2016 Semi-Annual Report of Midea Group Co., Ltd. Midea Group Co., Ltd.
Semi-Annual Report 2016
August 2016
2016 Semi-Annual Report of Midea Group Co., Ltd. Section I Important Notes, Contents and Definitions
The Board of Directors, Board of Supervisors, directors, supervisors and senior management of Midea Group Co., Ltd. (hereinafter referred to as the “Company”) hereby guarantee that the information presented in this Report is truthful, accurate and complete, and shall together be jointly and severally liable for any false records, misleading statements or material omissions in this Report.
All directors of the Company attended the Board meeting for reviewing this Report. The Company plans not to distribute cash dividends or bonus shares or turn capital reserves into share capital for the first half of 2016.
Mr. Fang Hongbo, chairman of the Board and president of the Company and Mr. Xiao Mingguang, responsible person for theCompany’s financial affairs have represented and warranted that the financial statements carried in this Report are truthful, accurate and complete.
This Report has not been audited by a CPAs firm.
The future plans and some other forward-looking statements mentioned in this Report shall not be regarded as virtual promises of the Company to investors. Therefore, investors are kindly reminded to pay attention to possible investment risks.
This Report has been prepared in both Chinese and English. Should there be any discrepancies or misunderstandings between the two versions, the Chinese version shall prevail.
2016 Semi-Annual Report of Midea Group Co., Ltd. Contents
Section I Important Notes, Contents and Definitions ...................................................... 2 Section II Corporate Profile .................................................................................................... 5 Section III Summary of Accounting Data and Financial Indicators ............................. 7 Section IV Report of the Board of Directors .................................................................... 10 Section V Significant Events ................................................................................................ 41 Section VI Changes in Shares and Particulars about Shareholders ........................ 66 Section VII Preference Shares ............................................................................................. 72 Section VIII Information about Directors, Supervisors and Senior Management .. 73 Section IX Financial Report .................................................................................................. 74 Section X Documents Available for Reference ............................................................. 153
2016 Semi-Annual Report of Midea Group Co., Ltd. Definitions
|||
|-|-|
|Term|Definition|
|Company, the Company, Midea Group or the Group|Midea Group Co., Ltd.|
|Midea Holding|Midea Holding Co., Ltd.|
|Little Swan|Wuxi Little Swan Company Limited|
|Midea Group Finance|Midea Group Finance Co., Ltd.|
|Toshiba|Toshiba Corporation|
|Toshiba Lifestyle|Toshiba Lifestyle Products & Services Corporation|
|KUKA|KUKA Aktiengesellschaft|
|MECCA|MECCA International (BVI) Limited|
|The Reporting Period|The period from 1 January 2016 to 30 June 2016|

2016 Semi-Annual Report of Midea Group Co., Ltd. Section II Corporate Profile
I Corporate information
|||||
|-|-|-|-|
|Stock name|Midea Group|Stock code|000333|
|Stock exchange|The Shenzhen Stock Exchange|||
|Company name in Chinese|美的集团股份有限公司|||
|Abbr. (if any)|美的集团|||
|Company name in English||||
||MIDEA GROUP CO., LTD.|||
|(if any)||||
|Legal representative|Mr. Fang Hongbo|||

II Contact information
||||
|-|-|-|
||Company Secretary|Representative for Securities Affairs|
|Name|Jiang Peng|Ou Yunbin|
||Midea Headquarters Building, 6 Midea Avenue, Beijiao Town, Shunde District,||
|Address|||
||Foshan City, Guangdong Province, China||
|Tel.|0757-22607708|0757-23274957|
|Fax|0757-26605456||
|E-mail|IR@midea.com||

III Other information
1. Ways to contact the Company
Changes in the Reporting Period to the registered address, office address and their zip codes, website address and email address of the Company:
□ Applicable√ N/A
No such changes in the Reporting Period. The said information can be found in the 2015 Annual Report. 2. About the media for information disclosure and the place where materials carrying disclosed information such as this Report are kept
Changes in the Reporting Period to the media for information disclosure and the place where materials carrying disclosed information such as this Report were kept:
□ Applicable√ N/A
The newspapers designated by the Company for information disclosure, the website designated by the
2016 Semi-Annual Report of Midea Group Co., Ltd. CSRC for disclosing this Report and the place where materials carrying disclosed information such as this Report were kept did not change in the Reporting Period. The said information can be found in the 2015 Annual Report.
