First Quarter 2018 Report of Qingdao Haier Co., Ltd. Stock Code: 600690 Short Name: Qingdao Haier First Quarter Report of 2018 Qingdao Haier Co., Ltd. 1 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. Contents I. Important Notice .......................................................................................................................3 II. Company Profile........................................................................................................................3 III. Important Events ...................................................................................................................... 9 IV. Appendix ....................................................................................................................................17 2 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. I. Important Notice 1.1 The Board of Directors, the Board of Supervisors, directors, supervisors and senior management of Qingdao Haier Co., Ltd. (“the Company”) hereby assure that the content set out in the quarterly report is true, accurate and complete, and free from any false record, misleading representation or material omission, and are individually and collectively responsible for the content set out therein. 1.2 Information on absent director from meeting Position of director Name of director absent Reason for the absence of Name of proxy absent from meeting from meeting director from meeting Independent Director Dai Deming Personal affair Shi Tiantao 1.3 Liang Haishan (legal representative of the Company), Gong Wei (chief financial officer of the Company) and Ying Ke (the person in charge of accounting department) hereby certify that the financial statement set out in the quarterly report is true, accurate and complete. 1.4 This First Quarter Report of the Company has not been audited. Note: This report and its abstract have been prepared in both Chinese and English. Should there be any discrepancies or misunderstandings between the two versions, the Chinese version shall prevail. II. Company Profile 2.1 Key financial information Unit and Currency: RMB As of December 31 2017 As of March 31 2018 Change (%) After adjustment Before adjustment Total assets 154,529,514,068.17 151,463,110,707.63 151,463,110,707.63 2.02 Net assets attributable to shareholders of the 33,875,351,365.63 32,215,515,201.45 32,215,515,201.45 5.15 Company January-March 2017 January-March 2018 Change (%) After adjustment Before adjustment 3 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. Net cash flows from 1,990,934,744.45 5,809,584,002.50 5,809,318,531.26 -65.73 operating activities January-March 2017 January-March 2018 Change (%) After adjustment Before adjustment Operating revenue 42,655,164,567.37 37,745,829,388.95 37,741,143,448.27 13.01 Net profit attributable to shareholders of the 1,979,995,364.53 1,736,546,852.11 1,738,763,572.81 14.02 Company Net profit after deduction of non-recurring profit or loss attributable to 1,761,919,417.70 1,461,794,756.85 1,461,794,756.85 20.53 shareholders of the Company Weighted average return Decreased by 5.99 6.33 6.38 on net assets (%) 0.34 pct pts Basic earnings per share 0.325 0.285 0.285 14.04 (RMB per share) Diluted earnings per 0.321 0.285 0.285 12.63 share (RMB per share) Notes: (1) Summary: ① In the first quarter of 2018, revenue from the Company’s original industry (excluding GE Appliances, “GEA”) increased by 18.85%, among which the business of domestic white appliances grew by more than 20%; Net profit attributable to shareholders of the Company increased by 14.7%; Net profit attributable to the shareholders of the Company after deduction of non-recurring profit or loss increased by 22.7%. ② In the first quarter of 2018, revenue form GEA as measured in US dollars increased by 5.9%, which translates into RMB10.8 billion, representing a year-on-year decrease of 1.95%. The decrease was partly due to the significant appreciation of renminbi in the first quarter of 2018 as compared with the corresponding period of last year. Benefiting from the improvement of operation efficiency and the release of synergies, GEA delivered improved profitability, with both net profit attributable to shareholders of the Company and net profit after deduction of non-recurring profit or loss attributable to shareholders of the Company increasing by more than 10%. (2) Domestic market: ① In 2018, revenue of domestic home appliance business increased by 21.9%, representing the sixth consecutive quarter in which a growth of more than 20% was recorded. ② Revenue from Casarte increased by 50%; Refrigerators and washing machines under the Casarte brand captured a market share of 36.5% and 70.5% in the price range of over RMB10,000, representing an increase of 6.3 and 4.3 pct. pts, respectively. ③ The market share continued to rise across the whole 4 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. product portfolio. According to CMM, retail sales of refrigerators, washing machines, air conditioners, water heaters, hoods and stoves rose by 4.05, 3.80, 0.87, 1.47, 0.87 and 0.93 pct. pts, respectively, as compared with the corresponding period of last year. Refrigerators and washing machines maintained its top position in the industry and continued to expand the lead. The market share in term of retail sales for refrigerators and washing machines reached 34.56% and 32.20%, respectively, representing 3.08 and 1.76 times of that of the runner-up brand, respectively. ④ The air-conditioning business has been delivering remarkable results in terms of technological and product innovation over the years. According to CMM, the average retail price of air-conditioners of the Company in the first quarter of 2018 was RMB4,486, an increase of 9.70% as compared with the corresponding period of last year, ranking No.1 among domestic brands in terms of average price. According to ChinaIOL.com, the air-conditioners export volume of the Company increased by 48.08% in the first quarter of 2018, higher than the industry growth of 4.39%. (3) Overseas markets: ① In the first quarter of 2018, GEA achieved a growth of 5.9% in revenue as measured in US dollar, far exceeding the industry growth of 2.6% in the North American market (Source: Stevenson); GEA’s