownership
to the transferee; ③The financial assets has been transferred, even though the Company has neither
transferred nor kept almost all risks and remunerations of financial assets ownership, the Company has given
up controlling the financial assets.

     If the enterprise has neither transferred or kept almost all risks and remunerations of financial assets
ownership, nor given up controlling the financial assets, then confirm the relevant financial assets according
to how it continues to involve into the transferred financial assets and confirm the relevant liabilities
accordingly. The degree of keeping involving into the transferred financial assets refers to the risk level with
which the fluctuation of this financial asset value makes the enterprise face.

     If the entire transfer of financial assets satisfies the demand for derecognition, reckon the balance
between the book value of the transferred financial assets and the sum of consideration received from

                                                            128
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

transfer and fluctuation accumulated amount of fair value formerly reckoned in other consolidated income in
the current profits and losses.

     If part transfer of financial assets satisfies the demand for derecognition, apportion the integral book
value of the transferred financial assets between the derecognized parts and the parts not yet derecognized
according to each relative fair value, and reckon the balance between the sum of consideration received from
transfer and fluctuation accumulated amount of fair value formerly reckoned in other consolidated income
that should be apportioned to the derecognized parts and the apportioned aforementioned carrying amounts
in the current profits and losses.

     (2) Financial liabilities

     When making the initial recognition for financial liabilities, the Company classifies the financial
liabilities into ones which are measured by fair value and whose change is recorded into prevailing gains and
losses, and other financial liabilities.

     Financial liabilities which are measured by fair value and whose change is recorded into prevailing
gains and losses include tradable financial liabilities and financial liabilities which are measured by fair value
and whose change is recorded into prevailing gains and losses at the initial recognition day. Follow-up
measurements are made by fair value. Recorded into prevailing gains and losses are the gains or losses
formed through fair value change and dividend and interest expenditure regarding to the financial liabilities.

     As for other financial liabilities, effective interest rate method is adopted and follow-up measurement is
made according to amortized cost.

     1) Method for recognition of fair value of financial assets and liabilities

     For those financial instruments existing in active markets, market quotation in the active market is used
to confirm their fair values. In active market, the Company takes the present bid price of already-held
financial assets or plan-to-undertake financial liabilities as the fair values of relevant assets and liabilities; the
Company takes the present offer price of plan-to-buy financial assets and –already-undertaken liabilities as
the fair values of relevant assets and liabilities. In the situation that there are no present bid and offer price
for financial assets and liabilities, while there is no material change in economic environment after the latest
business day, then fair value of the financial assets and liabilities is to confirm pursuant to the latest business
market quotation.

     Fair value of the financial instruments which have no active market is confirmed by adoption of
estimation technology. Estimation technology includes reference to the price applied by parties which know
well situation and are willing to make deals in the latest market business, reference to the current fair value
of other financial assets which are the same in principle, reference to discounted cash flow method and
option pricing model.

     10. Bad debt provision for accounts receivable

     Allowance method is adopted for the bad debt losses which are likely to happen. And conducting

                                                            129
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

impairment test independently or by combination at period-end, withdrawn bad debt provision and then
recorded into current gains and losses. As for the accounts receivable which are not able to call back through
definite evidence, they shall be treated as bad debt losses after approval of the Group according to regulated
procedures to offset withdrawn bad debt provision.

     The following situation as standards for confirmation of bad debt losses of accounts receivable: revoke,
bankruptcy, insolvency, serious insufficiency of cash flow of its debit units, or the debit units have to stop
production due to serious natural disaster and are not able to settle the debts or in predicted time, or other
definite evidence showing that the debt is not available to call back or the possibility of calling back is tiny.

     Account receivables were divided as follow categories at period-end, which was performed impairment
test in way of individual or group, and withdrawal bad debt provision:

     (1) Account receivable with single significant amount:
                            If totally amount takes over 80% of the total for over 5% occupied, than 5% of single amount
 Determine basis or amount
                            in total amounts recognized as single significant amount; if totally amount takes less than
 standards      for  single
                            80% of the total for over 5% occupied, than lower recognition standards till qualified 80% in
 significant amount
                            total
 Method     of    bad     debt
 provision accrual for account Withdrawal bad debt provision according to difference between the current value of future
 receivable with single major cash flow and book values; if there has no impairment been found in individual test,
 amount                        withdrawal bad debt provision while testing by group

     (2) Account receivable withdrawal bad debt provision based on combination:
 Basis for combination recognized
 Combination 1                  Account receivable except combination 2
                                Employee reserve fund, foreign investment amount, contact with related party, export tax refund
 Combination 2
                                receivable, account receivable with L/C or insurance, government subsidy etc.
 Methods on withdrawal of bad debt provision based on combination
 Combination 1                  Withdrawal bad debt provision by proportion in different age group
 Combination 2                  Risks are under control without bad debt provision accrual


     In combination 1, withdrawal proportion of bad debt provision for account receivable based on age analysis:
                                  Withdrawal proportion of account receivable        Withdrawal proportion of other account
              Age
                                                     (%)                                        receivable (%)
 Within 1 year (1 year
                                                         5                                               5
 included)

 1-2years                                              15                                              15

 2-3 years                                             35                                              35

 3-4 years                                             55                                              55

 4-5 years                                             85                                              85

 Over 5 years                                          100                                              100


     (3) Account receivable with single minor amount but withdrawal single item bad debt provision:
  Reasons for withdrawal single
                                Account with minor amount but have significant inflow risk on predicted future cash flow
item bad debt provision


                                                              130
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
 Withdrawal method for bad      Impairment test on the current value of predicted future cash flow, bad debt provision
 debt provision                 withdrawal.

     11. Inventories

     Inventories of the Company principally include raw materials, stock goods; work in process, self-made semi-finished
product, materials consigned to precede, low-value consumption goods, goods in transit, goods in process and mould etc.

     Perpetual inventory system is applicable to inventories. For daily calculation, standard price is adopted for raw
materials, low-value consumption goods and stock goods. Switch-back cost of the current month is adjusted by distribution
price difference at the end of the month, the dispatched goods will share the cost differences of inventory while in settlement
the business income; and low-value consumption goods is carried forward at once when being applied for use; the mould
expenses will evenly deferred share based on balance at period-begin plus increase amount in this period divided by 12
months.

     Inventory at period-end is valued by the Lower-of-value between the cost and net realizable value. For those individual
stock, suffering damage, totally or partly out of fashion or has lower sales price than cost, predicted recoverable parts in
cost, and withdrawal provision of inventory depreciation single. For those raw materials, stock commodities and goods in
transit, withdrawal provision of inventory depreciation by follow methods:

     (1) Determined the net realizable value of raw materials on the higher amount between the final prices of estimated
sale-price deducted cost (about to happen till products finished), estimated sales expense and relevant taxes, and the fair
value of external disposal.

     (2) Withdrawal obsolete provision for commodity stocks and goods in transit by the follow proportion:

     (1) Refrigerator, freezer and washing machine
                                                                                    Withdrawal proportion for obsolete
               Grade                                Stock duration
                                                                                               provision
                                          Within 3 months                                            0%
                                          4-6 months                                                 5%
                                          7-12 months                                                15%
 Grade-A
                                          1-2 years                                                  25%
                                          2-3 years                                                  40%
                                          Over 3 years                                              100%
 Qualified                                                                                           40%
 Grade-B                                                                                             50%
 Grade-C                                                                                             60%

 Unqualified                                                                                         60%

 Disposal                                                                                            65%

 Sample machine                                                                                      30%

 Special user type that exceed the order quantity                                                    50%


     (2) Air-conditioner

                                                              131
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

                                                                         Withdrawal proportion for obsolete
                                Location level
                                                                                      provision

 Repair                                                                                 50%

 Awaiting repair                                                                        70%

 Store return                                                                           70%

 De-stocking                                                                            70%

 Overstock                                                                             100%


      With respect to the inventories and delivered goods which are not vested to the above classification,
their realizable net value will be calculated by the Company based on the estimated selling price of the
inventories less estimated selling expense and related taxes. The Company re-checks the above mentioned
proportion at every end of the year. Calculated the net realizable value by difference between the estimated
sale price less the estimated sales expense and relevant taxation; after comparison with the book value of
commodity stocks and goods in transit, determined whether adjusted the proportion or not. Mould expense
will amortize in installment in usual times. Once the use-life of mould is terminated, and then transfers its
remaining cost into gains/losses, no withdrawal of obsolete provision at period-end.

     12. Long-term equity investment

     Long-term equity investment of the Company is mainly about investment in subsidiary, investment
in associates and investment in joint-ventures.

      For long-term equity investments acquired through business combination under common control, the
initial investment cost shall be the acquirer’s share of the carrying amount of net assets of the acquiree as
of the combination date as reflected in the consolidated financial statement of the ultimate controller. If the
carrying amount of net assets of the acquiree as of the combination date is negative, the investment cost of
long-term equity investment shall be zero. For long-term equity investment acquired through business
combination not under common control, the initial investment cost shall be the combination cost.

     Excluding the long-term equity investment acquired through business combination, there is also a
king of long-term equity investment acquired through cash payment, for which the actual payment for the
purchase shall be investment cost; If Long-term equity investments are acquired by issuing equity
securities, fair value of issuing equity investment shall be investment cost; for Long-term equity
investments which are invested by investors, the agreed price in investment contract or agreement shall be
investment cost; and for long-term equity investment which is acquired through debt reorganization and
non-monetary assets exchange, regulations of relevant accounting standards shall be referred to for
confirming investment cost.

      The Company adopts cost method for investment in subsidiaries, makes calculation for investments
in joint-ventures and associates by equity method.

     When calculated by cost method, long-term equity investment is priced according to its investment
                                                            132
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

cost, and cost of the investment is adjusted when making additional investment or writing off investment;
When calculated by equity method, current investment gains and losses represent the proportion of the net
gains and losses realized by the invested unit in current year attributable to or undertaken by the investor.
When the Company is believed to enjoy proportion of net gains and losses of invested unit, gains and
losses attributable to the Company according to its shareholding ratio is to computer out according to the
accounting policy and accounting period of the Company, on the basis of the fair value of various
recognizable assets of the invested unit as at the date of obtaining of the investment, after offset of gains
and losses arising from internal transactions with associates and joint-ventures, and finally to make
confirmation after adjustment of net profit of the invested unit. Confirmation on gains and losses from the
long-term equity investment in associates and joint-ventures held by the Company prior to the first
execution day, could only stand up with the precedent condition that debit balance of equity investment
straightly amortized according to its original remaining term has already been deducted, if the
aforementioned balance relating to the investment do exist.

     In case that investor loses joint control or significant influence over investee due to disposal of part
equity interest investment, the remaining equity interest shall be calculated according to Enterprise
Accounting Principles No.22-Recognition and Measurement of Financial Instrument. Difference between
the fair value of the remaining equity interest as of the date when lose of joint control or significant
influence and the carrying value is included in current gains and losses. Other comprehensive income
recognized in respect of the original equity interest investment under equity method should be treated
according to the same basis which the investee adopts to directly dispose the relevant assets or liabilities
when ceasing adoption of equity method calculation; and also switches to cost method for calculating the
long-term equity investments which entitles the Company to have conduct control over the invested units
due to its additional investments; and switches to equity method for calculating the long-term equity
investments which entitles the Company to conduct common control or significant influence, while no
control over the invested units due to its additional investments, or the long-term equity investments which
entitles the Company with no control over the invested units any longer while with common control or
significant influence.

     When disposing long-term equity investment, the balance between its carrying value and effective
price for obtaining shall be recorded into current investment income. When disposing long-term equity
investment which is calculated by equity method, the proportion originally recorded in owners’ equity
shall be transferred to current investment income according to relevant ratio, except for that other
movements of owners’ equity excluding net gains and losses of the invested units shall be recorded into
owners’ equity.

     13. Investment real estate

     The investment real estate of the Company includes leased houses and buildings, and is accounted
value by its cost. Cost of purchased-in investment real estate consists of payment for purchase, relevant
taxes and other expenditure which is attributable to the assets directly; while cost of self-built investment

                                                            133
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

real estate is formed with all necessary expenditures occurred before construction completion of the assets
arriving at the estimated utilization state.

     Consequent measurement of investment estate shall be measured by cost method. Depreciation is
provided with average service life method pursuant to the predicted service life and net rate of salvage
value. The predicted service life and net rate of salvage value and annual depreciation are listed as follows:
                                                                 Predicted rate of salvage   Depreciation rate per
            Type                   Depreciation term
                                                                          value                    annum
 Houses and buildings                  30-40 years                       4%-5%                  2.375%-3.20%


      When investment real estate turns to be used by holders, it shall switch to fixed assets or intangible
assets commencing from the date of such turning. And when self-used real estate turns to be leased out for
rental or additional capital, the fixed assets or intangible assets shall switch to investment real estate
commencing from the date of such turning. In situation of switch, the carrying value before the switch
shall be deemed as the credit value after the switch.
      When investment is disposed, or out of utilization forever and no economic benefit would be
predicted to obtain through the disposal, the Company shall terminate recognition of such investment real
estate. The amount of income from disposal, transfer, discarding as scrap or damage of investment real
estate after deducting the asset’ s carrying value and relevant taxation shall be written into current gains
and losses.

     14. Fixed assets

     Fixed assets of the Company represent the tangible assets and assets package: held by the Company
for purpose of producing commodities, providing labor service, leasing or operational management,
service life exceeds one year, and unit price exceeds RMB 2,000, including four categories of houses and
buildings, machinery equipments, transportation equipments and other equipments.

    Their credit value is determined on the basis of the cost taken for obtaining them. Of which, cost of
purchased-in fixed assets include bidding price and import duty and relevant taxes, and other expenditure
which occurs before the fixed assets arrive at the state of predicted utilization and which could be directly
attributable to the assets; while cost of self-built fixed asset is formed with all necessary expenditures
occurred before construction completion of the assets arriving at the estimated utilization state; credit value
of the fixed assets injected by investors is determined based on the agreed value of investment contracts or
agreements, while as for the agreed value of investment contracts or agreements which is not fair, it shall
take its fair value as credit value; and for fixed assets which are leased in through finance leasing, credit
value is the lower of fair value of leased assets and present value of minimized leasing payment as at the
commencing date of leasing.

     Consequent expenditure related to fixed assets consists of expenditures for repair and update reform.
For those meeting requirements for reorganization of fixed assets, they would be accounted as fixed asset
cost; and for the part which is replaced, reorganization of its carrying value shall cease; for those not
meeting requirements for reorganization of fixed assets, they shall be accounted in current gains and losses
                                                            134
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

as long as they occur. When fixed asset is disposed, or no economic benefit would be predicted to obtain
through utilization or disposal of the asset, the Company shall terminate reorganization of such fixed asset.
The amount of income from disposal, transfer, discarding as scrap or damage of fixed asset after deducting
the asset’ s carrying value and relevant taxation shall be written into current gains and losses.

     The Company withdraws depreciation for all fixed assets except for those which have been fully
depreciated while continuing to use. It adopts average service life method for withdrawing depreciation
which is treated respectively as cost or current expense of relevant assets according to purpose of use. The
depreciation term, predicted rate of salvage value and depreciation rate applied to fixed assets of the
Company are as follows:
                                                                    Predicted rate of salvage   Depreciation rate per
      No.                  Type                 Depreciation term
                                                                             value                    annum
       1         Houses and buildings                 30-40 years           4%-5%                  2.375%-3.20%
       2         Machinery equipments                 10-14 years           4%-5%                  6.786%-9.60%

       3         Transport equipment                  5-12 years            4%-5%                  7.92%-19.20%

       4         Other equipments                     8-12 years            4%-5%                  7.92%-12.00%


     The Company makes re-examination on predicted service life, predicted rate of salvage value and
depreciation method at each year-end. Any change will be treated as accounting estimation change.

     15. Construction in process

      Construction in process is measured with effective cost. Self-operated constructions projects are
measured with direct materials, direct salaries and direct construction expense; construction projects
undertaken by external are measured with the engineering payment payable; and engineering cost (income
abatement) of equipment-installation projects is confirmed with consideration of value of the equipments,
installation fee, and expenditure arising from trial operation of the projects. Borrowing expense and
exchange gains and losses which should be capitalized are also included in cost of construction in process.

     16. Borrowing expense

      Borrowing expenses include interest expense, amortization of discount or premium, auxiliary
expenses and exchange difference due to borrowing in foreign currency. The borrowing expense which
could be directly attributable to purchase or production of assets satisfying capitalization condition, starts
capitalization when capital expenditure and borrowing expense occur and when necessary purchase or
production conducted for promoting assets to reach the predicted available-for-use or available-for-sale
state; and capitalization shall cease when purchased or produced assets satisfying capitalization condition
have reached the predicted available-for-use or available-for-sale state. Other borrowing expense is
recognized as expense during the occurrence period.

     Capitalization shall be exercised for interest expense actually occurred from special borrowings in
current period after deduction of the interest income arising from unutilized borrowing capital which is
saved in banks or deduction of investment income obtained from temporary investment; For
reorganization of capitalized amount of common borrowing, it equals to the weighted average of the
                                                            135
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

assets whose accumulated expense or capital disburse is more than common borrowing times
capitalization rate of occupied common borrowing. Capitalization rate is determined according to
weighted average interest rate of common borrowing.

     Assets satisfying capitalization principle generally refer to fixed assets, investment real estate and
inventories which can only arrive at predicted available-for-use and available-for-sale state after quite a
long time (generally over one year) in purchase or production activities.

     If abnormal interruption happens during purchase or production of assets satisfying capitalization
principle and the interruption lasts over 3 months, the capitalization for the borrowing expense shall pause
until the purchase or production restarts.

     17. Intangible assets

    The Company holds intangible assets including land use right, trademark, patent technology and
non-patent technology. Intangible assets are measured according to the effective costs paid for obtaining
the assets. For those intangible assets purchased in by the Company, their effective cost consist of actual
payment and relevant other expenditure; for the intangible assets input by investors, effective cost is
determined according to the value agreed in investment contracts and agreements, while if the agreed
value is not fair, then effective value is confirmed according to fair value.

     Land use right is averagely amortized according to its transfer term commencing from the sate of
transfer; trademark use-rights averagely amortized by 10 years; patent technology, non-patent technology
and other intangible assets is averagely amortized according to the shortest of their predicted service life,
beneficial term concluded by contract and effective term regulated by laws. Amortization amount is
recorded in assets cost and current gains and losses relevant to beneficial objectives.

    Re-examination on predicted service life and amortization method of the intangible assets which
have limited service life shall be conducted at the end of each year. If changed, it would be treated as
change of accounting estimation. Re-examination on predicted service life of intangible assets which have
uncertain service life shall be conducted. For any evidence proving that service life of intangible assets is
limited, then the service life shall be estimated and the Company shall make amortization within the
predicted service life period.

     18. Research and development

     As for expenditure for research and development, the Company classifies it into expenditure on
research phase and development phase, based on nature of the expenditure and that whether the final
intangible assets formed by research & development is of great uncertainty. Expenditure arising during
research should be recorded in current gains and losses upon occurrence; expenditure arising during
development is confirmed as intangible assets when satisfying the following conditions:

     (1) Completions of the intangible assets make it available for application or sell in technology;

     (2) Equipped with plan to complete the intangible asset and apply or sell it;

                                                            136
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

     (3) There is market for products produced with this intangible assets or the intangible asset itself;

     (4) Have sufficient technology, financial resource and other resources to support development of the
intangible assets, and have ability to apply or sell the assets;

     (5) Expenditure attributable to development of the intangible assets could be reliable measured.

     Expenditure arising during development not satisfying the above conditions shall be recorded in
current gains and losses upon occurrence. Development expenditure which had been recorded in gains and
losses in previous period would not be recognized as assets in later period. Expenditure arising during
development phase which has been starting capitalization is listed in balance sheet as development
expenditure, and transferred to intangible assets since the project reaches at predicted utilization state.

     19. Impairment of non-financial long-term assets

     As at each balance sheet date, the Company has inspection on long-term equity investment, fixed
assets, construction in process and intangible assets with limited service life. When the following
indications appear, assets may be impaired, and the Company would have impairment test. As for
goodwill and intangible assets which have uncertain service life, no matter there is impairment or not,
impairment test shall be conducted at the end of every year. If it is hard to make test on recoverable
amount of single asset, test is expected to make on the basis of the assets group or assets group portfolio
where such asset belongs to.

      After impairment test, if the carrying value exceeds the recoverable amount of the asset, the balance
is recognized as impairment loss. As long as impairment loss of the aforementioned assets is recognized, it
couldn’t be switched back in later accounting periods. Recoverable amount of assets refers to the higher of
fair value of assets net disposal expense and present value of predicted cash flow of the asset.

     Indications for impairment are as follows:

     (1) Market value of asset drops a lot in current period, the drop scope is obviously greater than the
predicted drop due to move-on of times or normal utilization;

     (2) Economy, technology or law environment where enterprise operates or market where asset is
located will have significant change in current or recent periods, which brings negative influence to
enterprise;

    (3) Market interest rate or returning rate of other market investments have risen in current period,
which brings influence in calculating discount rate of present value of predicted future cash flow of assets,
which leads to a great drop in recoverable amount of such assets;

     (4) Evidence proving that asset is obsolete and out of time or its entity has been damaged;

     (5) Asset has been or will be keep aside, terminating utilization or disposed advance;

     (6) Internal report of enterprise shows that economic performance of asset has been or will be lower
than prediction, such as that net cash flow created by asset or operation profit (or loss) realized by asset is

                                                            137
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

greatly lower (or higher) than the predicted amount;

     (7) Other indications showing possible impairment of assets.

     20. Goodwill

    Goodwill represents balance between equity investment cost or business combination cost under no
common control exceeding the attributable part or fair value of recognizable net assets of party invested or
purchased (obtained through business combination) as of acquisition day or purchase day.

     Goodwill relating to subsidiaries is separately listed in consolidated financial statement. And goodwill
relating to associates and joint-ventures is included in carrying value of long-term equity investment.

     21. Long-term deferred expenses

    Long-term deferred expenses of the Company refer to the expense which has been paid out while
should be amortized from the current period and periods thereafter, with amortization term over 1 year
(excluding 1 year). Such expense is averagely amortized during the beneficial period. If such long-term
deferred expense could not bring benefit to following accounting periods, the unamortized value of the
item shall be fully transferred to current gains and losses.

     22. Staff remuneration

     Employee benefits mainly include all kinds of remuneration incurred in exchange for services
rendered by employees or compensation to the termination of employment relationship such as short-term
wages, post-employment benefits, compensation for the termination of employment relationship and other
long-term employee welfare.

     Short-term remuneration includes: staff salary, bonus, allowances and subsidies, staff benefits, social
insurances like medical insurance, work-related injury insurance and maternity insurance, housing fund,
labor union funds and staff education funds, short-term paid absence of duty, short-term profit sharing
scheme, and non-monetary benefits as well as other short-term remuneration. During the accounting
period when staff provides services, the short-term remuneration actually occurred is recognized as
liabilities and shall be included in current gains and losses or related asset costs according to the beneficial
items.

      Retirement benefits mainly consist of basic pension insurance, unemployment insurance and
early-retirement benefits, etc. retirement benefit scheme represents the agreement reached by the
Company and its employees in respect of retirement benefits, or the rules or regulations established by the
Company for providing retirement benefits to employees. In particular, defined contribution plan means a
retirement benefit plan, pursuant to which, the Company makes fixed contribution to independent fund,
upon which, and it is not obliged to make further payment. Defined benefit plan refers to retirement
benefit scheme other than defined contribution plan.

    The early retirement policy for staff and workers of the Company is the compensation for
encouraging staff and workers to accept the reduction voluntarily. The employees make applications
                                                            138
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

voluntarily, the two parties sign the compensation agreement after approved by the Company and
calculate the compensation amount according to the compensation standard passed by the staff
representative conference, and the Company confirms it as dismiss welfare and reckons it in current profits
and losses. As the Company promises to adjust the treatment for early retiring staff and workers with the
increase of social basic cost of living allowances, the discount elements will not be considered for
calculating the dismiss welfare.

     23. Estimated liabilities

     If the business in connection with such contingencies as a security involving a foreign party,
commercial acceptance bill discount, pending litigation or arbitration, product quality assurance, etc. meets
all of the following conditions, the Company will confirm the aforesaid as liabilities: the obligation is an
existing obligation of the Company; performance of the obligation is likely to cause economic benefits to
flow out of the enterprise; the amount of the obligation is reliably measurable.

     24. Principle of recognition of revenue and measurement method

     The Company’s sales revenue is mainly comprised of revenue from sale of goods, labor providing
income and revenue from assignment of asset use rights. The principle of recognition of such revenue is as
follows:

     (1) Revenue from the sale of goods shall be recognized when the Company has transferred to the
buyer the significant risks and rewards of ownership of the goods; the Company retains neither continuing
managerial involvement to the degree usually associated with ownership nor effective control over the
goods sold; the amount of revenue can be measured reliably; it is probable that the associated economic
benefits will flow into the Company; The export business is recognized when the packing list is received;
and the associated costs incurred or to be incurred can be measured reliably. Air-conditioner OEM/ODM
will recognize revenue while notes issued after commodity transferring to the shipping space that
appointed by the client.

     (2) The Company confirms the realization of service income when the gross income and total cost of
labor service cab be unfailingly calculated, the economic benefits related to labor service are likely to flow
into the Group, and the progress of labor service can be confirmed reliably. On balance sheet date, with
regard to those with results provided for labor service transactions can be estimated reliably, confirm the
relevant service income according to percentage of completion method and determine the
percentage-of-completion method by the proportion of the occurred cost in the estimated total cost; as for
those with results provided for labor service transactions can’t be estimated reliably and with occurred
labor cost predicted to be able to get compensation, confirm to provide service income according to labor
cost amount occurred and capable of getting compensation, and carry over the occurred labor costs; for
those with results provided for labor service transactions can’t be estimated reliably and with occurred
labor cost predicted to be not able to get compensation, reckon the occurred labor cost in the current profits
and losses, but not confirm to provide service income.

                                                            139
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

    (3) The economy benefit of use-right of transfer assets probably wills inflow to the Company, if the
income can be measure accountability, than use-right income of transfer assets recognized.

     25. Government subsidies

     Government subsidy at the Company be able to meet its attached conditions, and can be confirmed
when received. Government grants for monetary assets, in accordance with the measurement of the
amount actually received, according to a fixed quota for the allocation of the grant criteria, in accordance
with the amount of accounts receivable measurement; government subsidies for non-monetary assets, in
accordance with the fair value, fair value should not reliably achieved, in accordance with the notional
amount (RMB 1.00) measurement.

     Asset-related government grants recognized as deferred income, and average life of related assets
included in the current profit and loss distribution. With the proceeds of the relevant government subsidies
to compensate for the period after the relevant costs or losses recognized as deferred income and, while
recognizing the associated costs included in current period profit and loss; for compensation related costs
that have occurred or loss, directly gains and losses included in the current period.

     Government subsidies related to the daily activities of the enterprise shall be included in other income
or offset the relevant costs in accordance with the essence of the economic business. Government
subsidies not related to the daily activities of the enterprise shall be included in the non-operating income
and expenditure.

     26. Deferred Income Tax Assets and Deferred Income Tax Liabilities

      A deferred tax asset and deferred tax liability shall be determined by a difference (temporary
difference) between the carrying amount of an asset or liability and its tax base. The deferred tax asset shall
be recognized for the carry forward of unused deductible losses that it is probable that future taxable
profits will be available against which the deductible losses can be utilized. For temporary difference
arising from initial recognition of goodwill, no corresponding deferred income tax liabilities will be
recognized. For temporary difference arising from initial recognition of assets and liabilities occurred in
the transaction related to non business combination which neither affect accounting profit nor assessable
income (or deductable losses), no corresponding deferred income tax assets and deferred income tax
liabilities will be recognized. As of the balance sheet date, deferred income tax assets and deferred income
tax liabilities are measured at the effective tax rate applicable to the period when recovery of assets or
settlement of liabilities occur.

    The Company recognizes deferred income tax assets to the extent of future assessable income tax
which is likely to be obtained to offset deductable temporary difference, deductable losses and tax credits.

     27. Lease

     The Company categorizes the lease into the financial lease and the operating lease.

     The financial lease is the lease in which all risks and returns related to the ownership of assets are

                                                            140
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

transferred in substance. The Company as a lease holder, on the date of lease, the financial lease is
recognized as the fixed asset at lower cost of fair value of the rental asset and the NPV of minimum
payment of leasing. The minimum payment of leasing is recognized as long-term payable and the
difference is accounted into unrecognized financing expense.

     The operating lease is the lease apart from the financial lease. The Company, as a lease holder,
accounts the rents into current period by straight line method during the term of the lease. The Company,
as a leaser, accounts the rental income into current period by straight line method during the term of the
lease.

     28. Income tax accounting

     The Company accounted the income tax in a method of debit in balance sheet. The income tax
expenses include income tax in the current year and deferred income tax. The income tax associated with
the events and transactions directly included in the owners’ equity shall be included in the owners’ equity;
and the deferred income tax derived from business combination shall be included in the carrying amount
of goodwill, except for that above, the income tax expense shall be included in the profit or loss in the
current period.

     The income tax expense in the current year refers to the tax payable, which is calculated according to
the tax laws on the events and transactions incurred in the current period. The deferred income tax refers to
the difference between the carrying amount and the deferred tax assets and deferred tax liabilities at the
year-end recognized in the method of debit in the balance sheet.

     29. Segment information

      Business segment was the major reporting form of the Company, which divided into 5 parts:
air-conditioner, refrigerator and freezer, marketing, Small household appliances and others. The transfer
price among the segments will recognize based on the market price, common costs will allocated by
income proportion between segments except for the parts that without reasonable allocation.

     30. Explanation on significant accounting estimation

     The management of the Company needs to apply estimation and assumption when preparing
financial statement which will affect the application of accounting policy and amounts of assets, liabilities,
income and expense. The actual condition may differ from the estimation. Constant evaluation is
conducted by the management in respect of the key assumption involved in the estimation and judgment
of uncertainties. Effect resulting from change of accounting estimation is recognized in the period the
change occurs and future periods.

    The following accounting estimation and key assumption may result in material adjustment to the
book value of assets and liabilities in future period.

     (1) Inventory impairment provision

     The Company provides impairment provision according to the type of finished products and goods
                                                            141
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

delivered under fixed proportion, and estimates the realizable net value of inventories by reference to the
projected selling price of similar inventories less sales expenses and related taxes on a regular basis, so as
to evaluate the rationality of the provision proportion. If the actual selling price or expense differs from the
previous estimation, the management will make corresponding adjustment to the proportion. The
estimation results based on existing experiences may differ from the latter actual results, which may result
in adjustment to the book value of inventories in the balance sheet and affect over the gains and losses of
the period when the estimation changes.

     (2) Accounting estimation on long-term assets impairment provision

     The Company makes impairment test on fixed assets such as buildings, machine and equipments
which have impairment indication and long-term assets such as goodwill as at the balance sheet date. The
recoverable amount of relevant assets and assets group shall be the present value of the projected future
cash flow which shall be calculated with accounting estimation.

     If the management amends the gross profit margin and discount rate adopted in calculation of future
cash flow of assets and assets group and the amended gross profit margin is lower than the currently
adopted one or the amended discount rate is higher than the currently adopted one, the Company needs to
increase provision of impairment provision. If the actual gross profit margin is higher (or the discount rate
is lower) than the estimation of management, the Company cannot transfer back the long term assets
impairment provision provided already.

     (3) Accounting estimation on realization of deferred income tax assets

      Estimation on deferred income tax assets needs estimation on the taxable income and applicable tax
rate for each future year. Realization of deferred income tax assets depends on whether a company is able
to obtain sufficient taxable income in future. Change of future tax rate and switch back of temporary
difference could affect the balance of income tax expense (gains) and deferred income tax. Change of the
aforesaid estimation may result in material adjustment to deferred income tax.

     (4) Usable term and residual value rate of fixed assets and intangible assets

     The Company, at least at the end of each accounting year, reviews the projected usable life and
residual value rate of fixed assets and intangible assets. The projected usable life and residual value rate are
determined by the management based on the historical experiences of similar assets by reference to the
estimation generally used by the same industry with consideration on projected technical upgrade. If
material change occurs to previous estimation, the Company shall accordingly adjust the depreciation
expenses and amortization expenses for future period.

     (5) Projected liabilities arising from product quality guarantee

     The Company commits to repair the major spare parts of refrigerators sold through go-to-countryside
promotion activity for free for ten years. As to the maintenance expenses that may be increased arising
from such commitment, the Company has provided projected liabilities.

                                                            142
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

     Taking into account the various uncertainties during the ten years, the Company considers no
discount factor of such projected liabilities. Instead, the Company reviews the parameters (probability,
proportion, maintenance expense per single set) based on the actual occurrence of maintenance expenses
as of each balance sheet date. If obvious change is found, the Company will adjust the projected liabilities
according to the latest parameters so as to reflect the best estimation.

       31. Other comprehensive income

     Other comprehensive income represents various gains and losses not recognized in current gains and
losses according to other accounting rules.