3. Changes in the registered information
Changes in the Reporting Period to the registered information:
□ Applicable√ N/A
The registration date and place of the Company, its business license number, taxation registration number and organizational code did not change in the Reporting Period. The said information can be found in the 2015 Annual Report.
2016 Semi-Annual Report of Midea Group Co., Ltd. Section III Summary of Accounting Data and Financial Indicators
I Key accounting data and financial indicators
Retroactive adjustments to or restatements of accounting data due to changes in the accounting policies or corrections of accounting errors:
□ Yes√ No
|||||
|-|-|-|-|
||2016H1|2015H1|YoY Change (%)|
|Operating revenues (RMB'000)|77,522,287|82,509,144|-6.04%|
|Net profits attributable to the|9,496,493|8,324,123||
|shareholders of the Company|||14.08%|
|(RMB'000)||||
|Net profits attributable to the||||
|shareholders of the Company||||
||9,100,244|7,433,037|22.43%|
|excluding non-recurring gains and||||
|losses (RMB'000)||||
|Net cash flows from operating activities|8,129,163|8,815,673||
||||-7.79%|
|(RMB'000)||||
|Basic earnings per share (RMB/share)|1.48|1.32|12.12%|
|Diluted earnings per share|1.48|1.31||
||||12.98%|
|(RMB/share)||||
|Weighted average ROE (%)|17.64%|19.62%|-1.98%|
||As at the end of 2016H1|As at the end of 2015H1|YoY Change (%)|
|Total assets (RMB'000)|167,502,747|128,841,935|30.01%|
|Net assets attributable to the|55,333,098|49,201,852||
|shareholders of the Company|||12.46%|
|(RMB'000)||||

Total share capital of the Company on the last trading session before the disclosure of this Report:
|||
|-|-|
|Total share capital of the Company on the last trading||
||6,446,691,854|
|session before the disclosure of this Report (share)||
|Fully diluted earnings per share based on the latest||
||1.47|
|share capital above (RMB/share)||

2016 Semi-Annual Report of Midea Group Co., Ltd. Note: The total share capital of the Company on the last trading session before the disclosure of this Report increased by 21,757,595 shares from the end of the Reporting Period because the Company carried out a stock option incentive scheme and grantees exercised their stock options.
II Differences in accounting data under the domestic and overseas accounting standards
1. Differences in the net profits and net assets disclosed in the financial reports prepared under the international and China accounting standards
□ Applicable√ N/A
No such differences for the Reporting Period.
2. Differences in the net profits and net assets disclosed in the financial reports prepared under the overseas and China accounting standards
□ Applicable√ N/A
No such differences for the Reporting Period.
III Items and amounts of non-recurring gains and losses
√ Applicable□ N/A
Unit: RMB'000
||||
|-|-|-|
|Item|Amount|Note|
|Gains or losses on disposal of non-current assets (including|6,042||
|the offset asset impairment provisions)|||
|Government grants charged to the gains/losses for the|762,724||
|Reporting Period (except for the government grants closely|||
|related to the business of the Company and given at a fixed|||
|quota or amount in accordance with nationally uniform|||
|standards)|||
|Gains or losses on the changes in the fair value of|-539,590||
|held-for-trading financial assets and liabilities, as well as|||
|investment gains or losses on the disposal of held-for-trading|||
|financial assets and liabilities and available-for-sale financial|||
|assets, except for the effectively hedging business related to|||
|normal business operations of the Company|||
|Non-operating incomes and expense other than the above|67,147||
|Less: Income tax effects|30,545||
|Minority interests effects (after tax)|-130,471||
|Total|396,249|--|

2016 Semi-Annual Report of Midea Group Co., Ltd. Explain the reasons if the Company classifies an item as a non-recurring gain/loss according to the definition in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to thePublic—Non-recurring Gains and Losses, or classifies any non-recurring gain/loss item mentioned in the said explanatory announcement as a recurrent gain/loss item:
□ Applicable√ N/A
No such cases in the Reporting Period.