overall market share increased by 1.5 pct. pts as compared with the corresponding period of last year. ② The business was focused on high-end brand in each region, enhanced product and marketing competitiveness, and promoted healthy business development. For example, revenue from the South Asian market grew by more than 40%, while revenue from the European market grew by more than 30%. (4) During the reporting period, the Company was committed to building a smart home community in the era of the Internet of Things to create an ecological platform in a collaborative way. Haier Smart Home is comprised of seven ecological circles, including smart kitchen, smart bathroom, smart living room, smart bedroom, smart washing and care, smart air, and smart security, providing users with more than 200 kinds of full-scene smart living experiences. Building on the Dashunguang community interaction cloud platform, the SmartLife cloud platform and the COSMO Plat industrial cloud platform, we are dedicated to meeting the personalized needs of users for customized better life and exploring the business model in the era of the Internet of Things. ① Formation of touchpoint network for the integration of three kinds of stores: Leveraging on the Dashunguang community interaction cloud platform, we have achieved the organic integration of 5 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. “experience stores, online stores and micro-stores”, established the community interaction integrity system, and built the distribution of the touchpoint network comprising 1.13 million touchpoints, including 20,000 offline O+O experience stores, 443 online stores, 160,000 smart cloud stores from communities to villages, 800,000 million micro-stores, and 150,000 million urban and rural housekeepers. The network builds linkage among hundreds of millions of user resources, tens of millions of lifetime users, bringing continuous iteration of products and resources through continuous interaction between the network of touchpoints with users. For example, the Yunxi (云熙) series washing machines achieved three rounds of rapid iterations and growth for each launch through the interaction with users on Dashunguang platform. In the first quarter of 2018, the platform achieved a turnover of RMB2.87 billion, representing an increase of 109%. ② Continued iteration of user interaction experience, formation of the common interest group and realization of a win-win situation: Realization of large-scale customized value added for users based on the COSMOPlat platform; promoted cross-industry, cross-regional replication, and enabled transformation and upgrading of Small and Medium Enterprises. Currently the platform serves 11 regions and 12 major industries. For example, taking advantage of its large-scale customization model, the Recreation Vehicle (“RV”) platform business based on the COSMOPlat platform services empowered RV companies to transform and change from RV manufacturing companies to the “smart ecological platform for mobile homes”, by integrating with the Haier smart home ecosystem platform. In March 2018, the platform revenue of COSMOPlat amounted to RMB566 million (there was no such business in the corresponding period of last year). ③ Based on the smart home core, seven ecosystems were created involving clothing, food, living and entertainment, which realized the value of the ecosystem with the formation of experience scenes through user interaction: Smart active service was delivered based on the combination of big data of smart home appliances (internet appliances) and small data of users, and the scene-based business model was expanded through the upgrade of operational experience and control of smart home appliances, construction of an IOT + AI basic technology platform, while building channels for third-party ecological resources. For example, through the creation of a college laundry platform across the country, the “smart micro-washing” within smart washing and care ecological circle has linked 1,265 premises, such as higher education institutions, apartments and hotels, over 9.65 million 6 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. college students, and brought in ecological revenue through collaborative creation in the ecosystems. Meanwhile, the community washing model also achieved rapid growth in various communities across Japan. In 2017, a total of 1,776 stores participated in the program and over 6.35 million community users were served. The community laundry model has been copied to Southeast Asia and has begun to replicate in overseas regions such as the United States. In the first quarter of 2018, revenue of the smart home platform amounted RMB54 million, representing an increase of 140% as compared with the corresponding period of last year. Non-recurring Profit or Loss Items and Amount √Applicable □ Not Applicable Unit and Currency: RMB Amount of Items current period Losses and profits from disposal of non-current assets 476,430.28 Government grants included in current profit or loss, except that closely related to the normal operating business, complied with requirements of the national policies, continued to be 59,855,085.10 granted with the amount and quantity determined under certain standards In addition to the effective hedging business related to the normal operations of the Company, profit or loss of changes in fair value arising from holding of trading financial 97,539,123.27 assets and trading financial liabilities, as well as investment gain realized from disposal of trading financial assets, trading financial liabilities and financial assets available for sale Other non-operating income and expenses except the aforementioned items 103,250,405.83 Minority interests (after tax) -32,456,045.44 Income tax -10,589,052.21 Total 218,075,946.83 2.2 Table of top ten shareholders, top ten common shareholders (or the shareholders without selling restrictions) by the end of the reporting period Unit: Share Total number of shareholders 202,628 Shareholdings of top ten shareholders Number of Status of Number of shares shares Perce Nature Name of shares held held pledged ntage of Shareholder (full name) at the end of with or frozen (%) shareholder the period selling