     Other comprehensive income items shall be reported in the following two classes under other
relevant accounting rules:

    (1) Other comprehensive income items that cannot be reclassified into gains and losses in future
accounting periods, mainly including changes arising from re-measurement of net liabilities or net assets
under defined benefit plan and interest in investee’s other comprehensive income which are measured
under equity method and which cannot be reclassified into gains and losses in future accounting periods;

    (2) Other comprehensive income items that will be reclassified into gains and losses in future
accounting periods upon satisfaction of required conditions, mainly including interest in investee’s other
comprehensive income which are measured under equity method and which will be reclassified into gains
and losses in future accounting periods upon satisfaction of required conditions, gains or losses arising
from change of fair value of available-for-sale financial assets, gains or losses arising from reclassification
of held-to-maturity investment into available-for-sale financial assets, gains or losses occurred by cash
flow hedging instruments attributable to effective hedge, foreign currency financial statement translation
difference, etc.

       32. Change of significant accounting policies and accounting estimates

       (1) Change of significant accounting policies

       The Company had no change of significant accounting policies in the period.

       (2) Change of significant accounting estimates

       The Company had no change of significant accounting estimates in the period.

       V. Taxation

       (I) Major taxes (expenses) and tax (expense) rates
        Tax(expenses)                                 Tax base                           Tax rate
 VAT                            Income from sales of goods and from processing     17%、13%、6%、5%
 Urban maintenance       and
                                Turnover tax                                             5% or 7%
 construction tax
 Education surcharge            Turnover tax                                                3%
 Local education surcharge      Turnover tax                                                2%


                                                            143
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
        Tax(expenses)                                   Tax base                            Tax rate

 Corporate income tax           Taxable income                                            15% or 25%

                                Original Book value of house property×(1-30%)or
 House Property Tax                                                                     1.2% or 12%
                                annual rent income

 Land use tax                   Actual land area used                              RMB 2.5/M2 to RMB 15/M2


     2. Preferential tax and approval documents

     The Company and its subsidiary Zhongke Meiling Cryogenics Technology Limited Company were
recognized as second Hi-Tech Enterprise for year of 2014 in Anhui Province with term of three years.
Therefore, the Company and its subsidiary Zhongke Meiling Cryogenics Technology Limited Company
enjoys 15% rate for the income tax for State Hi-Tech Enterprise. On 22 January 2015, being recognized by
―Name Lists of First Hi-Tech Enterprise for year of 2014 in Anhui Province‖[WGQR(2014) No. 37] from
Anhui Science & Technology Department, the Company and Zhongke Meiling Cryogenics Technology
Limited Company continuous to enjoy 15% rate for the income tax for State Hi-Tech Enterprise for three
years term.

     Subsidiary Zhongshan Changhong Electric Co., LTD. was recognized as First Hi-Tech Enterprise for
year of 2008 in Guangdong Province with 15% rate for the income tax for State Hi-Tech Enterprise enjoys
for term of three years. On 10 October 2014, being recognized by ―Name Lists of Second Hi-Tech
Enterprise for year of 2014 in Guangdong Province‖[YKGS(2014) No.15] from Guangdong Science &
Technology Department, Zhongshan Changhong Appliance Co., Ltd. continuous to enjoy 15% rate for the
income tax for State Hi-Tech Enterprise for three years term.

     The subsidiary Sichuan Changhong Air Conditioning Co., Ltd. has passed the review for high-tech
enterprise certification on December 8, 2016, which is valid for three years. After passing the filing and
auditing of tax bureau, the company will only pay the corporate income tax by 15% of the tax rate.

     Subsidiary Mianyang Meiling Software Technology Co., Ltd. pass the software enterprise certificate
on 27 June 2014, and obtained the Software Enterprise Certification [Chuan No.:R-2014-0072].
Calculating the promotion period since the year of profit-making, the 1st year to 2nd year, the income tax
shall be exempted, levy income tax based on half of the statutory rates from the 3rd year to 5th year, and
enjoy the preferential till expired.

     Subsidiary Mianyang Meiling Software Technology Co., Ltd. pass the software enterprise certificate
on 27 June 2014, and obtained the Software Enterprise Certification [Chuan No.:R-2014-0072].
Calculating the promotion period since the year of profit-making, the 1st year to 2nd year, the income tax
shall be exempted, levy income tax based on half of the statutory rates from the 3rd year to 5th year, and
enjoy the preferential till expired.

      Subsidiary Guangdong Changhong Ridian Technology Co., Ltd. obtained a High-Tech Enterprise
certificates on 9 December 2016 with three-year valid, and the enterprise enjoys 15% favorable income

                                                             144
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

tax for the national high-tech enterprise

      VI. Notes to the major items in the consolidated financial statements

      With respect to the financial statements figures disclosed below, unless otherwise specified,
―year-beginning‖ refers to Jan. 1, 2017, ―period-end‖ refers to June 30, 2017, ―the period‖ refers to Jan. 1
to June 30, 2017, ―the last period‖ refers to Jan. 1 to June 30, 2016, the currency is RMB.

     1. Monetary fund
                           Item                                   Balance at period-end          Balance at year-begin
 Cash                                                                               83,233.09                    94,415.53
 Bank deposit                                                              4,349,072,332.23               3,827,367,022.13
 Other Monetary fund                                                         569,030,082.45                231,407,796.97
                          Total                                            4,918,185,647.77               4,058,869,234.63
 Including: total amount deposited in overseas                                11,786,986.88                  19,067,202.50


     Other monetary fund:
                                            Item                                                 Amount at period-end
 Deposits                                                                                                  528,902,400.86
 Account of foreign currency for verification                                                                34,005,529.84
 Union Pay online                                                                                             4,456,393.66
 Taobao account                                                                                               1,665,758.09
                                           Total                                                           569,030,082.45


     Among the other monetary fund, the cash deposit (with over three months restiction) and account of
third payment platform are not considered as the cash and cash equivalent, which amounting to
108,727,129.38 Yuan in total.

    According to the national policies relating to foreign exchange management, all goods payment
denominated in foreign currency should be transferred to reviewing accounts which may not be used
temporarily. Upon approval of such review, those payments may be transferred to general accounts. Due
to the relatively short time for reviewing foreign exchange, balance of the reviewing accounts is not
limited on utilization.

     2. Financial assets measured at fair value and whose changes are recorded in the profits and losses of
the current period
                        Item                                Balance at period-end               Balance at year-begin
 Derivative financial assets                                              10,813,272.50                      12,060,213.30


     Derivative financial assets refer to the RMB forward exchange fund in the period.

     3. Notes receivable

     (1) Category of notes receivable

                                                            145
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

                            Item                                      Balance at period-end               Balance at year-begin

 Bank acceptance bill                                                          2,314,320,720.47                    1,096,452,069.60

 Commercial acceptance bill                                                       197,394,708.94                    324,977,654.13

                            Total                                              2,511,715,429.41                    1,421,429,723.73


      (2) Notes receivable mortgaged by end of the year
                            Item                                           Amount mortgaged by end of the period

 Bankacceptance                                                                                                     586,118,629.32


    Note: in order to improve the utilization rate of notes, the Company pledged to banks those notes that
haven’t expired yet in exchange for issuance of banking acceptance drafts.

      (3) Note receivables endorsement or discount at year-end and are not expired on balance sheet date
                                                                                                            No termination
                                                               Termination confirmation
                            Item                                                                        confirmation amount at
                                                                 amount at period-end
                                                                                                              period-end

 Bank acceptance bill                                                          2,235,142,755.76

 Commercial acceptance bill                                                       242,420,369.40

                            Total                                              2,477,563,125.16


      (4) Notes transfer to account receivable due to the failure implementation from drawer at year-end:
Nil

      4 Accounts receivable

      (1) Account receivable by category
                                                                              Amount at period-end

                  Category                            Book balance                     Bad debt provision
                                                                                                                     Book value
                                                                        Percent                         Percent
                                                  Amount                               Amount
                                                                          age                             age
 Significant account receivable and withdrawal
 bad debt provision single
 Account receivable withdrawal bad debt
 provision by combination
Combination 1                                      1,425,699,322.29       66.91%        73,041,490.89     5.12%        1,352,657,831.40
Combination 2                                       690,888,200.94        32.42%                   -           -        690,888,200.94
Subtotal of combination                            2,116,587,523.23       99.33%        73,041,490.89     3.45%        2,043,546,032.34
 Account receivable with single minor amount
                                                     14,236,410.51         0.67%         9,449,901.74     66.38%          4,786,508.77
 but withdrawal bad debt provision singly
                    Total                          2,130,823,933.74      100.00%        82,491,392.63     3.87%        2,048,332,541.11


      (Continued)
                                                                              Amount at year-begin
                  Category
                                                      Book balance                     Bad debt provision            Book value


                                                              146
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                                                                           Percent                      Percent
                                                       Amount                          Amount
                                                                             age                          age
 Significant account receivable and withdrawal
 bad debt provision single
 Account receivable withdrawal bad debt
 provision by combination
Combination 1                                            834,543,507.58      71.22%     43,843,529.45     5.25%       790,699,978.13
Combination 2                                            323,321,432.79      27.59%                       0.00%       323,321,432.79
Subtotal of combination                                 1,157,864,940.37     98.81%     43,843,529.45     3.79%      1,114,021,410.92
 Account receivable with single minor amount
                                                          13,898,468.17      1.19%       8,959,326.60     64.46%        4,939,141.57
 but withdrawal bad debt provision singly
                     Total                              1,171,763,408.54   100.00%      52,802,856.05     4.51%      1,118,960,552.49


     1) No account receivable with single major amount but withdrawal bad debt provision singly at
period-end.

     2) Account receivable with withdrawal bad debt provision for combination 1 by aging account
                                                                             Balance at period-end
                    Age
                                                 Account receivable            Bad debt provision          Provision proportion

 Within 1 year                                        1,415,374,510.68                70,768,725.53                         5.00%

 1-2 years                                                7,781,228.46                  1,167,184.27                       15.00%

 2-3 years                                                2,003,415.01                   701,195.25                        35.00%

 3-4 years                                                  250,015.02                   137,508.26                        55.00%

 4-5 years                                                  155,170.28                   131,894.74                        85.00%

 Over 5 years                                               134,982.84                   134,982.84                      100.00%

 Total                                                1,425,699,322.29                73,041,490.89


     3) Account receivable with no withdrawal bad debt provision for combination 2
                              Combination                                                         Book balance

 Account connect with related parties                                                                              574,882,713.94

 Letter of Credit                                                                                                  116,005,487.00

                                   Total                                                                           690,888,200.94


     4) Account receivable with single minor amount but withdrawal bad debt provision singly, refers to
the minor single receivables, and withdrawal bad debt provision by combination shows no risk
characteristic of the receivables, 11 clients involved.

     (2) Bad debt reserve provided for, reversed (or recovered) during this period

     New accrual bad debts in the period amounting to RMB 29,688,536.58, no trade receivables
written-off in previous year were recovered.

     (3) No account receivable actually written-off in the period.

                                                                   147
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

     (4) In the period, top five receivables collected by arrears party amounting to RMB 857,662,386.81
in total, accounted for 40.25% of the receivables at balance of the period-end, the bad debt provision
accrual correspondingly amounting to RMB 16,602,557.02 at period-end balance.

     5. Accounts paid in advance

     (1) Age of account paid in advance
                                   Amount at period-end                                      Amount at year-begin
       Item
                                 Amount                   Percentage                        Amount                    Percentage
 Within 1 year                        286,492,615.39               98.85%                      131,113,656.82               97.33%
 1-2 years                              2,764,333.17              0.95%                         2,983,725.64                2.22%
 2-3 years                                186,787.65              0.06%                             487,258.38              0.36%
 Over 3 years                              392,324.70              0.14%                             121,847.54              0.09%
         Total                        289,836,060.91          100.00%                          134,706,488.38             100.00%


    (2) Top 5 of account paid in advance in balance at period-end amounting to RMB 201,885,181.30,
accounted for 69.65% of the account.

     6. Interest receivable
                      Item                               Balance at period-end                       Balance at year-begin
 Deposit interest receivable                                                 3,229,356.48                              2,645,494.32


     7. Other accounts receivable

     (1) Category of other account receivable
                                                                               Amount at period-end

                   Category                               Book balance                  Bad debt provision
                                                                                                                        Bookvalue
                                                                                                         Percent
                                                     Amount          Percentage         Amount
                                                                                                           age
 Significant other account receivable and
 withdrawal bad debt provision single
 Other account receivable withdrawal bad
 debt provision by combination
Combination 1                                      11,062,149.18            15.54%     2,360,977.37      21.34%        8,701,171.81
Combination 2                                      59,836,339.63            84.08%                   -            -   59,836,339.63
Subtotal of combination                            70,898,488.81            99.62%     2,360,977.37       3.33%       68,537,511.44
 Other account receivable with single minor                                                               100.00
                                                     267,932.63             0.38%       267,932.63                                  -
 amount but withdrawal bad debt provision singly                                                              %
                     Total                         71,166,421.44       100.00%         2,628,910.00       3.69%       68,537,511.44


       (Continued)
                                                                               Amount at year-begin

                   Category                               Book balance                  Bad debt provision
                                                                                                                        Bookvalue
                                                                        Percent                          Percent
                                                        Amount                          Amount
                                                                          age                              age
 Significant other account receivable and

                                                              148
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                                                                          Amount at year-begin

                   Category                             Book balance              Bad debt provision
                                                                                                             Bookvalue
                                                                      Percent                    Percent
                                                      Amount                      Amount
                                                                        age                        age
 withdrawal bad debt provision single

 Other account receivable withdrawal bad
 debt provision by combination
Combination 1                                         8,798,418.31     20.99%    2,091,596.95    23.77%     6,706,821.36
Combination 2                                        32,347,098.08     77.18%                              32,347,098.08
Subtotal of combination                              41,145,516.39     98.17%    2,091,596.95     5.08%    39,053,919.44
 Other account receivable with single minor
                                                        767,932.63     1.83%       267,932.63    34.89%      500,000.00
 amount but withdrawal bad debt provision singly
                                                                       100.00
                      Total                          41,913,449.02               2,359,529.58     5.63%    39,553,919.44
                                                                           %

      1) No significant other account receivable and no withdrawal bad debt provision single at period-end.

      2) Other account receivable with withdrawal bad debt provision for combination 1 by aging account
                                                                       Balance at period-end
                  Age
                                              Account receivable        Bad debt provision        Provision proportion

 Within 1 year                                         7,661,808.58                383,090.43                     5.00%

 1-2 years                                              706,540.60                 105,981.09                    15.00%

 2-3 years                                              969,067.92                 339,173.77                    35.00%

 3-4 years                                              180,000.00                  99,000.00                    55.00%

 4-5 years                                              740,000.00                 629,000.00                    85.00%

 Over 5 years                                           804,732.08                 804,732.08                  100.00%

                  Total                               11,062,149.18              2,360,977.37


      3) Other account receivable with no withdrawal bad debt provision for combination 2
                               Combination                                               Book balance
 Contact with related party                                                                                   200,000.00
 Employee’s reserve loans                                                                                 29,892,444.67
 Export rebate                                                                                             29,743,894.96
                                   Total                                                                   59,836,339.63


     4) The other account receivable with major amount at period-end and accrual for bad debt provision
single refers to the receivable amount of 267,932.63 Yuan from Guangdong Xiongfeng Electric Co., Ltd.

      (2) Reversal (or withdraw) of reserve for bad debts in the period

     New accrual bad debts in the year amounting to RMB 269,380.42, no trade receivables written-off in
previous year were recovered.

                                                             149
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

       (3) No actual verification of other receivables in the period.

       (4) Classification of other accounts receivable according to the nature of account
                             Nature                           Book balance at period-end           Book balance at year-begin
 Employee’s reserve loans                                                    29,892,444.67                           18,784,317.17
 Non-consolidated related party                                                  200,000.00                           12,870,014.08
 Deposit                                                                       7,990,509.82                            8,062,507.62
 Advance money temporary                                                         267,932.63                            1,413,879.45
 Export rebate                                                                29,743,894.96                             159,982.87
 Other                                                                         3,071,639.36                             622,747.83
                             Total                                            71,166,421.44                           41,913,449.02


       (5) Top 5 other receivables collected by arrears party at balance of period-end:
                                                                                                                        Bad Balance
                                                                                              Proportion in total
                                                              Balance at                                                at period-end
                  Name                Nature ofaccount                         Bookage        other receivables at
                                                              period-end                                                  of debt
                                                                                                  period-end
                                                                                                                        provision
 State   Administration   of
 Taxation of Hefei Economic                                                   Within 1
                                      Export rebate         29,358,965.71                                  41.25%
 &             Technological                                                   year
 Development Zone
                                      Employees                               Within 1
 Fei Ming                                                    4,293,600.00                                   6.03%
                                      deposit                                  year
                                                                              Within 1
 Nanjing Customs of PRC               Cash deposit           1,775,972.11                                   2.50%         88,798.61
                                                                               year
                                      Employees                               Within 1
 Li Miao                                                     1,090,329.05                                   1.53%
                                      deposit                                  year
 Beijing Tongzhou New Rural           Guarantee                               Within 1
                                                             1,000,000.00                                   1.41%         50,000.00
 Construction Service Center          money                                    year
                  Total                                     37,518,866.87                                  52.72%       138,798.61


       (6) No other account receivable involved government subsidies at period-end.

     (7) No other receivables terminated reorganization due to the transfer of financial assets at
period-end.

       (8) No assets and liability transfer other receivables and continues to involve at period-end.

       8. Inventories

       (1) Classification of inventories
                                                                              Amount at period- end
                      Item
                                                         Bookbalance          Impairment provision             Book value

Rawmaterials                                                 322,314,685.16              2,144,408.97                320,170,276.19
Stockcommodities                                           1,825,782,218.57           79,589,804.12              1,746,192,414.45

Low value consumable articles                                 12,545,529.30                           -               12,545,529.30

Goodsin transit                                              426,481,411.06              8,326,761.05                418,154,650.01



                                                                    150
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

                                                                                   Amount at period- end
                       Item
                                                           Bookbalance             Impairment provision               Book value

Goods-in-process                                                  41,023,888.17                            -               41,023,888.17
Deferred expense for moulds                                       44,451,856.35                            -               44,451,856.35
                       Total                                 2,672,599,588.61              90,060,974.14                2,582,538,614.47


(Continues)

                                                                                   Amount at year- begin
                       Item
                                                           Bookbalance             Impairment provision               Book value

Rawmaterials                                                   239,470,144.24               2,133,956.27                  237,336,187.97
Stockcommodities                                             1,477,211,122.85              71,224,130.62                1,405,986,992.23

Low value consumable articles                                     11,908,736.75                            -               11,908,736.75

Goodsin transit                                                245,587,568.44               2,700,789.83                  242,886,778.61

Goods-in-process                                                  31,950,329.21                            -               31,950,329.21
Deferred expense for moulds                                       44,457,710.09                            -               44,457,710.09
                       Total                                 2,050,585,611.58              76,058,876.72                1,974,526,734.86


       (2) Inventory falling price reserves
                                                                                                                         Amount at
                               Amount at            Increased in the              Decreased in the period
       Item                                                                                                              period-end
                               year-begin                period
                                                                             Switch-back     Other switch-out

 Raw materials                    2,133,956.27               10,447.01                                                      2,144,403.28

 Stock
                                 71,224,130.62            9,586,178.63                            1,220,499.44             79,589,809.81
 commodities

 Goods            in
                                  2,700,789.83            5,795,290.81                              169,319.59              8,326,761.05
 transit
       Total                     76,058,876.72           15,391,916.45                            1,389,819.03             90,060,974.14


       (3) Provision for inventories
                                                                                                                    Reasons for the
           Item                        Specific basis for determining of net realizable value                  Switch-back or conversion
                                                                                                                     in the period
                               Cost is higher than net realizable value (The processed products are
 Raw materials                 decline)

 Stock                         Cost is higher than net realizable value (The market price at period-end
                               fell)
 commodities
                               Cost is higher than net realizable value (The market price at period-end
 Goods in transit              fell)
                               Cost is higher than net realizable value (The processed products are
 Goods in process
                               decline)

                                                                       151
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

     9. Non-current assets due within one year
                                                                               Balance at                        Nature
                Item                         Balance atperiod-end
                                                                               year-begin
 Time deposits due within one
                                                    46,133,664.00              12,625,340.00         Reclassification of time deposit
 year

    Note: This project is the three-year term fixed deposit that the subsidiary Zhongshan Changhong has
deposited at Guangdong Development Bank Zhongshan Branch for getting the bank’s long-term loan.
The deposit amount is US $ 6,810,000.00 dollars, will expire in 2017 and reclassify to this project.

     10. Other current assets
              Item                          Balance atperiod-end               Balance at year-begin                  Nature
 Financial products                               1,767,200,000.00                     1,385,200,000.00        Bank financial products
 Value-added     tax    to     be                                                                             Reclassify of value-added
                                                        86,050,824.57                       56,525,274.99
 deducted                                                                                                        tax to be deducted
 Advance payment of income                                                                                     Reclassify of advance
                                                        11,124,666.91                       12,357,316.25
 tax                                                                                                           payment of income tax
                                                                                                               Re-classify the prepaid
 Advance payment of taxes
                                                         3,307,780.55                         263,706.18        construction tax and
 and surcharges
                                                                                                                education surcharge

             Total                                1,867,683,272.03                     1,454,346,297.42


     11. Finance asset available for sales

     (1) Finance asset available for sales
                                                        Balance atperiod-end                           Balance at year-begin
               Item                                         Impairm                                           Impairme
                                          Bookbalance          ent          Book value         Bookbalance       nt          Book value
                                                            provision                                         provision
 Equity instrument available for
                                 31,000,000.00                            31,000,000.00       17,000,000.00                 17,000,000.00
 sales
 Including: measured by cost             31,000,000.00                    31,000,000.00       17,000,000.00                 17,000,000.00
               Total                     31,000,000.00                    31,000,000.00       17,000,000.00                 17,000,000.00


     (2) Finance asset available for sales measured by cost at period-end
                                                                                                                Holding         Cash
                                                                                Decrease
                                                              Increase in                                     proportion      dividend
          Invested Unit                   Year-begin                             in the        Period-end
                                                              the period                                      in invested      for the
                                                                                 period
                                                                                                                  unit         period
 Huishang Bank Co., Ltd.                  5,000,000.00                                        5,000,000.00      0.0972%                   -
 Sichuan Hongyun         New        it                       14,000,000.0
                                         12,000,000.00                                       26,000,000.00        16.00%
 Investment Fund                                                        0
                                                             14,000,000.0
               Total                     17,000,000.00                                       31,000,000.00                                -
                                                                        0

     (3) No impairment reserve of finance asset available for sales at period-end.




                                                                        152
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

     12. Long-term equity investment
                                                                                                           Change in the period
                                                                                                                                                                                         Impairmen
                                               Balance at                                 Investment            Other         Other                     Provisio         Balance at        t reserve
               Invested Unit                                                     Disin                                                 Declaration of
                                               year-begin        Additional              profit and loss     comprehen       changes                     n for           period-end       balance at
                                                                                 vestm                                                 cash dividends            Other
                                                                 investment              confirmed by        sive income        of                      impair                           period-end
                                                                                  ent                                                    or profits
                                                                                         equity method       adjustment       equity                     ment
 Associated companies
 1. ChanghongRuba
                                                29,314,674.36                                 720,850.57       -921,916.41                                               29,113,608.52
 Electric Company(Private)Ltd.
 2. Hefei Xingmei Assets Management
                                                12,394,800.39                                 -512,602.26                                                                11,882,198.13
 Co., Ltd.
 3. Sichuan Zhiyijia Network Technology
                                                 9,380,373.67                               -2,236,489.97                                                                 7,143,883.70
 Co., Ltd.
 4. Hengyuan Dineng Rebao Technology
                                                22,771,065.45                                  -41,337.05                                                                22,729,728.40
 Company Limited
 5. Sichuan Tianyou Guigu Technology
                                                 7,782,717.50                                 971,714.68                                                                  8,754,432.18
 Co., Ltd.
 6.    Chengdu    Guigu  Environment
                                                                 12,500,000.00              -1,876,105.23                                                                10,623,894.77
 Technology Co., Ltd.
                   Total                        81,643,631.37    12,500,000.00              -2,973,969.26      -921,916.41                                               90,247,745.70

     Note: Chengdu Guigu Environment Technology Co., Ltd. established on 22 May 2013, and according to the equity transfer agreement and supplementary agreement
signed between the Sichuan Changhong Air-conditioner Co., Ltd. and Sichuan Tianyou Guigu Technology Co., Ltd. dated 31 December 2016, the 25% equity of
Chengdu Guigu Environment Technology Co., Ltd. are acquired by the Company with 12.5 million Yuan contributed on 31 March 2017




                                                                                                 153
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

       13. Investment properties

       (1) Investment properties measured at costs
                                                            Houses and
                            Item                                                    Land use rights             Total
                                                             buildings
 I. Original book value
 1.Balance at year-begin                                       23,142,172.83                916,691.38         24,058,864.21
 2.Increased in the period
 3.Decreased in the period
 4.Balance at period-end                                       23,142,172.83                916,691.38         24,058,864.21
 II.  Accumulated       depreciation             and
 accumulated amortization
 1.Balance at year-begin                                       10,328,434.76                454,798.05         10,783,232.81
 2.Increased in the period                                        385,106.79                 19,184.28            404,291.07
 (1) provision or amortization                                    385,106.79                 19,184.28            404,291.07
 3.Decreased in the period
 4.Balance at period-end                                       10,713,541.55                473,982.33          11,187,523.88
 III. Provision for impairment
 IV. Book value
 1.Book value at period-end                                    12,428,631.28                442,709.05         12,871,340.33
 2.Book value at year-begin                                    12,813,738.07                461,893.33         13,275,631.40


       (2) No investment real estate measured by fair value at period-end.

       (3) No particular about mortgage of investment property at period-end.

       (4) No investment real estate having not completed the property right certificate at period-end.
       14. Fixed assets

       (1) Details of fixed assets
                                    Houses and          Mechanical       Transport              Others
                Item                                                                                               Total
                                     buildings          equipment        equipment            equipment
 I. Originalbookvalue
                                                                                                              2,087,508,116.1
 1.Balance atyear-begin            904,218,907.77      985,418,849.90    24,269,870.93       173,600,487.55
                                                                                                                            5
 2.Increased inthe period           11,505,120.83       65,881,249.60     2,414,923.37        14,454,768.32    94,256,062.12
 (1)Purchase                         1,017,777.70       23,488,521.06     1,752,055.74         4,005,376.97    30,263,731.47
 (2) Construction in progress
                                    10,487,343.13       42,392,728.54          662,867.63     10,449,391.35    63,992,330.65
 transfer-in
 (3) Inventorytransfer-in                                                                                                   -
 (4) Increase in exchange rate
                                                                                                                            -
 fluctuation
 3.Decreasedin theperiod             2,311,532.81       53,784,188.91     1,035,550.14        22,819,027.46    79,950,299.32
 (1)disposeorretirement              2,311,532.81       46,099,647.91     1,035,550.14        22,819,027.46    72,265,758.32

 (2) Construction in progress                    -       7,684,541.00                   -                 -     7,684,541.00



                                                                154
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                                       Houses and             Mechanical           Transport            Others
                 Item                                                                                                        Total
                                        buildings             equipment            equipment          equipment
 transfer-in

 (3)otherdecrease                                    -                      -                    -                -                     -
                                                                                                                        2,101,813,878.9
 4.Balance atperiod-end               913,412,495.79         997,515,910.59        25,649,244.16     165,236,228.41
                                                                                                                                      5
 II.        Accumulated
                                                                                                                                        -
 depreciation
 1.Balance atyear-begin               181,544,269.20         605,064,394.99        15,989,039.94      79,008,738.98     881,606,443.11
 2.Increased inthe period              14,967,319.56          40,878,868.73           893,212.38       7,814,416.44       64,553,817.11
 (1)provision                          14,967,319.56          40,878,868.73           893,212.38       7,814,416.44       64,553,817.11
 3.Decreasedin theperiod                  417,225.55          40,937,661.52           990,798.74      18,350,809.90      60,696,495.71
 (1)disposeorretirement                   417,225.55          39,381,369.90           990,798.74      18,350,809.90      59,140,204.09
 (2) Construction in progress
                                                     -         1,556,291.62                      -                -        1,556,291.62
 transfer-in
 (3)otherdecrease                                    -                      -                    -                -                     -
 4.Balance atperiod-end               196,094,363.21         605,005,602.20        15,891,453.58      68,472,345.52     885,463,764.51
 III.  Provision             for
                                                                                                                                        -
 impairment
 1.Balance atyear-begin                              -         1,601,411.95               7,403.67      199,687.70         1,808,503.32
 2.Increased inthe period                                                                                                               -
 3.Decreasedin theperiod                                                                                                                -
 (1)disposeorretirement                                                                                                                 -
 4.Balance atperiod-end                              -         1,601,411.95               7,403.67      199,687.70         1,808,503.32
 IV Book value                                                                                                                          -
                                                                                                                        1,214,541,611.1
 1.Bookvalue at period-end            717,318,132.58         390,908,896.44         9,750,386.91      96,564,195.19
                                                                                                                                      2
                                                                                                                        1,204,093,169.7
 2.Bookvalue atyear-begin             722,674,638.57         378,753,042.96         8,273,427.32      94,392,060.87
                                                                                                                                      2

     The new fixed assets in the period mainly due to the transfer-in of construction in progress, and
disposal of fixed assets in the period makes the decrease of fixed assets

       (2) No fixed assets temporary idle at period-end.

       (3) No fixed assets for collateral at period-end.

       (4) No fixed assets leased through operating lease at period-end.

       (5) No fixed assets leased through operating lease at period-end.
                                                                 Accumulated                  Depreciation
               Items               Original book value                                                                Net book value
                                                                 depreciation                  provision
 Mechanical
                                              1,750,124.70                  212,108.29                       -                1,538,016.41
 equipment
 Transport equipment                           197,640.00                   187,758.00                       -                   9,882.00
 Building construction                       32,626,483.29                 7,399,519.29                      -               25,226,964.00
 Others equipment                            15,214,412.00                 2,097,531.77                      -               13,116,880.23




                                                                      155
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

           Total                            49,788,659.99                     9,896,917.35                            -                39,891,742.64


     (6) Fixed assets without property certificate
                                                                                                                   Reason of not complete the
                              Item                                                     Book value
                                                                                                                      property certificate
 II canteen of living area                                                                       25,910,795.15               In procedure
 6# building for cadremen                                                                         8,930,447.86               In procedure
 7# building for cadremen                                                                         8,215,215.45               In procedure
 4# makeshift shelter (dormitory building transfer to capital)                                    6,651,069.97               In procedure
 3# makeshift shelter                                                                             5,689,907.18               In procedure
 8# makeshift shelter                                                                             5,178,824.74               In procedure
 5# makeshift shelter                                                                             5,140,247.60               In procedure
 Canteen                                                                                          2,716,313.94               In procedure
                              Total                                                              68,432,821.89


     (7) No fixed assets ready for sale at period-end.

     15. Construction in progress

     (1) Details of construction in progress
                                                                 Amount at period-end                               Amount at year-begin
                                                                             Imp                                                  I
                                                                              air                                                m
                                                                             men                                                 pa
                                                                               t                                                 ir
                    Item                                                     pro                                                 m
                                                     Book balance            visio     Book value            Book balance        en     Book value
                                                                               n                                                  t
                                                                                                                                 pr
                                                                                                                                 ov
                                                                                                                                 isi
                                                                                                                                 on
 Relocation and capacity           expansion
                                                            83,304,597.68                    83,304,597.68       60,889,270.95              60,889,270.95
 project of Zhongke Meiling
 Construction of intelligent manufacturing                  23,126,522.82                    23,126,522.82       12,785,053.55              12,785,053.55
 Leasing project in college                                  7,072,430.40                     7,072,430.40        5,631,371.46               5,631,371.46
 Reform of the box shell molding in
                                                             4,654,700.80                     4,654,700.80
 Jiangxi
 Equipments pending for installation                         4,278,102.62                     4,278,102.62        3,490,730.72               3,490,730.72
 Production reform       of    J     line    big
                                                             3,190,119.66                     3,190,119.66
 refrigeration
 28 station box foam line                                    3,072,649.63                     3,072,649.63
 Jiangmei door foam line                                     2,256,410.28                     2,256,410.28
 Door shell molding extruder of Jiangxi
                                                             1,897,435.90                     1,897,435.90
 Meiling
 Reform of line R290                                         1,769,230.77                     1,769,230.77        4,031,885.46               4,031,885.46
 Upgrading and reform of the production
 line of intelligent refrigerator of                         1,496,635.61                     1,496,635.61       11,190,008.45              11,190,008.45
 Mianyang Meiling




                                                                            156
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

                                                            Amount at period-end                                    Amount at year-begin
                                                                         Imp                                                      I
                                                                          air                                                    m
                                                                         men                                                     pa
                                                                           t                                                     ir
                        Item                                             pro                                                     m
                                                    Book balance         visio        Book value          Book balance           en         Book value
                                                                           n                                                      t
                                                                                                                                 pr
                                                                                                                                 ov
                                                                                                                                 isi
                                                                                                                                 on
 Construction of the lab test center
                                                        1,051,340.78                       1,051,340.78
 building and experiment ability
 Squeeze board line of Jiangxi Meiling                   979,843.89                         979,843.89             593,777.99                    593,777.99
 Cold perfusion system of Jiangxi Meiling                773,504.23                         773,504.23
 Liner punch line of Jiangxi Meiling                     721,794.87                         721,794.87
 Domestic web depart. Of Jiangxi Meiling                 589,743.59                         589,743.59
 Central air conditioning relocation and
                                                                                                     -            1,124,429.99                 1,124,429.99
 Capacity Upgrading Project
 KA line                                                                                             -             792,136.75                    792,136.75
 2nd phase construction of the fitting life
                                                                                                     -             165,000.00                    165,000.00
 zone in new industrial park of Meiling
 Comprehensive promotion of non shrink
                                                                                                     -              87,220.00                     87,220.00
 tube expander
 Other miscellaneousitems                               8,391,347.64                       8,391,347.64           6,256,524.63                 6,256,524.63
                         Total                        148,626,411.17          -         148,626,411.17          107,037,409.95       -       107,037,409.95


      (2) Changes in significant construction in progress
                                                                             Transfer to
                                     Book              Increase              fixed assets         Other
                                                                                                                 Book balance
             Projects              balance at         during the                                                                         Source offunds
                                                                                  in the         decrease        at period-end
                                   year-begin           period
                                                                                 period

 Relocation and capacity
 expansion    project of            60,889,270.95        22,453,788.27             38,461.54                -        83,304,597.68        Self-raised
 Zhongke Meiling
 Intelligentmanufacturingproject    12,785,053.55        17,751,938.34           7,410,469.07               -        23,126,522.82        Raisefunds
 Upgrading and reform of
 the production line of
                                    11,190,008.45        22,846,920.68        32,540,293.52                 -         1,496,635.61        Self-raised
 intelligent refrigerator of
 Mianyang Meiling

(Continued)
                                                                                            Accumulated    including:    Interest
                                                           Proportion of
                                                                                             amount of       interest   capitaliza
                                    Budget (in 10             project               Progres
             Projects                                                                         interest     capitalized   tion rate
                                   thousand Yuan)          investment in               s
                                                                                            capitalizatio amount of the    of the
                                                              budget
                                                                                                 n            period      period
 Relocation and capacity
 expansion    project of                   16,512.00               96.00%            96.00%
 Zhongke Meiling
 Intelligentmanufacturingproject           26,128.00               13.81%            23.00%



                                                                       157
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
 Upgrading and reform of the
 production line of intelligent            4,792.00            71.03%      90.00%
 refrigeratorofMianyangMeiling


     (3) No depreciation reserves for construction in process at year-end.