2016 Semi-Annual Report of Midea Group Co., Ltd. Section IV Report of the Board of Directors
I Industry Overview
In the first half year of 2016, the macro-economic growth slowed down in China, housing market further polarized, raw material price went up and down, foreign exchange rate continued to be fluctuated, and the home appliance market entered into a stage of focusing on de-stocking, structural change, and product& consumption upgrading. According to China IOL data, the total sales volume of residential Air-conditioner for 2016H1 was just 58million units for the whole China market, which saw15% decline year-on-year; the total sales volume of refrigerator for 2016H1 was 28.94million units, which saw1.4% decline year-on-year; and the total sales volume of wash machine for 2016H1 was 27.50million units, which saw3.82% increase year-on-year. Nevertheless, kitchen appliances and small appliances witnessed fast growth with 16.72million units sold at retail market for 2016H1, which has4.7% increase year-on-year, according to All View Cloud data.
Under the new economic environment, consumers showed much more participation in the process of buying home appliances and using appliances. Home appliances manufacturers become more product& consumer-oriented. Improving operational efficiency, developing smart appliances, leveraging online sales, and encouraging technological, sales channel and service model innovation, have been the core growth momentum for home appliances manufacturers.
2016 has seen consumption being further upgraded,people’s average income being constantly increased, new consuming group represented by youth born after 1985 being more and more active. All these contributed to the diversification of consuming demands and expansion of consuming area which pushed home appliance manufacturers to actively improve product mix, innovation technologies, as well as structural adjustment. According to All View Cloud data, premium smart home appliances have shown rapid growth trend. Sales of smart air conditioners account for15.3% of total air conditioner sales in the offline channel and achieved183.8% increase year-on-year, Smart refrigerators account for10.5% of total refrigerator sales in the offline channel and achieved438.2% growth year-on-year. Smart wash machines account for5.8% of total wash machine sales in the offline channel and achieved251% growth year-on-year.
2016 Semi-Annual Report of Midea Group Co., Ltd. 2016 also witnessed further channel restructuring in the home appliance industry. O2O business model, application of big data and widespread use of mobile payment have largely promoted channel upgrading in the home appliance industry as well as cooperation between home appliance and internet companies. E-commerce has entered into rapid growth period. In the first half of 2016, online sales of home appliances have reached historic high. The B2C online sales market for home appliances for 2016H1 has reached RMB184.8bn, and achieved35% growth year-on-year. After fiveyears’ rapid growth, online shopping has become a significant distribution channel for home appliances.
From mid to long term perspective, the growth momentum of home appliance industry in Chinahasn’t had any change. The major reasons are as follows:
1) With constant increase ofpeople’s income and accelerated urbanization in China, the penetration rate of home appliance market is still expected to be improved. According to the data from the National Bureau of Statistics of China, the nominal per capita disposable personal income (DPI) for 2016H1 is RMB 11,886, which has8.7% increase year-on-year. Meanwhile, urbanization has been accelerated in China. A number of key projects have entered into implementation stage, which created new growth opportunities. All these can effectively pull consumption and release potential of domestic demands. 2) Continuous consumption upgrade, combining with the existing 1.6bn units home appliances sold in the Chinese market, has become a driving force to grow the home appliance sales in China. Notable progress has been made on improving technologies such as energy-saving, environmental friendly, smart appliances, industrial design as well as other features and quality of home appliances products. New generation of consumers has higher demand for life quality which also urged home appliance manufactures to improve their product offering. All these can help improve the product mix and profitability of home appliance manufacturers.
3) In an era ofinternet+, technology& innovation will further push China to become a Manufacturing Power. Improvement on relevant technologies such as smart control technology, information technology, IOT, big data, cloud computing etc. as well as the widespread use of mobile devices will effectively drive the rapid development of smart home which has been widely recognized as the future trend for the development of home appliances. According to the prediction of China Market Monitor, by 2020 the penetration rate of smart appliances will be further improved in China with smart appliances account for45%,25%, and28% respectively of white goods, kitchen appliances and small domestic appliances
2016 Semi-Annual Report of Midea Group Co., Ltd. sales. In the future five years, the demand for smart appliances will reach RMB1500bn in China. 4) Under the new competition environment, the ecology of home appliance industry will be further improved, and home appliance market will be further consolidated. Leading home appliance manufacturers, with their competitive advantages in brands, technologies, industrial chain, services, and channels, are expected to further improve their market share and profitability.