Status of Number restriction shares 7 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. Haier Electric Domestic Appliances International 1,258,684,824 20.64 Nil non-state-owne Co., Ltd. d legal entity Domestic Haier Group Corporation 1,072,610,764 17.59 Nil non-state-owne d legal entity Hong Kong Securities 450,907,644 7.40 Nil Unknown Clearing Co., Ltd. KKR HOME Foreign legal 362,089,988 5.94 Nil INVESTMENT S.A R.L. entity GIC PRIVATE Foreign legal 285,971,753 4.69 Nil LIMITED entity China Securities Finance 248,679,560 4.08 Nil Unknown Corporation Limited Qingdao Haier Venture Domestic & Investment non-state-owne Information Co., Ltd. (青 172,252,560 2.83 Nil d legal entity 岛海尔创业投资咨询有 限公司) National social security Unknown 101,888,830 1.67 Nil fund, Portfolio 104 Central Huijin Asset Unknown 69,539,900 1.14 Nil Management Ltd. National social security Unknown 48,000,449 0.79 Nil fund, Portfolio 103 Shareholdings of top ten shareholders not subject to selling restrictions Number of Class and number of shares tradable Name of shareholder shares without Class Number selling restrictions Haier Electric Appliances International Co., 1,258,684,824 RMB ordinary 1,258,684,824 Ltd. Haier Group Corporation 1,072,610,764 RMB ordinary 1,072,610,764 Hong Kong Securities Clearing Co., Ltd. 450,907,644 RMB ordinary 450,907,644 KKR HOME INVESTMENT S.A R.L. 362,089,988 RMB ordinary 362,089,988 GIC PRIVATE LIMITED 285,971,753 RMB ordinary 285,971,753 China Securities Finance Corporation 248,679,560 RMB ordinary 248,679,560 Limited Qingdao Haier Venture & Investment Information Co., Ltd. (青岛海尔创业投资 172,252,560 RMB ordinary 172,252,560 咨询有限公司) National social security fund, Portfolio 104 101,888,830 RMB ordinary 101,888,830 8 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. Central Huijin Asset Management Ltd. 69,539,900 RMB ordinary 69,539,900 National social security fund, Portfolio 103 48,000,449 RMB ordinary 48,000,449 Related-parties or parties acting in concert (1) Haier Electric Appliances International Co., Ltd. is a among the aforesaid shareholders holding subsidiary of Haier Group Corporation. Haier Group Corporation holds 51.20% of its equity. Qingdao Haier Venture & Investment Information Co., Ltd. (青岛海尔创业 投资咨询有限公司) is a party acting in concert with Haier Group Corporation; (2) The Company is not aware of the existence of any connections of other shareholders. Description of preferential shareholders N/A with restoration of voting rights and their shareholdings 2.3 Total number of preferential shareholders, top ten preferential shareholders and top ten holders of preference shares without selling restriction by the end of the reporting period □Applicable √ Not Applicable III. Significant Events 3.1 The changes in the key financial results of this reporting period and the reasons for such changes √Applicable □Not Applicable 1) Financial assets measured at fair value and its changes of which included in current profit or loss decreased by 63.90% from the beginning of the year, which was mainly attributable to the influence of change in fair value of derivative financial instruments such as foreign exchange contracts; 2) Other non-current assets increased by 48.27% from the beginning of the year, which was mainly attributable to the change in fair value of forward foreign exchange contracts held by the Company as at the end of the period with a maturity date of more than one year; 3) Financial liabilities measured at fair value through profit or loss for the period increased by 798.60% from the beginning of the year, which was mainly attributable to changes in fair value of derivative financial instruments such as foreign exchange contracts for the period; 4) Taxes payable increased by 34.95% from the beginning of the year, which was mainly due to the increase in taxes that have been accrued by the Company; 9 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. 5) Interest payable increased by 148.43% from the beginning of the year, which was mainly due to the increase in accrued unpaid interest; 6) Deferred income tax liabilities decreased by 32.71% from the beginning of the year, which was mainly due to the decrease in the reserve of income tax of foreign companies due to the actual dividends distributed by the subsidiaries of the Company. 7) Other comprehensive income decreased by 675.00% from the beginning of the year, which was mainly due to the decrease in the share of other comprehensive income that will be reclassified into profit or loss and the change in foreign currency translation differences; 8) Financial expenses increased by 108.15% as compared with the corresponding period of last year, which was mainly due to the increase in exchange losses for the period as compared with the corresponding period of last year; 9) Revenue from changes in fair value increased by 30.81% as compared with the corresponding period of last year, which was mainly due to changes in fair value of derivative financial instruments such as forward foreign exchange; 10) Gain on disposal of assets increased by 121.30% as compared with the corresponding period of last year, which was mainly due to the decrease in expenses related to the disposal of recurrent assets for the period; 11) Other income increased by 36.97% as compared with the corresponding period of last year, which was mainly due to the increase in government grants related to daily operations and included in current profit or loss; 12) Non-operating expenses decreased by 84.55% as compared with the corresponding period of last year, which was mainly due to the scrapping of some fixed assets in the corresponding period of last year and fewer occurrences for the period; 13) Net cash flows from operating activities decreased by 65.73% as compared with the corresponding period of last year, which was mainly due to the higher net cash flows from operating activities during the corresponding period of last year, which resulted in a higher base; net cash flows from operating activities for the period is in line with the profitability and the target has been achieved; 10 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. 