     16. Disposal of fixed assets
                                                        Amount at                    Amount at         Reasons for disposal
                       Item
                                                        period-end                   year-begin            transferred
                                                                                                        Relocation for land
 Relevant assets disposal for reserved lands             75,846,390.89                 75,788,138.47
                                                                                                             reserve

     Pursuant to the urban planning requirements of the People’s Government of Hefei city, Hefei Land
Reserve Center plans to purchase and store the land use right of an integrated economic development zone
of the Company located at Longgang of Hefei with an area of 103,978.9 sq.m. (Approximately 155.9684
mu, Land Use Right Certificate No.: Dong Guo Yong (2004) Zi No. 0200, the stated use of the land is for
industrial purpose). The estimated consideration for purchasing and storage is RMB74.48 million. The
land is mainly used for the Company’s warehouse, product finishing workshop and the factory of
Zhongke Meiling. Pursuant to the purchasing and storage requirements of land use right, the land will be
purchased and stored with vacant possession. In April 2013, the Company completed the relocation of
occupants of the premises, and the net fixed assets in relation to the land will transfer as disposal,
accounting treatment will be conduct in line with relevant rules upon receiving of the relocation
compensation.

     Pursuant to the urban planning requirements of Hefei Municipal Government and the Government of
Feidong county, the land reserve center of Feidong county will purchase and store the land use right of an
economic development zone located at Feidong county, Hefei city, which is owned by the Company’s
subordinate companies, Equator Electric and Equator Home Appliance, respectively, with an area of
19,245.09 sq.m. (Approximately 28.87 mu, Land Use Right Certificate No.: Dong Guo Yong (2008) No.
0366, the stated use of the land is for industrial purpose) and an area of 46,161.9 sq.m. (Approximately
69.24 mu, Land Use Right Certificate No.: Dong Guo Yong (2008) No. 0367, the stated use of the land
is for industrial purpose). The total consideration for purchasing and storage is approximately RMB36
million, of which the consideration for the land use right owned by Equator Electric and Equator Home
Appliance is approximately RMB10.59 million and RMB25.41 million, respectively. The Company has
completed the relocation of occupants of the premises, and the net fixed assets in relation to the land will
transfer as disposal, accounting treatment will be conduct in line with relevant rules upon receiving of the
relocation compensation.

     No impairment of relevant assets disposal for reserved lands at period-end.

     17. Intangible assets

     (1) According to intangible assets item
                                                Trademark               Non-patent
        Item              Land use right                                                     Other              Total
                                               special right            technology




                                                               158
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                                                      Trademark                 Non-patent
          Item              Land use right                                                                Other                 Total
                                                     special right              technology
 I. Original book
 value
 1.Balance            at
                             613,696,837.62          283,292,439.34             195,407,299.78            161,699.32        1,092,558,276.06
 year-begin
 2.Increased in the
                                              -                       -          17,766,418.25            179,245.29          17,945,663.54
 period
 (1) purchase                                 -                                                           179,245.29             179,245.29
 (2)            Internal
                                                                                 17,766,418.25                                17,766,418.25
 research
 3.Decreased in the
                                              -                       -                         -                       -                    -
 period
 (1) Disposal                                                                                                                                -
 (2)otherdecrease                                                                                                                            -
 4.Balance            at
                             613,696,837.62          283,292,439.34             213,173,718.03            340,944.61        1,110,503,939.60
 period-end
 II. Accumulated
                                                                                                                                             -
 depreciation
 1.Balance            at
                              116,684,176.11         270,959,304.29              90,912,770.61             32,753.42         478,589,004.43
 year-begin
 2.Increased in the
                                6,549,112.52            1,941,443.40             18,084,625.99             19,157.36          26,594,339.27
 period
 (1) provision                  6,549,112.52            1,941,443.40             18,084,625.99             19,157.36          26,594,339.27
 3.Decreased in the
                                                                                                                                             -
 period
 (1)otherdecrease
 4.Balance            at
                             123,233,288.63          272,900,747.69             108,997,396.60             51,910.78         505,183,343.70
 period-end
 III. Provision for
                                                                                                                                             -
 impairment
 IV. Book value                                                                                                                              -
 1.Book value         at
                             490,463,548.99           10,391,691.65             104,176,321.43            289,033.83         605,320,595.90
 period-end
 2.Book value         at
                             497,012,661.51           12,333,135.05             104,494,529.17            128,945.90         613,969,271.63
 year-begin

      (2) As of the end of the period, mortgage of intangible assets is as follows:
         Name              Property certificate serials                Area(M2)                     Net book value              Note

 Land use right            HGYJCZi No.: 0121                                    27,120.22
                                                                                                       19,827,456.74

18. Development expense
                                                  Increase during the
                                                                                     Decrease during the period
                                                        period
                            Balance at                                      Included in                                         Balance at
         Item                                       Internal
                            year-begin                                        current     Confirmed as                          period-end
                                                  development         Other                               Other
                                                                            profits and intangible assets
                                                  expenditure
                                                                               losses
Technology
 development        for       30,878,434.47           41,688,995.69         -               -            4,534,710.78             68,032,719.38
 Air-conditioner



                                                                      159
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
Technology
 development       for       12,797,092.26             3,915,239.55         -           -         13,231,707.47            3,480,624.34
 refrigerator
Other technology
                              1,348,223.87             1,099,654.74         -           -                    -             2,447,878.61
development
       Total                 45,023,750.60            46,703,889.98         -           -         17,766,418.25           73,961,222.33


     19. Goodwill

     (1) Original value of goodwill
                                                        Increase during the            Decrease during the
                                                              period                         period
   Name of invested              Balance at           Formation                      Formation                        Balance at
        unit                     year-begin             from                           from                           period-end
                                                                        Other                          Other
                                                      enterprise                     enterprise
                                                       merger                         merger
 Hefei Meiling Group
                                   3,553,367.77                                                                         3,553,367.77
 Holding Co., Ltd.
 Guangxi        Huidian
 Household      Electrics          5,313,913.50                                                                         5,313,913.50
 Co., Ltd
         Total                     8,867,281.27                                                                         8,867,281.27


     (2) Impairment provision of goodwill
                                                        Increase during the            Decrease during the
   Name of invested              Balance at                   period                         period                   Balance at
        unit                     year-begin                                                                           period-end
                                                        Provision           Other     Provision        Other
 Hefei Meiling Group
                                   3,553,367.77                                                                         3,553,367.77
 Holding Co., Ltd.
 Guangxi        Huidian
 Household      Electrics          5,313,913.50                                                                         5,313,913.50
 Co., Ltd
         Total                     8,867,281.27                                                                         8,867,281.27


     Note: at the period end, the Company conducted impairment test on goodwill, and provided for
impairment reserve in connection with the difference between the predicted future cash flow of the
investee and the group of assets including the goodwill. The recoverable amount is based on the predicted
future cash flow of the investee.

     20. Long-term deferred expenses
                                                            Increase            Amortization      Other increase
                                       Balance at                                                                     Balance at
               Item                                        during the            during the        during the
                                       year-begin                                                                     period-end
                                                             period               period             period
 Relocation expenses of the
                                       1,132,075.48         1,546,289.16            95,258.41                     -     2,583,106.23
 intelligent manufacturing plant

     21. Deferred income tax assets and deferred income tax liabilities

     (1) Deferred income tax assets without the offset
                                                              Balance at period-end                      Balance at year-begin
                      Item                               Deductible              Deferred           Deductible          Deferred
                                                         temporary              income tax          temporary          income tax
                                                         difference                assets           difference            assets



                                                                      160
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                                                      Balance at period-end                      Balance at year-begin
                    Item                           Deductible         Deferred                Deductible         Deferred
                                                   temporary         income tax               temporary         income tax
                                                   difference           assets                difference           assets
 Deferred income tax assets recognized from
                                                   140,671,711.72        21,466,063.56        107,230,307.69     16,454,229.77
 property depreciation preparation
 Deferred income tax assets recognized from
                                                   328,801,716.59        49,320,257.49        331,575,430.79     49,736,314.62
 accrual liability
 Deferred income tax assets recognized from
                                                    32,119,825.09          4,817,973.76        35,517,365.78      5,327,604.87
 dismission welfare
 Deferred income tax assets recognized from
                                                    68,179,831.33        10,252,327.40         82,260,654.75     12,339,098.21
 deferred income
Deferred income tax assets recognized from
                                                     1,268,504.84           317,126.21          1,293,875.10        323,468.74
ir-reparable losses
Deferred income tax assets recognized from
                                                     8,881,394.08          1,332,209.11          559,249.58          83,887.44
changes in the fair value
                    Total                          579,922,983.65        87,505,957.53        558,436,883.69     84,264,603.65


      (2) Deferred income tax liabilities without the offset
                                                      Balance at period-end                      Balance at year-begin
                    Item                           Deductible         Deferred                Deductible         Deferred
                                                   temporary         income tax               temporary         income tax
                                                   difference           assets                difference           assets
Deferred income tax liabilities recognized
                                                  10,023,272.50          1,503,490.88         12,060,213.30      1,809,032.00
from changes in the fair value

      (3) Deferred income tax assets or liabilities listed after set-off
                        Inter-neutralization at   Ending balance after      Inter-neutralization at     Opening balance after
        Item
                                period-end               set-off                   year-begin                  set-off

 Deferred      income
                                                           87,505,957.53                                         84,264,603.65
 tax assets

 Deferred      income
                                                           1,503,490.88                                          1,809,032.00
 tax liabilities


      (4) Details of unrecognized deferred income tax assets
                    Item                              Balance at period-end                       Balance at year-begin
 Deductible temporary difference                                     36,196,248.37                              26,140,372.22
 Deductible loss                                                    241,612,758.47                             373,985,517.42
                        Total                                       277,809,006.84                             400,125,889.64


      22. Other non-current assets
                        Item                             Balance at period-end                    Balance at year-begin
 Term deposit for pledge                                                                  -                     34,615,630.00


    Note: This project is the three-year term fixed deposit that the subsidiary Zhongshan Changhong has
deposited at Guangdong Development Bank Zhongshan Branch for getting the bank’s long-term loan.
The deposit amount is US $ 4,990,000 dollars, part will expire in 2017 and reclassify to this project.

                                                             161
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

     23. Short-term loans

     (1) Types of short-term loans
               2. Type of loans                       Balance at period-end          Balance at year-begin

 Loan in pledge                                                     26,500,000.00                  26,500,000.00
 Loan in credit                                                   1,406,122,701.07                261,843,724.73

                       Total                                      1,432,622,701.07                288,343,724.73


     New loans in the period:

    The Company signed the Agreement on Comprehensive Credit Line of Trade Financing with China
Everbright Bank Hefei Branch. Up to June 30, 2017, the financing amount under this service agreement
was USD 39,800,000.00, equivalent to RMB 269,621,120.00.

     The Company signed the Agreement on Trade Financing Business Service with Agricultural Bank of
China Co., Ltd., Hefei Jinzhai Road Sub-branch, up to June 30, 2017, the financing amount under this
service agreement was EUR 10,005,959.80, equivalent to RMB 77,542,186.07, and the financing period
was from April 1, 2017 to August 22, 2017.

     The Company signed the Agreement on Financing Business Cooperation of Export Commercial
Invoice with China Construction Bank Co., Ltd., Hefei Luyang Sub-branch, up to June 30, 2017, the
financing amount under this service agreement was EUR 10,000,000.00, equivalent to RMB
77,496,000.00.

    The Company signed the Agreement on Financing of Export Commercial Invoice with Bank of
China Co., Ltd. Hefei Economic Development Zone Branch, up to June 30, 2017, the financing amount
under this service agreement was RMB 5,770,000.00, and the financing period was from June 30, 2017 to
December 11, 2017.

    The Company signed the Agreement on Financing of Export Order with Industrial and Commercial
Bank of China Co., Ltd., Hefei Changjiang East Road Sub-branch, up to June 30, 2017, the financing
amount under this service agreement was RMB 107,000,000.00.

     The Company signed the Contract of Working Capital Loan with Agricultural Bank of China Co.,
Ltd., Hefei Jinzhai Road Sub-branch, up to June 30, 2017, the financing amount under this service
agreement was RMB 50,000,000.00, and the financing period was from June 12, 2017 to June 11, 2018.

     The Company signed the Contract of Ren Min Bi Working Capital Loans with China Construction
Bank Co., Ltd., Hefei Luyang Sub-branch, up to June 30, 2017, the financing amount under this service
agreement was RMB 200,000,000.00, and the financing period was from March 1, 2017 to February 28,
2018.

    The Company signed the Contract of Working Capital Loan with Bank of Communications Co., Ltd.
Anhui Branch, up to June 30, 2017, the financing amount under this service agreement was RMB



                                                            162
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

268,483,395.00.

     The Company signed the Trade Credit Financing Letter with United Overseas Bank, Chengdu
Branch, up to June 30, 2017, the financing amount under this service agreement was RMB
100,000,000.00, and the financing period was from June 20, 2017 to December 20, 2017.

     The Company signed the Agreement on Trade Financing with China Minsheng Bank, Hefei Branch,
up to June 30, 2017, the financing amount under this service agreement was RMB 195,000,000.00.

    The subsidiary Zhongke Meiling signed the Contract of Working Capital Loan with Bank of China,
Anhui Branch on June 26, 2017, the loan amount on the contract was RMB 9,200,000.00 and the loan
term was from June 27, 2017 to June 26, 2018, the loan adopted floating interest rate, every 12 months
was a floating cycle; the interest rate was the average interest rate floating by 92 base points based on the
loan prime rate of one working day before the actual withdrawal date published by National Interbank
Funding Center.

     On March 29, 2021, Zhongshan Changhong Company applied for the financing of EUR
5,500,000.00 to China Construction Bank Co., Ltd. Zhongshan Branch by export commodity financing,
equivalent to RMB 42,622,800.00, the financing interest rate was 1.4%, and the financing period was
from March 29, 2017 to September 22, 2017.

     On June 30, 2017, the subsidiary Zhongshan Changhong Company applied for the financing of USD
500,000.00 to Huaxia Bank Co., Ltd. Zhongshan Branch by export commodity financing, equivalent to
RMB 3,387,200.00, the financing interest rate was 2.9%, and the financing period was from June 30, 2017
to July 28, 2017.

     On September 13, 2016, the subsidiary Zhongshan Changhong Company applied for financing of
RMB26,500,000.00 from Agricultural Bank of China Co., Ltd., Zhongshan Nantou Sub-branch by export
commodity financing, the financing interest rate was 3.15%, and the financing period was from
September 13, 2016 to September 8, 2017.

     (2) No overdue short term borrowings unredeemed at period-end.

     24. Financial liabilities at fair value through gains and losses
                                                                                  Balance at             Balance at
                                     Item
                                                                                  period-end             year-begin
 Derivative financial liabilities                                                      9,671,394.08          559,249.58


     25. Notes payable
                           Type                           Balance at period-end               Balance at year-begin
 Bank acceptance bill                                               4,151,427,967.62                    2,315,706,781.72
 Commercial acceptance bill                                          422,430,013.95                      319,344,958.58
                        Total                                       4,573,857,981.57                    2,635,051,740.30


     Notes expired at period-end without paid.



                                                            163
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

      26. Account payable

      (1) Age of account payable
                               Item                               Balance at period-end                Balance at year-begin
 Total                                                                       3,168,053,679.32                    2,331,899,310.82
 Including: over 1 year                                                         68,509,996.79                       47,332,805.86


      (2) No account payable with over one year book age at period-end.

      27. Advance payment

      (1) Age of advance payment
                               Item                               Amount at period-end                 Amount at year-begin
 Total                                                                        472,573,801.58                      390,935,440.46
 Including: over 1 year                                                         18,267,405.69                       13,605,202.15


      (2) No major account received in advance with over one year age at period-end

      28. Wages payable

      (1) Types of wages payable
                                                 Balance at         Increase in this       Decrease in this       Balance at
                   Item
                                                 year-begin             period                 period             period-end
 Short-term compensation                         178,822,854.81       583,841,841.44         677,554,930.79         85,109,765.46
 After-service     welfare-           defined
                                                   4,948,222.26          47,830,929.91          38,416,264.80       14,362,887.37
 contribution plans
 Dismiss welfare                                   5,820,961.93           1,652,300.02           3,414,853.22        4,058,408.73
                   Total                        189,592,039.00        633,325,071.37         719,386,048.81       103,531,061.56


      (2) Short-term compensation
                                                 Balance at         Increase in this       Decrease in this       Balance at
                   Item
                                                 year-begin             period                 period             period-end
 Wages ,bonuses, allowancesand subsidies         146,971,903.13       519,315,260.52         589,643,902.20         76,643,261.45
Welfare for workers and staff                        100,340.00          19,747,658.74          19,740,043.13         107,955.61
 Social insurance                                  2,498,982.71          20,788,123.40          20,539,250.66        2,747,855.45
 Including: Medical insurance                      2,345,425.78          17,580,484.43          17,548,178.68        2,377,731.53
          Work injury insurance                       47,092.65           1,618,690.35           1,577,678.15           88,104.85
          Maternity insurance                        106,464.28           1,588,948.62           1,413,393.83         282,019.07
 Housing accumulation fund                         3,326,804.54          22,868,732.94          22,374,622.48        3,820,915.00
 Labor union expenditure and
                                                   1,742,673.51           1,122,065.84           1,074,961.40        1,789,777.95
     personnel education expense
 Short-termprofitsharingplan                      24,182,150.92                        -        24,182,150.92                   -
                  Total                          178,822,854.81       604,629,964.84         698,094,181.45         87,857,620.91


      (3) Defined contribution plans
                                                 Balance at         Increase in this       Decrease in this       Balance at
                   Item
                                                 year-begin             period                 period             period-end




                                                                   164
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                                            Balance at           Increase in this       Decrease in this          Balance at
               Item
                                            year-begin               period                 period                period-end
 Basic endowment insurance                     3,867,272.79         45,384,484.37          36,077,525.26           13,174,231.90
 Unemployment insurance                        1,080,949.47          2,446,445.54           2,338,739.54            1,188,655.47
               Total                           4,948,222.26         47,830,929.91          38,416,264.80           14,362,887.37


     29. Tax payable
                                 Item                                       Balance at period-end          Balance at year-begin
 Value-added tax                                                                       39,161,576.95               19,079,499.27
 Enterprise income tax                                                                  2,902,240.90                3,423,898.42
 Individual income tax                                                                  7,340,175.56                3,205,739.98
 Urban maintenance and construction tax                                                 2,726,475.63                3,302,546.79
 House property tax                                                                     5,010,184.86                5,593,587.71
 Land-use right tax                                                                     4,603,515.26                4,802,263.59
 Educational surtax                                                                     1,964,898.41                2,428,555.60
 Stamp tax                                                                                904,624.34                2,944,485.06
 Construction fund of Water Conservancy Projects                                          621,024.81                  745,069.75
 Treatment fund for abandon electric & electronics products                            18,173,836.00               12,328,067.00
 Other                                                                                  1,968,457.01                1,995,318.96
                                    Total                                              85,377,009.73               59,849,032.13


     30. Interest payable

     (1) Classification of interest payable
                          Item                                   Balance at period-end                 Balance at year-begin
 Interest on long-term loans for repayment of principal
                                                                                    708,602.61                       1,617,352.01
 of installment maturity

     (2) No significant overdue and unpaid interest at period-end.

     31. Dividends payable
                                 Item                                       Balance at period-end          Balance at year-begin
 Sichuan Changhong Electric Co., Ltd.                                                  14,082,358.08                           -
 City insurance company                                                                   450,504.45                  376,729.65
 Hefei Branch of BOC                                                                      225,252.20                  188,364.80
 Hefei collective industry association                                                    225,251.86                  188,364.52
 Entrust Investment Wuhu of Provincial ABC                                                180,201.78                  150,691.86
 BOC-Fullgoal Tianyi Securities Investment Fund                                           153,697.50                  153,697.50

Other piecemeal units                                                                   1,655,457.01                1,487,952.90
                                 Total                                                 16,972,722.88                2,545,801.23


     Note: Balance at period-end refers to the common dividends that not receiving by shareholders.

     32. Other payable


                                                              165
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

       (1) Classification of other payable according to nature of account
                                 Nature of account                               Balance at period-end      Balance at year-begin
 1.Accrued expenses(expenses occurred without reimbursed)                               635,158,520.52              479,907,162.28
 2. receivables received temporary and deducted temporary                                13,736,245.44                   7,725,476.68
 3.deposit, margin                                                                       94,875,963.37                  88,308,204.63
 4.not the come-and-go with related parties in statement scope                           28,054,566.50                  12,959,890.54
 5.other                                                                                 40,945,232.23                  33,679,589.30
                                          Total                                         812,770,528.06              622,580,323.43


    (2) Other significant payables aging over one year as at the period-end mainly refers to the
procurement deposit.

       33. Non-current liability due within one year

       (1) Classification of non-current liability due within one year
                                          Item                                   Balance at period-end      Balance at year-begin
 Long term loans due within one year                                                     46,202,065.60              262,486,600.00
 Deferred income transfer to gains and losses within one year                            13,516,439.17                   9,715,990.10
                                          Total                                          59,718,504.77              272,202,590.10


       (2) Deferred income transfer into profit and loss within 1 year
                                                                                     Amount
                                                                   Subsidy        reckoned into
                                                  Amount at                                                                Amount at
      Itemofgovernment subsidies                               increase during    non-operation     Other changes
                                                  year-begin                                                               period-end
                                                                 this period      revenue in the
                                                                                      period
Demolition compensation                 of
                                                2,425,513.16      1,204,791.70       1,188,519.14        2,409,240.60     Assets-related
Hefei Meiling
Technical      reform      for   Athena
                                                4,286,250.00      2,143,125.00       2,143,125.00        4,286,250.00     Assets-related
Project
Freezer project of Hefei Meiling                  734,062.52        367,031.25        367,031.21          734,062.48      Assets-related
Promotion of new industrialization (annual
output of 0.6 million large and volume
                                                  304,412.50        152,206.24        152,206.22          304,412.48      Assets-related
environmental protection energy-saving
freezer project,)
Demolition compensation                 of
                                                1,797,880.32        898,940.16        898,940.16         1,797,880.32     Assets-related
Jiangxi Meiling
Production adaption project of
                                                  167,871.60      1,182,490.85       3,379,600.93        2,364,981.68     Assets-related
FTXS
Industrialization project of the intelligent
                                                                    105,154.63        315,463.91          210,309.28      Assets-related
energy-savingAC
VISA research and application
                                                                    704,651.16       2,113,953.49        1,409,302.33     Assets-related
project
                 Total                          9,715,990.10      6,758,390.99      10,558,840.06    13,516,439.17


       34. Long-term loans

       (1) Classification of long-term loans
                                               Type                              Amount at period-end       Amount at year-begin




                                                                    166
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

                                          Type                                  Amount at period-end         Amount at year-begin
 Loan in pledge                                                                                      -                  34,157,788.00
 Loan in mortgage                                                                         2,560,000.00                   3,200,000.00
 Loan in credit                                                                        250,900,000.00                    1,551,000.00
                                       Total                                           253,460,000.00                   38,908,788.00


         (2) Details of long-term loans at year-end
                                                                                                  Amount at               Amount at
                                          Borrowing         Returning      Foreign   Interest
              Loan unit                                                                           period-end              year-begin
                                             day               day        currency     rate
                                                                                                    (RMB)                 (RMB)
 Zhongshan Branch of China Guangfa
                                           2015-01-06       2018-01-06    USD         3.20%                        -       34,157,788.00
 BankNote1
Ministry of Finance of HefeiNote2          2002-11-21       2017-11-20    RMB         1.80%                        -         651,000.00
Ministry of Finance of HefeiNote3          2004-12-10       2019-12-10    RMB         1.80%               900,000.00         900,000.00
                               Note4
Ministry of Finance of Hefei                   2006-11-9     2021-11-8    RMB         1.80%              2,560,000.00       3,200,000.00
 Anhui branch Import and Export Bank
 Note5                                         2017-05-16    2019-05-12   RMB         3.35%         250,000,000.00                     -

                  Total                                                                             253,460,000.00         38,908,788.00


     Note 1: on 6 January 2015, subsidiary Zhongshan Changhong entered into Middle and Long Term
Foreign Currency Borrowing Contract with China Guangfa Bank Zhongshan Branch, which agreed that
China Guangfa Bank Zhongshan Branch would provide loans of USD 4,924,000.00 to the Company to
finance the joint venture project conducted by Zhongshan Changhong Appliances Co., Ltd and RUBA
GENERAL TRADING FZE Company in Pakistan. This borrowing was secured by Zhongshan
Changhong with the fixed deposits of USD 86, 000.00 and USD 4, 904,000.00 saved by it in China
Guangfa Bank Zhongshan Branch, respectively. And re-classified to non-current liability due within one
year in the period

    Note 2: on 1 November 2002, the Company entered into the Agreement Relating to Implementing
Construction Projects through Lending Treasury Bond Funds with the finance office of Hefei, pursuant to
which, the finance office of Hefei lent the treasure bonds or RMB7.16 million related to our ―Technology
Reform Project in relation to Nanometer Materials for Retaining Freshness‖ to our Company, with a terms
of 15 years. The lent funds have begun to carry interest commencing from the date of appropriation of
funds by the finance office of Hefei (namely 21 November 2002), and the Company shall pay the interests
to the finance office of Hefei annually on an average basis during the lending period. The first four years of
the loan is grace period. The interest rate per annum applicable to the lent funds is floating interest rate
since 1999 (for interest rate per annum in respect of each batch of Treasury bond lending capital, it is
determined by reference to one-year time deposit rate per annum on value date of the prevailing year as
published by the PBOC, plus 0.3 percentage points). And re-classified to non-current liability due within
one year in the period



         Note 3: It was the special Treasury bond capital appropriated by Ministry of Finance of Hefei for

                                                                    167
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

enterprises’ information reform, received on Dec. 10th, 2004.

     Note 4: In August of 2006, the Company signed Asset Mortgage Agreement with Ministry of
Finance of Hefei. It takes five industry crusher chambers which cover an area of 2,322.98 square meters as
mortgage for the Company to get the lending of treasury bond fund which has 15-year term and worthy of
RMB 7,040,000 from the Ministry of Finance of Hefei. The capital on-lending began to bear interest from
the appropriate date (November 9, 2006), which would be paid by stages in the loan period to Ministry of
Finance of Hefei by the Company. The first four years were grace period, during which the annual interest
rate was subject to floating interest rate (the annual interest rate was the annual interest rate of one year
fixed deposit plus 0.3%). On 1 March 2013, according to the Letter Relating to Ceasing Process of Other
Securities in respect of the Properties in Feidong Longgang Industrial Park of Hefei Meiling Co., Ltd.
(HCJ(2006)No.85) issued by the finance office of Hefei, Meiling commenced the national purchase of its
land parcels in Longgang in compliance with the land planning of Hefei municipal government, which
required its properties in Longgang land parcel to be unrestricted. The real estate for mortgage lifted in
2006 of the Company with registration No. HGYJCZ No.0121 which was used as the security for treasury
bonds lending capital (details were set out in Note VI-15).

    Note 5: On May 12, 2017, the Company signed the Loan Contract (seller's credit on exports) with the
Export-Import Bank Anhui Branch, the contract appointed Export-Import Bank Anhui Branch to offer
loans of total amount of RMB 250 million to the Company, this loan should be exclusively used in the
export of general mechanical and electrical products, the loan period is 2 years, and the interest rate is
subject to the interest rate of the seller's credit on exports.

     35. Long-term wage payable
                                                                                                        Balance at
                                  Item                                   Balance at period-end
                                                                                                        year-begin
 Dismissal welfare                                                               28,061,416.36             29,696,403.85


     According to the internal early retirement policy, the long-term payable dismissal welfare bears by
the Company up to end of the period.

     36. Account payable special funds
                                                                  Decrease
                                 Balance at       Increase in                  Balance at
             Item                                                  in the                               Reason
                                 year-begin       the period                   period-end
                                                                   period
 Special fund of technical
                                                                                                 Zhongshan Science    &
 transformation         of      1,400,000.00                      420,000.00     980,000.00
                                                                                                 Technology Plan
 Zhongshan

     37. Projected liability
                     Item                      Balance at period-end     Balance at year-begin            Reason
 Product quality guarantee                               11,795,030.15           11,795,030.15      Guarantee of product
 Guarantee fund for quality service                     317,006,686.44          319,780,400.64      Guarantee of product
                     Total                              328,801,716.59          331,575,430.79




                                                            168
    Annotations of Financial Statements of Hefei Meiling Co., Ltd.
    From 1 January 2017 to 30 June 2017
    (Unless other wise specified, RMB for record in the Statement)

         Product quality deposit is the maintenance expense provided by the Company under the national
    policy, while quality service special guarantee capital is the warranty costs provided for product quality in
    addition to such policy.

           38. Deferred income

           (1) Classification of deferred income
                                                                                                                  Amount at
                                                Item                                 Amount at period-end
                                                                                                                  year-begin
      Government subsidies---subsidies of development project                                 58,560,896.86          67,032,277.62
      Government subsidies---subsidies of relocation                                          64,152,104.28          75,887,284.87
                                                Total                                        122,713,001.14        142,919,562.49


           (2) Government subsidy
                                                                                Amount
                                                                   New                                                         Concerned
                                                                             reckoned into
                                                  Amount at      subsidy                        Other          Amount at          with
                   Item                                                      non-operating
                                                  year-begin      in the                       changes         period-end      assets/earn
                                                                             income in the
                                                                  period                                                          ings
                                                                                period
Demolition compensation of Hefei                                                                                                 Assets
                                                 44,974,521.48                                1,188,519.14    43,786,002.34
Meiling                                                                                                                        concerned
                                                                                                                                 Assets
 Demolition compensation                         23,356,008.77                9,647,721.29                    13,708,287.48
                                                                                                                               concerned
 Adaptability improvement of the
                                                                                                                                 Assets
 FTXS production (Propane                        18,751,981.92                                3,379,600.93    15,372,380.99
                                                                                                                               concerned
 instead of the HCFC-22)
 Special fund of the Athena technical                                                                                            Assets
                                                 13,450,312.50                                2,143,125.00    11,307,187.50
 transformation                                                                                                                concerned
 VISA research and application                                                                                                   Assets
                                                 10,100,000.00                                2,113,953.49     7,986,046.51
 project                                                                                                                       concerned
Demolition compensation                   of                                                                                     Assets
                                                  7,556,754.62                                 898,940.16      6,657,814.46
Jiangxi Meiling                                                                                                                concerned
 Subsidy fund for the new factory of                                                                                             Assets
                                                  5,000,000.00                                                 5,000,000.00
 Zhongke Meiling                                                                                                               concerned
Intelligent white-goods software platform and
                                                                                                                                 Assets
research and industrialization of typical         4,000,000.00                                                 4,000,000.00
                                                                                                                               concerned
applications
Capital appropriated fromthenationaltreasury                                                                                     Assets
                                                  2,950,000.00                                                 2,950,000.00
                                                                                                                               concerned
Development and productization of the CHIQ                                                                                       Assets
                                                  2,350,000.00                                                 2,350,000.00
AC                                                                                                                             concerned
Research and application of frequency
                                                                                                                                 Assets
                                                  2,300,000.00                                                 2,300,000.00
conversion controlMCUchip                                                                                                      concerned

                                                                                                                                 Assets
Freezer project of Hefei Meiling                  2,202,187.45                                 367,031.21      1,835,156.24
                                                                                                                               concerned
 Special fund of strategy emerging industry                                                                                      Assets
                                                  2,000,000.00                                                 2,000,000.00
 and high-end growth industry                                                                                                  concerned
 Industrialization project of the intelligent                                                                                    Assets
                                                  1,700,000.00                                 315,463.91      1,384,536.09
 energy-savingAC                                                                                                               concerned
 Promotion of new industrialization (annual
 output of 0.6 million large and volume                                                                                          Assets
                                                  1,674,268.75                                 152,206.22      1,522,062.53
 environmental protection energy-saving                                                                                        concerned
 freezer project,)



                                                                       169
   Annotations of Financial Statements of Hefei Meiling Co., Ltd.
   From 1 January 2017 to 30 June 2017
   (Unless other wise specified, RMB for record in the Statement)
                                                                                      Amount
                                                                         New                                                                        Concerned
                                                                                   reckoned into
                                                 Amount at             subsidy                             Other                  Amount at            with
                  Item                                                             non-operating
                                                 year-begin             in the                            changes                 period-end        assets/earn
                                                                                   income in the
                                                                        period                                                                         ings
                                                                                      period
Design and application of energy saving air                                                                                                           Assets
                                                     300,000.00                                                                    300,000.00
conditioningduct                                                                                                                                    concerned
                                                                                                                                                      Assets
 Subsidy ofproject development                       253,527.00                                                                    253,527.00
                                                                                                                                                    concerned
                 Total                        142,919,562.49                        9,647,721.29      10,558,840.06            122,713,001.14


           Note: other movements of this item are attributable to reclassification of the amount to be amortized
   over one year to non-current liabilities due within one year.