5) Based on the huge domestic market with a big population of 1.4bn in China, the home appliance manufacturers in China have formed their competitive advantages in respect of scale, product cluster, industrial chain support and capital, and will still maintain their competitiveness globally. Developing markets have large population and growing economy, and are now entering into fast-developing period for home appliances. Chinese companies are expected to play a significant role in these markets which will provide a solid foundation for the export growth of Chinese companies. Meanwhile, Chinese companies are very active in the globalM&A fields. Acquisitions of brands, channels, technologies will provide Chinese companies with new competitive advantages worldwide.
II Analysis of Main Businesses
1. Overview
Midea is a leading global player in consumer appliances and heating, ventilation and air-conditioning (HVAC) systems. In the first half of 2016, the Company continues to adhere to the three corporate strategic focuses: “Leading Products, Operational Efficiency, and Global Operations”. Organizational restructuring has centered on products and users. As a result,R&D capability, reputation of product quality, operational efficiency and business profitability of the Company have been largely improved. Margins of a number of product categories have reached historic high level, risk factors have been generally lowered, overseas sales have achieved substantial growth, globalization has made milestone progress, and the competitive advantage of the Company, having wide range of product categories and worldwide market synergies, has been further strengthened. In 2016H1, the total revenue of the Company is RMB 78Bn with5.87% decline year-on-year, net income is RMB 10.2Bn, net income attributable to the shareholders is RMB 9.5Bn with14.08% growth, gross margin reached29.33% which has 1.97 percent increase compared to 2015H1, ROE is17.64%.
In 2016, Midea successfully entered into the Fortune Global 500 list, becoming the first Chinese
2016 Semi-Annual Report of Midea Group Co., Ltd. home appliance manufacture listed on the Fortune Global 500. Midea has been continuously three years ranked highest among home appliance manufacturers on the list of Fortune China 500. According to the 2016 State of Innovation published by Thomson Reuters, Midea Group is ranked highest among Top 10 GlobalInnovators–Home Appliances (2015) and Top 10 KitchenInnovators–Asia (2011-2015). According toEuromonitor’s Consumer Appliance Global Ranking, Midea Group, with a global market share of4.6%, is ranked the second after Philips among global home appliance companies.
In the first half of 2016, the key tasks of the Company are the following:
1) Focusing on users and technological innovation, continuously optimizing product mix and steadily improving product competitive advantages
Adhere to the principle of making good products, strengthening on consumer research, developing innovative products, improving product mix and the share of premium products, which result in the better reputation of our products
In the field of residential air conditioning, Midea focuses on the unique features and differentiation of products. Midea YB300 “Cooling King” floor-standing inverter air conditioners adopted a self-developed innovative refrigerant technology which enables the air conditioner to cool down air rapidly even at60℃ high temperature. It can meanwhile keep noise level at 18DB, has 100 shifts wind speed alternatives, and Wi-Fi remote control function, etc. Midea ALL EASY split air conditioners adopted an innovative design with panel and frame in one piece and chassis being removable, which make installation, maintenance and cleaning air conditioners much more convenient. Midea residential air conditioner, thanks to its technological innovations in all these years, has been granted various honors and awards inside and outside of China. This year there are products being granted 2016 Red Dot product design awards from Germany, the Most Efficient Mini Split Certificate by the Air Conditioning, Heating, and Refrigeration Institute (AHRI), being tested by the Intertek Group from the United States, and Outstanding Design Grand Gold Award and Outstanding Design Gold Award from China Light Industry Outstanding Design Awards.