14) Net cash flows from investing activities decreased by 33.94% as compared with the corresponding period of last year, which was mainly due to the increase in expenditures for the construction of plants and warehouses for the period; 15) Net cash flows from financing activities decreased by 76.17% from the same period of last year, which was mainly due to the increase in expenses in respect of repayment of borrowings for the period. 3.2 Note and analysis on the progress of significant events and their impact and solution √ Applicable □Not Applicable (1) As of the end of the reporting period, the external guarantees of the Company and its subsidiaries are all guarantees among the Company and its subsidiaries, and the period-end balance of the external guarantees amounted to RMB28.38 billion, representing 88.3% of net assets and 18.7% of the total assets of the Company for the latest period. (2) As of the end of the reporting period, the balance of the Company’s transactions of derivative foreign exchange products amounted to approximately US$3.58 billion. (3) As of the end of the reporting period, the amount of entrusted wealth management of the Company was approximately RMB1.98 billion. 11 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. 3.3 Overdue commitments in the reporting period or ongoing at the period-end. □Applicable √Not applicable During the reporting period, the Company has no undertakings that have past due but not performed. The undertakings made by the actual controlling shareholders, shareholders, related parties, purchasers and the Company and others during or up to the reporting period are as follows: Whether Whether it has a it is Coven Time and deadline performed Background Type Content anter term for in a timely performa and strict nce way During the period from September 2006 to May 2007, the Company issued shares to Haier Group Corporation (“Haier Group”) to purchase the controlling Eliminate equity in its four subsidiaries, namely Qingdao Haier Air-Conditioner Electronics Undertaking the Co., Ltd. (青岛海尔空调电子有限公司), Hefei Haier Air-conditioning Co., related to Haier property Limited (合肥海尔空调器有限公司), Wuhan Haier Electronics Co., Ltd. (武汉 27 September significant Group right 海尔电器股份有限公司), Guizhou Haier Electronics Co., Ltd. (贵州海尔电器 2006, long YES YES assets Corpor defects in 有限公司). With regard to the land and property required in the operation of term reorganizati ation land and Qingdao Haier Air-Conditioner Electronics Co., Ltd. (青岛海尔空调电子有限 on etc. 公司) , Hefei Haier Air-conditioning Co., Limited (合肥海尔空调器有限公司), Wuhan Haier Electronics Co., Ltd. (武汉海尔电器股份有限公司) (the “Covenantees”), Haier Group made an undertaking (the “2006 Undertaking”). 12 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. According to the content of 2006 Undertaking and current condition of each Covenantee, Haier Group will constantly assure that Covenantees will lease the land and property owned by Haier Group for free. Haier Group will make compensation in the event that the Covenantees suffer loss due to the unavailability of such land and property. Haier Group Corporation undertakes that it will assure Qingdao Haier and its subsidiaries of the constant, stable and unobstructed use of the leased property. In the event that Qingdao Haier or any of its subsidiaries suffers any economic loss due to the fact that leased property has no relevant ownership certificate, Haier Group Corporation will make compensation to impaired party in a timely and sufficient way and take all reasonable and practicable measures to support the impaired party to recover to normal operation before the occurrence of loss. Upon the expiration of relevant leasing period, Haier Group Corporation will Eliminate grant or take practicable measures to assure Qingdao Haier and its subsidiaries of the Haier priority to continue to lease the property at a price not higher than the rent in Undertaking property 24 December Group comparable market at that time. Haier Group Corporation will assure Qingdao related to right 2013, long YES YES Corpor Haier and its subsidiaries of the constant, stable, free and unobstructed use of refinancing defects in term ation self-built property and land of the Group. In the event that Qingdao Haier or any land and of its subsidiaries fails to continue to use self-built property according to its own etc. will or in original way due to the fact that self-built property has no relevant ownership certificate, Haier Group Corporation will take all reasonable and practicable measures to eliminate obstruction and impact, or will support Qingdao Haier or its affected subsidiary to obtain alternative property as soon as possible, if Haier Group Corporation anticipates it is unable to cope with or eliminate the external obstruction and impact with its reasonable effort. For details, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Formation, Current Situation of the Defective Property, the Influence on 13 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. Operation of Issuer Caused by Uncertainty of Ownership, Solution for the Defect and Guarantee Measures (L 2014-005) published by the Company on the four major securities newspapers and the website of Shanghai Stock Exchange on 29 March 2014. The Company undertakes that it will eliminate the property defects of the Eliminate Company and main subsidiaries within five years with reasonable business effort the since 24 December 2013, so as to achieve the legality and compliance of the Qingda property Company and main subsidiaries in terms of land and property. For details, please 24 December o Haier right refer to the Announcement of Qingdao Haier Co., Ltd. on the Formation, Current 2013, five YES YES Co., defects in Situation of the Defective Property, the Influence on Operation of Issuer Caused years Ltd. land and by Uncertainty of Ownership, Solution for the Defect and Guarantee Measures (L etc. 2014-005) published by the Company on the four major securities newspapers and the website of Shanghai Stock Exchange on 29 March 2014. Inject the assets of Fisher&Paykel to the Company or dispose such assets through Haier other ways according to the requirements of the domestic supervision before June Other May Asset Group 2020. For more details, please refer to the Announcement of Qingdao Haier Co., undertaking 2015-June YES YES