           39. Share capital
                                                                                 Change during the period(+、-)
                                                                                 Shares
                                                Balance at         New         transferred                                                Balance at
                    Item                                                 Bonus
                                                year-begin        shares           from           Other                Subtotal           period-end
                                                                         share
                                                                  issued          capital
                                                                                 reserve
     Total shares                             1,044,597,881.00                                                                           1,044,597,881.00


           40. Capital reserve
                                                  Amount at              Increase during the        Decrease during                   Amount at
                    Item
                                                  year-begin                   period                 the period                      period-end
     Share premium                              2,639,787,797.95                              -            2,647,197.88             2,637,140,600.07
     Other capital reserve                           48,173,262.70                            -                            -             48,173,262.70
                   Total                        2,687,961,060.65                              -            2,647,197.88             2,685,313,862.77


       Note: decrease of the share premium mainly because purchasing minority equity from part of the
   marketing subsidiaries in the period, which is off-setting the capital reserves as 2,647,197.88 Yuan.

           41. Other comprehensive income
                                                                                 Account in the period
                                                             Less: written in
                                                                   other
                                                             comprehensive
                                     Balance at    Account      income in                             Belong to          Belong to        Balance at
                Item                                                             Less :
                                     year-begin     before   previous period                           parent            minority         period-end
                                                                              income tax
                                                income tax in and carried                             company          shareholders
                                                                                expense
                                                  the period   forward to                             after tax          after tax
                                                             gains and losses
                                                                in current
                                                                  period
     Other comprehensive income re-divided into gains/losses
     Including: conversion
     difference      arising
                                      3,474,546.95     -3,352,515.41                                   -2,536,079.62       -816,435.79         938,467.33
     from foreign currency
     financial statement

           42. Surplus reserves



                                                                             170
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                                       Amount at             Increase during the       Decrease during         Amount at
             Item
                                       year-begin                  period                the period            period-end
 Statutory surplus reserve                275,421,718.17                                                        275,421,718.17
 Discretionary surplus reserve            115,607,702.16                                                        115,607,702.16
             Total                        391,029,420.33                                                        391,029,420.33


     43. Retained profit
                                  Item                                              This period               Last year
 Amount at the end of last year                                                       968,097,382.98            817,667,480.44
 Add: adjustment from undistributed profit at year-begin
      Including: retroactive adjustment by Accounting Standards for
 Business Enterprise
                 change of accounting policy
                 Correction of former material error
                 Change of combination scope under common control
 Amount at the beginning of this year                                                 968,097,382.98            817,667,480.44
 Add: net profit attributable to shareholders of parent company for this
                                                                                       92,075,039.77            220,216,680.96
 year
 Less: withdraw of statutory surplus reserve                                                                     23,962,426.15
      withdraw of discretional surplus reserve
      Withdraw of general risk provision
       Dividend payable for ordinary shares                                            62,675,872.85             45,824,352.27
      Dividend of ordinary shares transferred to share capital
 Amount at the end of this period                                                     997,496,549.90            968,097,382.98


     44. Operating income and operating cost

     (1) Operating income and operating cost
                                                                               Amount for this           Amount for the same
                                  Item
                                                                                  period                  period of last year
 Main business income                                                                8,133,419,814.85         6,635,243,672.98
 Other business income                                                                384,374,378.25            231,387,589.70
                                  Total                                              8,517,794,193.10         6,866,631,262.68
 Main business cost                                                                  6,646,020,504.49         5,226,428,116.77
 Other business cost                                                                  350,205,544.36            206,033,570.33
                                  Total                                              6,996,226,048.85         5,432,461,687.10


     (2) Main business classified according to product
                                  Amount for this period                           Amount for the same period of last year
     Product
                        Operation income               Operation cost         Operation income              Operation cost
 Refrigerator,
                             3,712,357,454.31           3,021,413,721.30             3,511,755,682.66         2,641,347,914.01
 freezer
 Air-condition               3,830,599,287.94           3,157,180,107.27             2,578,582,275.76         2,117,657,552.65
 Washing
                              227,162,009.50               177,357,302.38             214,447,675.62            174,849,330.14
 machine



                                                                 171
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                                 Amount for this period                   Amount for the same period of last year
     Product
                         Operation income          Operation cost        Operation income          Operation cost
 Small
 appliances and
                              264,195,096.38           229,232,770.78         192,655,423.38           174,011,438.27
 kitchen    and
 toilet
 Other                         99,105,966.72            60,836,602.76         137,802,615.56           118,561,881.70
      Total                 8,133,419,814.85          6,646,020,504.49      6,635,243,672.98         5,226,428,116.77


     (3) Main business classified according to sales region
                                 Amount for this period                   Amount for the same period of last year
     Region
                         Operation income          Operation cost        Operation income         Operation cost
 Domestic                   6,013,436,261.57          4,647,630,149.87      4,999,875,111.36         3,763,161,367.63
 Overseas                   2,119,983,553.28          1,998,390,354.62      1,635,368,561.62         1,463,266,749.14
      Total                 8,133,419,814.85          6,646,020,504.49      6,635,243,672.98         5,226,428,116.77


     Top five clients have income in sales of RMB 3,048,439,744.17 yuan in total, a 35.79% in total
operation income.

     45. Business tax and extra charges
                                                                         Amount for this        Amount for the same
                                 Item
                                                                            period               period of last year
 Business tax                                                                               -              354,041.11

 City construction tax                                                          8,915,596.60            19,899,317.46
 Extra charge for education and local education surcharge                       6,645,828.18            14,421,660.64
 Real estate tax                                                                5,629,056.96             5,722,192.63
 Treatment fund for abandon electrics & electronics                            31,420,436.00            27,244,167.00
 Land tax                                                                       4,976,086.01             5,143,139.80
 Stamp duty                                                                     4,878,793.95             3,644,166.46
 Water fund                                                                     3,205,205.83             2,763,018.05
 Other                                                                           165,016.78                265,878.11
                                   Total                                       65,836,020.31            79,457,581.26


     According to the finance and accounting of the Ministry of Finance No. [2016] 22 ―About Printing
the Notice of Accounting Treatment Provisions for Value Added Tax‖, after the overall trial
implementation of business tax changing to value-added tax, the title of "business tax and surcharges"
changes to ―taxes and surcharges‖, this account is used to calculate the consumption tax, city maintenance
and construction tax, resource tax, education surcharge and property tax, land use tax, travel tax, stamp tax
and other related taxes occurred in business operations. The company adjusts property tax, land tax, stamp
tax, water conservancy funds and other taxes and fees to the taxes and additional subject accounting
accordingly, relevant items are re-state in administrative expenses of last period

     46. Sales expense



                                                             172
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                                                                  Amount for this      Amount for the same
                                    Item
                                                                     period             period of last year
 Market support                                                       147,028,679.89          267,473,422.40
 Wages and surcharges, social security                                236,131,802.33          236,101,636.65
 Transport expenses                                                   294,108,877.21          207,605,016.03
 Air conditioner installation fee                                     178,757,254.42          120,680,390.00
 National three guarantees expense                                    119,131,144.08           82,896,108.22
 Storage lease expenses                                                54,395,016.56           51,149,832.06
 Advertisement expenses                                                30,738,929.11           29,181,669.39
 Travelling expenses                                                   19,520,650.45           14,924,457.13
 Operation activities expenses                                         10,205,202.11            8,087,086.19
 Communication expenses                                                 6,278,918.66            6,235,033.36
 House-lease expenses                                                   8,851,097.31            5,521,119.25
 Vehicle consumption                                                    3,093,351.13            3,604,088.38
 Depreciation                                                           3,128,078.94            2,999,300.47
 Communication fee                                                      2,912,337.19            2,432,210.13
 Exhibition expenses                                                    2,926,713.09            2,267,160.86
 Others                                                                22,963,979.60           34,489,220.08
                                    Total                           1,140,172,032.08        1,075,647,750.60


      47. Administration expense
                                                                  Amount for this      Amount for the same
                                    Item
                                                                     period             period of last year
 Salary and social insurance etc.                                      96,746,046.21           78,371,373.79
 Trial fee of R&D                                                      20,069,927.78           19,368,311.75
 Amortized intangible assets                                           26,351,436.68           19,260,530.22
 Depreciation                                                          12,215,178.83           10,181,555.80
 Inspection and authentication fee                                      3,236,512.69            4,684,054.78
 Domestic travelling fee                                                3,657,865.58            4,132,225.03
 Utilities                                                              5,236,432.59            4,029,484.90
 Business activities                                                    2,348,636.48            3,906,395.17
 Office charge                                                          3,101,227.29            3,027,548.26
 Property insurance                                                     1,947,504.69            1,797,851.23
 Others                                                                47,622,322.92           27,205,090.02
                                      Total                           222,533,091.74          175,964,420.95


      48. Financial expense
                                                                  Amount for this      Amount for the same
                                    Item
                                                                     period             period of last year
 Interest expenditure                                                  16,357,573.34            4,108,756.46
 Less: Interest income                                                 74,918,215.41           32,356,650.27
 Add: exchange loss                                                    12,143,246.92          -18,503,350.12



                                                            173
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
      procedure charge expenditure                                                 6,631,231.15            10,153,124.33
      discount expenditure                                                         6,331,681.33            -3,102,122.56
      other expenditure                                                                                             900.00
                                    Total                                       -33,454,482.67            -39,699,342.16


     49. Loss from Assets depreciation
                                                                           Amount for this        Amount for the same
                                    Item
                                                                              period               period of last year
 Bad debt losses                                                                 30,101,356.29             33,194,478.64
 Provision for falling price of inventory                                        15,391,916.45              3,392,202.47
                                      Total                                      45,493,272.74             36,586,681.11


     50. Changes in fair value gains/loses
                                                                           Amount for this        Amount for the same
                                    Item
                                                                              period               period of last year
 Financial assets measured at fair value and whose movements are
                                                                                  -1,246,940.80             2,340,308.20
 included in the profit and loss of the current period
 Including :Income of fair value changes from derivative financial
                                                                                  -1,246,940.80             2,340,308.20
 instruments
 Financial liabilities measured at fair value and whose movements are
                                                                                  -9,112,144.50            -3,618,878.41
 included in the profit and loss of the current period
 Including :Income of fair value changes from derivative financial
                                                                                  -9,112,144.50            -3,618,878.41
 instruments
                                      Total                                     -10,359,085.30             -1,278,570.21


     51. Investment income

     (1) Sources of investment income
                                                                           Amount for this        Amount for the same
                                    Item
                                                                              period               period of last year
 Long-term equity investment income by equity method                              -3,226,328.17              -833,210.42
 Investment income obtained from disposal of long-term equity
                                                                                       2,506.98                          -
 investment
 Investment income obtained from held of finance asset available for
                                                                                 19,584,987.35              4,986,301.37
 sales
 Investment income obtained from disposal of financial assets
 measured at fair value and whose movements are included in the                    7,232,183.50                          -
 profit and loss of the current period
                                    Total                                        23,593,349.66              4,153,090.95


     (2) Long-term equity investment income by equity method
                                                                           Amount for
                                                         Amount for         the same       Reason of change of this period
                             Item
                                                         this period      period of last           than last year
                                                                              year
                                                                                           Changes of net profit of the
 Hefei Xingmei Assets Management Co., Ltd.                  -512,602.26      -56,019.64
                                                                                           invested unit
 ChanghongRuba Electric                                                                    Changes of net profit of the
                                                            468,491.66      -220,932.04
 Company(Private)Limited                                                                   invested unit and counter



                                                            174
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                                                                             Amount for
                                                         Amount for           the same         Reason of change of this period
                           Item
                                                         this period        period of last               than last year
                                                                                year
 Sichuan Zhiyijia Network Technology Co., Ltd.            -2,236,489.97         2,322,881.18   current transaction offset

 Hongyuan Dineng Rebao Technology Co. Ltd.                   -41,337.05     -2,196,252.31
 Sichuan Tianyou Guigu Technology Co., Ltd.                 971,714.68          -682,887.61

 Chengdu Guigu Environment Technology Co., Ltd.           -1,876,105.23                    -

                        Total                             -3,226,328.17         -833,210.42


     (3) Investment income obtained from disposal of long-term equity investment
                                                                                Amount for this         Amount for the same
                                  Item
                                                                                   period                period of last year
 Equity income obtained from disposal of Hefei MeiLing Packing
                                                                                           2,506.98                              -
 Products Co., Ltd.

     (4) Investment income obtained from financial assets available for sales
                                                                                Amount for this         Amount for the same
                                  Item
                                                                                   period                period of last year
 Purchase of bank financial products                                                  19,584,987.35                4,986,301.37

                                  Total                                               19,584,987.35                4,986,301.37


     (5) The investment income from disposal of financial assets at fair value through profit or loss refers
to the profit or loss occurred from non-deliverable forward (NDF) transaction.

     52. Other income
         Source of other revenue                 Amount for this period            Amount for the same period of last year
 Drawback policy of VAT for software
                                                                 1,275,937.62                                                    -
 products
                   Total                                         1,275,937.62                                                    -


    According to the regulations of Accounting Standards for Business Enterprises No. 16 - Government
Subsidy (CK No.[2017] 15) issued and revised by the Ministry of Finance in May 2017, since January 1,
2017, the government subsidy related to the daily activities of the enterprise should be included in other
income or offset the relevant costs in accordance with the essence of economic business. During the
reporting period, the wholly-owned subsidiary Mianyang Meiling Software Technology Co., Ltd. received
the refunds of added-value tax of software products in accordance with the Notice on VAT Policy of
Software Products of State Administration of Taxation (CS No. [2011] 100), which is closely related to the
company’s normal business, and this business should be included in the subject list in the current period.

     53. Non-operation revenue

     (1)Non-operation revenue
                                                                                                          Amount reckoned
                                                                           Amount for the same            into non-recurring
                Item                          Current period
                                                                            period of last year            gains/losses in the
                                                                                                                 period




                                                            175
 Annotations of Financial Statements of Hefei Meiling Co., Ltd.
 From 1 January 2017 to 30 June 2017
 (Unless other wise specified, RMB for record in the Statement)
                                                                                                                      Amount reckoned
                                                                              Amount for the same                     into non-recurring
                      Item                         Current period
                                                                               period of last year                     gains/losses in the
                                                                                                                             period
   Gains from disposal of non-current
                                                                261,776.49                      330,833.76                      261,776.49
   assets
   Including:Gains from disposal of
                                                                261,776.49                      330,833.76                      261,776.49
   fixed assets
   Government subsidy                                      22,490,062.54                    16,456,206.17                    22,490,062.54
   Income of penalty                                            483,051.41                      301,433.90                      483,051.41
   Other                                                        256,257.41                    4,383,228.61                      256,257.41
                      Total                                23,491,147.85                    21,471,702.44                    23,491,147.85


        (2) Government subsidy
                                                                 Amount for the
                     Item                     Current period     same period of              Resource and basis              Assets/benefitrelated
                                                                    last year
                                                                                   Drawback policy of VAT for
VAT refunds                                                 -       1,705,532.50                                                Income related
                                                                                   software product

Other government subsidy etc.                    1,960,999.85       2,641,549.48   -                                            Income related
OtherDeferred income transfer-in                16,406,112.28       4,803,445.57   Deferred income transfer-in                  Income related

NJP production trade enterprise award            1,238,685.00                  -   Nanjing Port (Group) Co., Ltd.               Income related
                                                                                   Finance Bureau of Zhongshan
Government subsidy for Step Out                   526,900.00                   -                                                Income related
                                                                                   City
Supporting fund of Anhui Branch of                                                 Hefei Government, He Zheng
                                                  508,404.98                   -                                                Income related
SINOSURE                                                                           (2014) No.62 etc.
 National informatization standard                                                 He Zheng [2016] No. 35
                                                  500,000.00                   -                                                Income related
recognition award
Social security subsidies                         304,629.43                   -   Wan RSF (2016) No. 33                        Income related
Skills development cash grant from
                                                                                    He    Cai           Zhen          2011
Hefei Human Resources and Social                  211,500.00                   -                                                Income related
                                                                                   [No.1035]
Security Bureau
 Training base grants from Hefei
                                                  200,000.00                   -       He Jiao Mi [2017] No. 234                Income related
Board of Education
                                                                                    Zhongshan Ke Fa (2017)
Subsidy for high-tech enterprise                  200,000.00                   -                                                Income related
                                                                                   No. 85
Contract foreign projects of special
                                                                                    Zhong Shangwu                He     Zi
funds for foreign trade and economic              177,831.00                   -                                                Income related
                                                                                   (2016) No. 24
development of 2016
Supporting fund for multi hierarchy                                                    He Jing Qu Guan [2016]
                                                  104,000.00                   -                                                Income related
man power (2nd batch)                                                                  No.90
Self-service innovation award                     100,000.00                   -   He Zheng [2016] No. 35                       Income related

Offering rewards for NEEQ                          51,000.00                   -   Cai Jin (2015) No. 2035                      Income related
                                                            -                      City      Commercial          Bureau-
A special fund of trade promotion for
                                                                    1,733,000.00   special       fund       of     trade        Income related
year of 2016
                                                                                   promotion for year of 2016

Reward          of       the       new-type                 -
                                                                    1,538,700.00   He Zheng [2015] No. 36                       Income related
industrialization development policy




                                                                   176
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                                                             Amount for the
                   Item                 Current period       same period of              Resource and basis          Assets/benefitrelated
                                                                last year
promotion

Subsidy for technically improve of                     -
                                                                 1,217,800.00    He Zheng [2015] No. 36                 Income related
the fixed assets

                                                       -                         Hefei   2015     Economic      &
                                                                                 Technological     Development

Subsidy of industry carry-over fund                              1,000,000.00    Area (HETA) - promotion of             Income related
                                                                                 the new-type industrialization
                                                                                 development policy

                                                       -                         Agreement of the Tianjin
Policy rewards                                                                   Xintai Industrial Economic
                                                                 1,014,456.72                                           Income related
                                                                                 Development     Management
                                                                                 Center
                                                       -                         Contract of the investment of
Enterprise       development     fund
                                                                  801,721.90     2 million refrigerators for one        Income related
distributed by High-Tech Zone
                                                                                 year

                   Total                   22,490,062.54       16,456,206.17


      54. Non-operating expenditure
                                                                                                              Amount reckoned
                                                                              Amount for the same             into non-recurring
                      Item                       Current period
                                                                               period of last year             gains/losses in the
                                                                                                                     period
  Loss from disposal of non-current
                                                         11,359,875.16                   1,545,129.64               11,359,875.16
  assets
  Including: loss from disposal of fixed
                                                         11,359,875.16                   1,545,129.64               11,359,875.16
  assets
  Penalty and late fee                                        16,170.32                     259,138.22                    16,170.32
  Other                                                       79,255.15                      14,606.32                    79,255.15
                      Total                                11,455,300.63                 1,818,874.18                11,455,300.63


      55. Income tax expenses
                                                                                                         Amount for the same
                               Item                                        Current period
                                                                                                          period of last year
  Current income tax                                                             12,992,795.39                      23,825,374.34
  Deferred Income Tax                                                             -3,553,237.53                      -5,009,188.36
                               Total                                               9,439,557.86                     18,816,185.98


      56. Other comprehensive income

      Found more in ―VI. 41. Other comprehensive income‖ in the Note

      57. Items to cash flow statement

      (1) Cash received (paid) from (for) other activities relating to operation/investment/financing

      1) Cash received from other activities relating to operation


                                                               177
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                                                                                        Amount for the same
                              Item                                Current period
                                                                                         period of last year
 Government subsidy and rewards                                          6,083,950.26              9,947,228.10
 Margin, deposit                                                         2,932,691.26              3,672,988.85
 Rental and trademark income                                             2,326,107.91              3,930,732.75
 Compensations                                                             492,082.89               103,131.84
 Other                                                                   4,734,239.77              1,961,189.58
                              Total                                     16,569,072.09            19,615,271.12


     2) Cash paid for other activities relating to operation
                                                                                        Amount for the same
                              Item                                Current period
                                                                                         period of last year
 Market support fee                                                    107,158,880.74           100,020,332.36
 Advertising fee                                                        16,086,131.50            14,594,018.03
 Travel expense                                                         25,366,506.33            21,472,512.46
 Rental fee                                                             17,832,545.16              9,218,885.60
 Business activity fee                                                  16,561,532.31            11,903,159.89
 Pretty cash for employees                                               9,558,081.08            11,554,152.86

 Meeting organization fee                                                6,041,902.70              7,113,406.24
 Regular bus expenses                                                    5,069,668.94              4,598,247.00

 Inspection and certification fee                                        6,369,408.44              5,446,512.42
 Vehicle cost                                                            5,736,637.76              3,973,278.42
 Handling Charges                                                        4,719,226.91            25,077,479.49

 Office expenses                                                         5,656,327.46              3,575,528.11
 Exhibition expenses                                                     3,018,403.85              3,215,177.35
 Penalty and overdue fine                                                   16,170.32               259,138.22
 Changes of the limited monetary fund                                   37,101,414.00            60,085,067.00

 Other                                                                  53,980,478.26            36,462,279.04
                              Total                                    320,273,315.76           318,569,174.49


     3) Cash received from other activities relating to investment
                                                                                        Amount for the same
                              Item                                Current period
                                                                                         period of last year
 Interest income arising from bank savings                              40,936,820.59            31,720,923.67
 Government investment granted                                                      -              4,331,970.00
 Margin                                                                    540,386.28               336,823.00
                              Total                                     41,477,206.87            36,389,716.67


     4) Cash paid for other activities relating to investment
                                                                                        Amount for the same
                              Item                                Current period
                                                                                         period of last year
 Loses of forward exchange settlement                                      647,270.61




                                                            178
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
 Bid bond refund                                                                    351,000.00
                               Total                                                998,270.61


     5) Cash received from other activities relating to financing
                                                                                                        Amount for the same
                               Item                                        Current period
                                                                                                         period of last year
 Odd shares returned by stock exchange                                                          -                      3,451.80


     6) Cash paid for other activities relating to financing
                                                                                                        Amount for the same
                               Item                                        Current period
                                                                                                         period of last year
 Amount refund to minority shareholders due to the
                                                                                        15,642.93                                -
 cancellation of subsidiary
 Handling charge of dividend                                                        135,968.31                        98,192.48
                               Total                                                 151,611.24                       98,192.48


     (2) Supplementary information about consolidated cash flow statement
                                                                                                    Amount for the same period
                            Item                                       Current period
                                                                                                           of last year
 1. Net profit is adjusted to cash flow of operation
 activities:
 Net profit                                                                    98,094,701.39                     109,923,646.84
 Add: provision for depreciation of assets                                     45,493,272.74                      36,586,681.11
    Depreciation of fixed assets, consumption of oil gas
                                                                               64,958,108.18                      69,875,277.54
 assets and depreciation of productive biological assets
    Amortization of intangible assets                                          26,594,339.27                      19,417,253.87
    Amortization of long-term retained expense                                     95,258.41
   Loss from disposal of fixed assets, intangible assets
                                                                               11,098,098.67                       1,214,295.88
 and other long term assets(gain is listed with ―-‖)
     Loss from discarding fixed assets as useless (gain is
 listed with ―-‖)
      Loss from change of fair value(gain is listed with
                                                                               10,359,085.30                       1,278,570.21
 ―-‖)
    Financial expense (gain is listed with ―-‖)                             -46,417,395.15                     -28,247,893.81
    Investment loss (gain is listed with ―-‖)                               -23,593,349.66                      -4,153,090.95
     Decrease of deferred income tax assets (increase is
                                                                               -3,241,353.88                      -5,009,188.36
 listed with ―-‖)
     Increase of deferred income tax liabilities (decrease
                                                                                 -305,541.12
 is listed with ―-‖)
    Decrease of inventories (increase is listed with ―-‖)                  -622,013,977.03                     -27,646,224.86
    Decrease of operational            accounts     receivable
                                                                           -2,129,300,425.57                    -995,881,410.16
 (increase is listed with ―-‖)
     Increase of operational accounts payable (decrease
                                                                            3,052,409,876.36                   1,694,331,587.58
 is listed with ―-‖)
     Other
 Net cash flow arising from operation activities                              484,230,697.91                     871,689,504.89
 2. Major investment and financing activities that do
 not involve cash receipts:




                                                                 179
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                                                                                                 Amount for the same period
                            Item                                        Current period
                                                                                                        of last year
        Conversion of debt into capital
        Switching Company bonds due within one year
        financing lease of fixed assets
 3. Net change in cash and cash equivalents:
    Balance at period-end of cash                                            4,809,458,518.39               4,062,884,413.48
        Less: Balance at year-begin of cash                                  3,986,098,419.76               2,121,161,238.01
        Add: Balance at year-end of cash equivalents
        Less: Balance at year-begin of cash equivalents
    Net increase in cash and cash equivalents                                  823,360,098.63               1,941,723,175.47


     (3) No net cash paid for subsidiary obtained in the period.

     (4) No cash received from subsidiary and other operation units disposal in the period

     (5) Cash and cash equivalent
                                   Item                                    Amount at period-end       Amount at year-begin
 Cash                                                                             4,809,458,518.39          3,986,098,419.76
 Including: cash in stock                                                                83,233.09                 94,415.53
             Bank deposits available for payment at any time.                     4,349,072,332.23          3,810,367,022.13
             Bank deposits available for payment at any time                       460,302,953.07             175,636,982.10
 Cash equivalents
 including: bond investment due within 3 months
 Balance of cash and cash equivalents at year end                                 4,809,458,518.39          3,986,098,419.76
 Including: using the restricted cash and cash equivalents of the
 parent company or subsidiary of the group

     58. Assets with ownership or the right to use restricted
                Item                          Ending book value                                 Reasons
 Monetary fund                                        108,727,129.38                            Margin
 Notes receivable                                      586,118,629.32                           Pledged
 Intangible assetsnote1                                 19,827,456.74                           Pledged
 Non-current assets due within 1
                                                        46,133,664.00                           Pledged
 yearnote2
                Total                                 760,806,879.44


    Note 1: security for intangible assets was security of land use right. For details, please refer to ―34.
Long term borrowings‖ under this note VI.

    Note 2: non-current assts due within one year are pledged as time deposit, found more in 9.
non-current assets due within one year in Note VI.

     59. Foreign currency



                                                                180
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

     (1) Foreign currency
                                      Ending foreign currency                           Ending RMB converted
               Item                                                 Exchange rate
                                              balance                                          balance
 Monetary fund
 Including: USD                                     58,017,135.02              6.7744           393,031,279.50
        Euro                                         6,580,132.00              7.7496            50,993,390.95
        AUD                                          1,384,006.85              5.2099             7,210,537.29
        IDR                                     2,337,016,816.00               0.0005             1,168,508.41
        Rupi                                        17,834,337.79              0.0645             1,150,314.79
 Account receivable
 Including: USD                                   126,320,333.81               6.7744           855,744,469.38
        Euro                                         8,571,952.19              7.7496            66,429,200.69
        AUD                                          2,031,639.94              5.2099            10,584,640.92
        IDR                                    17,415,143,335.00               0.0005             8,707,571.67
        Rupi                                    1,593,760,001.86               0.0645           102,797,520.12
 Other receivables
 Including: USD                                         67,569.47              6.7744              457,742.62
        Euro                                             8,268.56              7.7496                64,078.03
        IDR                                     1,856,629,640.00               0.0005              928,314.82
        Rupi                                        18,676,421.30              0.0645             1,204,629.17
 Advance payment
 Including: USD                                      1,920,308.16              6.7744            13,008,935.60
        IDR                                          1,052,966.00              0.0005                  526.48
        Rupi                                      740,762,639.24               0.0645            47,779,190.23
 Other accounts payable
 Including: USD                                        225,933.49              6.7744             1,530,563.83
        IDR                                     1,094,956,343.00               0.0005              547,478.17
        Rupi                                      264,014,236.91               0.0645            17,028,918.28
 Short-term loans
 Including: USD                                     40,300,000.00              6.7744           273,008,320.00
        Euro                                        25,505,959.80              7.7496           197,660,986.07
 Payment in advance
 Including: USD                                     35,319,258.98              6.7744           239,266,788.04
        Euro                                         2,380,231.99              7.7496            18,445,845.83
        AUD                                              2,273.84              5.2099                11,846.48
        IDR                                          2,500,000.00              0.0005                 1,250.00
 Advance payment
 Including: USD                                        581,515.25              6.7744             3,939,416.91
        Euro                                         2,579,917.72              7.7496            19,993,330.36
        IDR                                       781,556,641.00               0.0005              390,778.32



                                                            181
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                                      Ending foreign currency                           Ending RMB converted
              Item                                                  Exchange rate
                                              balance                                          balance
 Current assets due within one
 year
 Including: USD                                      6,810,000.00              6.7744            46,133,664.00
 Non-current liabilities     due
 within 1y ear
 Including: USD                                      6,724,000.00              6.7744            45,551,065.60


     (2) Foreign operational entity

     The foreign operational entity of the Company was Changhong Ruba Trading Company (Private)
Limited, mainly operates in Lahore, Pakistan; Recording currency is Pakistan Rupi. CHANGHONG
MEILING ELECTRIC INDONESIA,PT, mainly operates in Jakarta; Recording currency is IDR.