In the field of commercial air conditioning, as a leading Chinese brand in the commercial air conditioning industry, Midea holds over 1000 patents in this field and won a lot of important projects worldwide including the largest shopping mall in Dubai, Dalma Mall, Foro Central commercial real estate project in Brazil, Changi Airport from Singapore, Jakarta International Airport from Indonesia, as well as
2016 Semi-Annual Report of Midea Group Co., Ltd. sports game stadiums such as the World Cup in Brazil, the European Youth Olympic Festival and the African Games. 2016 also saw Midea won100% of public biddings hold by Olympic Committee for the air conditioning of all newly built Rio Olympic Games indoor stadiums. According to China IOL, the growth of Midea commercial air conditioners has been in the last years continuously higher than the growth of industry. Midea commercial air conditioners were granted by the Air Conditioning, Heating, and Refrigeration Institute (AHRI) from the United States the first Modular Air Conditioning Unit Performance Certificate in the world, the first Heat Pump Performance Certificate in Asia, and by Eurovent Certita Certification from the Europe the first VRF Performance Certificate in China. Major testing criteria such as cooling/heating capacity, power consumption, energy efficiency and noise level, are all rated as international leading level.
In the field of laundry, Midea continues to invest heavily inR&D and product innovation by building a globally competitiveR&D platform, investing in advanced technologies, smart technologies and core technologies, as well as continuously launching new products. For instance, this year the Company launched its premium series Beverly and differentiation series Disney. The Beverly series design is an outcome from working with Italian craft research institute and represents our premium products. Disney series design is tailor made for children wash machines, wall-hung wash machines as well as portable mini-wash machines, which focuses on combination of arts and practical use and represents our differentiation products. In 2016, Little Swan, theCompany’s subsidiary, was granted Certificates for its Water Cubic High Efficiency& Energy Saving Technology and for BLDC Motor 20-Year Operating Life Quality by VDE, the world leading Association for Electrical, Electronic& Information Technologies. Beverly front-loading wash machine was granted 2016 Appliance Product Award by China Household Electrical Appliance Association. Beverly top-loading wash machine was granted 2016 Ret Dot product design awards from Germany.
In the field of refrigerator, Midea focused on the development of energy-saving technologies and smart appliances. A number of Midea refrigerator product series were included in the Energy Efficiency Top-Runner List. Midea double-screen smart refrigerator received broad attention at the Appliance& Electronics World Expo in Shanghai due to its special features such as intelligent food management, double screen interactive representation, mobile control, etc. Midea refrigerator 401WGPZV was granted 2016 Appliance Product Award by China Household Electrical Appliance Association due to its
2016 Semi-Annual Report of Midea Group Co., Ltd. unique selling features such as two separate keeping fresh systems technology, two cabinets separate temperature control technology, auto-control atomization and moisture reservation technology. In the last years, Midea refrigerators have been granted various international and domestic certifications such as UL safety certification from the United States, Energy Star certification from Europe, TUV quality certification, Greenhouse Gas Emission Certification (first one received in the industry), CSC Energy-saving technology certification, CQC quality certification, etc.
In the field of small appliances, Midea has been constantly launching new products in order to addressconsumers’ improving life quality needs. Midea microwave oven M1-L201B adopted the fourth generation of inverter technology which can auto control the temperature, retain freshness and nutrition of food, and meet level 1 energy efficiency standard. Midea “Tianmu” series hoods can reach 400Pa wind pressure for exhaustion and conduct intelligent auto steaming cleaning. Midea “Dinghuo” gas stove adopted three-level combustion technology and its burning capacity can reach 5.0KW. Midea “Menxiang Dingfu” IH rice cooker adopted the world leading multi-frequency IH technology which can cause rice to turn720° in two directions and achieve the effect of having strong fire but fine heating. Midea “Qingyu” smart electric fan adopted feather-imitation blade design, which can produce soft winds and address the concerns of elders and children. It can connect with air condition and provide an auto control air treatment solution. Midea MUSE water heater is embedded with JBL Bluetooth loud speaker which enable people to listen to music and receive phone calls during showering. A number of Midea small appliance categories have been granted international and domestic awards such as IF Design Awards, Red Dot Awards, and Appliance Awards for consecutive years, which effectively demonstrated the competitiveness of Midea products.