injection Corpor Ltd. on the Changes of Funding Commitment of Haier Group Corporation (L s 2020 ation 2015-015) published on the four major securities newspapers and the website of Shanghai Stock Exchange on 26 May 2015. Inject the assets of Haier Photoelectric to the Company or dispose such assets Haier through other ways according to the requirements of the domestic supervision Other December Asset Group before June 2020. For more details, please refer to the Announcement of Qingdao undertaking 2015-June YES YES injection Corpor Haier Co., Ltd. on the Changes of Funding Commitment of Haier Group s 2020 ation Corporation (L 2015-063) published on the four major securities newspapers and the website of Shanghai Stock Exchange on 23 December 2015. Other Profit Haier In December 2015 and January 2016, the meeting of the Board of Directors and December YES YES undertaking forecast Group general meeting of the shareholders considered and approved the matters in 2015- 14 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. s and Corpor relation to the acquisition of minority equity interest of Mitsubishi Heavy December compensat ation Industries Haier and Carrier Refrigeration Equipment held by Haier Group. The 2018 ion Company signed the Profit Compensation Agreement with Haier Group to forecast the profits achieved by the aforementioned two companies in 2015 - 2018. If the profits are not reached during the commitment period, the difference part will be made up to the Company by Haier Group in cash. For more details, please refer to the Announcement of Qingdao Haier Co., Ltd. on the Acquisition of Equity in Sino-foreign Joint Venture Held by Haier Group Corporation and Related-party Transaction (L 2015-062) published on the four major securities newspapers and the website of Shanghai Stock Exchange on 23 December 2015. 15 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. 3.4 Warning and explanation on reasons for accumulated net profit for the period from the beginning of the year to the end of the next reporting period to be at a loss or expected to have material change as compared to those of the same period of last year. Applicable √Not Applicable Name of Company Qingdao Haier Co., Ltd. Legal representatives Liang Haishan Date 24 April 2018 16 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. IV. Appendix 4.1 Financial Statements Consolidated Balance Sheet 31 March 2018 Prepared by: Qingdao Haier Co., Ltd. Unit and Currency: RMB Unaudited Items Closing balance Opening balance Current Assets: Cash 34,072,725,366.99 35,177,276,903.91 Clearing settlement funds Placements with banks Financial assets measured at fair value and changes of which included in 33,897,429.51 20,681,695.50 current profit and loss Derivative financial assets Notes receivables 12,420,131,506.45 13,033,083,520.99 Accounts receivables 15,833,303,930.11 12,448,004,833.06 Prepayments 603,350,177.16 590,693,658.21 Premiums receivable Reinsurance accounts receivables Reinsurance contract reserves receivable Interests receivables 255,716,384.55 203,637,543.83 Dividends receivables 4,524,472.84 4,524,472.84 Other receivables 901,313,953.98 961,263,981.87 Financial assets purchased under resale agreements Inventories 22,850,509,586.29 21,503,524,800.18 Held for sale assets Non-current assets due within one year Other current assets 4,519,926,995.06 4,389,760,018.83 Total current assets 91,495,399,802.94 88,332,451,429.22 Non-current assets: Loans and advances granted Available-for-sale financial assets 1,378,724,861.35 1,415,354,307.82 17 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. Held-to-maturity investments Long-term receivables Long-term equity investments 13,247,491,506.51 12,992,767,394.28 Investment properties 30,313,843.60 31,214,015.99 Fixed assets 15,588,932,136.22 16,017,523,376.11 Construction in progress 1,885,717,211.24 1,530,390,130.25 Construction materials Disposals of fixed assets 55,808,808.81 55,808,808.81 Biological assets for production Fuel assets Intangible assets 6,759,264,347.28 7,005,186,296.28 Development expenses 1,007,296,297.14 966,051,333.81 Goodwill 19,110,949,048.42 19,843,317,357.30 Long-term amortization 152,728,496.68 123,768,671.33 expenditures Deferred income tax assets 1,957,535,076.97 1,895,213,404.67 Other non-current assets 1,859,352,631.01 1,254,064,181.76 Total non-current assets 63,034,114,265.23 63,130,659,278.41 Total assets 154,529,514,068.17 151,463,110,707.63 Current liabilities: Short-term borrowings 11,114,536,392.33 10,878,580,275.18 Borrowings from central bank Absorbing deposit and deposit in inter-bank market Placements from banks Financial liabilities measured at 22,685,707.54 2,524,569.45 fair value and changes of which included in current profit and loss Derivative financial liabilities Notes payable 18,404,685,210.58 16,378,699,659.77 Accounts payables 29,341,571,372.43 25,654,013,649.96 Payments received in advance 4,457,946,217.94 5,833,552,815.05 Disposal of repurchased financial assets Handling charges and commissions payable Staff remuneration payable 1,841,561,578.16 2,349,189,122.90 Taxes payable 2,576,569,157.76 1,909,260,527.42 Interests payable 143,235,601.79 57,656,458.79 Dividends payable 158,965,235.09 153,756,315.64 Other payables 9,970,601,666.79 10,805,162,943.62 Reinsurance accounts payable 18 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. Deposits for insurance contracts Customer deposits for trading in securities Amounts due to issuer for securities underwriting Held for sale liabilities Non-current liabilities due within 2,330,383,347.39 2,850,325,000.00 one year Other current liabilities 27,313,282.12 21,729,198.70 Total current liabilities 80,390,054,769.92 76,894,450,536.48 Non-current liabilities: Long-term borrowings 13,613,417,306.10 16,036,492,809.81 Debentures payable 5,995,671,346.64 6,211,088,362.68 Including: preference shares perpetual bonds Long-term payable 102,833,569.29 106,020,029.74 Long-term payables for staff’s 884,278,301.73 898,160,742.53 remuneration Special payable Estimated liabilities 2,631,779,719.51 2,619,699,551.41 Deferred income 525,458,976.51 497,141,088.72 Deferred income tax liabilities 187,823,829.18 279,114,620.35 Other non-current liabilities 1,344,958,187.97 