                                                            182
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)


       VII. Changes of consolidation rage

       1. Enterprise combined under the different control: Nil

       2. Enterprise combined under the same control: Nil

       3. Reversed takeover: Nil

       4. Disposal of subsidiary: Nil

       5. Subsidiary liquidated
                                                                                                                                                                          Difference betweenthe disposalpriceand Othercomprehensive income
                                                 Priceofthe                                                                                                              proportion of thesubsidiary’s netassets enjoy transferredinto investment
                                                               Ratio oftheequity    Way ofthe equity                                      Determination basisforthe time
                 Subsidiary                        equity                                                  Time point of controlrightlose                                    in aspect of theconsolidatedfinancial     income ,whichrelatedwith the
                                                                   disposed           disposed                                               point of control rightlose
                                                  disposed                                                                                                                statement,whichisrespond tothe disposal equity investment of original
                                                                                                                                                                                           investment                           subsidiary
 Xi’an MeizhilaiApplianceMarketingCo., Ltd.                      98.50%           Liquidation cancelled             2017.6                   Liquidation completed


       6. Subsidiary established
                                                                                                                    Capital
                                                                                                                                          Other balance that                                   Ratio of
                                                              Registe                        RC (10             actually paid at                                            Share-hol
                                                                          Business                                                        consider as the net                                voting right Consolidate              Minority’s
            Subsidiary                          Type            red                         thousand            period-end (10                                              ding Ratio
                                                                           nature                                                      investment for subsidiary                                           d (Y/N)                  interest
                                                               place                          Yuan)                thousand                                                    (%)               (%)
                                                                                                                                              in nature
                                                                                                                     Yuan)
                                                Limited
MeiLing     Candy             Washing                                                                                                                                                                                             19,962,638.78
                                               Liability       Hefei        Sale           RMB:15,000              RMB:5,000                                                      60.00              60.00           Y
Machine Co., Ltd.
                                               Company
Guangzhou Changhong Trade                       Limited       Zhongsh
                                                                            Sale               RMB:100              RMB:100                                                      100.00             100.00           Y                            -
Co., Ltd.                                      Company          an
Zhongshan Hongling Trade Co.,                   Limited       Zhongs
                                                                            Sale               RMB:100               RMB:60                                                      100.00             100.00           Y                            -
Ltd.                                           Company         han




                                                                                                                        183
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

      VIII. Equity in other entity

      1. Equity in subsidiary

      (1) Composition of the enterprise group
                                                                                                 Share-holding ratio
                                                                  Registration     Business             (%)
                    Subsidiary                      Business area                                                              Acquire way
                                                                     place          nature                  Indirectl
                                                                                                 Directly
                                                                                                               y
                                                                                 Manufactures,
ZhongkeMeilingCryogenicTechnologyCo., Ltd. 1)          Hefei         Hefei                        66.76                 Investment
                                                                                    sales
                                                                                   Software
MianyangMeilingSoftwareTechnologyCo., Ltd. 2)        Mianyang      Mianyang                                 100.00      Investment
                                                                                 development
                                                                                 Manufactures,
MianyangMeilingRefrigeration Co., Ltd.3)             Mianyang      Mianyang                       95.00       5.00      Investment
                                                                                    sales
                                                                                 Manufactures,
JiangxiMeilingAppliance Co., Ld.4)                   Jingdezhen    Jingdezhen                     98.75       1.25      Investment
                                                                                    sales
Hefei MeilingApplianceMarketingCo., Ltd.5)             Hefei         Hefei           Sales        99.82       0.18      Investment
                                                                                                                        Enterprise combined under the
GuangxiHuidian HomeApplianceCo., Ltd.6)               Nanning       Nanning          Sales                  100.00
                                                                                                                        differentcontrol
Wuhu MeilingApplianceMarketingCo., Ltd.7)              Wuhu          Wuhu            Sales                   98.00      Investment
ChangchunMeilingApplianceMarketing Co., Ltd.8)       Changchun    Changchun          Sales                  100.00      Investment
Lanzhou MizhilaiApplianceMarketingCo., Ltd.9)         Lanzhou       Lanzhou          Sales                  100.00      Investment
JinanMeilingApplianceMarketing Co., Ltd.10)            Jinan         Jinan           Sales                   91.40      Investment
NanchangXiangyouApplianceMarketingCo., Ltd.11)       Nanchang      Nanchang          Sales                   85.00      Investment
Jingzhou MeilingApplianceMarketingCo., Ltd.12)        Jingzhou      Jingzhou         Sales                   96.00      Investment
ShengyangMeilingApplianceMarketingCo., Ltd.13)       Shengyang     Shengyang         Sales                  100.00      Investment
Wuhan MeizhirongApplianceMarketingCo., Ltd.14)        Wuhan         Wuhan            Sales                   91.00      Investment
Zhengzhou MeilingApplianceMarketingCo., Ltd.15)      Zhengzhou    Zhengzhou          Sales                  100.00      Investment
ShijiazhuangMeilingApplianceMarketing Co., Ltd.16) Shijiazhuang Shijiazhuang         Sales                  100.00      Investment
MianyangMeilingApplianceMarketing Co., Ltd.17)       Mianyang      Mianyang          Sales                  100.00      Investment
Chengdu MeilingApplianceMarketing Co.,Ltd.18)         Chengdu      Chengdu           Sales                   94.80      Investment
Guiyang MeilingApplianceMarketingCo.,Ltd.19)          Guiyang       Guiyang          Sales                  100.00      Investment
Fuzhou MeilingApplianceMarketingCo., Ltd.20)          Fuzhou        Fuzhou           Sales                  100.00      Investment
NanjingMeilingApplianceMarketingCo., Ltd.21)          Nanjing       Nanjing          Sales                  100.00      Investment
Hefei MeilingWhiteApplianceMarketing Co., Ltd.22)      Hefei         Hefei           Sales                   95.00      Investment
Taiyuan MeilingApplianceMarketingCo., Ltd.23)         Taiyuan       Taiyuan          Sales                  100.00      Investment
ChangshaMeilingApplianceMarketingCo., Ltd.24)        Changsha      Changsha          Sales                   97.00      Investment
HohhotXiangyouApplianceMarketingCo.,Ltd.25)           Hohhot        Hohhot           Sales                   95.00      Investment
HangzhouMeilingApplianceMarketing Co., Ltd.26)       Hangzhou      Hangzhou          Sales                  100.00      Investment
ChongqingMeilingApplianceMarketingCo., Ltd.27)       Chongqing     Chongqing         Sales                  100.00      Investment
KunmingMeilingApplianceMarketingCo.,Ltd.28)          Kunming       Kunming           Sales                    97.5      Investment
ShanghaiMeilingApplianceMarketing Co.,Ltd.29)         Shanghai     Shanghai          Sales                   99.00      Investment
NantongMeilingApplianceMarketingCo.,Ltd.30)           Nantong       Nantong          Sales                  100.00      Investment




                                                                          184
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                                                                                                  Share-holding ratio
                                                                   Registration     Business             (%)
                    Subsidiary                       Business area                                                              Acquire way
                                                                      place          nature                  Indirectl
                                                                                                  Directly
                                                                                                                y
Guangzhou MeilingApplianceMarketingCo., Ltd.31)       Guangzhou    Guangzhou          Sales                   98.00      Investment
TianjinMeilingApplianceMarketing Co., Ltd.32)           Tianjin      Tianjin          Sales                  100.00      Investment
UrumchiMeilingApplianceMarketingCo., Ltd.33)           Urumchi      Urumchi           Sales                   90.00      Investment
Harbin MeilingApplianceMarketingCo., Ltd.34)            Harbin       Harbin           Sales                  100.00      Investment
BeijingMeilingApplianceMarketing Co., Ltd.35)           Beijing      Beijing          Sales                  100.00      Investment
                                                                                  Manufactures,                          Enterprise combined under the
Hefei MeiLing NonferrousMetalProductsCo., Ltd.36)       Hefei         Hefei                                  100.00
                                                                                     sales                               differentcontrol
                                                                                  Manufactures,                          Enterprise combined under the
GuangdongChanghongRidianTechnologyCo., Ltd.37) Zhongshan            Zhongshan                     98.855
                                                                                     sales                               same control
ChangmeiTechnologyCo., Ltd. 38)                       Mianyang      Mianyang          Sales       92.64                  Investment
CHONGHONG        MEILING                  ELECTRIC
                                                        Jakarta       Jakarta         Sales                  100.00      Investment
INDONESIA,PT39)
ChanghongRubaTradingCompany40)                         Pakistan      Pakistan         Sales                   60.00      Investment
                                                                                  Manufactures,                          Enterprise combined under the
Sichuan ChanghongAirConditionerCo., Ltd.41)           Mianyang      Mianyang                      100.00
                                                                                     sales                               same control
                                                                                  Manufactures,                          Enterprise combined under the
Zhongshan ChanghongElectric Co., LTD42)               Zhongshan     Zhongshan                      90.00      10.00
                                                                                     sales                               same control
                                                                                  Manufactures,                          Enterprise combined under the
Hefei Meiling Group HoldingCo., Ltd.43)                 Hefei         Hefei                       100.00
                                                                                     sales                               differentcontrol
                                                                                  Manufactures,                          Enterprise combined under the
MeilingEquatorElectric(Hefei)Co., Ltd. 44)              Hefei         Hefei                                  100.00
                                                                                     sales                               differentcontrol
                                                                                  Manufactures,                          Enterprise combined under the
Hefei Equator Electric Co., Ltd. 45)                    Hefei         Hefei                                  100.00
                                                                                     sales                               differentcontrol
Hongyuan Earth Energy Heat Pump Technology Co.                                    Manufactures,
                                               Mianyang             Mianyang                                  51.00      Investment
Ltd.46)                                                                              sales
 MeiLing Candy Washing Machine Co.,                                               Manufactures,
                                                        Hefei         Hefei                        60.00                 Investment
 Ltd.47)                                                                             sales
 Guangzhou        Changhong Trade Co.,                                                                        100.0
                                                      Zhongshan    Zhongshan          Sales                              Investment
 Ltd.48)                                                                                                          0
                                                                                                              100.0
 Zhongshan Hongling Trade Co., Ltd.49)                Zhongshan    Zhongshan          Sales                              Investment
                                                                                                                  0


      Note:

     1) Zhongke Meiling Low Temperature Technology Company Limited (―Zhongke Meiling‖), the
predecessor of which was Zhongke Meiling Low Temperature Technology Limited Liability Company,
was established on 29 October 2002 by joint contribution from the Company and Technical Institute of
Physics and Chemistry, CAS (―TIPC‖), with registered capital of RMB60 million upon the establishment,
among which, the Company made capital contribution of RMB42 million (including the assets in specie at
the consideration of RMB35,573,719.70 as evaluated by Beijing Zhongzheng Appraisal Co., Ltd. with
issuance of the Appraisal Report (ZZPBZ(2002)No.029) and cash contribution of RMB6,426,280.30)
accounting for 70% of the aforesaid registered capital, and TIPC made capital contribution of RMB18
million with intangible assets of such value (namely the single compressor mixture industrial low
temperature refrigeration technology) as evaluated by Jingzhongzi Assets Appraisal Co., Ltd. with


                                                                            185
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

issuance of the Appraisal Report (ZZPBZ(2002)No.225) accounting for 30% of the aforesaid registered
capital. The paid-in of the above registered capital has been verified by Huazheng Accounting Firm by
issuance of the Assets Verification Report (HZYZ(2002)No.B157) dated 16 October 2002.

     In October 2014, according to the relevant provision under the Management Rules on Application of
State Owned Assets by Central Business Organs, TIPC transferred the 30% equity interests held by it in
Zhongke Meiling Low Temperature Technology Company Limited to its wholly-owned subsidiary
Zhongke Xianxing (Beijing) Assets Management Co., Ltd (―Zhongke Xianxing‖) which would perform
management over the operating assets of TIPC. Upon consideration and approval at the 37th meeting of
the 7th Board of Directors of Hefei Meiling Co., Ltd, it is agreed to waive the pre-emptive right.

    On 10 August 2015, all the founders signed the Founder Agreement of Zhongke Meiling Low
Temperature Technology Company Limited, pursuant to which, they decided to change the firm type of
Zhongke Meiling Low Temperature Technology Company Limited to a joint stock company. Based on
the net assets of RMB96, 431,978.25 as audited by Xinyong Zhonghe CPA as of 30 June 2015, an
aggregate of 65,000,000 shares have been converted at the proportion of 1:0.67, which are to be held by
the original shareholders according to their respective entitlement. In case that the net assets exceed
registered capital, the balance shall be recorded in capital reserve. On 28 August 2015, Xinyong Zhonghe
CPA reviewed the registered capital and paid-in thereof in respect of the stock reform, and issued Assets
Verification Report (XYZH/2015CDA40161). The Company registered industrial and commercial
information on 11 September 2015.

     On November 25, 2016, the first Extraordinary Shareholders' General Meeting of Zhongke Meiling
Low Temperature Technology Co., Ltd. in 2016 considered and approved the Proposal on the Issuance
Plan of the Company, Zhongke Meiling Company issued 3,150,000 shares to specific investors by the
non-public offering of shares at 1.63 Yuan per share. The current capital increase was verified by the No.
[XYZH/2016CDA40294]capital verification report issued by ShineWing CPA (special general
partnership). After the completion of the issuance, the share capital of Zhongke Meiling Company
increased to 68,150,000 shares and the Company's shareholding ratio was 66.76%.

     2) Mianyang Meiling Software Technology Co., Ltd. (hereinafter referred to as Meiling Software
Company) was established on Jan. 24, 2014. It is a limited company jointly invested by the Company and
Mianyang Meiling Refrigeration Co., Ltd., being approved by the Industrial and Commerce Bureau of
Peicheng District, Mianyang City. The company owes registered capital of RMB 5 million, including
RMB 4.95 million contributed by Meiling Company in cash, accounted for 99% of the registered capital;
Mianyang Meiling Refrigeration Co., Ltd. contributed RMB 50000 in cash with 1% of the register capital
occupied. The above mentioned register capital have been verified by verification report of Chuanjinlai
Yanzi No.[2014] B039 issued by Sichuan Jinlai Accounting Firm Co., Ltd. In July 2016, the shares of
Mianyang Meiling Software Technology Co., Ltd., held by the Company has transferred to Sichuan
Changhong AC Co., Ltd., after transferred, Changhong AC has 99% equity of Mianyang Software, the
Company has no shares of Mianyang Software directly



                                                                 186
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

     3) Mianyang Meiling Refrigeration Co., Ltd. (hereinafter referred to as Mianyang Meiling Company),
a limited liability company jointly set up by the Company and China-tech Meiling Company, was founded
on Mar. 6, 2009. Its registered capital and paid-in capital was RMB 50 million upon establishment, of
which, the Company invested RMB 45 million, accounting for 90% of the registered capital; Zhongke
Meiling Company invested RMB 5 million, accounting for 10% of the registered capital. The capital
receipt was verified by the verification report [CXKY (2009) No. 008] of Sichuan Xingrui Certified Public
Accountants. On 19 January 2011, the Company increase RMB 50 million in capital of Mianyang
Meiling, of which RMB 95 million invested by the Company, a 95% of total register capital while RMB 5
million invested by Zhongke Meiling, a 5% of total capital occupied. The paid-in capital has been verified
by Capital Verification Report [XYZH/2010CDA6040]from Chengdu Branch of Shinewing CPA CO.,
Ltd. In 2011, Zhongke Meiling entered into ―Equity Transfer Agreement‖ with Jiangxi Meiling
Refrigeration Co., Ltd. 5 percent equity of Mianyang Meiling held by Zhongke Meiling was transferred to
Jiangxi Meiling Refrigerator. In September 2013, Jiangxi Meiling Refrigeration was combined by Jiangxi
Meiling Appliance Co., Ld, than 5 percent equity was transfer to Jiangxi Meiling Appliance.

     4) Jiangxi Meiling Appliance Co., Ld.(Jiangxi Meiling Appliance Co.,) was a limited liability
company jointly established by the Company and Mianyang Meiling on 23 May 2011. Register capital of
the company totally as RMB 50 million, RMB 49.375 million invested by the Company, 98.75% in total
register capital while RMB 0.625 million invested by Mianyang Meiling , a 1.25% in total register capital
occupied. The initial investment RMB 10.50 million was received dated 13 May 2011 with RMB 10
million from the Company and RMB 0.5 million from Mianyang Meiling. Rest of the capital shall be
invested fully within 2 years after the joint ventures established according to capital requirement. The
initial investment capital were verified by the Capital Verification Report [JXKYZi(2011) No. 090] issued
from Jingdezhen Xingci CPA Co., Ltd. Second capital RMB 39.5 million was fully funded on 28 July
2011, the Company contributed RMB 39.375 million while Mianyang Meiling Company invested RMB
125,000, the contributions have been verified by the capital verification report [Jing Xing Kuai Yan Zi
(2011) No.: 134] issued from JDZ Xingci CPA Co., Ltd.

      5) Hefei Meiling Appliance Marketing Co., Ltd. (Meiling Marketing Company for short) is the
limited company jointly invested by the Company and Mianyang Meiling Company on 21 Oct. 2009.
Registered capital and paid-up capital was RMB 10 million, including RMB 9.9 million invested by the
Company, a 99% of the registered capital; Mianyang Meiling Company contributed RMB 0.1 million, a
1% of the registered capital. The above mentioned paid-up register capital have been verified by
verification report of [Wan An Lian Xin Da Yan Zi (2009) No. 074] issued by Anhui An Lian Xin Da
Accounting Firm Co., Ltd. On 25 Nov. 2010, the Company increased capital RMB 45 million, registered
capital amounting to RMB 55 million, including RMB 54.9 million contributed by the Company, a
99.82% of the registered capital, while Mianyang Meiling invested RMB 0.1 million, a 0.18% of the
registered capital. The increased capital have been verified by verification report of [Wan Hua Shen Zheng
Da Kuai Yan Zi (2010) No. 1514] issued by Anhui Hua Shen Zhengda CPA Co., Ltd.




                                                                 187
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

     6) Guangxi Huidian Home Appliance Co., Ltd. (Guangxi Huidian for short) established in March
2010 with registered capital of RMB 5 million. The Company invested RMB 1 million, accounted for
20% of the registered capital; Meiling Marketing acquired 44% equity interests from the minority
shareholders in 2014. In 2015, Meiling Marketing and Jiangxi Meiling Appliances entered into equity
transfer agreements with minority shareholders respectively, to acquire as the transferees the 35.6% and
0.4% equity interests of Guangxi Weidian held by minority shareholders. Upon completion of equity
transfer in April 2015, Meiling Marketing and Jiangxi Meiling Appliances held the entire equity interests
of Guangxi Weidian as a whole.

     7) Wuhu Meiling Appliance Marketing Co., Ltd. (Wuhu Meiling for short) was established dated 24
December 2010 with registered capital of RMB 6 million; the Company invested RMB 2.16 million,
accounted for 36% of the registered capital. After Meiling Marketing acquired 65% equity interests from
the minority shareholders in 2014, Meiling Marketing the Company totally holds 98% equity of the Wuhu
Meiling.

     8) Changchun Meiling Appliance Marketing Co., Ltd. (Changchun Meiling for short) was
established dated 22 December 2010 with registered capital of RMB 3million; Meiling Marketing
invested RMB 2.91 million, accounted for 97% of the registered capital. After Meiling Marketing
acquired 3% equity interests from the minority shareholders in 2017, Meiling Marketing the Company
totally holds 100% equity of the Changchun Meiling.

     9) Lanzhou Meizhilai Meiling Appliance Marketing Co., Ltd., originally named Lanzhou Meiling
Appliance Marketing Co., Ltd. (Meiling for short) was established dated 25 March 2011 with registered
capital of RMB 3 million; Meiling Marketing invested RMB 1.215 million, accounted for 40.50% of the
registered capital. After Meiling Marketing acquired 11% equity interests from the minority shareholders
in 2013, Meiling Marketing acquired 48.5% equity interests from the minority shareholders in 2016,
Meiling Marketing the Company totally holds 100% equity of Lanzhou Meiling.

     10) Jinan Meiling Appliance Marketing Co., Ltd. (Jinan Meiling for short) was established dated 3
June 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 1.08 million,
accounted for 36% of the registered capital; after Meiling Marketing acquired 55.4% equity interests from
the minority shareholders in 2015, Meiling Marketing totally holds 91.4% equity of the Jinan Meiling.

      11) Nanchang Youxiang Appliance Marketing Co., Ltd. (Nanchang Xiangyou for short) was
established dated 5 January 2011 with registered capital of RMB 3 million; Meiling Marketing invested
RMB 1.08 million, accounted for 36% of the registered capital. After the Company acquired 49% equity
interests from the minority shareholders in 2014, Meiling Marketing totally holds 85% equity of
Nanchang Meiling.

     12) Jingzhou Meiling Appliance Marketing Co., Ltd. (Jingzhou Meiling for short) was established
dated 10 January 2011 with registered capital of RMB 4 million; Meiling Marketing invested RMB 2.4
million, accounted for 60% of the registered capital. In 2013, the Company purchased 20% equity from



                                                                 188
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

minority; After Meiling Marketing acquired 1% equity interests from the minority shareholders in 2014,
Meiling Marketing acquired 15% equity interests from the minority shareholders in 2016, Meiling
Marketing totally holds 96% equity of Jingzhou Meiling.

     13) Shengyang Meiling Appliance Marketing Co., Ltd. (Shengyang Meiling for short) was
established dated 26 January 2011 with registered capital of RMB 3 million; Meiling Marketing invested
RMB 2.844 million, accounted for 94.8% of the registered capital.

     14) Wuhan Meizhirong Appliance Marketing Co., Ltd. (Wuhan Meizhirong for short) was
established dated 10 January 2011 with registered capital of RMB 5 million; Meiling Marketing invested
RMB 4.55 million, accounted for 91% of the registered capital.

     15) Zhengzhou Meiling Appliance Marketing Co., Ltd. (Zhengzhou Meiling for short) was
established dated 17 January 2011 with registered capital of RMB 3 million; Meiling Marketing invested
RMB 1.08 million, accounted for 36% of the registered capital. In 2013, Meiling Marketing purchased
10% equity from minority; Meiling Marketing signed equity transfer agreement with the minority
shareholders in April 2015, to acquire as the transferee the 39% equity interests of Zhengzhou Meiling
held by minority shareholders, Meiling Marketing acquired 10% equity interests from the minority
shareholders in February 2016; Upon completion of such equity transfer, Meiling Marketing held in
aggregate the 95% equity interests of Zhengzhou Meiling. After Meiling Marketing acquired 5% equity
interests from the minority shareholders in 2017, Meiling Marketing held in aggregate the 100% equity
interests of Zhengzhou Meiling.

     16) Shijiazhuang Meiling Appliance Marketing Co., Ltd. (Shijiazhuang Meiling for short) was
established dated 14 January 2011 with registered capital of RMB 3 million; Meiling Marketing invested
RMB 1.08 million, accounted for 36% of the registered capital; After Meiling Marketing acquired 27.33%
equity held by the minority in 2014, holding 63.33% equity of the Shijiazhuang Meiling; After Meiling
Marketing acquired 32% equity held by the minority in 2015, totally holding 95.33% equity of
Shijiazhuang Meiling. After Meiling Marketing acquired 4.67% equity interests from the minority
shareholders in 2017, Meiling Marketing held in aggregate the 100% equity interests of Shijiazhuang
Meiling.

     17) Mianyang Meiling Appliance Marketing Co., Ltd. (Mianyang Meiling for short) was established
dated 27 January 2011 with registered capital of RMB 5 million; Meiling Marketing invested RMB 2.6
million, accounted for 52% of the registered capital. After Meiling Marketing purchased 33% equity from
minority in 2013, and purchased 8.8% equity from minority in 2015, Meiling Marketing totally holds
93.8% equity of Mianyang Meiling. After Meiling Marketing acquired 6.2% equity interests from the
minority shareholders in 2017, Meiling Marketing held in aggregate the 100% equity interests of
Mianyang Meiling.

     18) Chengdu Meiling Appliance Marketing Co., Ltd. (Chengdu Meiling for short) was established
dated 26 January 2011 with registered capital of RMB 5 million; Meiling Marketing invested RMB 4.17



                                                                 189
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

million, accounted for 83.4% of the registered capital; After Meiling Marketing purchased 9% equity from
minority in 2015, and purchased 0.8% equity from minority in 2016, Meiling Marketing totally holds
94.8% equity of Chengdu Meiling.

     19) Guiyang Meiling Appliance Marketing Co., Ltd. (Guiyang Meiling for short) was established
dated 24 January 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 0.78
million, accounted for 26% of the registered capital; after Meiling Marketing purchased 18% equity from
minority in 2013, Meiling Marketing purchased 42% equity from minority in 2015, Meiling Marketing
purchased 14% equity from minority in 2016, Meiling Marketing held in aggregate the 100% equity
interests of Guiyang Meiling.

     20) Fuzhou Meiling Appliance Marketing Co., Ltd. (Fuzhou Meiling for short) was established dated
25 January 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 2.97 million,
accounted for 99% of the registered capital. After Meiling Marketing acquired 1% equity interests from
the minority shareholders in 2017, Meiling Marketing held in aggregate the 100% equity interests of
Fuzhou Meiling.

     21) Nanjing Meiling Appliance Marketing Co., Ltd. (Nanjing Meiling for short) was established
dated 14 Feb. 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 2.97
million, accounted for 99% of the registered capital. After Meiling Marketing acquired 1% equity interests
from the minority shareholders in 2017, Meiling Marketing held in aggregate the 100% equity interests of
Nanjing Meiling.

     22) Hefei Meiling White Appliance Marketing Co., Ltd. (White Appliance for short) was established
dated 21 January 2011 with registered capital of RMB 6 million; Meiling Marketing invested RMB 5.1
million, accounted for 85% of the registered capital; Meiling Marketing signed equity transfer agreement
with the minority shareholders in 2015, to acquire as the transferee the 10% equity interests of White
Appliance held by minority shareholders. Upon completion of such equity transfer in February 2015,
Meiling Marketing held in aggregate the 95% equity interests of White Appliance.

     23) Taiyuan Meiling Appliance Marketing Co., Ltd. (Taiyuan Meiling for short) was established
dated 18 January 2011 with registered capital of RMB 4 million; Meiling Marketing invested RMB 1.59
million, accounted for 39.75% of the registered capital; after Meiling Marketing purchased 45.5% equity
from minority in 2013, Meiling Marketing purchased 14.75% equity from minority in 2016, Meiling
Marketing totally holds 100% equity of the Taiyuan Meiling.

     24) Changsha Meiling Appliance Marketing Co., Ltd. (Changsha Meiling for short) was established
dated 26 January 2011 with registered capital of RMB 5 million; Meiling Marketing invested RMB 1.8
million, accounted for 36% of the registered capital; the Company entered into equity transferred
agreement with minority shareholders in 2014, transferred 50% equity of Changsha Meiling held by the
minority, after Meiling Marketing purchased 11% equity from minority in 2016, Meiling Marketing
totally holds 97% equity of Changsha Meiling.



                                                                 190
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

     25) Hohhot Meiling Appliance Marketing Co., Ltd., originally called Hohhot Xiangyou Appliance
Marketing Co., Ltd.(Hohhot Meiling for short) was established dated 21 Feb. 2011 with registered capital
of RMB 3 million; Meiling Marketing invested RMB 1.65 million, accounted for 55% of the registered
capital; after Meiling Marketing purchased 28% equity from minority in 2013, Meiling Marketing
purchased 12% equity from minority in 2016, Meiling Marketing totally holds 95% equity of the Hohhot
Meiling.

     26) Hangzhou Meiling Appliance Marketing Co., Ltd. was established dated 17 Feb. 2011 with
registered capital of RMB 3 million; Meiling Marketing invested RMB 2.655 million, accounted for
88.5% of the registered capital; Meiling Marketing signed equity transfer agreement with the minority
shareholders in 2015, to acquire as the transferee the 6.5% equity interests of Hangzhou Meiling held by
minority shareholders. Upon completion of such equity transfer in February 2015, Meiling Marketing held
in aggregate the 95% equity interests of Hangzhou Meiling. After Meiling Marketing acquired 5% equity
interests from the minority shareholders in 2017, Meiling Marketing held in aggregate the 100% equity
interests of Hangzhou Meiling.

     27) Chongqing Meiling Appliance Marketing Co., Ltd. (Chongqing Meiling for short) was
established dated 1 March 2011 with registered capital of RMB 3 million; Meiling Marketing invested
RMB 2.55 million, accounted for 85% of the registered capital; After Meiling Marketing purchased 13%
equity from minority in 2015, Meiling Marketing totally holds 98% equity of Chongqing Meiling. After
Meiling Marketing acquired 2% equity interests from the minority shareholders in 2017, Meiling
Marketing held in aggregate the 100% equity interests of Chongqing Meiling.

     28) Kunming Meiling Appliance Marketing Co., Ltd. (Kunming Meiling for short) was established
dated 28 Feb. 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 1.395
million, accounted for 46.5% of the registered capital; after Meiling Marketing purchased 40% equity
from minority in 2013, Meiling Marketing purchased 9% equity from minority in 2016, Meiling
Marketing totally holds 95.5% equity of the Kunming Meiling. After Meiling Marketing acquired 2%
equity interests from the minority shareholders in 2017, Meiling Marketing held in aggregate the 97.5%
equity interests of Kuming Meiling.

     29) Shanghai Meiling Appliance Marketing Co., Ltd. (Shanghai Meiling for short) was established
dated 9 March 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 2.97
million, accounted for 99% of the registered capital.

     30) Nantong Meiling Appliance Marketing Co., Ltd. (Nantong Meiling for short) was established
dated 8 March 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 1.74
million, accounted for 58% of the registered capital; In 2013, after Meiling Marketing purchased 34%
equity from minority, Meiling Marketing totally holds 92% equity of the Nantong Meiling. After Meiling
Marketing acquired 8% equity interests from the minority shareholders in 2017, Meiling Marketing held
in aggregate the 100% equity interests of Nantong Meiling.




                                                                 191
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

      31) Guangzhou Meiling Appliance Marketing Co., Ltd. (Guangzhou Meiling for short) was
established dated 13 May 2011 with registered capital of RMB 5 million; Meiling Marketing invested
RMB 4.3 million, accounted for 86% of the registered capital; after Meiling Marketing acquired 12%
equity interests from the minority shareholders in 2014, Meiling Marketing totally held the 98% equity
interests of Guangzhou Meiling.

    32) Tianjin Meiling Appliance Marketing Co., Ltd. (Tianjin Meiling for short) was established dated
2 March 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 2.565 million,
accounted for 85.5% of the registered capital; In 2015, Meiling Marketing and Jiangxi Meiling Appliances
entered into equity transfer agreements with minority shareholders respectively, to acquire as the
transferees the 14.1% and 0.4% equity interests of Guangxi Weidian held by minority shareholders. Upon
completion of equity transfer in December 2015, Meiling Marketing totally held the entire equity interests
of Tinjian Meiling.

     33) Urumchi Meiling Appliance Marketing Co., Ltd. (Urumchi Meiling for short) was established
dated 4 March 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 2.7
million, accounted for 90% of the registered capital.

    34) Harbin Meiling Appliance Marketing Co., Ltd. (Harbin Meiling for short) was established dated
6 April 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 1.08 million,
accounted for 36% of the registered capital; Meiling Marketing acquired 41.5% equity interests from the
minority shareholders in 2014, Meiling Marketing acquired 17.5% equity interests from the minority
shareholders in 2015, Meiling Marketing totally held the 95% equity interests of Harbin Meiling. After
Meiling Marketing acquired 5% equity interests from the minority shareholders in 2017, Meiling
Marketing held in aggregate the 100% equity interests of Harbin Meiling.

    35) Beijing Meiling Appliance Marketing Co., Ltd. (Beijing Meiling for short) was established dated
28 March 2011 with registered capital of RMB 3 million; Meiling Marketing invested RMB 2.97 million,
accounted for 99% of the registered capital. After Meiling Marketing acquired 1% equity interests from
the minority shareholders in 2017, Meiling Marketing held in aggregate the 100% equity interests of
Beijing Meiling.

      36) Hefei Meiling Nonferrous Metal Products Co., Ltd. (Nonferrous Metal) was the Sino-foreign
joint venture jointly set up by original Meiling Group, Hefei Meiling Copper Co., Ltd. And Singapore
Kim Shin Development Co., Ltd., which have been originally approved by the [WJMWFZZ(1996)
No.349] of Foreign Trade and Economic Committee of Anhui Province. Its registered capital was
US$ 2.92 million upon establishment, of which, original Meiling Group invested US$ 1.46 million
(monetary capital), accounting 50% of the registered capital, Hefei Meiling Copper Co., Ltd invested
US$ 0.584 million (monetary capital of RMB 0.18 million and real assets of US$ 0.404 million),
accounting 20% of registered capital while Singapore Kim Shin Development Co., Ltd invested
US$ 0.876 million (monetary capital), accounting 30% of the registered capital. The above mentioned
investment verified by the verification report of [HSWZ(1995) No. 0737], [HSWZ(1996) No. 328] and


                                                                 192
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

[HSWZ(1998) No. 088] from Anhui CPAs Co., Ltd. In July 2008, approved by [HWS(2008) No.53] from
Foreign Trade Economic Cooperation Bureau of Hefei City, 30% equity and 20% equity held by
Singapore Kim Shin Development Co., Ltd and Hefei Meiling Copper Co., Ltd respectively transferred to
original Meiling Group Totally. The Company’s register capital came into RMB 24,286,808.00 after
transference, and was not the joint-venture any more.

     37) Guangdong Changhong Ridian Technology Co., Ltd. (hereinafter referred to as the Company, the
company) is a limited liability company invested and established by Sichuan Changhong Electric Co., Ltd.
(hereinafter referred to as Sichuan Changhong) and Sichuan Changhong Motor Transport Co., Ltd.
(hereinafter referred to as Changhong Motor Transport Company) on May 25, 2016. The registered capital
and paid-in capital are RMB 40 million Yuan, of which Sichuan Changhong has invested 32 million Yuan
by monetary capital, accounting for 80% of the registered capital; Changhong Motor Transport Company
has invested 8 million Yuan, accounting for 20% of the registered capital. The official receipts of registered
capital have been verified by original Sichuan Junhe Accounting Firm [No. JHYZ (2006) 3027]. The
company increased registered capital of 43 million Yuan on January 4, 2007, changing from 40 million
Yuan to 83 million Yuan , for the newly increased 43 million Yuan , Sichuan Changhong invested 1.8
million Yuan , Guangdong Xiongfeng Electric Co., Ltd. invested 40 million Yuan , and Kou Huameng and
other 9 natural person shareholders invested 1.2 million Yuan , at the same time, the shareholders' meeting
considered and agreed to transfer the investment of 8 million Yuan of Changhong Motor Transport
Company to Sichuan Changhong Innovation Investment Co., Ltd., the structure of the registered capital
after changes was that Sichuan Changhong invested 33.8 million Yuan , accounting for 40.72%;
Guangdong Xiongfeng Electric Co., Ltd. invested 40 million Yuan , accounting for 48.19%; Sichuan
Changhong Innovation Investment Co., Ltd. Invested 8 million Yuan, accounting for 9.64%; Kou
Huameng and other 9 natural person shareholders invested 1.2 million Yuan , accounting for 1.45%. The
change of registered capital was verified by Zhongshan Promise Accounting Firm [No. ZCHZ
(2007)501010].

     On February 18, 2009, 7 natural person shareholders transferred total 0.76% stock rights to Hu
Zhiheng, after the transfer, the registered capital of the company was still 83 million Yuan , the structure of
registered capital after changes was that Sichuan Changhong invested 33.8 million Yuan , accounting for
40.72%; Guangdong Xiongfeng Electric Co., Ltd. invested 40 million Yuan , accounting for 48.19%;
Sichuan Changhong Innovation Investment Co., Ltd. invested 8 million Yuan , accounting for 9.64%; Hu
Zhiheng and other two natural person shareholders invested 1.2 million Yuan , accounting for 1.45%.