2) Completely strengthening positions in channels, rapidly developing e-commerce, and effectively improving logistics capability
Thanks to its wide product categories advantage, Midea is able to strengthen its positions in 6 major channels, i.e., flagship store, Suning, Gome, regional chain stores (TOP Club), smaller regional chain stores (VIP 200) as well as specialty stores in towns and counties, which covers channels from metropolis, tier one cities to towns and villages. 2016H1 has witnessed steady and fast development of V200 and specialty stores, and scale effect shall be shown in the
2nd
half of this year. Other channels, particularly flagship stores and TOP club, have grown over10%, which largely contribute to the stable
2016 Semi-Annual Report of Midea Group Co., Ltd. development of domestic market.
Centered on users and products, Midea built its online big data platform and started full strategic cooperation with JD, Tmall, Suning online platforms. Midea online flagship stores on these platforms experienced fast growth. In 2016H1, online sales of Midea products in total exceeded RMB 10bn with57% growth year-on-year, and Midea is ranked the top among all home appliance companies in terms of online sales value.
By way of developing its own logistics platform, Midea has completed consolidating its logistics business in 1/3 provinces in China so far, with an aim of completing nationwide consolidation by the end of this year. Facing the industry development trend from “Logistics Internet” to “Internet Logistics”,Midea’s logistics platform is experiencing a proactive transformation with an aim to achieve its business covering all different channels and combining delivery and installation business together. Through intelligent cloud warehouse, Truckload / Less Truckload, urban distribution, and delivery combining with installation, Midea logistics is able to offer exceptional experience for its customers.
3) Adhere toR&D cooperation, strengthening positions in smart home, and maintaining leading position in the industry
Based on its wide product category and large amount of users, Midea has been actively pushing forward its M-Smart strategy. Internally, Midea developed a smart home service application (SaaS), committed to promote the upgrading and optimization of smart appliances, launched Midea Smart Life Plan, and executed the smart life operation and service platform. Externally, Midea strengthened its cooperation with nearly 50 partners on the ecological chain. It entered into strategic relationship with Huawei, IFLYTEK, State Grid, Dooya to develop smart home together. It worked with OnStar to seamlessly connect the Internet of Vehicles with smart home in order to provide smart home users broader experiences. It also cooperated with well-known universities and institutes worldwide on the core technologies of IoT and achieved breakthrough in key areas such as the development of core SIP communication module, combination of three networks module, audio+ communication module, security strengthening, smart cloud 2.0 upgrading, etc. which have leading positions in the industry.
4) Making further investment in developing overseas market, improving the development of overseas sales platform, and increasing OBM sales
Making further investment in developing overseas market, transforming the business model from
2016 Semi-Annual Report of Midea Group Co., Ltd. “exporting from China” to “local operations overseas”, expanding the product categories for overseas manufacturing, promoting localization of manufacturing and supply chain, and improving the product qualities of overseas factories; enhancing the consumer research in various countires, strengthening overseas channels, improving the band image of Midea-owned brands, and improve the product competitiveness at local markets; enhancing the risk control and after-sales service support for overseas sales, unifying the standard for overseas logistics and services, and setting up overseas logistics platform. In the first half year of 2016,Midea’s export business grew approximately14% year-on-year, inventory has been significantly lowered down, margins and operation efficiency have been largely improved.
5) With a global view, strengthening positions in the industry and exploring new industries
In the first half of 2016, Midea has launched three internationalM&A deals and strategic cooperation with total value exceeding RMB30bn.
The strategic cooperation with Toshiba home appliance business has been completed. Through this transaction, Midea acquired80.1% stake in Toshiba Lifestyle Products& Services Corporation (“TLSC”), the home appliance arm of Toshiba Corporation. Midea obtained 5,000 IP assets and is licensed to use the Toshiba brand worldwide for 40 years. This transaction will improveMidea’s capability in branding, technology, channel and manufacturing so as to strengthenMidea’s global influence and competitiveness.
As part of the “Smart Home+ Intelligent Manufacturing” strategy, Midea launched a voluntary public tender offer for all shares in KUKA AG (KUKA), a leading global supplier of intelligent automation solutions. By the end of the tender offer acceptance period,81.04% of all existing shares of KUKA were tendered into the offer. The total number of KUKA shares tendered during the regular and additional tender period, in conjunction with the13.51% KUKA shares indirectly held by Midea prior to the takeover offer, results in a total of94.55% of the issued share capital in KUKA.
In 2016H1, Midea has entered into a Definitive Agreement with the shareholder of Clivet S.p.A for the acquisition of80% stake in Clivet. Benefited fromClivet’s position in commercial air conditioner industry in Europe, Midea will further improve its market share of large-capacity commercial air conditioner in Europe as well as worldwide.