1,170,936,828.55 Total non-current liabilities 25,286,221,236.93 27,818,654,033.79 Total liabilities 105,676,276,006.85 104,713,104,570.27 Owners’ equity Share capital 6,097,402,727.00 6,097,402,727.00 Other equity instruments 431,424,524.07 431,424,524.07 Including: preference shares perpetual bonds Capital reserve 827,598,495.52 826,883,093.84 Less: Treasury stock Other comprehensive income -281,820,717.97 -36,363,809.96 Special reserve Surplus reserve 2,103,057,782.41 2,103,057,782.41 General risk provisions Undistributed profits 24,697,688,554.60 22,793,110,884.09 Total equity attributable to owners 33,875,351,365.63 32,215,515,201.45 of the parent company Minority interests 14,977,886,695.69 14,534,490,935.91 Total owners’ equity 48,853,238,061.32 46,750,006,137.36 Total liabilities and owners’ 154,529,514,068.17 151,463,110,707.63 19 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. equities Legal representative: Chief accountant: Person in charge of accounting department: Liang Haishan Gong Wei Ying Ke Balance Sheet of the Parent Company 31 March 2018 Prepared by: Qingdao Haier Co., Ltd. Unit and Currency: RMB Unaudited Items Closing balance Opening balance Current Assets: Cash 3,172,463,996.76 2,070,527,802.97 Financial assets measured at fair value and changes of which included in current profit and loss Derivative financial assets Notes receivables Accounts receivables 334,140,723.95 288,499,726.07 Prepayments 73,048,606.66 20,000,000.00 Interests receivables 248,729,039.22 220,157,282.75 Dividends receivables 958,851,045.94 970,851,045.94 Other receivables 350,096,477.76 15,895,048.43 Inventories 108,306,782.28 89,650,514.91 Held for sale assets Non-current assets due within one year Other current assets 115,255,086.18 87,165,597.70 Total current assets 5,360,891,758.75 3,762,747,018.77 Non-current assets: Available-for-sale financial assets 5,690,636.76 5,818,587.80 Held-to-maturity investments Long-term receivables 8,600,000,000.00 8,600,000,000.00 Long-term equity investments 23,626,271,572.17 23,581,254,928.08 Investment properties Fixed assets 115,025,129.81 118,553,830.32 Construction in progress 16,078,100.17 13,594,976.50 Construction materials Disposals of fixed assets Biological assets for production 20 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. Fuel assets Intangible assets 14,422,217.09 14,601,582.38 Development expenses Goodwill Long-term amortization expenditures 5,740,180.74 Deferred income tax assets 106,347,777.99 106,347,777.99 Other non-current assets 813,804.30 Total non-current assets 32,490,389,419.03 32,440,171,683.07 Total assets 37,851,281,177.78 36,202,918,701.84 Current liabilities: Short-term borrowings Financial liabilities measured at fair value and changes of which included in current profit and loss Derivative financial liabilities Notes payable Accounts payables 294,178,194.49 310,387,267.67 Payments received in advance 2,913,185,303.02 2,465,908,721.32 Staff remuneration payable 15,709,604.82 51,533,384.22 Taxes payable 64,085,749.63 62,255,803.87 Interests payable 67,012,725.74 156,447,167.63 Dividends payable Other payables 22,400,064,899.25 21,112,143,360.73 Held for sale liabilities Non-current liabilities due within one year Other current liabilities 14,083,470.32 12,498,265.43 Total current liabilities 25,768,319,947.27 24,171,173,970.87 Non-current liabilities: Long-term borrowings Debentures payable Including: preference shares perpetual bonds Long-term payable 20,000,000.00 20,000,000.00 Long-term payables for staff’s remuneration Special payable Estimated liabilities Deferred income 37,700,000.00 37,700,000.00 Deferred income tax liabilities 36,133,622.68 36,152,815.34 Other non-current liabilities Total non-current liabilities 93,833,622.68 93,852,815.34 21 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. Total liabilities 25,862,153,569.95 24,265,026,786.21 Owners’ equity: Share capital 6,097,402,727.00 6,097,402,727.00 Other equity instruments Including: preference shares perpetual bonds Capital reserve 2,317,907,947.71 2,317,907,947.71 Less: Treasury stock Other comprehensive income -20,437,041.80 -43,234,737.77 Special reserve Surplus reserve 1,437,313,649.93 1,437,313,649.93 Undistributed profits 2,156,940,324.99 2,128,502,328.76 Total owners’ equity 11,989,127,607.83 11,937,891,915.63 Total liabilities and owners’ equities 37,851,281,177.78 36,202,918,701.84 Legal representative: Chief accountant: Person in charge of accounting department: Liang Haishan Gong Wei Ying Ke Consolidated Income Statement January-March 2018 Prepared by: Qingdao Haier Co., Ltd. Unit and Currency: RMB Unaudited Items Current amount Prior amount I. Total operating revenue 42,655,164,567.37 37,745,829,388.95 Including: Operating revenue 42,655,164,567.37 37,745,829,388.95 Interest income Insurance premiums earned Fee and commission income II. Total cost 40,388,152,695.05 35,834,083,962.03 Including: Cost of sales 30,449,298,701.96 26,380,596,377.85 Interest expenses Fee and commission expenses Insurance withdrawal payment Net payment from indemnity Net provisions for insurance contract Insurance policy dividend paid Reinsurance cost Business taxes and surcharge 223,258,372.32 178,393,139.98 Selling expenses 6,254,887,373.85 6,683,104,490.92 Administrative expenses 2,746,972,301.60 2,143,172,877.49 22 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. Financial expenses 468,944,062.41 225,289,791.40 Loss in assets impairment 244,791,882.91 223,527,284.39 Add: Income from change in fair value (losses 207,293,485.79 158,467,287.04 are represented by “-”) Investment income (losses are represented 242,480,840.14 319,933,556.06 by “-”) Including: investment income of associates and joint ventures Gains on disposal of assets (losses are 429,548.74 -2,016,573.57 represented by “-”) Exchange gain (losses are represented by “-”) Other incomes 106,214,641.01 77,545,764.01 III. Operating profit (losses are represented by 2,823,430,388.00 2,465,675,460.46 “-”) Add: Non-operating income 111,793,323.64 144,996,386.52 Less: Non-operating expenses 8,496,036.27 55,000,489.53 IV. Total profit (total losses are represented by 2,926,727,675.37 2,555,671,357.45 “-”) Less: Income tax expense 458,014,171.70 407,958,955.60 V. Net