     On October 9, 2014, the company held the shareholders meeting which considered and agreed Kou
Huameng to transfer its stock rights of total 250,000 Yuan which accounts for 0.301% of the company's
registered capital to Sichuan Changhong Innovation Investment Co., Ltd. at the cost of 317,802 Yuan. The
other shareholders of the Company waived the right of pre-emption. On December 11, 2014, the company
held the shareholders meeting which considered and agreed Guangdong Xiongfeng Electric Co., Ltd. to
transfer its stock rights of total 40 million Yuan which accounts for 48.19 % of the company's registered



                                                                 193
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

capital to Sichuan Changhong Electric Co., Ltd. at the cost of 43,977,300 Yuan. The other shareholders of
the Company waived the right of pre-emption. The structure of registered capital after changes was that
Sichuan Changhong invested 73.8 million Yuan , accounting for 88.92%; Sichuan Changhong Innovation
Investment Co., Ltd. Invested 8.25 million Yuan , accounting for 9.94%; Hu Zhiheng and another natural
person shareholder invested 950,000 Yuan , accounting for 1.14%.

     On January 4, 2016, Sichuan Changhong and Sichuan Changhong Innovation Investment Co., Ltd.
transferred total 98.855% of the Company’s stock rights they held to the Company. After the transfer, the
Company directly holds 98.855% stock rights of Changhong Ridian.

     38) Changmei Technology Co., Ltd. (Changmei Technology for short) was invested and set up on
May 12, 2016 in order to promote intelligent transformation and implement the company’s intelligent life
project according to the company's strategic planning and business development needs. Changmei
Technology has registered capital of 50 million Yuan, of which the Company subscribed and paid 45
million Yuan in cash, accounting for 90% of the registered capital, and Changmei Management Group
team subscribed and paid 5 million Yuan in cash, accounting for 10% of the registered capital.

     On 19 December 2016, being deliberated on shareholders meeting, 2.64% equity held by part of the
natural persons, are agreed to transferred to Hefei Meiling Co., Ltd. After transferred, the equity structures
are as: Hefei Meiling Co., Ltd. contributes 46.32 million Yuan, a 92.64% in registered capital; natural
person of Changmei management team totally contributed 3.68 million Yuan, a 7.36% in registered
capital.

     39) CHANGHONG MEILING ELECTRIC INDONESIA, PT.(Indonesia Changhong for short) is a
subsidiary established in Indonesia and jointly invested by Zhongshan Changhong and Sichuan
Changhong in 2016, the company’s registered capital is 6 million US dollars, of which Zhongshan
Changhong subscribed and paid 5.88 million US dollars in cash, accounting for 98% of the registered
capital, Changhong Air Conditioning subscribed and paid 120,000 US dollars in cash, accounting for 2%
of the registered capital.

     40) Changhong Ruba Trading Company (Private) Limited (―Changhong Ruba‖) was a joint venture
established by Zhongshan Changhong Appliances Company Limited and RUBA GENERAL TRADING
FZE Company (―RUBA‖) on 5 August 2011 with the approval from Guangdong Development and
Reform Commission by issuance of the Approval Relating to Joint Construction of a Manufacturing and
Selling Platform Project in Pakistan by Zhongshan Changhong Appliances Company Limited
(YFGWZ(2011)958). The resolution of the second extraordinary shareholders' meeting of Zhongshan
Changhong in 2016 passed the "Proposal on the Company's Capital Increase to Changhong Ruba Trading
Company (Private) Limited", and agreed that the company and UAE RUBA Company jointly increase
capital to Changhong Ruba Trading Company(Private) Limited which was invested by both sides in
Pakistan at an earlier stage, Zhongshan Changhong invested 3.84 million US dollars in this capital increase,
and UAE RUBA Company invested 2.56 million US dollars, the shares held by both sides remained
unchanged. After the capital increase, the company’s registered capital became 12.4 million US dollars, of


                                                                 194
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

which Zhongshan Changhong Electric Co., Ltd. Invested 7.44 million US dollars in cash, shareholding
ratio was 60%, UAE RUBA Company invested 4.96 million US dollars in cash, and shareholding ratio
was 40%.

      41) Sichuan Changhong Air-conditioners Co., Ltd.(Changhong Air-conditioner for short), a limited
liability company jointly set up by Sichuan Changhong and Changhong Chuangtou, was founded on
November 28, 2008. Its registered capital was RMB 200 million upon establishment, of which, Sichuan
Changhong invested RMB 298 million (RMB 210,088,900 invested by monetary capital while RMB
87,911,100 invested by real material), equivalent to RMB 198 million shares, accounting for 99% of the
registered capital; and Changhong Chuangtou invested RMB 3 million, accounting for 1% of the
registered capital with equivalent of RMB 2 million shares. The registered capital receipt was verified by
the verification report [CGYYZ (2008) No. 177] of Sichuan Guangyuan Certified Public Accountants Co.,
Ltd. and [HLTHYZ(2008) No. 12-006] of Sichuan Henglitai Certified Public Accountants Co., Ltd. In
December 2009, the Company obtained 100% equity of Changhong Air-conditioner by consolidated
under the same control.

    42) Zhongshan Changhong Electric Co., Ltd.( Zhongshan Changhong), was the original Guangdong
Changhong Electric Co., Ltd., and is a limited liability company jointly set up by Sichuan Changhong and
China Minmetals on May 22, 2001. Its registered capital was RMB 80 million upon establishment, of
which, Sichuan Changhong invested RMB 72 million, including RMB 69.3 million biding for the estate/
non-estate from original Zhongshan Sanrong Air-conditioner Co., Ltd. And its patent use-right of RMB2.7
million, accounting for 90% of the registered capital; Chine Minmetals invested RMB 8 million in
monetary capital accounting 10% of the registered capital. The Company changed its name originally
from Guangdong Changhong Electric Co., Ltd in July 2003. In December 2009, the Company obtained
90% equity of Zhongshan Changhong by consolidated under same control. 10% equity held by China
Minmetals has been transferred by Changhong Air-conditioner on April 11, 2010. On 25 May 2014, the
Company increased RMB 36 million to Zhongshan Changhong, and Changhong AC increased RMB 4
million. In 2016, according to the overseas development strategy of the Company and the development
and operation needs of the subsidiaries, the Company and the wholly-owned subsidiary Changhong Air
Conditioning have increased capital of RMB 64 million Yuan to Zhongshan Changhong according to the
existing shareholding ratio, among which the capital increase of the Company was RMB 57.6 million
Yuan, and the capital increase of Changhong Air Conditioning was RMB 6.4 million Yuan. After the
completion of this capital increase, the registered capital Zhongshan Changhong shall increase to RMB
184 million Yuan, the shareholding ratio of the company and Changhong Air Conditioning remained
unchanged and was still 90% and 10%, of which the Company invested 165.6 million Yuan, accounting
for 90% of the registered capital, Changhong Air Conditioning invested 18.4 million Yuan, accounting for
10% of the registered capital.

     43) Hefei Meiling Group Holding Co., Ltd (Meiling Group), was the state-owned company
originally approved by People’s Government of Hefei Province and established authorized by SASAC of



                                                                 195
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

Hefei City. On July 14, 2008, 100% state-owned equity of Meiling Group has freely transferred to Xingtai
Holding by Hefei SASAC. Agreement by the approval of < State-owned property agreement transfer from
Meiling Group> [ HGZCQ(2010) No.34] of Hefei SASAC on April 9, 2010, 100% state-owned property
of Meiling Group after partial assets and liabilities separated transferred to the Company from Xingtai
Holding as amount of RMB 113.2 million. The re-registration of industrial and commercial procedure for
Meiling Group after separated partial assets liability has finished on July 28, 2010. The new Meiling
Group has register capital of RMB 80 million, and has been verified by the [AD(2010)YZD No. 016]
from Anhui Anding CPAs Co., Ltd.

     44) Meiling Equator Appliance (Hefei) Co., Ltd.( Equator Appliance for short) was the Sino-foreign
joint venture jointly set up by original Meiling Group and EQUATOR INVESTMENTS (USA)
INC.( EQUATOR for short), which have been approved by the [SWZWFZZ(2004) No.0103] of
Approval Certificate of Foreign Enterprise from People’s Government of Anhui Province. Its registered
capital was US$ 3 million upon establishment, of which, Sino company invested US$ 2.25 million in
machinery equipment, accounting 75% of the registered capital while foreign company invested US$ 0.5
million in monetary capital and US$ 0.25 million in intangible assets, amounting to US$0.75 million,
accounting 25% of the registered capital. The above mentioned investment verified by the verification
report of [WYAYZ (2004) No. 135] from Anhui Yongan CPAs Co., Ltd. In July 2007, approved by
[HWJ(2007) No.136] from Foreign Trade Economic Cooperation Bureau of Hefei City, 25% equity held
by EQUATOR transferred to Anhui Meiling Electric Co., Ltd. Totally. The Company’s register capital
came into RMB 24,793,200 after transference, and was not the joint-venture any more. 25% equity owned
by Anhui Meiling Electric Co., Ltd has been transferred totally to original Meiling Group in July 2009.

     45) Hefei Equator Appliance Co., Ltd.( Equator Appliance) was jointly set up by original Meiling
Group and Yingkaite Appliance on September 26, 2007. Its register capital was RMB 12 million, among
which, original Meiling Group invested RMB 8,670,600 in monetary capital, accounting 72.255% in
registered capital; Equator Appliance invested RMB 3,329,400 in the assessment value of intangible assets
(land-use right), accounting 27.745% of total registered capital. The investment being verified by
[WYAZ(2004) No. 135] from Anhui Yongan CPAs Co., Ltd.

     46) Hongyuan Ground Energy Heating Pump Technology Company (―Hongyuan Ground Energy‖)
was established as a limited liability company with joint capital contribution from Sichuan Changhong Air
Conditioner Company (―Changhong Air Conditioner‖) and Hengyouyuan Science & Technology
Development Group on 28 August 2015, with the approval from the Industrial and Commercial
Administration Office of Fucheng district, Mianyang, Sichuan province. The registered capital of the
company is RMB50 million, among which, RMB25.5 million is contributed by Changhong Air
Conditioner in cash with shareholding proportion of 51%, and the remaining RMB24.5 million is
contributed by Hengyouyuan Science & Technology Development Group in cash with shareholding
proportion of 49%.

     47) Meiling Candy Washing Machine Co., Ltd. (―Meiling Candy‖) was established on 27 April 2017



                                                                 196
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

with joint capital contribution from Hefei Meiling Co., Ltd. and Candy Hoover Group S.r.l.. Registered
capital amounting to 150 million Yuan, including 90 million Yuan contributed by Hefei Meiling Co., Ltd.,
a 60% in total registered capital while 60 million Yuan or equivalent USD contributed by Candy Hoover
Group S.r.l., a 40%in total registered capital. Ended as 30 June, the first phase contribution 30 million
Yuan and 20 million Yuan are paid respectively by Hefei Meiling and Candy Hoover Group S.r.l.

     48) Guangzhou Changhong Trade Co., Ltd. (―Guangzhou Changhong‖) was established in line with
the strategy plans and operation development requirement by Zhongshan Changhong Electric Co., LTD
on 6 January 2017 with registered capital of one million Yuan. Zhongshan Changhong contributed in cash,
a 100% in registered capital.

     49) Zhongshan Hongling Trade Co., Ltd. (―Hongling Trade‖) was established as a limited liability
company by Guangdong Changhong Ridian Technology Co., Ltd. dated 5 December 2016. Registered
capital amounting to one million Yuan, Guangdong Changhong Ridian Technology takes 100% equity.

      (2) Major non-wholly-owned subsidiary
                                                                                                       Dividend
                                                                         Gains/losses                                          Balance of
                                                  Shareholdi                                         distributed to
                                                                        attributable to                                        minority’s
                Subsidiary                          ng of                                               minority
                                                                        minority in the                                        interest at
                                                   minority                                         announced in the
                                                                            period                                             period-end
                                                                                                         period
 Zhongke Meiling                                            33.24%                   986,542.54                                    38,507,489.75
 Hongyuan Ground Energy                                     49.00%               2,372,403.10                                      12,095,380.59
 Changhong Ridian                                           1.14%                     46,439.28                                     1,295,378.72
 Meiling Kadi                                               40.00%                   -37,361.22                                    19,962,638.78


      (3) Financial information for major non-wholly-owned subsidiary
                                                                           Ending balance
 Subsidiary                                                                                                  Non-current
                    Current assets     Non-current assets        Total assets          Current liabilities                      Totalliabilities
                                                                                                               liability
 Zhongke
                      125,050,695.49       101,526,920.98        226,577,616.47           105,715,124.36        5,000,000.00      110,715,124.36
 Meiling
 Hongyuan
 Ground               195,690,658.99         1,877,476.61        197,568,135.60           172,883,685.42                   -      172,883,685.42
 Energy
 Changhong
                      190,122,411.51        58,864,880.48        248,987,291.99           135,812,098.27                   -      135,812,098.27
 Ridian
 Meiling Kadi         111,284,441.35          158,066.04         111,442,507.39             61,535,910.44                  -       61,535,910.44


(Continued)
                                                                           Opening balance
 Subsidiary                                                                                                  Non-current
                    Current assets     Non-current assets        Total assets          Current liabilities                      Totalliabilities
                                                                                                               liability
 Zhongke
                       95,736,799.26        79,041,552.96        174,778,352.22             56,884,199.81       5,000,000.00       61,884,199.81
 Meiling
 Hongyuan
 Ground                94,131,015.35           214,113.11            94,345,128.46          74,502,317.25                          74,502,317.25
 Energy




                                                                        197
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
 Subsidiary                                                               Opening balance
 Changhong
                      201,344,325.02        59,154,559.91        260,498,884.93       151,381,017.63                         151,381,017.63
 Ridian
 Meiling Kadi                      -                   -                       -                   -                  -                   -


(Continued)
                                                                         Current period
 Subsidiary                                                                         Total comprehensive              Cash flow from
                     Operation income                       Net profit
                                                                                           income                   operation activity
 Zhongke
                                 60,567,937.18                     2,968,339.70                   2,968,339.70                36,565,279.44
 Meiling
 Hongyuan
 Ground                         266,905,097.64                     4,841,638.97                   4,841,638.97                -9,120,688.64
 Energy
 Changhong
                                208,290,529.53                     4,057,326.42                   4,057,326.42                -5,939,023.08
 Ridian
 Meiling Kadi                    24,592,916.36                       -93,403.05                        -93,403.05               309,458.60


(Continued)
                                                       Amount for the same period of last year
   Subsidiary                                                                       Total comprehensive              Cash flow from
                     Operation income                       Net profit
                                                                                           income                   operation activity
 Zhongke
                                 38,908,381.02                     2,151,566.44                   2,151,566.44                 6,169,648.52
 Meiling
 Hongyuan
 Ground                           34,314,113.36                     -798,632.06                    -798,632.06                  -926,619.14
 Energy
 Changhong
                                222,027,059.04                     3,034,542.05                   3,034,542.05                27,949,640.51
 Ridian
 Meiling Kadi                                -                                 -                               -                          -


      (4) Major limitation on using enterprise group’s assets and liquidate debts of enterprise group: Nil

     (5) Offering financial supporting or other supports for structured entity that included in consolidation
statement scope: Nil




                                                                     198
 Annotations of Financial Statements of Hefei Meiling Co., Ltd.
 From 1 January 2017 to 30 June 2017
 (Unless other wise specified, RMB for record in the Statement)

          2. Changes of owner’ equity shares in subsidiary and its impacts
                                  Changchun      zhengzhou     Shijiazhuang   Mianyang      Fuzhou        Nanjing       Hangzhou      Chongqing     Kunming       Nantong       Harbin        Beijing
             Item                                                                                                                                                                                           Total
                                   Meiling        Meiling        Meiling       Meiling      Meiling       Meiling        Meiling       Meiling      Huidian       Meiling       Meiling       Meiling
Originalratio ofsharesheld            97.00%        95.00%          95.33%       93.80%        99.00%        99.00%        95.00%        98.00%        95.50%        92.00%        95.00%        99.00%
Equitypurchased fromminority           3.00%         5.00%           4.67%          6.20%       1.00%         1.00%         5.00%         2.00%         2.00%         8.00%         5.00%         1.00%
Ratio of shares held at
                                     100.00%       100.00%         100.00%      100.00%       100.00%       100.00%       100.00%       100.00%        97.50%       100.00%       100.00%       100.00%
 period-end
Cash                                        1             3              1             5              1             1            1             1              4             1             1             1           21.00
Acquisition cost/total disposal
                                            1             3              1             5              1             1            1             1              4             1             1             1           21.00
consideration
Less: net assets of subsidiary
measured by equity shares          -170,960.56   -769,777.59     -97,449.94    412,939.38   -119,653.94   -117,860.92   -735,435.01    -48,991.17    -20,037.95   -441,685.90   -156,586.55   -381,676.73   -2,647,176.88
obtainedbydisposed
Balance                            170,961.56     769,780.59      97,450.94   -412,934.38   119,654.94    117,861.92     735,436.01     48,992.17    20,041.95    441,686.90    156,587.55    381,677.73    2,647,197.88
Including:
                                   -170,961.56   -769,780.59     -97,450.94    412,934.38   -119,654.94   -117,861.92   -735,436.01    -48,992.17    -20,041.95   -441,686.90   -156,587.55   -381,677.73   -2,647,197.88
Capitalpublicreserveadjusted

      The balance between the newly achieved long-term equity investment by purchasing stock rights of minority shareholders of some marketing subsidiaries and the net
 asset shares held by the subsidiary continuously calculated from the purchase date and calculated by the newly increased shareholding ratio was -2,647,197.88 Yuan, and
 should be included in the capital reserve.




                                                                              199
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

        3. Equity in joint venture or affiliated enterprise

        (1) Major joint venture or affiliated enterprise
                                                                                                              Share holding
                                                                                                                  (%)              Accounting

                                                                                                                                   treatment          for
                                                         Main office         Registe         Business                              investment          of
 Joint venture or affiliated enterprise                    place             r place          nature         Direct     Indire
                                                                                                               ly        ctly      joint venture or

                                                                                                                                   affiliated

                                                                                                                                   enterprise
 Affiliated enterprise:
1.ChanghongRubaElectricCompany                            Lahore,                         Manufactures,
                                                                             Lahore                                       40.00            Equity
(Private)Ltd.                                             Pakistan                        sales
2.Hefei Xingmei Assets Management Co.,                                                    Rental,
                                                            Hefei            Hefei                              48.28                      Equity
Ltd.                                                                                      agency
3.Sichuan Zhiyijia Network Technology
                                      Mianyang                              Mianyang Sales                      30.00                      Equity
Co., Ltd.
4.Hongyuan Dineng Rebao Technology Co.                                                    R & D, sales,
                                       Mianyang                             Mianyang                                      49.00            Equity
Ltd.                                                                                      after-sales
5.Sichuan Tianyou Guigu Technology Co.,                                                   Manufactures,
                                        Mianyang                            Mianyang                                      25.00            Equity
Ltd.                                                                                      sales
6.Chengdu Guigu Environment Technology                                                    Manufactures,
                                                          Chengdu           Chengdu                                       25.00            Equity
Co., Ltd.                                                                                 sales

        (2) Financial information for major Joint venture: Nil

        (3) Financial information for affiliated enterprise
                                                                                Ending balance /Current period
                                                                                                                                             Chengdu
                                                         HefeiXingmei         Sichuan Zhiyijia         Hongyuan            Sichuan
                Item                  ChanghongRub                                                                                             Guigu
                                                            Assets                Network            Dineng Rebao       Tianyou Guigu
                                      aElectricCompa                                                                                       Environmen
                                                         Management           Technology Co.,        Technology Co.     Technology Co.,
                                       ny(Private)Ltd.                                                                                     t Technology
                                                           Co.,Ltd.                 Ltd.                  Ltd.               Ltd.
                                                                                                                                             Co., Ltd.
 Currentassets:                         106,622,727.23      3,794,894.67       1,767,413,320.51       108,375,007.35       11,803,904.00      37,397,817.27
 Including: cash and cash
                                            862,247.27      3,737,574.67           525,244,514.18         536,417.51        6,302,339.05      25,814,460.87
 equivalent
 Non-currentassets                       81,040,087.59    22,419,345.68             13,977,775.32        4,042,220.08     25,380,204.84       14,467,194.33
 Total assets                           187,662,814.82    26,214,240.35        1,781,391,095.83       112,417,227.43      37,184,108.84       51,865,011.60
 Currentliability                       101,018,008.57      1,603,225.17       1,730,935,643.69         59,301,986.01        606,786.89         9,124,966.94
 Mom-currentliability                                -                  -            1,400,000.00                  -        1,511,363.63         243,750.00
 Totalliabilities                       101,018,008.57      1,603,225.17       1,732,335,643.69         59,301,986.01       2,118,150.52        9,368,716.94
 Minority’sinterest                                 -                  -                        -        104,684.88                  -                     -
 Equity attributable to shareholder
                                         86,644,806.25     24,611,015.18            49,055,452.14       53,010,556.54     35,065,958.32       42,496,294.66
 ofparentcompany
 Share of net assets measured by
                                         34,657,922.50     11,882,198.13            14,716,635.63       25,975,172.70       8,766,489.58      10,624,073.66
 shareholding
 Adjustmenttime                                      -                  -                        -                 -                  -                     -
 --Goodwill                                          -                  -                        -                 -                  -                     -




                                                                             200
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
 Unrealized profit of the internal
                                           5,544,313.98                      -            7,572,751.93            3,245,444.30            12,057.40                178.89
 downstreamtransactions
 Unrealized profit of the internal
                                               517,388.80                    -                       -                      -                     -                     -
 upstreamtransactions
 Other                                                  -                    -                       -                      -                     -                     -
 Book value of the equity
                                          29,113,608.52         11,882,198.13             7,143,883.70       22,729,728.40              8,754,432.18        10,623,894.77
 investmentforaffiliate
 Fair value of equity investment
 for the affiliates with consideration                  -                    -                       -                      -                     -                     -
 publicly
 Operation income                        130,908,878.06              74,174.75     1,824,770,956.91          24,702,679.10               513,414.56          2,635,882.58
 Financialexpenses                             191,224.13            -5,430.52           -11,144,192.28             69,906.80           -310,264.28            -76,340.87
 Income taxexpenses                                     -                    -            7,230,229.39                      -                     -                     -
 Netprofit                                     -632,619.48      -1,061,727.97            12,060,219.73              -71,775.81          -304,136.00         -3,422,217.75
 Net profit of discontinuing
                                                        -                    -                       -                      -                     -                     -
 operation
 Othercomprehensiveincome                               -                    -                       -                      -                     -                     -
 Total comprehensiveincome                              -                    -                       -                      -                     -                     -
 Dividend received from affiliates
                                                        -                    -                       -                      -                     -                     -
 in theYear

(Continued)
                                                                      Opening balance /Amount forthe same period of lastYear

                                                ChanghongRuba          HefeiXingmei         Sichuan Zhiyijia           Hongyuan
                         Item                                                                                                               SichuanTianyou
                                                ElectricCompany           Assets            Network                  Dineng Rebao
                                                                                                                                           GuiguTechnology
                                                                       Management           Technology Co.,          Technology Co.
                                                   (Private)Ltd                                                                                 Co.,Ltd.
                                                                         Co.,Ltd.           Ltd.                          Ltd.
          Currentassets:                             53,816,804.37        4,306,112.28         1,082,166,887.90        110,218,752.45            46,813,516.00
          Including: cash and cash
                                                      3,218,558.81        4,230,072.28          432,181,490.05           3,089,747.24            36,370,617.75
          equivalent
          Non-currentassets                          87,139,096.04      22,951,140.57             14,581,224.90          4,316,949.46            42,568,210.38
          Total assets                              140,955,900.41      27,257,252.85          1,096,748,112.80        114,535,701.91            89,381,726.38
          Currentliability                           51,373,683.63        1,584,509.70         1,058,052,880.39         61,339,639.80            54,110,854.39
          Mom-currentliability                                                                     1,700,000.00                                   4,078,409.09
          Totalliabilities                           51,373,683.63        1,584,509.70         1,059,752,880.39         61,339,639.80            58,189,263.48
          Minority’sinterest                                                                                              113,729.76
          Equity attributable to shareholder
                                                     89,582,216.78      25,672,743.15             36,995,232.41         53,082,332.35            31,192,462.90
          ofparentcompany
          Share of net assets measured by
                                                     35,832,886.70      12,394,800.39             11,098,569.71         26,010,342.85             7,798,115.73
          shareholding
          Adjustmenttime
          --Goodwill
          Unrealized profit of the internal
                                                      6,783,242.24                                 1,718,196.04          3,239,277.40                  15,398.22
          downstreamtransactions
          Unrealized profit of the internal
                                                        265,029.89
          upstreamtransactions
          Other




                                                                                 201
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
        Book value of the equity
                                                29,314,674.36     12,394,800.39        9,380,373.67       22,771,065.45         7,782,717.50
        investmentforaffiliate
        Fair value of equity investment
        for the affiliates with consideration
        publicly
        Operation income                        70,462,882.13       844,579.58      1,558,745,387.54      90,683,257.48         4,030,586.19
        Financialexpenses                         100,521.40          -3,138.37        -4,722,600.31         -24,436.43          -310,111.90
        Income taxexpenses                                 -                   -       1,997,985.96                  -                    -
        Netprofit                               -2,017,456.15       -116,030.74        9,003,340.70       -4,238,296.19        -2,700,889.12
        Net profit of discontinuing
        operation
        Othercomprehensiveincome
        Total comprehensiveincome
        Dividend received from affiliates
        in theYear


      (4) Financial summary for non-important Joint venture and affiliate enterprise
                                                                Ending balance / Current               Opening balance /Amount forthe same period
                           Item
                                                                         period                                        of lastYear
 Affiliate:
 Total book value of investment
 Total amount measured by shareholding
 ratio
 --net profit                                                                      -4,967,426.56                                  -1,831,541.72
 --Other comprehensiveincome
 -- Total comprehensiveincome                                                      -4,967,426.56                                  -1,831,541.72


      (5) Major limitation on capital transfer ability to the Company from joint venture or affiliates: Nil
      (6) Excess loss occurred in joint venture or affiliates: Nil

      (7) Unconfirmed commitment with joint venture investment concerned: Nil

      (8) Intangible liability with joint venture or affiliates investment concerned: Nil

      4. Major conduct joint operation: Nil

      5. Structured body excluding in consolidate financial statement: Nil

      IX. Relevant risks related with financial instrument

     The major financial instruments of the Company include borrowings, account receivables, account
payables, transactional financial assets, transactional financial liabilities, the details of which are set out in
Note 6. Risks related to these financial instruments include exchange risks and interest rate risks. The
management of the Company controls and monitors the risk exposures to ensure the above risks are under
control.

     In connection with exchange risks, in order to prevent from exchange risks arising from foreign
currency transaction amount, foreign currency dominated loans and interest expenditure, the Company


                                                                         202
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

entered into several forward exchange contracts with banks. Fair value of the forward exchange contract
which has been recognized as derivative financial instrument as of 31 December 2016 has been included
in profits and losses. As export business is increasing, if risks that are out of control of the Company occur
such as appreciation of RMB, the Company will mitigate the relevant risks by adjusting its sales policy.

      The Company’s interest rate risk arises from bank borrowings and interest-bearing debt. Financial
liabilities at floating rate expose the Company to cash flow interest rate risk, and financial liabilities at
fixed rate expose the Company to fair value interest rate risk. The Company will determine the respective
proportion of contracts at fixed and floating rates based on the prevailing market conditions. As of 30 June
2017, the interest-bearing debts mainly referred to borrowing contracts at floating rate denominated in
RMB with total amount of 1,215,413,395.00, borrowing contracts at fixed rate denominated in USD with
total amount of 273,008,320.00, borrowing contracts at fixed rate denominated in EURO with total
amount of 197,660,986.07. Risks relating to change of fair value of financial instruments arising from
movement of interest rate mainly related to bank borrowings at fixed rate. As for borrowings at fixed rate,
the Company aims to keep its floating rate. Risks relating to change of cash flow of financial instruments
arising from movement of interest rate mainly related to bank borrowings at floating rate. The Company
establishes its policy to keep floating rate for these borrowings so as to eliminate fair value risk arising
from movement of interest rate.

      X. Fair value

     1. Asset and liability measured by fair value at end of the period and fair value measurement level
                                                                      F ai r v al u e at p e r i o d - e n d
                   Item
                                                    1st level                2nd level               3rd level     Total

 Financial assets measured by fair value and with variation reckoned into current gains/losses
 1. Transactional financial assets

 (1) Derivative financial assets                                            10,813,272.50                        10,813,272.50

 Financial liabilities measured by fair value and with variation reckoned into current gains/losses
 1. Transactional financial liabilities

 (1) Derivative financial liabilities                                         9,671,394.08                        9,671,394.08


    The derivative contract is measured by fair value on 2nd level, which is the real-time quote on foreign
exchange market on balance sheet date.

      XI. Related parties and related transaction

      (I) Relationship of related parties

      1. Controlling shareholder and ultimate controller

     (1) Controlling shareholder and ultimate controller




                                                                203
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

     Controlling shareholder and                       Place of                              Legal
                                          Type of                        Nature of                            Organization
                                                      registratio                         representativ
                                           entity                        business                                code
          ultimate controller                              n                                    e
 Sichuan Changhong Electric Co.,          Mianya     Manufactur
                                                                       4,616,244,222               25.10%               25.10%
 LTD                                       ng        e and sales

     Sichuan Changhong Electronic Holding Group is the controlling shareholder of Sichuan Changhong
Appliances, and the SASAC Mianyang office holds 100.00% equity interests of Sichuan Changhong
Electronic Holding Group, which means that SASAC Mianyang office is the ultimate controller of the
Company.