6) Building a highly efficient operation scheme, strengthening lean management through the
2016 Semi-Annual Report of Midea Group Co., Ltd. complete value chain
Midea 632 IT project, which covers 6 operation systems, 3 management platforms and 2 technical platforms, has been fully launched, which further enhanced theCompany’s management principle of “One Midea, One System, One Standard” and helped the overall improvement in every business fields of Midea.
Midea has been pushing forward lean management through the whole value chain.T+3 order based production planning scheme changes production planning from base on manufacturer self-evaluation to base on customer ordering, which reduces lead time and accelerated turnover. From distribution side, Midea tries to persuade its customers to change their mindset and to improvement ordering and inventory management. From supply chain side, Midea enhanced its management of exclusive suppliers and introduced good quality suppliers. FromR&D side, Midea continues to reduce SKUs, reduce the number of materials and improve standardization. From manufacturing side, Midea upgraded manufacturing through implementing flexible production, automation, and lean management. TheT+3 scheme has effectively improved inventory turnover and reduced warehouse area which leads to improvement of operational efficiency.
7) Continuously launching long-term incentive plans, improving corporate governance
This year Midea launched the third term of share option plan for mid to high level management employees, and the second term of Partnership Program (ESOP) for core senior management people which aims to change professional managers to partners and link the interests of management with the long term value of the Company. Partnership Program and share option plan aligned the interests of senior management, key employees and shareholders together and largely improved the corporate governance of the Company.
The main tasks for the second half of 2016 are as follows:
a. Focusing on the home appliance and HAVC industry, to continuously push forward the transformation and upgrade of existing business; focusing onR&D, to ensure the steady improvement of product competitiveness; focusing on users, to further develop differentiation products and product innovation, and to ensure the unique technology capability and product competitive advantages of Midea products.
b. Continue to apply the lean management philosophy and methods through the whole value chain,
2016 Semi-Annual Report of Midea Group Co., Ltd. extending theT+3 scheme with an aim to further lower down inventory level, optimize inventory structure, shorten cash conversation cycle, and improve efficiency criteria.
c. Adhere to the Smart Home and Intelligent Manufacturing Strategy, embracing the opening, cooperative, mutual benefiting and win-win philosophy, and providing better quality and more convenient smart home user experience
d. exploring the international strategic markets, further driving the globalization of Midea, improving the global competitiveness of Midea, ensuring the post-acquisition integration of Toshiba transaction as well as otherM&A projects, and ensuring a good entry and positioning in new industries such as robotics industry.
e. continuously improving corporate structure and systems, paying attention to the training of talents and recruitment of professionals, improving the corporate atmosphere and innovating long term inventive plans.
YoY changes in key financial data
Unit:RMB’000
||||||
|-|-|-|-|-|
||2016H1|2015H1|YoY Change (%)|Main reasons for change|
|Operating revenues|77,522,287|82,509,144|-6.04%||
|Operating costs|54,866,160|59,878,906|-8.37%||
|Selling expenses|8,185,178|8,986,099|-8.91%||
|Administrative expenses|3,690,059|3,604,757|2.37%||
||-905,261|-778||Mainly due to the interests’ income and|
|Financial expenses|||-116,257.46%||
|||||foreign exchange gains.|
|Income tax expenses|1,946,671|1,808,007|7.67%||
||8,129,163|8,815,673||Mainly due to the loan providing|
|||||business of Midea financing company.|
|Net cash flows from|||||
||||-7.79%|Net cash flow from operating activities|
|operating activities|||||
|||||excluding the loan business has|
|||||actually increased 9%.|
|Net cash flows from investing|-16,336,731|-8,825,101||Mainly due to the increased investment|
||||85.12%||
|activities||||activities.|
|Net cash flows from financing|13,246,447|272,708||Mainly due to borrowing loans and|
||||4,757.37%||
|activities||||issuing bonds.|

2016 Semi-Annual Report of Midea Group Co., Ltd.
||||||
|-|-|-|-|-|
|Net increase in cash and|5,109,499|234,907|||
||||2,075.12%|Reasons mentioned above.|
|cash equivalents|||||

Major changes to the profit structure or sources of the Company in the Report Period:
□ Applicable√ Inapplicable
No such cases in the Report Period.