profit (net losses are represented by “-”) 2,468,713,503.67 2,147,712,401.85 (I) Classification by continuous operation 1.Net profit from continuous operation (net 2,468,713,503.67 2,147,712,401.85 losses are represented by “-”) 2. Net profit from discontinuous operation (net losses are represented by “-”) (II)Classification by ownership of the equity 1.Profit or loss of minority shareholders 488,718,139.14 411,165,549.74 2.Net profit attributable to owners of the 1,979,995,364.53 1,736,546,852.11 Company VI. Post tax other comprehensive income -331,219,394.34 466,905.94 Post tax other comprehensive income -285,717,414.13 17,502,928.86 attributable to owners of the Company (I) Other comprehensive income that will not -1,280,674.80 -7,751.33 be reclassified subsequently to profit or loss 1. Changes in net liabilities or net assets arising from re-measurement of defined benefit -1,280,674.80 -7,751.33 plans 2. Share of other comprehensive income of investees that cannot be reclassified to profit or loss under equity method (II) Other comprehensive income to be -284,436,739.33 17,510,680.19 reclassified subsequently to profit or loss 23 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. 1. Share of other comprehensive income of investees that will be reclassified subsequently -42,701,390.85 -40,488,326.71 to profit or loss under equity method 2. Gain or loss from change in fair value -678,068.23 -499,456.91 of available-for-sale financial assets 3. Gain or loss arising from reclassification from held-to-maturity investments to available-for-sale financial assets 4. Gains or losses on effective cash flow 14,114,618.65 -1,795,233.82 hedging 5. Exchange differences on translation of financial statements denominated in foreign -255,171,898.90 60,293,697.63 currencies 6. Other Other comprehensive income attributable to -45,501,980.21 -17,036,022.92 minority shareholders, net of tax VII. Total comprehensive income 2,137,494,109.33 2,148,179,307.79 Attributable to owners of the Company 1,694,277,950.40 1,754,049,780.97 Attributable to non-controlling interests 443,216,158.93 394,129,526.82 VIII. Earnings per share: (I) Basic earnings per share (RMB/share) 0.325 0.285 (II) Diluted earnings per share (RMB/share) 0.321 0.285 Legal representative: Chief accountant: Person in charge of accounting department: Liang Haishan Gong Wei Ying Ke Income Statement of the Parent Company January-March 2018 Prepared by: Qingdao Haier Co., Ltd. Unit and Currency: RMB Unaudited Items Current amount Prior amount I. Operating revenue 743,844,065.67 813,013,367.46 Less: Operation cost 533,278,383.46 594,504,109.45 Taxes and surcharge 5,402,608.47 6,561,826.29 Selling expenses 68,121,527.59 52,682,906.16 Administrative expenses 108,216,752.39 127,936,222.24 Financial expenses 25,428,042.84 18,751,061.43 Loss in assets impairment 10,058,187.90 486,242.29 Add: Income from change in fair value (losses are represented by “-”) Investment income (losses are represented 50,428,218.53 42,029,840.49 by “-”) 24 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. Including: Investment income of associates and joint ventures Gains on disposal of assets (losses are represented by “-”) Other incomes 5,969,287.05 II. Operating profit (losses are represented by “-”) 49,736,068.60 54,120,840.09 Add: Non-operating income 8,370,547.68 5,795,459.39 Less: Non-operating expenses 233,919.53 III. Total Profit (losses are represented by “-”) 57,872,696.75 59,916,299.48 Less: Income tax expense 1,116,671.73 2,669,218.85 IV. Net Profit (net losses are represented by “-”) 56,756,025.02 57,247,080.63 (I) Net profit from continuous operation (net 56,756,025.02 57,247,080.63 losses are represented by “-”) (II) Net profit from discontinuous operation (net losses are represented by “-”) V. Post tax other comprehensive income 7,680,578.08 -11,481,154.32 (I) Other comprehensive income will not be reclassified subsequently to profit or loss 1. Changes in net liabilities or net assets arising from re-measurement of defined benefit plans 2. Share of other comprehensive income of investees that cannot be reclassified to profit or loss under equity method (II) Other comprehensive income to be 7,680,578.08 -11,481,154.32 reclassified subsequently to profit or loss 1. Share of other comprehensive income of investees that will be reclassified subsequently to 7,789,336.46 -11,874,318.49 profit or loss under equity method 2. Gain or loss from change in fair value of -108,758.38 393,164.17 available-for-sale financial assets 3. Gain or loss arising from reclassification from held-to-maturity investments to available-for-sale financial assets 4. Gains or losses on effective cash flow hedging 5. Exchange differences on translation of financial statements denominated in foreign currencies 6. Other VI. Total comprehensive income 64,436,603.10 45,765,926.31 VII. Earnings per share: (I) Basic earnings per share (RMB/ share) (II) Diluted earnings per share (RMB/share) 25 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. Legal representative: Chief accountant: Person in charge of accounting department: Liang Haishan Gong Wei Ying Ke Consolidated Cash Flow Statement January-March 2018 Prepared by: Qingdao Haier Co., Ltd. Unit and Currency: RMB Unaudited Items Current amount Prior amount I. Cash flows from operating activities: Cash received from sales of goods and 39,294,461,022.85 42,040,544,736.74 rendering of services Net increase in customer and interbank deposits Net increase in borrowing from PBOC Net cash increase in borrowing from other financial institutes Cash received from premiums under original insurance contract Net cash received from reinsurance Business Net increase in deposits of policy holders and investment Net increase from the disposal of financial assets measured at fair value and changes of which included in current profit and loss Cash paid for interest, bank charges and Commissions Net increase in cash borrowed Net increase in cash received from repurchase operation Refunds of taxes 242,113,942.09 305,118,454.78 Cash received from other related 244,653,473.68 368,100,490.83 operating activities Sub-total of cash inflows from 39,781,228,438.62 42,713,763,682.35 operating activities Cash paid on purchase of goods and 