     (2) Register capital and change thereof of controlling shareholder
                                                                      Increase          Decrease
       Controlling shareholder             Opening balance           during the        during the           Ending balance
                                                                       period            period
 Sichuan Changhong Electric Co.,
                                                  4,616,244,222                                                   4,616,244,222
 LTD


(3) Shares held by the controlling shareholder and its changes on equity

                                                  Amount of shares held                      Shareholding ratio (%)
       Controlling shareholder                                                            Ratio at                 Ratio at
                                           Ending balance         Opening balance
                                                                                         period-end               year-begin
 Sichuan Changhong Electric Co.,
                                                262,171,365           259,871,791                  25.10%               24.88%
 LTD

      2. Subsidiary

     Found more in Note ―VIII. 1 (1) Enterprise group composition‖

      3. Joint venture and affiliated enterprise

     Major Joint venture and affiliated enterprise of the Company found more in Note ―VIII. 3 (1) major
joint venture and affiliated enterprise‖. Other Joint venture and affiliated enterprise that have related
transactions occurred with the Company in the Year or occurred in last period, and with balance results:
           Joint venture and affiliated enterprise                                       Relationship
 Hefei Meiling Sole Energy Technology Co., Ltd.                  Affiliated enterprise of Subsidiary Meiling Group
 ChanghongRubaElectricCompany(Private)Ltd.                       Affiliated enterprise of Subsidiary Zhongshan Changhong
 Hefei Xingmei Assets Management Co., Ltd.                       Affiliated enterprise of the Company
                                                                 Affiliated enterprise of the Company, sharing the same
 Sichuan Zhiyijia Network Technology Co., Ltd.                   controlling shareholder with the Company and actual
                                                                 controller
                                                                 Affiliated enterprise        of     Subsidiary      Changhong
 Hongyuan Dineng Rebao Technology Co. Ltd.
                                                                 Air-conditioning
                                                                 Affiliated enterprise        of     Subsidiary      Changhong
 Sichuan Tianyou Guigu Technology Co., Ltd.
                                                                 Air-conditioning
                                                                 Affiliated enterprise        of     Subsidiary      Changhong
 Chengdu Guigu Environment Technology Co., Ltd.
                                                                 Air-conditioning

      4. Other related parties



                                                            204
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                   Other related parties                                             Relationship
                                                                 Control by same controlling shareholder and ultimate
 CHANGHONG(HK)TRADINGLIMITED
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 CHANGHONGELECTRIC(AUSTRALIA)
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 CHANGHONGELECTRICMIDDLEEASTFZE
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 PT.CHANGHONGELECTRICINDONESIA
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Chengdu Changhong Electronic Technology Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Guangdong Changhong Electronics Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Guangdong Changhong Device Technology Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Guangyuan Changhong Electronics Technology Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Hefei Changhong Industrial Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Huayi Compressor Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Lejiayi Chain Management Co., Ltd.
                                                                 controller
 Mianyang Technology Town Big Data Technology Co.,               Control by same controlling shareholder and ultimate
 Ltd.                                                            controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Hongwei Technology Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Hongxin Software Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Service Exp. Appliance Service Chain Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Changhong Package Printing Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Changhong Innovation Investments Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Changhong Diandianbang Tech. Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Changhong Power Source Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Changhong Electronic Products Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Changhong Electronic System Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Changhong Energy Sunshine Technology Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Changhong Jijia Fine Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Changhong Precision Electronics Tech. Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Changhong Minsheng Logistics Co., LTD
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Changhong Mold Plastic Tech. Co., Ltd.
                                                                 controller
 Sichuan Changhong Devices Technology Co., Ltd.                  Control by same controlling shareholder and ultimate




                                                           205
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                     Other related parties                                           Relationship
                                                                 controller

                                                                 Control by same controlling shareholder and ultimate
 Sichuan Changhong Network Tech. Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Changhong New Energy Tech. Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Changhong Wisdom Health Technology Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Changhong Property Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Changhong International Holdings (Hong Kong) Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 BVCH Optronics (Sichuan) Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Orion PDP Co.,ltd
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Anhui Xinhao PDP Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Guangyuan Hongcheng Industrial Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 081 Electronic Group
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Ailian Technology Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Hongcheng Real Estate Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Hongcheng Construction Engineering Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Huafeng Enterprise Group Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Huanyu Industrial Co. Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Jiahong Industry Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Changhong Electronic Technology Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Changhong Gerun Renewable Resources Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Changhong International Hotel Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Changhong International Travel Agency Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Changhong Group Finance Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Changhong Educational Technology Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Changhong Property Service Co., Ltd.
                                                                 controller
                                                                 Control by same controlling shareholder and ultimate
 Sichuan Changhong Xinrui Technology Co., Ltd
                                                                 controller
 Sichuan Changhong Intelligent Manufacturing Technology          Control by same controlling shareholder and ultimate
 Co., Ltd.                                                       controller
                                                                 Control by same controlling shareholder and ultimate
 Yibing Hongxing Electronics Co., Ltd.
                                                                 controller




                                                           206
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                   Other related parties                                                  Relationship
 Sichuan Hongyu Metal Manufacture Co., Ltd.                      Affiliate enterprise of controlling shareholder
 Sichuan Changxin Refrigeration Parts Co., Ltd.                  Affiliate enterprise of controlling shareholder
 Mianyang Highly Electric Co., Ltd.                              Affiliate enterprise of controlling shareholder
 Sichuan Changhe Technology Co., Ltd.                            Affiliate enterprise of controlling shareholder
 Sichuan Jiashibang Electric Service Co., Ltd.                   Affiliate enterprise of controlling shareholder
 Hengyouyuan Technology Development Group Co., Ltd.              The investor has major influence on the subsidiary


      (II) Related transactions

     1. Purchasing commodity
                                                                                                              Amount for the
                                                                                        Current period        same period of
                       Related parties                                Content            (10 thousand            last Year
                                                                                             Yuan)             (10 thousand
                                                                                                                   Yuan)
                                                                    Purchasing
Sichuan Changhong Electric Co., Ltd.                                                             20,358.26             7,972.57
                                                                    commodity
                                                                    Purchasing
Huayi Compressor Co., Ltd.                                                                       22,954.46            23,598.51
                                                                    commodity
                                                                    Purchasing
Sichuan Changhong Mold Plastic Tech. Co., Ltd.                                                   32,589.07            24,724.78
                                                                    commodity
                                                                    Purchasing
Sichuan Changhong Jijia Fine Co., Ltd.                                                           15,533.97            11,425.50
                                                                    commodity
                                                                    Purchasing
Sichuan Changhong Package Printing Co., Ltd.                                                      5,360.60             2,819.62
                                                                    commodity
                                                                    Purchasing
Sichuan Changhong Precision Electronics Tech. Co., Ltd.                                             748.78              471.03
                                                                    commodity
                                                                    Purchasing
Sichuan Jiahong Industry Co., Ltd.                                                                                         2.91
                                                                    commodity
                                                                    Purchasing
Sichuan Changhong New Energy Tech. Co., Ltd.                                                           0.71              16.18
                                                                    commodity
                                                                    Purchasing
081 Electronic Group                                                                                235.55              165.29
                                                                    commodity
                                                                    Purchasing
Sichuan Changhong Devices Technology Co., Ltd.                                                                         2,578.26
                                                                    commodity
                                                                    Purchasing
Guangdong Changhong Electronics Co., Ltd.                                                           663.79              561.62
                                                                    commodity
                                                                    Purchasing
CHANGHONG(HK)TRADINGLIMITED                                                                                             179.34
                                                                    commodity
                                                                    Purchasing
Sichuan Changhong Energy Sunshine Technology Co., Ltd.                                                                     0.57
                                                                    commodity
Sichuan Changhong Intelligent Manufacturing Technology              Purchasing
                                                                                                     86.44               46.93
Co., Ltd.                                                           commodity
                                                                    Purchasing
Sichuan Changhong Xinrui Technology Co., Ltd                                                      4,901.96             2,874.03
                                                                    commodity
                                                                    Purchasing
Sichuan Changhong Power Source Co., Ltd.                                                                                   3.68
                                                                    commodity
                                                                    Purchasing
Sichuan Hongwei Technology Co., Ltd.                                                                                       4.92
                                                                    commodity
                                                                    Purchasing
Sichuan Zhiyijia Network Technology Co., Ltd.                                                          0.92                1.32
                                                                    commodity




                                                           207
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                                                                                                     Amount for the
                                                                                 Current period      same period of
                       Related parties                             Content        (10 thousand          last Year
                                                                                      Yuan)           (10 thousand
                                                                                                          Yuan)
                                                                  Purchasing
Sichuan Huafeng Enterprise Group Co., Ltd.                                                    1.40
                                                                  commodity
                                                                  Purchasing
Sichuan Changhong Electronic Products Co., Ltd.                                           2,403.23
                                                                  commodity
                                                                  Purchasing
Sichuan Ailian Technology Co., Ltd.                                                        434.57
                                                                  commodity
                                                                  Purchasing
Sichuan Changhong Educational Technology Co., Ltd.                                            5.03
                                                                  commodity
                                                                  Purchasing
Sichuan Hongyu Metal Manufacture Co., Ltd.                                                  63.52                 6.97
                                                                  commodity
                                                                  Purchasing
Sichuan Changhe Technology Co., Ltd.                                                       431.07              308.60
                                                                  commodity
                                                                  Purchasing
Sichuan Changxin Refrigeration Parts Co., Ltd.                                           21,212.11           11,569.40
                                                                  commodity
                                                                  Purchasing
Mianyang Highly Electric Co., Ltd.                                                       18,335.82           11,853.60
                                                                  commodity
                                                                  Purchasing
Mianyang Hongrun Electronics Co., Ltd.                                                                         583.74
                                                                  commodity
                                                                  Purchasing
Hongyuan Dineng Rebao Technology Co. Ltd.                                                                     7,981.68
                                                                  commodity
                                                                  Purchasing
Sichuan Tianyou Guigu Technology Co., Ltd.                                                                     175.02
                                                                  commodity
                                                                  Purchasing
Chengdu Guigu Environment Technology Co., Ltd.                                                3.28
                                                                  commodity
                            Total                                                      146,324.54          109,926.07


     2. Labor service receive
                                                                                                     Amount for the
                       Related parties                             Content       Current period      same period of
                                                                                                       last Year
                                                                 Labor service
Sichuan Changhong Electric Co., Ltd.                                                  8,164,963.58       12,247,946.22
                                                                   receive
                                                                 Labor service
Sichuan Changhong Electronics Holding Group Co., Ltd.                                    23,035.00            9,235.00
                                                                   receive
                                                                 Labor service
Sichuan Changhong Minsheng Logistics Co., LTD                                       251,485,024.96      179,284,102.84
                                                                   receive
                                                                 Labor service
Sichuan Service Exp. Appliance Service Chain Co., Ltd.                               73,918,850.99       54,735,610.51
                                                                   receive
                                                                 Labor service
Sichuan Hongxin Software Co., Ltd.                                                     632,000.00            37,735.85
                                                                   receive
                                                                 Labor service
Guangdong Changhong Electronics Co., Ltd.                                              308,552.78          298,128.51
                                                                   receive
                                                                 Labor service
Sichuan Jiahong Industry Co., Ltd.                                                     236,642.41          148,240.81
                                                                   receive
                                                                 Labor service
Sichuan Changhong International Hotel Co., Ltd.                                          83,082.01           81,913.94
                                                                   receive
                                                                 Labor service
CHANGHONG(HK)TRADINGLIMITED                                                            237,531.09            97,468.90
                                                                   receive
                                                                 Labor service
Sichuan Changhong International Travel Agency Co., Ltd.                                  31,250.00
                                                                   receive



                                                           208
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                                                                  Labor service
Sichuan Changhong Property Service Co., Ltd.                                               386,219.15
                                                                    receive
                                                                  Labor service
Sichuan Hongwei Technology Co., Ltd.                                                       206,683.02
                                                                    receive
                                                                  Labor service
Sichuan Zhiyijia Network Technology Co., Ltd.                                              155,943.39
                                                                    receive
                                                                  Labor service
Lejiayi Chain Management Co., Ltd.                                                           22,641.51
                                                                    receive
                                                                  Labor service
Sichuan Changhong Network Tech. Co., Ltd.                                                     5,743.71
                                                                    receive
Sichuan Changhong Intelligent Manufacturing Technology            Labor service
                                                                                           196,581.20
Co., Ltd.                                                           receive
                                                                  Labor service
Sichuan Changhong Jijia Fine Co., Ltd.                                                        1,794.87
                                                                    receive
                            Total                                                       336,096,539.67      246,940,382.58


     3. Purchase of fuels and energy
                                                                                                         Amount for the
                       Related parties                               Content         Current period      same period of
                                                                                                           last Year

                                                                 Receive fuels and
Sichuan Changhong Electric Co., Ltd.                                                      6,950,453.59        6,045,488.65
                                                                      energy

                                                                 Receive fuels and
Sichuan Changhong Electronics Holding Group Co., Ltd.                                                            10,243.00
                                                                      energy

                                                                 Receive fuels and
Huayi Compressor Co., Ltd.                                                                                     262,087.18
                                                                      energy

                                                                 Receive fuels and
Guangdong Changhong Electronics Co., Ltd.                                                  498,792.14          570,996.81
                                                                      energy

                                                                 Receive fuels and
Sichuan Jiahong Industry Co., Ltd.                                                            4,781.60            7,135.70
                                                                      energy

                                                                 Receive fuels and
Sichuan Changhong Property Service Co., Ltd.                                                 10,928.55
                                                                      energy
                            Total                                                         7,464,955.88        6,895,951.34


     4. Sales of goods/ labor service providing
                                                                                                         Amount for the
                                                                                     Current period      same period of
                       Related parties                               Content          (10 thousand          last Year
                                                                                          Yuan)           (10 thousand
                                                                                                              Yuan)
Sichuan Changhong Electric Co., Ltd.                              Sales of goods             84,180.47           53,934.25
Sichuan Changhong Electronics Holding Group Co., Ltd.             Sales of goods                99.47              148.47
Sichuan Changhong Jijia Fine Co., Ltd.                            Sales of goods              3,774.84            2,269.56
Sichuan Changhong Mold Plastic Tech. Co., Ltd.                    Sales of goods              5,503.42            8,989.13
Lejiayi Chain Management Co., Ltd.                                Sales of goods               173.06              176.06




                                                           209
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                                                                                                     Amount for the
                                                                                  Current period     same period of
                       Related parties                             Content         (10 thousand         last Year
                                                                                       Yuan)          (10 thousand
                                                                                                          Yuan)
PT.CHANGHONGELECTRICINDONESIA                                    Sales of goods               0.49
CHANGHONG(HK)TRADINGLIMITED                                      Sales of goods          24,741.31          36,112.72
CHANGHONGELECTRIC(AUSTRALIA)                                     Sales of goods             847.30              10.66
Sichuan Hongwei Technology Co., Ltd.                             Sales of goods               8.95               0.61
Sichuan Changhong Devices Technology Co., Ltd.                   Sales of goods                                  0.17
Sichuan Changhong Minsheng Logistics Co., LTD                    Sales of goods             108.76              58.92
Sichuan Service Exp. Appliance Service Chain Co., Ltd.           Sales of goods             559.66             285.23
Sichuan Changhong Gerun Renewable Resources Co., Ltd.            Sales of goods             759.82             364.88
Hefei Changhong Industrial Co., Ltd.                             Sales of goods               2.11             104.71
Sichuan Huafeng Enterprise Group Co., Ltd.                       Sales of goods               0.26              15.58
Sichuan Zhiyijia Network Technology Co., Ltd.                    Sales of goods          98,589.85          66,360.65
Sichuan Changhong Property Co., Ltd.                             Sales of goods               5.97               3.70
Anhui Xinhao PDP Co., Ltd.                                       Sales of goods                                  5.13
Sichuan Changhong Network Tech. Co., Ltd.                        Sales of goods               8.71               0.61
Chengdu Changhong Electronic Technology Co., Ltd.                Sales of goods                                  1.55
Sichuan Changhong Wisdom Health Technology Co., Ltd.             Sales of goods               0.36               0.30
Sichuan Changhong Property Service Co., Ltd.                     Sales of goods               2.05
Guangdong Changhong Electronics Co., Ltd.                        Sales of goods                                  0.14
Sichuan Huanyu Industrial Co. Ltd.                               Sales of goods              12.10               0.42
Sichuan Changhong Xinrui Technology Co., Ltd                     Sales of goods               1.89              75.89
Orion PDP Co.,ltd                                                Sales of goods             961.52
Sichuan Changhong Intelligent Manufacturing Technology
                                                                 Sales of goods               1.12               0.23
Co., Ltd.
Mianyang Technology Town Big Data Technology Co., Ltd.           Sales of goods               0.29
BVCH Optronics (Sichuan) Co., Ltd.                               Sales of goods               1.28
Sichuan Changhong Electronic Products Co., Ltd.                  Sales of goods               9.04
Sichuan Changhong Group Finance Co., Ltd.                        Sales of goods               1.59
Sichuan Changhong Package Printing Co., Ltd.                     Sales of goods               1.76
Sichuan Changhong Power Source Co., Ltd.                         Sales of goods              35.17
Sichuan Changhong Educational Technology Co., Ltd.               Sales of goods               1.63
081 Electronic Group                                             Sales of goods               4.46
Guangyuan Changhong Electronics Technology Co., Ltd.             Sales of goods              39.05
Sichuan Ailian Technology Co., Ltd.                              Sales of goods              19.22
Sichuan Changhong Innovation Investments Co., Ltd.               Sales of goods               0.02
Guangyuan Hongcheng Industrial Co., Ltd.                         Sales of goods               0.10
Sichuan Changhong Energy Sunshine Technology Co., Ltd.           Sales of goods               0.12




                                                           210
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                                                                                                      Amount for the
                                                                                   Current period     same period of
                       Related parties                              Content         (10 thousand         last Year
                                                                                        Yuan)          (10 thousand
                                                                                                           Yuan)
Sichuan Changhong Electronic Technology Co., Ltd.                Sales of goods                0.42
Sichuan Hongxin Software Co., Ltd.                               Sales of goods                0.62
Sichuan Hongcheng Real Estate Co., Ltd.                          Sales of goods                0.75
Sichuan Changhong New Energy Tech. Co., Ltd.                     Sales of goods               64.70
Sichuan Changhong Electronic System Co., Ltd.                    Sales of goods                3.23
Sichuan Changhong Precision Electronics Tech. Co., Ltd.          Sales of goods                8.86
Changhong International Holdings (Hong Kong) Co., Ltd.           Sales of goods                0.05
Sichuan Changxin Refrigeration Parts Co., Ltd.                   Sales of goods            5,863.82           3,962.85
Hongyuan Dineng Rebao Technology Co. Ltd.                        Sales of goods            1,040.01          12,126.08
Sichuan Tianyou Guigu Technology Co., Ltd.                       Sales of goods               36.18             210.02
ChanghongRubaElectricCompany(Private)Ltd.                        Sales of goods            1,122.42           3,524.40
                            Total                                                        228,598.28         188,742.92


     Businesses between the Company and its connected persons are generally conducted under market
operation rules as if they were the same as other business counterparties. For price of sale or purchase
and provision of other labor service between the Company and its related parties, the state pricing is
applicable if the pricing do exists; in case of absence of such state pricing, price is determined under
market price; in case of absence of such market price, price is determined by both parties at actual cost
plus reasonable expenses; for some special services, the price of which cannot be determined under the
rule of cost plus expense, the price shall be determined by both parties by negotiation.

     5. Fuel and energy providing
                                                                                                      Amount for the
                      Related parties                               Content        Current period     same period of
                                                                                                        last Year
                                                                 Fuel and energy
 Guangdong Changhong Electronics Co., Ltd.                                               51,666.51         292,821.41
                                                                   providing
                                                                 Fuel and energy
 Sichuan Changhong Minsheng Logistics Co., LTD                                           10,848.03          20,229.17
                                                                   providing
                                                                 Fuel and energy
 Sichuan Hongwei Technology Co., Ltd.                                                        71.89
                                                                   providing
                                                                 Fuel and energy
 Sichuan Changhong Devices Technology Co., Ltd.                                         333,399.12         136,553.66
                                                                   providing
                                                                 Fuel and energy
 Sichuan Changhong Jijia Fine Co., Ltd.                                                  13,781.32          65,288.54
                                                                   providing
                                                                 Fuel and energy
 Sichuan Changhong Mold Plastic Tech. Co., Ltd.                                        2,030,399.35       3,010,107.37
                                                                   providing
                                                                 Fuel and energy
 Hefei Changhong Industrial Co., Ltd.                                                      9,677.31
                                                                   providing
                                                                 Fuel and energy
 Sichuan Changhong Precision Electronics Tech. Co., Ltd.                                   1,964.92
                                                                   providing
                                                                 Fuel and energy
 Sichuan Service Exp. Appliance Service Chain Co., Ltd.                                    2,269.46
                                                                   providing




                                                           211
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                                                                                                            Amount for the
                       Related parties                             Content              Current period      same period of
                                                                                                              last Year
                             Total                                                          2,454,077.91        3,525,000.15


      6. Related rental

      (1) Renting
                                                                                                             Leasing income
                                                                         Type of          Leasing income       in the same
    Lessor                               Lessee
                                                                          assets           in this period     period of last
                                                                                                                   year
  Hefei Meiling
                  Sichuan Changhong Jijia Fine Co., Ltd.                     Plant             253,680.00
    Co.,Ltd.
  Hefei Meiling
                  Sichuan Changhong Jijia Fine Co., Ltd.               Warehouse                                   14,060.38
    Co.,Ltd.
  Hefei Meiling
                  Sichuan Changhong Jijia Fine Co., Ltd.                Forklifttruck                                442.45
    Co.,Ltd.
  Hefei Meiling
                  Sichuan Changhong Mold Plastic Tech. Co., Ltd.             Plant             702,270.00
    Co.,Ltd.
  Hefei Meiling
                  Sichuan Changhong Mold Plastic Tech. Co., Ltd.       Apartment               152,224.76
    Co.,Ltd.
  Hefei Meiling
                  Sichuan Changhong Mold Plastic Tech. Co., Ltd.       Warehouse                                   34,301.89
    Co.,Ltd.
  Hefei Meiling
                  Sichuan Changhong Minsheng Logistics Co., LTD           Office                10,608.00
    Co.,Ltd.
  Hefei Meiling   Sichuan Service Exp. Appliance Service Chain Co.,
                                                                       Apartment               106,491.41
    Co.,Ltd.      Ltd.
  Hefei Meiling
                  Sichuan Changhong Xinrui Technology Co., Ltd          Forklifttruck            2,016.51            390.57
    Co.,Ltd.
  Hefei Meiling
                  Sichuan Changhong Xinrui Technology Co., Ltd         Warehouse                14,867.93          12,226.42
    Co.,Ltd.
  Hefei Meiling
                  Sichuan Changhe Technology Co., Ltd.                 Warehouse                 5,458.49           1,833.96
    Co.,Ltd.
  Hefei Meiling
                  Hefei Changhong Industrial Co., Ltd.                 Apartment                87,680.00
    Co.,Ltd.
  Hefei Meiling   Sichuan Changhong Precision Electronics Tech. Co.,
                                                                       Apartment                15,657.14
    Co.,Ltd.      Ltd.
 Changhong
                                                                         Freight
 Air-conditio     BVCH Optronics (Sichuan) Co., Ltd.                                            52,480.00          63,720.00
                                                                         elevator
     ner
 Changhong
                                                                         Machinery
 Air-conditio     Sichuan Changhong Mold Plastic Tech. Co., Ltd.                                25,433.40
                                                                         equipment
     ner
 Changhong
 Air-conditio     Sichuan Changhong Jijia Fine Co., Ltd.                 Driving                 7,000.00
     ner
  Zhongshan
                  Guangdong Changhong Electronics Co., Ltd.             2# livingarea           59,606.04           3,889.43
  Changhong
  Zhongshan
                  Sichuan Changhong Minsheng Logistics Co., LTD        Warehouse                                 100,000.00
  Changhong
  Zhongshan                                                               Trade
                  Guangdong Changhong Electronics Co., Ltd.                                                      402,298.16
  Changhong                                                               Center
  Zhongshan                                                               Trade
                  Sichuan Changhong Minsheng Logistics Co., LTD                                                    20,006.99
  Changhong                                                               Center




                                                           212
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                                                                                                              Leasing income
                                                                                Type of     Leasing income      in the same
    Lessor                                Lessee
                                                                                 assets      in this period    period of last
                                                                                                                    year
   Jiangxi
                  Sichuan Changhong Mold Plastic Tech. Co., Ltd.                   Plant        237,432.38        241,197.71
   Meiling
  Changhong
                  Sichuan Changhong Minsheng Logistics Co., LTD                    Plant        514,072.40        515,462.10
    Ridian
  Changhong
                  Sichuan Changhong Devices Technology Co., Ltd.                   Plant        463,469.00        418,624.00
    Ridian
  Changhong
                  Sichuan Hongwei Technology Co., Ltd.                             Plant          35,218.29
    Ridian
   Mianyang
                  Sichuan Changhong Mold Plastic Tech. Co., Ltd.              Warehouse                             32,943.40
  Refrigeration
   Mianyang
                  Sichuan Changhe Technology Co., Ltd.                        Warehouse                               113.21
  Refrigeration
   Mianyang
                  Sichuan Changxin Refrigeration Parts Co., Ltd.              Warehouse                               113.21
  Refrigeration
                                  Total                                                        2,745,665.75      1,861,623.88


      (2) Lessee of related parties
                                                                                                                  Leasing
                                                                                           Leasing expense    expense in the
                   Lessor                               Lessee           Type of assets
                                                                                            in this period    same period of
                                                                                                                 last year
                                                    Changhong
 Sichuan Changhong Electric Co., Ltd.                                      Workshop                              2,204,901.44
                                                   Air-conditioner
                                                    Changhong
 Sichuan Changhong Electric Co., Ltd.                                       Office                                  46,951.52
                                                   Air-conditioner
 Sichuan Changhong Electronics Holding              Changhong
                                                                           Building               33,310.74         51,912.42
 Group Co., Ltd.                                   Air-conditioner
 Sichuan Changhong Property Service                 Changhong
                                                                           Workshop             908,313.35
 Co., Ltd.                                         Air-conditioner
 Guangdong Changhong Electronics Co.,               Changhong
                                                                          Staffdormitory           4,763.20
 Ltd.                                              Air-conditioner
 Chengdu      Changhong          Electronic         Changhong
                                                                            Office                84,765.80
 Technology Co., Ltd.                              Air-conditioner
                                                                           Workshop
 Sichuan Changhong Electric Co., Ltd.          Mianyang Refrigeration                           583,939.82
                                                                            leasing
 Sichuan Changhong Electronics Holding
                                               Mianyang Refrigeration     Staffdormitory           3,280.00          2,080.00
 Group Co., Ltd.
 Sichuan Changhong Electric Co., Ltd.              Appliance marketing      Office                                354,901.77
 Sichuan Changhong Electric Co., Ltd.                BeijingMeiling         Office                                  89,128.50
 Sichuan Changhong Electric Co., Ltd.               NanjingMeiling          Office                10,584.72
 Sichuan Changhong Property Service                   Changmei
                                                                            Office                13,207.55
 Co., Ltd.                                           Technology
 Chengdu      Changhong          Electronic           Changmei
                                                                            Office                80,048.73
 Technology Co., Ltd.                                Technology
 Guangdong Changhong Electronics Co.,                Changhong
                                                                          Staffdormitory          30,975.80       279,543.46
 Ltd.                                                  Ridian
                               Total                                                           1,753,189.71      3,029,419.11


      7. Related guarantee



                                                                  213
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                                                          Maximum guarantee
                                                                                                                         Completed
   Secured party                Sponsored party             amount (in 10               Start              End
                                                                                                                           (Y/N)
                                                           thousand Yuan)
                                   Zhongshan
  Hefei Meiling Co., Ltd.                                       5,000.00             2016.08.05         2017.08.04           N
                                   Changhong
                                   Zhongshan
  Hefei Meiling Co., Ltd.                                       5,000.00             2016.10.28         2017.10.28           N
                                   Changhong
                                   Zhongshan
  Hefei Meiling Co., Ltd.                                       6,000.00             2017.01.03         2018.01.03           N
                                   Changhong
                                   Zhongshan
  Hefei Meiling Co., Ltd.                                       5,500.00             2017.01.22         2018.01.22           N
                                   Changhong
                                   Zhongshan
  Hefei Meiling Co., Ltd.                                      20,000.00             2017.03.01         2018.03.31           N
                                   Changhong
                                   Zhongshan
  Hefei Meiling Co., Ltd.                                      10,000.00             2017.03.29         2018.03.29           N
                                   Changhong
  Hefei Meiling Co., Ltd.      Changhong Ridian                 4,500.00             2016.05.05         2017.05.05           N
  Hefei Meiling Co., Ltd.      Changhong Ridian                 2,000.00             2016.09.01         2017.09.01           N
  Hefei Meiling Co., Ltd.      Changhong Ridian                 2,000.00             2017.06.13         2017.09.01           N
  Hefei Meiling Co., Ltd.       Zhongke Meiling                 2,000.00             2017.02.16         2018.01.05           N
  Hefei Meiling Co., Ltd.       Zhongke Meiling                 1,000.00             2017.06.23         2018.06.22           N
 Counter
 guarantee:
     Zhongshan
                                Hefei Meiling Co., Ltd.         5,000.00             2016.08.05         2017.08.04           N
     Changhong
     Zhongshan
                                Hefei Meiling Co., Ltd.         5,000.00             2016.10.28         2017.10.28           N
     Changhong
     Zhongshan
                                Hefei Meiling Co., Ltd.         6,000.00             2017.01.03         2018.01.03           N
     Changhong
     Zhongshan
                                Hefei Meiling Co., Ltd.         5,500.00             2017.01.22         2018.01.22           N
     Changhong
     Zhongshan
                                Hefei Meiling Co., Ltd.        20,000.00             2017.03.01         2018.03.31           N
     Changhong
     Zhongshan
                                Hefei Meiling Co., Ltd.        10,000.00             2017.03.29         2018.03.29           N
     Changhong
 Changhong Ridian               Hefei Meiling Co., Ltd.         4,500.00             2016.05.05         2017.05.05           N
 Changhong Ridian               Hefei Meiling Co., Ltd.         2,000.00             2016.09.01         2017.09.01           N
 Changhong Ridian               Hefei Meiling Co., Ltd.         2,000.00             2017.06.13         2017.09.01           N
  Zhongke Meiling               Hefei Meiling Co., Ltd.         2,000.00             2017.02.16         2018.01.05           N
  Zhongke Meiling               Hefei Meiling Co., Ltd.         1,000.00             2017.06.23         2018.06.22           N


      8. Assets transfer, debt restructuring of related parties
                                                                                                                     Amount for the
                            Related parties                                 Type                Current period       same period of
                                                                                                                        last year
                                                                        Purchase and
 Sichuan Changhong Electric Co., Ltd.                                construction of fixed            25,000.00           216,211.27
                                                                            assets
                                                                        Purchase and
 Sichuan Changhong                Intelligent       Manufacturing
                                                                     construction of fixed        13,629,166.26
 Technology Co., Ltd.
                                                                            assets

 Sichuan Hongxin Software Co., Ltd.                                     Purchase and               1,895,509.44           188,679.25
                                                                     construction of fixed



                                                                     214
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                                                                                                                    Amount for the
                    Related parties                                     Type                   Current period       same period of
                                                                                                                       last year
                                                                        assets

 Sichuan Hongcheng Construction Engineering Co.,
                                                          Purchasing fixed assets                  3,688,920.36
 Ltd.
 Sichuan Hongcheng Real Estate Co., Ltd.                  Purchasing fixed assets                   509,433.94
 Sichuan Hongwei Technology Co., Ltd.                     Purchasing fixed assets                                      1,110,261.19
                                                           Purchase of intangible
 Sichuan Hongxin Software Co., Ltd.                                                                                      149,292.45
                                                                  assets
 Sichuan Changhong Gerun Renewable Resources
                                                              Fixed assets sold                                           31,091.89
 Co., Ltd.

     9. Related transaction with Changhong Finance Company

     (1) Saving balance
                                                                                                                Income from bank
                 Company                           Opening balance                  Ending balance
                                                                                                                     saving
 Hefei Meiling Co., Ltd.                              1,269,669,769.16                    770,376,202.99               7,605,780.39
 Sichuan Changhong Air-conditioner Co.,
                                                        419,338,790.38                    502,791,520.88               7,453,833.28
 Ltd.
 Zhongshan Changhong Electric Co., LTD                   67,318,559.05                    102,644,880.25                 296,153.11
 Hefei Meiling Group Holdings Limited                     1,185,381.05                    101,771,524.73                  12,143.68
 Mianyang Meiling Refrigeration Co., Ltd.                     60,008.27                     3,987,404.56                    5,807.24
 Zhongke Meiling Cryogenic Technology
                                                         25,450,411.46                     17,294,389.52                  83,978.06
 Co., Ltd.
 Jiangxi MeiLing Electric Appliance Co.,
                                                                                          405,000,000.00                    7,198.58
 Ltd.
 Guangdong Changhong Ridian Technology
                                                        125,819,243.83                      1,370,298.23                 511,270.45
 Co., Ltd.
                    Total                             1,908,842,163.20                   1,905,236,221.16             15,976,164.79


     (2) Notes discounted
                                                 Bank acceptance book                Bank acceptance                Expenses of
                 Company
                                                  discounted amount                 discounted amount               discounted
 Hefei Meiling Co., Ltd.                                508,958,028.25                       502,739,694.94            6,218,333.31
 Sichuan Changhong Air-conditioner Co.,
                                                        513,290,861.30                       507,593,215.01            5,697,646.29
 Ltd.
 Mianyang Meiling Refrigeration Co., Ltd.                 4,000,000.00                         3,971,666.67               28,333.33
 Jiangxi MeiLing Electric Appliance Co.,
                                                        205,000,000.00                       205,000,000.00
 Ltd.
                    Total                             1,231,248,889.55                     1,219,304,576.62           11,944,312.93


     (3) Notes issued
                 Company                                 Issuing unit                          Note amount              Type
                                              Sichuan     Changhong              Group
 Hefei Meiling Co., Ltd.                                                                        99,403,000.00           Bankacceptance
                                              Finance Co., Ltd.
 Sichuan Changhong          Air-conditioner   Sichuan     Changhong              Group
                                                                                               626,539,394.79           Bankacceptance
 Co., Ltd.                                    Finance Co., Ltd.




                                                            215
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
 Zhongshan Changhong Electric Co.,            Sichuan     Changhong      Group
                                                                                       282,638,177.49              Bankacceptance
 LTD                                          Finance Co., Ltd.
 Mianyang Meiling Refrigeration Co.,          Sichuan     Changhong      Group
                                                                                            5,233,311.20           Bankacceptance
 Ltd.                                         Finance Co., Ltd.
 Zhongke      Meiling         Cryogenic       Sichuan     Changhong      Group
                                                                                        17,277,060.00              Bankacceptance
 Technology Co., Ltd.                         Finance Co., Ltd.
 Guangdong       Changhong        Ridian      Sichuan     Changhong      Group
                                                                                            7,490,730.08           Bankacceptance
 Technology Co., Ltd.                         Finance Co., Ltd.
 Jiangxi MeiLing Electric Appliance           Sichuan     Changhong      Group
                                                                                       200,000,000.00              Bankacceptance
 Co., Ltd.                                    Finance Co., Ltd.
                                      Total                                          1,238,581,673.56


     (4) Borrowing: Nil

     (5) Accounts receivable factoring: Nil

      (III) Come and go balance with related parties

     1. Receivables
                                                                       Ending balance                      Opening balance
                                                                                            Bad                              Bad
      Item                      Related parties                                             debt                             debt
                                                                      Book balance                    Book balance
                                                                                            prov                             provi
                                                                                            ision                            sion
 Account
                   Sichuan Changhong Electric Co., Ltd.                     678,572.23                         521,671.35
 receivable
 Account           Sichuan Changhong Electronics Holding
                                                                             17,850.00                         376,186.92
 receivable        Group Co., Ltd.
 Account           Sichuan Changhong Mold Plastic Tech.
                                                                            608,155.97                         965,201.45
 receivable        Co., Ltd.
 Account           CHANGHONGELECTRIC(AUSTRALI
                                                                          8,568,997.49                         144,829.93
 receivable        A)
 Account           Sichuan Changhong Property Service
                                                                                                                12,516.00
 receivable        Co., Ltd.
 Account
                   Huayi Compressor Co., Ltd.                               275,400.00                         334,800.00
 receivable
 Account
                   Sichuan Changhong Jijia Fine Co., Ltd.                   164,379.15
 receivable
 Account           Sichuan Changhong Minsheng Logistics
                                                                            196,189.88
 receivable        Co., LTD
 Account           PT.CHANGHONGELECTRICINDONE
                                                                              4,809.82                          26,971.06
 receivable        SIA
 Account           CHANGHONG(HK)TRADINGLIMITE
                                                                        233,409,742.89                      60,541,639.57
 receivable        D
 Account           Sichuan Changhong Package Printing
                                                                             19,943.20                           4,400.00
 receivable        Co., Ltd.
 Account           Sichuan Changhong International Hotel
                                                                            825,626.90                       1,334,736.90
 receivable        Co., Ltd.
 Account           Chengdu      Changhong           Electronic
                                                                            434,509.01                         434,509.01
 receivable        Technology Co., Ltd.
 Account           Sichuan Changhong Gerun Renewable
                                                                                     0.60                            0.60
 receivable        Resources Co., Ltd.
 Account
                                                                            394,817.20
 receivable        Lejiayi Chain Management Co., Ltd.




                                                             216
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                                                                   Ending balance             Opening balance
                                                                                     Bad                        Bad
      Item                      Related parties                                      debt                       debt
                                                                  Book balance               Book balance
                                                                                     prov                       provi
                                                                                     ision                      sion
 Account           Sichuan Zhiyijia Network Technology
                                                                    232,654,318.73            174,033,095.60
 receivable        Co., Ltd.
 Account
                   Sichuan Hongwei Technology Co., Ltd.                  70,553.20                   7,600.00
 receivable
 Account
                   Anhui Xinhao PDP Co., Ltd.                            63,000.00                 63,000.00
 receivable
 Account           Sichuan Changhong Power Source Co.,
                                                                         26,289.18
 receivable        Ltd.
 Account
                                                                                                  147,174.10
 receivable        Yibing Hongxing Electronics Co., Ltd.
 Account           Sichuan     Changhong          Educational
                                                                         18,765.20
 receivable        Technology Co., Ltd.
 Account
                   Sichuan Huanyu Industrial Co. Ltd.                   141,550.00
 receivable
 Account
                   Sichuan Changhong Property Co., Ltd.                  69,900.00
 receivable
 Account           Sichuan Changhong New Energy Tech.
                                                                        313,864.41
 receivable        Co., Ltd.
 Account           Sichuan      Changhong         Innovation
                                                                            232.80
 receivable        Investments Co., Ltd.
 Account           Mianyang Technology Town Big Data
                                                                          3,313.20
 receivable        Technology Co., Ltd.
 Account           Sichuan Changhong Electronic System
                                                                          3,000.00
 receivable        Co., Ltd.
 Account           Sichuan Changhong Electronic Products
                                                                          4,100.00
 receivable        Co., Ltd.
 Account           Sichuan Changhong Network Tech. Co.,
                                                                         34,064.00
 receivable        Ltd.
 Account
                                                                      9,469,893.05
 receivable        Orion PDP Co.,ltd
 Account
                   Hefei Changhong Industrial Co., Ltd.                   8,744.00
 receivable
 Account           Changhong International Holdings (Hong
                                                                            620.80
 receivable        Kong) Co., Ltd.
 Account           Hongyuan Dineng Rebao Technology Co.
                                                                     59,547,184.81              36,070,419.59
 receivable        Ltd.
 Account           ChanghongRubaElectricCompany(Privat
                                                                     26,854,326.22              16,296,282.53
 receivable        e)Ltd.
 Account paid
                   Sichuan Changhong Electric Co., Ltd.               7,816,525.64               1,054,531.13
 in advance
 Account paid      Sichuan Changhong Electronics Holding
                                                                         93,901.98
 in advance        Group Co., Ltd.
 Account paid
                   Sichuan Hongwei Technology Co., Ltd.                 363,948.00                263,948.00
 in advance
 Account paid      Sichuan Zhiyijia Network Technology
                                                                          5,258.97                 14,074.00
 in advance        Co., Ltd.
 Account paid      Sichuan     Changhong        Intelligent
                                                                        616,680.00                254,682.00
 in advance        Manufacturing Technology Co., Ltd.
 Account paid
                                                                         21,000.00
 in advance        Sichuan Changhong Jijia Fine Co., Ltd.



                                                            217
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                                                                      Ending balance                  Opening balance
                                                                                         Bad                             Bad
      Item                      Related parties                                          debt                            debt
                                                                     Book balance                    Book balance
                                                                                         prov                            provi
                                                                                         ision                           sion
 Other
                                                                                                           39,617.46
 receivables       Sichuan Changhong Electric Co., Ltd.
 Other             Sichuan Service Exp. Appliance Service
                                                                           200,000.00                     200,000.00
 receivables       Chain Co., Ltd.
 Other             Hongyuan Dineng Rebao Technology Co.
                                                                                                          130,396.62
 receivables       Ltd.
 Other             Sichuan Tianyou Guigu Technology Co.,
                                                                                                        12,500,000.00
 receivables       Ltd.
                            Total                                      584,000,028.53                 305,772,283.82


     2. Payables
      Item                            Related parties                        Ending balance             Opening balance
 Accounts
                   Sichuan Changhong Electric Co., Ltd.                              65,507,692.60            18,441,774.94
 payable
 Accounts
                   Sichuan Changhong Mold Plastic Tech. Co., Ltd.                   234,352,253.68           111,859,645.07
 payable
 Accounts
                   Huayi Compressor Co., Ltd.                                        96,415,634.09            54,756,261.49
 payable
 Accounts
                   Sichuan Changhong Jijia Fine Co., Ltd.                           173,559,467.19            49,428,116.49
 payable
 Accounts
                   Sichuan Changhong Minsheng Logistics Co., LTD                     18,962,093.41            40,128,307.43
 payable
 Accounts
                   Sichuan Changhong Package Printing Co., Ltd.                      47,699,791.37            11,582,508.82
 payable
 Accounts
                   Sichuan Changhong Devices Technology Co., Ltd.                                              8,244,251.90
 payable
 Accounts          Sichuan Changhong Precision Electronics Tech. Co.,
                                                                                     15,312,633.09             2,231,885.31
 payable           Ltd.
 Accounts
                   081 Electronic Group                                                 864,603.30               397,568.22
 payable
 Accounts
                   Sichuan Changhong New Energy Tech. Co., Ltd.                                                         235.76
 payable
 Accounts
                   Guangdong Changhong Electronics Co., Ltd.                          6,432,120.19             3,602,882.13
 payable
 Accounts
                   Sichuan Changhong Power Source Co., Ltd.                                                          4,806.70
 payable
 Accounts          Sichuan Service Exp. Appliance Service Chain Co.,
                                                                                     14,622,269.15             6,593,913.18
 payable           Ltd.
 Accounts
                   Sichuan Hongwei Technology Co., Ltd.                               1,647,512.58             1,647,512.58
 payable
 Accounts
                   Sichuan Hongxin Software Co., Ltd.                                 1,377,000.00
 payable
 Accounts          Sichuan Changhong Gerun Renewable Resources
                                                                                         10,503.63                  10,503.63
 payable           Co., Ltd.
 Accounts
                   Sichuan Changhong International Hotel Co., Ltd.                                                  24,483.00
 payable
 Accounts
                   Sichuan Changhong Xinrui Technology Co., Ltd                      23,817,184.85            31,134,508.32
 payable




                                                            218
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
      Item                            Related parties                     Ending balance       Opening balance
 Accounts          Sichuan Changhong        Intelligent   Manufacturing
                                                                               13,381,744.45        1,159,293.19
 payable           Technology Co., Ltd.
 Accounts          Sichuan Changhong International Travel Agency Co.,
                                                                                 104,170.00            14,981.00
 payable           Ltd.
 Accounts
                   Sichuan Changhong Electronic System Co., Ltd.                  77,000.00            77,000.00
 payable
 Accounts
                   Sichuan Jiahong Industry Co., Ltd.                                                   1,500.00
 payable
 Accounts
                   Sichuan Changhong Property Service Co., Ltd.                      546.00                28.00
 payable
 Accounts
                   Sichuan Huafeng Enterprise Group Co., Ltd.                     16,335.76           283,500.63
 payable
 Accounts
                   Sichuan Changhong Electronic Products Co., Ltd.             20,441,553.82
 payable
 Accounts
                   Sichuan Ailian Technology Co., Ltd.                          4,487,817.51
 payable
 Accounts
                   Sichuan Jiashibang Electric Service Co., Ltd.                    2,325.00
 payable
 Accounts
                   Sichuan Hongyu Metal Manufacture Co., Ltd.                    962,208.48           475,411.87
 payable
 Accounts
                   Sichuan Changxin Refrigeration Parts Co., Ltd.              44,248,452.99       16,767,170.82
 payable
 Accounts
                   Mianyang Highly Electric Co., Ltd.                          47,125,794.58       33,257,152.05
 payable
 Accounts
                   Sichuan Changhe Technology Co., Ltd.                         3,063,524.32        2,769,516.97
 payable
 Accounts
                   Hongyuan Dineng Rebao Technology Co. Ltd.                        1,783.60
 payable
 Accounts
                   Sichuan Tianyou Guigu Technology Co., Ltd.                                         397,435.50
 payable
 Accounts
                   Chengdu Guigu Environment Technology Co., Ltd.                441,220.12
 payable
 Account
 received     in   Sichuan Changhong Electric Co., Ltd.                                            36,470,918.03
 advance
 Account
 received     in   Lejiayi Chain Management Co., Ltd.                                   0.02          559,819.59
 advance
 Account
 received     in   081 Electronic Group                                                             2,906,393.55
 advance
 Account
 received     in   CHANGHONGELECTRICMIDDLEEASTFZE                                   1,696.65           37,303.37
 advance
 Account
                   Sichuan Changhong Gerun Renewable Resources
 received     in                                                                   47,011.00          273,106.03
                   Co., Ltd.
 advance
 Account
                   Sichuan Service Exp. Appliance Service Chain Co.,
 received     in                                                                  85,406.59            52,999.49
                   Ltd.
 advance
 Account
 received     in   Sichuan Changhong Power Source Co., Ltd.                                           164,400.00
 advance
 Account           Sichuan Changhong Precision Electronics Tech. Co.,
                                                                                                            0.01
 received     in   Ltd.



                                                            219
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
      Item                            Related parties                   Ending balance       Opening balance
 advance

 Account
 received     in   Sichuan Changhong Diandianbang Tech. Co., Ltd.                  259.00               259.00
 advance
 Account
 received     in   Hefei MeiLing Solar Energy Technology Co., Ltd.                                  315,389.49
 advance
 Account
 received     in   Hongyuan Dineng Rebao Technology Co. Ltd.                   633,687.85
 advance
 Account
 received     in   Sichuan Tianyou Guigu Technology Co., Ltd.                                       269,700.06
 advance
 Other
 accounts          Sichuan Changhong Electric Co., Ltd.                      15,310,127.66          189,285.06
 payable
 Other
 accounts          Sichuan Changhong Mold Plastic Tech. Co., Ltd.             7,275,110.79        6,021,988.84
 payable
 Other
 accounts          Sichuan Changhong Jijia Fine Co., Ltd.                     1,900,500.00        1,900,500.00
 payable
 Other
                   Sichuan Changhong Gerun Renewable Resources
 accounts                                                                       10,000.00            10,000.00
                   Co., Ltd.
 payable
 Other
 accounts          Huayi Compressor Co., Ltd.                                 1,598,900.00        1,050,000.00
 payable
 Other
 accounts          Sichuan Changhong Package Printing Co., Ltd.                 50,000.00            50,000.00
 payable
 Other
                   Sichuan Changhong Precision Electronics Tech. Co.,
 accounts                                                                          322.46               145.16
                   Ltd.
 payable
 Other
 accounts          Sichuan Changhong Minsheng Logistics Co., LTD               586,504.95           586,504.95
 payable
 Other
 accounts          CHANGHONG(HK)TRADINGLIMITED                                  45,136.48         1,881,972.53
 payable
 Other
 accounts          Sichuan Changhong Devices Technology Co., Ltd.                                       260.07
 payable
 Other
 accounts          Sichuan Changhong Electronic Products Co., Ltd.              50,013.43            50,000.00
 payable
 Other
 accounts          Sichuan Changhong Xinrui Technology Co., Ltd                200,000.00           200,000.00
 payable
 Other
 accounts          081 Electronic Group                                            169.00               169.00
 payable
 Other
 accounts          Sichuan Jiahong Industry Co., Ltd.                             7,193.12            4,643.32
 payable
 Other             Guangdong Changhong Electronics Co., Ltd.                      4,602.00            4,602.00



                                                            220
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
      Item                            Related parties                     Ending balance       Opening balance
 accounts
 payable
 Other
                   Sichuan Changhong        Intelligent   Manufacturing
 accounts                                                                        219,375.00           219,375.00
                   Technology Co., Ltd.
 payable
 Other
 accounts          Mianyang Highly Electric Co., Ltd.                            637,644.61           637,644.61
 payable
 Other
 accounts          Sichuan Changhe Technology Co., Ltd.                          100,000.00           100,000.00
 payable
 Other
 accounts          Sichuan Changxin Refrigeration Parts Co., Ltd.                  50,000.00           50,000.00
 payable
 Other
                   Hengyouyuan Technology Development Group Co.,
 accounts                                                                                               2,800.00
                   Ltd.
 payable
 Other
 accounts          Hongyuan Dineng Rebao Technology Co. Ltd.                        8,967.00
 payable
 Dividends
                   Sichuan Changhong Electric Co., Ltd.                        14,082,358.08
 payable
                                  Total                                       877,840,221.45      449,302,334.16


      (IV) Commitments from related parties: Nil

      XII. Share-based payment: Nil

      XIII. Contingency

     1. Pending action or possible liabilities formed from arbitration: Nil

     2. Contingency from external guarantee: Nil

     3. Other contingency: Nil

      XIV. Commitments: Nil

      XV. Events occurring after the balance sheet date

     1. Important non-adjustment items: Nil

     2. Profit distribution: Nil

     3. Major sales return: Nil

     4. Other than the above mentioned events, the Company have no other events occurred after
balance sheet date.

      XVI. Other significant matters

     1. Correction of previous periods and influence: Nil

     2. Debt restructuring: Nil




                                                            221
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

        3. Assets replacement: Nil

        4. Pension plan: Nil

        5. Discontinuing operation: Nil

        6. Branch information
                                                                                                       Small
                                                                                                     househol
                      Item                       Ice cumber             AC          Marketing                        Other        Salesin branch          Total
                                                                                                         d
                                                                                                     appliances
Operation income                                 406,929.55          407,704.24      80,240.23       20,829.05      14,608.07          78,531.72        851,779.42
Including:: Income fromtradingoutside            338,516.23          407,605.54      80,240.23       20,452.80       4,964.62                      -    851,779.42
       Income fromtradinginbranch                 68,413.32               98.70                 -       376.26       9,643.45          78,531.72                  -
Operation expenses                               407,400.30          408,202.14      76,076.39       20,583.76      13,251.49          78,290.82        847,223.26
Operationprofit                                     -470.75              -497.90      4,163.84          245.29       1,356.58                             4,797.06
Total assets                                    1,251,216.60         508,806.84      27,832.11       24,898.73      15,082.90        158,886.21        1,668,950.97
Totalliability                                   720,335.31          427,527.47      54,495.73       13,581.21       8,381.39          77,183.35       1,147,137.76
Supplementaryinformation                                      -                -                -             -               -                    -              -
Depreciation and amortization expenses              6,110.27            2,328.24            9.48        198.48        390.51             -118.26          9,155.24
Capital expenditure                               10,680.29             7,194.96        26.39           169.51        264.47               62.79         18,272.83
Non-cash expenses except for depreciation and
                                                  39,292.71            52,444.60      7,399.60         1,512.96      1,748.39            -310.60        102,708.86
amortization

        7. Other major transactions and events shows impact on investor’s decision-making: Nil

        XVII. Notes to main items of financial statement of parent company

        1. Account receivable

        (1) Risk structure of account receivable
                                                                                              Ending amount
                      Category                                       Book balance                    Bad debt provision
                                                                                                                                   Book value
                                                                  Amount            Ratio            Amount           Ratio
 Account receivable with single significant
 amount and withdrawal single item bad
 debt provision
 Account receivable withdrawal bad debt
 provision by combination
 Combination 1                                                    317,354,799.99    17.92%          16,042,896.99      5.06%        301,311,903.00
 Combination 2                                            1,453,826,130.66          82.08%                                    -   1,453,826,130.66
 Combination Subtotal                                     1,771,180,930.65         100.00%          16,042,896.99      0.91%      1,755,138,033.66
 Account receivable with single minor
 amount but withdrawal single item bad
 debt provision
                        Total                             1,771,180,930.65         100.00%          16,042,896.99      0.91%      1,755,138,033.66


(Continued)



                                                                           222
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

                                                                                 Opening amount
                  Category                           Book balance                    Bad debt provision
                                                                                                                    Book value
                                                  Amount                Ratio        Amount             Ratio
 Account      receivable   with    single
 significant amount and withdrawal single
 item bad debt provision
 Account receivable withdrawal bad debt
                                                             —             —                —            —                   —
 provision by combination
 Combination 1                                    234,535,499.95        23.02%      12,281,916.10        5.24%      222,253,583.85
 Combination 2                                    784,448,310.52        76.98%                                      784,448,310.52
 Combination Subtotal                           1,018,983,810.47       100.00%      12,281,916.10        1.21%    1,006,701,894.37
 Account receivable with single minor
 amount but withdrawal single item bad
 debt provision
                    Total                       1,018,983,810.47       100.00%      12,281,916.10       1.21%     1,006,701,894.37


     1) No account receivable with single significant amount and withdrawal bad debt provision single
at period-end.

     2) Account receivable with withdrawal of bad debt provision by aging account in combination 1
                                                                            Ending balance
                Book Age
                                            Account receivable             Bad debt provision             Provision ratio (%)
 Within 1 year                                     316,931,501.71                   15,846,575.09                             5%
 1-2 years                                              78,258.40                        11,738.76                           15%
 2-3 years                                             246,846.47                        86,396.26                           35%
 3-4 years                                                         -                                -                        55%
 4-5 years                                                  43.55                            37.02                           85%
 Over 5 years                                           98,149.86                        98,149.86                         100%
 Total                                             317,354,799.99                   16,042,896.99


     3) Account receivable without bad debt provision withdrawal in combination 2
                             Combination                                                        Book balance
 Connected amount between related parties                                                                        1,408,187,606.66
 Account receivable with L/C                                                                                       45,638,524.00
                                  Total                                                                          1,453,826,130.66


     4) No account receivable with single minor amount but withdrawal single item bad debt provision
at period-end

     (2) Provision, reversal (or recovery) of bad debt provision

     The bad debt accrual in the period was RMB 3,760,980.89; no recovery or reversal bad debt
provision in the year.

     (3) No account receivable actually written-off in the period.




                                                           223
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

     (4) No arrears of the shareholders holding more than 5% (including 5%) shares with voting rights
of the Company at period-end.

     (5) The top five account receivable at period-end has RMB 1,047,684,539.21 in total, a 59.15% in
total account receivable.

     (6) Account receivable de-recognized: Nil

     2. Other account receivable

     (1) Category of other account receivable
                                                                              Ending amount
                  Category                             Book balance                Bad debt provision
                                                                                                              Book value
                                                    Amount            Ratio        Amount         Ratio
 Other account receivable with single
 significant amount and withdrawal single
 item bad debt provision
 Other account receivable withdrawal bad
 debt provision by combination
 Combination 1                                        3,031,000.28     5.06%        296,487.57     9.78%       2,734,512.71
 Combination 2                                       56,814,966.89    94.94%                  -           -   56,814,966.89
 Combination Subtotal                                59,845,967.17   100.00%        296,487.57     0.50%      59,549,479.60
 Other account receivable with single minor
 amount but withdrawal single item bad
 debt provision
                    Total                            59,845,967.17   100.00%        296,487.57     0.50%      59,549,479.60


(Continued)
                                                                              Opening amount
                  Category                             Book balance                Bad debt provision
                                                                                                              Book value
                                                    Amount            Ratio        Amount         Ratio
 Other account receivable with single
 significant amount and withdrawal single
 item bad debt provision
 Other account receivable withdrawal bad
 debt provision by combination
 Combination 1                                        2,286,196.46     8.50%        164,504.75     7.20%       2,121,691.71
 Combination 2                                       24,620,732.24    91.50%                                  24,620,732.24
 Combination Subtotal                                26,906,928.70   100.00%        164,504.75     0.61%      26,742,423.95
 Other account receivable with single minor
 amount but withdrawal single item bad debt
 provision
                    Total                            26,906,928.70   100.00%        164,504.75    0.61%       26,742,423.95


     1) No other account receivable with single significant amount and no withdrawal bad debt
provision single at period-end.

     2) Other account receivable with withdrawal bad debt provision by aging account for combination



                                                           224
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

1
                                                                           Ending balance
                    Item
                                            Account receivable           Bad debt provision          Provision ratio (%)
    Within 1 year                                    2,546,998.03                    127,349.90                        5%
    1-2 years                                           11,315.60                      1,697.34                       15%
    2-3 years                                          462,686.65                    161,940.33                       35%
    3-4 years                                           10,000.00                      5,500.00                       55%
    4-5 years                                                    -                             -                      85%
    Over 5 years                                                 -                             -                     100%
                    Total                            3,031,000.28                    296,487.57


        3) Other receivable without bad debt provision withdrawal in combination 2
                             Combination                                                      Book balance
 Connected amount between related parties                                                                    20,240,856.48
 Loans of employee’s pretty cash                                                                             7,380,361.69
 Export rebate                                                                                               29,193,748.72
                                    Total                                                                    56,814,966.89


        4) No other account receivable with single minor amount but withdrawal bad debt provision singly,
refers to the minor single receivables at period-end.

        (2) Reversal (or withdraw) of reserve for bad debts in the period

        The bad debt accrual in the period was RMB 131,982.82; no recovery or reversal bad debt
provision in the year.

        (3) Other account receivable charge off in this period: Nil

        (4) No areas from shareholders’ unit with over 5 percent (5 percent included) voting rights held at
period-end.

        (5) Top 5 other account receivable has RMB 52,706,330.90 in total, an 88.07% in total account
receivable at period-end.

        (6) Other receivables classify by nature
                    Nature                         Ending book balance                        Opening book balance
 Related parties                                                     20,240,856.48                           21,867,562.15
 Loans of employee’s pretty cash                                     7,380,361.69                            2,753,170.09
 Margin                                                                                                       1,344,924.85
 Advance money paid temporary                                                                                   619,956.01
 Other                                                                3,031,000.28                              321,315.60
 Export rebate                                                       29,193,748.72
                     Total                                           59,845,967.17                           26,906,928.70




                                                           225
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

     (7) Other receivable de-recognized: Nil




                                                           226
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

      3. Long-term equity investments

      (1) Classification of long-term equity investments
                                                                      Ending balance                                           Opening balance
                     Item
                                                 Book balance         Impairment loss    Book value         Book balance       Impairment loss   Book value
 Investment in subsidiaries:
 ZhongkeMeilingCryogenicTechnologyCo., Ltd.          42,000,000.00                         42,000,000.00       42,000,000.00                        42,000,000.00
 Mianyang Meiling Refrigeration Co., Ltd.            95,000,000.00                         95,000,000.00       95,000,000.00                        95,000,000.00
 Hefei Meiling Appliance Marketing Co.,
                                                     54,900,000.00                         54,900,000.00       54,900,000.00                        54,900,000.00
 Ltd.
 Zhongshan Changhong Electric Co., LTD              169,856,419.37                        169,856,419.37      169,856,419.37                       169,856,419.37
 Sichuan Changhong Air-conditioner Co.,
                                                    305,600,437.79                        305,600,437.79      305,600,437.79                       305,600,437.79
 Ltd.
 Hefei Meiling Group Holdings Limited               113,630,000.00                        113,630,000.00      113,630,000.00                       113,630,000.00
 Jiangxi MeiLing Electric Appliance Co.,
                                                     79,000,000.00                         79,000,000.00       79,000,000.00                        79,000,000.00
 Ltd.
 Guangdong       Changhong              Ridian
                                                     90,802,061.95                         90,802,061.95       90,802,061.95                        90,802,061.95
 Technology Co., Ltd.
 Changmei Technology Co., Ltd.                       18,528,000.00                         18,528,000.00       18,000,000.00                        18,000,000.00
 Meiling Candy Washing Machine Co.,
                                                     30,000,000.00                         30,000,000.00                   -                                    -
 Ltd.
 Investment in associates:
 Hefei Xingmei Assets Management Co.,
                                                      11,882,198.13                        11,882,198.13       12,394,800.39                        12,394,800.39
 Ltd.
 Sichuan Zhiyijia Network Technology
                                                     14,716,635.63                         14,716,635.63       11,098,569.71                        11,098,569.71
 Co., Ltd.
                     Total                        1,025,915,752.87                       1,025,915,752.87     992,282,289.21                       992,282,289.21


      (2) Investment in subsidiaries




                                                                                   227
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)
                                                                            Increase during the           Decrease during the                                 Provision forimpairment          Ending balance of
                  Invested unit                     Opening balance                                                                    Ending balance
                                                                                  period                        period                                                  losses                  impairment loss
 Zhongke Meiling Cryogenic Technology
                                                          42,000,000.00                                                                      42,000,000.00
 Co., Ltd.
 Mianyang Meiling Refrigeration Co., Ltd.                 95,000,000.00                                                                      95,000,000.00
 Hefei Meiling Appliance Marketing Co.,
                                                          54,900,000.00                                                                      54,900,000.00
 Ltd.
 Zhongshan Changhong Electric Co., LTD                   169,856,419.37                                                                    169,856,419.37
 Sichuan Changhong Air-conditioner Co.,
                                                         305,600,437.79                                                                    305,600,437.79
 Ltd.
 Hefei Meiling Group Holdings Limited                    113,630,000.00                                                                    113,630,000.00
 Jiangxi MeiLing Electric Appliance Co.,
                                                          79,000,000.00                                                                      79,000,000.00
 Ltd.
 Guangdong       Changhong              Ridian
                                                          90,802,061.95                                                                      90,802,061.95
 Technology Co., Ltd.
 Changmei Technology Co., Ltd.                            18,000,000.00               528,000.00                                             18,528,000.00
 Meiling Candy Washing Machine Co.,
                                                                                   30,000,000.00                                             30,000,000.00
 Ltd.
                       Total                             968,788,919.11            30,528,000.00                                           999,316,919.11


     (3) Investment in associates
                                                                                                       Changes inthe period
                                  Opening                                                          Adjustment                                                                                           Ending balance
       Invested unit                                                         Investment income                         Other     Cash dividend or                                   Ending balance
                                  balance        Additional     Negative                             for other                                         Provision for                                    of impairment
                                                                              recognizedunder                          equity   profitannounced to                       Other
                                                 Investment    Investment                          comprehensi                                       impairment loss
                                                                                   equity                             change           issued
                                                                                                    ve income
 Hefei Xingmei Assets
                               12,394,800.39                                        -512,602.26                                                                                         11,882,198.13
 Management Co., Ltd.
 Sichuan Zhiyijia Network
                               11,098,569.71                                       3,618,065.92                                                                                         14,716,635.63
 TechnologyCo.,Ltd.
          Total                23,493,370.10                                       3,105,463.66                                                                                         26,598,833.76




                                                                                                 228
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

     3. Operation income and operation cost
                                    Amount in the period                       Amount in the same period of last year
         Item
                              Income                      Cost                    Income                       Cost
 Main business              3,544,613,227.13           3,199,404,365.71         3,359,972,441.96            2,762,714,566.29
 Other business               584,995,125.37             575,965,090.55           410,800,721.97              397,417,660.72
         Total              4,129,608,352.50           3,775,369,456.26         3,770,773,163.93            3,160,132,227.01


     (1) Classified according to product
                                    Amount in the period                       Amount in the same period of last year
      Product
                        Operation income             Operation cost          Operation income             Operation cost
Refrigerator      and
                            3,279,271,848.62           2,971,360,809.10         3,178,958,581.60            2,612,206,850.23
freezer
Washing machine               176,232,144.12             151,753,972.11           179,396,785.22              150,507,716.06
 Small household
 appliances     and            89,105,560.29              76,286,085.40                         -                          -
 kitchen and toilet
 Other                                 3,674.10                  3,499.10           1,617,075.14                           -
         Total              3,544,613,227.13           3,199,404,365.71         3,359,972,441.96            2,762,714,566.29


     (2) Classified according to region
                                    Amount in the period                       Amount in the same period of last year
      Regions
                        Operation income            Operation cost           Operation income             Operation cost
 Domestic income            2,457,823,202.55           2,162,505,987.73         2,481,708,373.76            2,002,163,732.22
 Export income              1,086,790,024.58           1,036,898,377.98           878,264,068.20             760,550,834.07
         Total              3,544,613,227.13           3,199,404,365.71         3,359,972,441.96            2,762,714,566.29


     Top five clients of the Company owe income in sales of RMB 2,076,958,447.26 yuan, a 50.29%
in total operation income.

     4. Investment income
                                                                                                    Amount in the same
                                Item                                    Amount in the period
                                                                                                     period of last year
 Long-term equity investment income by equity method                             3,105,463.66               2,644,982.57
 Investment income arising from disposal of the long-term equity
                                                                                     2,506.98
 investment
 Investment income arising from period of holding the long-term
                                                                                            -              75,261,313.40
 equity investment
 Investment income from disposal of financial assets, which is
 measured by fair value and with its variation reckoned into current             7,232,183.50
 gains/losses
 Investment income during holding the financial assets available for
                                                                               19,389,929.81                4,986,301.37
 sale
                               Total                                           29,730,083.95               82,892,597.34


      XI. Approval of financial statement



                                                           229
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

     The financial statement has already been approved from the board of directors of the Company
for reporting dated 9 August 2017.




                                                           230
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

      Supplementary information for financial statement

      1. Non-operational gains and losses for this period

      (1) Non-recurring gains and losses regulated by Explanation Announcement of Information
Disclosure on Stock Issuance Enterprise No.1—Non-recurring gains/losses (2008) from CSRC:
                                               Item                                                 Current Period     Note
  Gains and losses from disposal of non-current assets                                                -11,095,591.69
  Tax refund or mitigate due to examination-and-approval beyond power or without official
  approval document or accident
  Government subsidy recorded in current gains and losses                                             22,490,062.54
  Capital occupancy expense, collected from non-financial enterprises and recorded in current
  gains and losses
  Income from the exceeding part between investment cost of the Company paid for obtaining
  subsidiaries, associates and joint-ventures and recognizable net assets fair value attributable
  to the Company when acquiring the investment
  Gains and losses from exchange of non-monetary assets
  Gains and losses from assets under trusted investment or management
  Various provision for impairment of assets withdrew due to act of God, such as natural
  disaster
   Gains and losses from debt restructuring
   Enterprise reorganization expense
   Gains and losses of the part arising from transaction in which price is not fair and
   exceeding fair value
   Current net gains and losses occurred from period-begin to combination day by
   subsidiaries resulting from business combination under common control
  Gains and losses arising from contingent proceedings irrelevant to normal operation of the
  Company
  Except for effective hedge business relevant to normal operation of the Company, gains and
  losses arising from fair value change of tradable financial assets and tradable financial
                                                                                                     -10,359,085.30
  liabilities, and investment income from disposal of tradable financial assets, tradable
  financial liabilities and financial assets available for sale
  Switch-back of provision of impairment of account receivable which are treated with
  separate depreciation test
  Gains and losses obtained from external trusted loans
  Gains and losses arising from change of fair value of investment real estate whose follow-up
  measurement are conducted according to fair value pattern
  Affect on current gains and losses after an one-time adjustment according to requirements of
  laws and regulations regarding to taxation and accounting
  Trust fee obtained from trust operation
  Other non-operating income and expenditure except for the aforementioned ones                          643,883.35
  Other gains and losses items complying with definition for non-current gains and losses             26,817,170.85
   Subtotal                                                                                           28,496,439.75
  Affect on income tax                                                                                 3,129,349.31

   Affect on minority equity(after taxation)                                                             197,389.65

  Total                                                                                               25,169,700.79


      2. Return on equity and earnings per share




                                                               231
Annotations of Financial Statements of Hefei Meiling Co., Ltd.
From 1 January 2017 to 30 June 2017
(Unless other wise specified, RMB for record in the Statement)

     In accordance with requirement of the No. 9 Rule of Information Disclosure Compiling of Public
Listed Companies: Calculation and Disclosure of Return on Equity and Earnings per Share (revised in
2010), the weighted average return on equity, basic earnings per share and diluted earnings per share of
the Company semi-annual report in 2017 are as follow:
                                                Weighted average             Earnings per share/EPS
      Profit during the report period
                                                return on equity         Basic EPS           Diluted EPS
Net profit attributable to shareholders of
                                                                 1.79%          0.0881                0.0881
parent company
Net profit attributable to shareholders of
parent company after deduction of                                1.30%          0.0640                0.0640
non-recurring gains and losses

     3. Accounting difference under the accounting rules in and out of China: Nil

     4. Supplementary information for accounting policy changed: Nil




                                                            232
                                                         HEFEI MEILING CO., LTD SEMI-ANNUAL REPORT 2017




               Section XI Documents available for Reference

    I. Text of Semi-Annual Report carrying the signatures of the Chairman;

     II. Financial statement carrying the signatures and seals of the Chairman, Vice President and
person in charge of finance, and person in charge of accounting organ (accountant in charge);

    III. Original documents of the Company and manuscripts of public notices that disclosed in the
website designated by CSRC in the report period;

    The aforesaid documents are all available at headquarter of the Company. The Company would
provide them timely when CSRC and Shenzhen Stock Exchange require or the shareholders need
consultation according to the regulations and Articles of Association.




                                                                          Chairman: Li Wei

                                                                       Hefei Meiling Co., Ltd.

                                                                           10 August 2017




                                               233