26,876,400,215.94 27,222,452,573.86 services 26 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. Net increase in loans and advances Net increase in deposits in PBOC and interbank Cash paid for compensation payments under original insurance contract Cash paid for interest, bank charges and commissions Cash paid for insurance policy dividend Cash paid to and on behalf of employees 4,552,161,808.21 4,836,611,393.11 Cash paid for all types of taxes 2,146,684,682.86 1,619,809,910.52 Cash paid to other operation related 4,215,046,987.16 3,225,305,802.36 activities Sub-total of cash outflows from 37,790,293,694.17 36,904,179,679.85 operating activities Net cash flows from operating 1,990,934,744.45 5,809,584,002.50 activities II. Cash flows from investing activities: Cash received from disposal of 12,305,650.00 7,431,782.63 investments Cash received from return on investments 112,610,536.61 64,142,955.22 Net cash received from the disposal of fixed assets, intangible assets and other 38,778,216.12 198,536.43 long term assets Net cash received from disposal of subsidiaries and other operating entities Cash received from other investment 67,249,789.10 related activities Sub-total of cash inflows from 230,944,191.83 71,773,274.28 investing activities Cash paid on purchase of fixed assets, intangible assets and other long term 1,391,128,737.25 727,144,871.20 assets Cash paid for investments 289,116,220.14 349,845,557.45 Net increase in secured loans Net cash paid on acquisition of subsidiaries and other operating entities Cash paid on other investment related 15,000.00 76,823,787.07 activities Sub-total of cash outflows from 1,680,259,957.39 1,153,814,215.72 investing activities Net cash flows from investing -1,449,315,765.56 -1,082,040,941.44 activities III. Cash flows from financing activities: 27 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. Cash received from investment 8,278,135.66 22,247,648.00 Including: Cash received by subsidiaries from minority shareholders’ investment Cash received from borrowings 3,589,764,080.03 10,375,831,949.73 Cash received from issuing bonds Cash received from other financing 58,950,000.00 related activities Sub-total of cash inflows from 3,656,992,215.69 10,398,079,597.73 financing activities Cash paid on repayment of borrowings 5,291,464,063.74 11,291,851,345.83 Cash paid on distribution of dividends, 38,225,632.87 74,495,510.24 profits, or interest expenses Including: Dividend, profit paid to minority shareholders by subsidiaries Cash paid on other financing activities 62,515,783.81 16,702,520.08 Sub-total of cash outflows from 5,392,205,480.42 11,383,049,376.15 financing activities Net cash flows from financing -1,735,213,264.73 -984,969,778.42 activities IV. Effect of fluctuations in exchange -396,885,933.47 29,621,430.35 rates on cash and cash equivalents V. Net increase in cash and cash -1,590,480,219.31 3,772,194,712.99 equivalents Add: Balance of cash and cash 34,340,013,574.22 23,295,157,047.86 equivalents at the beginning of the period VI. Balance of cash and cash equivalents 32,749,533,354.91 27,067,351,760.85 at the end of the period Legal representative: Chief accountant: Person in charge of accounting department: Liang Haishan Gong Wei Ying Ke Cash Flow Statement of the Parent Company January-March 2018 Prepared by: Qingdao Haier Co., Ltd. Unit and Currency: RMB Unaudited Items Current amount Prior amount I. Cash flows from operating activities: Cash received from sales of goods 816,513,664.12 34,265,286.31 or rendering of services 28 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. Refunds of taxes 2,249,452.13 Cash received from other related 21,182,595.59 3,562,034.19 operating activities Sub-total of cash inflows from 839,945,711.84 37,827,320.50 operating activities Cash paid on purchase of goods and 221,179,942.07 605,901,367.09 services Cash paid to and on behalf of employees 131,351,975.78 371,066,552.46 Cash paid for all types of taxes 29,006,267.68 47,645,546.40 Cash paid to other operation related 116,047,065.74 98,883,185.35 activities Sub-total of cash outflows from 497,585,251.27 1,123,496,651.30 operating activities Net cash flows from operating 342,360,460.57 -1,085,669,330.80 activities II. Cash flows from investing activities: Cash received from disposal of 78,325.00 investments Cash received from return on 12,000,613.55 39,306,692.40 investments Net cash received from the disposal of fixed assets, intangible assets and other long term assets Net cash received from disposal of subsidiaries and other operating entities Cash received from other investment related activities Sub-total of cash inflows from 12,078,938.55 39,306,692.40 investing activities Cash paid on purchase of fixed assets, intangible assets and other long term 11,279,152.65 364,910.00 assets Cash paid for investments 168,659,237.50 Net cash paid on acquisition of subsidiaries and other operating entities Cash paid on other investment related activities Sub-total of cash outflows from 11,279,152.65 169,024,147.50 investing activities Net cash flows from investing 799,785.90 -129,717,455.10 activities III. Cash flows from financing activities: Cash received from investment 29 / 30 First Quarter 2018 Report of Qingdao Haier Co., Ltd. Cash received from borrowings Cash received from other financing 758,777,670.99 related activities Sub-total of cash inflows from 758,777,670.99 financing activities Cash paid on repayment of borrowings Cash paid on distribution of dividends, profits, or interest expenses Cash paid on other financing activities 177,527,578.53 Sub-total of cash outflows from 177,527,578.53 financing activities Net cash flows from financing 758,777,670.99 -177,527,578.53 activities IV. Effect of fluctuations in exchange -1,723.67 -263.89 rates on cash and cash equivalents V. Net increase in cash and cash 1,101,936,193.79 -1,392,914,628.32 equivalents Add: Balance of cash and cash 2,070,527,802.97 3,888,623,400.28 equivalents at the beginning of the period VI. Balance of cash and cash equivalents 3,172,463,996.76 2,495,708,771.96 at the end of the period Legal representative: Chief accountant: Person in charge of accounting department: Liang Haishan Gong Wei Ying Ke 4.2 Audit Report □Applicable √Not Applicable 30 / 30