Report Period progress of any development planning in the disclosed documents of the Company such as share-soliciting prospectuses, offering prospectuses, asset reorganization reports, etc.:
□ Applicable√ Inapplicable
No such cases in the Report Period.
Report Period progress of any operating plans previously disclosed by the Company:
In the Report Period, we moved forward with all of our tasks according to our schedules of the beginning of the year and progress has been made. For details, see “I Overview” in this section. III Main business breakdown
Unit: RMB'000
||||||||
|-|-|-|-|-|-|-|
||||Gross|YoY change in|YoY change in|YoY change in|
||Operating revenue|Operating cost|margin|operating|operating cost|gross margin|
||||(%)|revenue (%)|(%)|(%)|
|By business segment|||||||
|Manufacturing|70,661,932|48,885,454|30.82%|-6.86%|-10.24%|2.61%|
|Logistics|||||||
||905,094|836,276|7.60%|7.95%|14.68%|-5.42%|
|transportation|||||||
|By product|||||||
|Large home|||||||
||48,282,097|33,090,488|31.46%|-11.41%|-13.83%|1.92%|
|appliances|||||||
|Air conditioners and|||||||
||34,199,997|22,894,273|33.06%|-20.12%|-23.35%|2.82%|
|components|||||||
|Refrigerators and|||||||
||6,701,367|4,955,414|26.05%|11.18%|9.99%|0.79%|
|components|||||||
|Washing machines|||||||
||7,380,733|5,240,801|28.99%|30.52%|30.06%|0.25%|
|and components|||||||

2016 Semi-Annual Report of Midea Group Co., Ltd.
||||||||
|-|-|-|-|-|-|-|
|Small household|||||||
||20,368,484|14,182,924|30.37%|5.38%|-1.12%|4.59%|
|appliances|||||||
|Motors|3,610,901|3,091,178|14.39%|-4.83%|-5.86%|0.94%|
|Logistics|2,182,447|1,986,472|8.98%|5.75%|3.74%|1.76%|
|By geographical segment|||||||
|PRC|40,240,886|26,163,392|34.98%|-18.56%|-22.24%|3.08%|
|Other countries and|||||||
||31,326,140|23,558,338|24.80%|14.77%|9.34%|3.74%|
|regions|||||||

Note: In order to help investors learn about the actual scale of operation and operational capability of motors and logistics, the above mentioned data include the intercompany sales of motors and logistics within the Company. Please refer to the notes to the financial statements in this Annual Report for the data excluding the intercompany sales amount.
IV Core competitiveness analysis
1. Midea is a world leading consumer appliance and HVAC industrial conglomerate and its major product categories have a leading position in the industry, which enables the Company to provide one-stop full service high quality home appliance solutions to users.
Midea is the only home appliance and HAVC manufacturer in China with fully integrated value chain and widest product categories. With its industry-leading technologies and manufacturing capabilities in key components of home appliances such as compressors, motors, magnetrons, and its strong logistics and service capabilities, Midea has obtained fully integrated value chain includingR&D of key components and finished goods, as well as in-house manufacturing and sales. Midea brand is a very well-known brand in China for home appliances and HVAC products. A wide range of product categories have leading positions in the industry which enable the Company to provide systematic and competitive home appliances solutions to the consumers as well provide synergies in banding, bargaining with supplier, consumer research andR&D cross all categories. Facing the development trend of smart appliances in the future, the compatibility, collaboration and interaction between home appliances become increasingly important. With such wide range of product categories, Midea has competitive
advantages in building smart home platform and providing systematic solutions to consumers.
2. Midea is able to integrate worldwideR&D resources and has world leadingR&D and technology
2016 Semi-Annual Report of Midea Group Co., Ltd. innovation capabilities
Midea is committed to building a globally competitive and multi-tierR&D scheme and acquiring world leadingR&D technologies and capabilities. According to the 2016 State of Innovation published by Thomson Reuters, Midea Group is ranked highest among Top 10 GlobalInnovators–Home Appliances (2015) and Top 10 KitchenInnovators–Asia (2011-2015). The Company has invested in setting up a global innovation center, recruiting high-end talents, as well asR&D centers in the USA, Germany, Singapore, South Korea, Japan, Italy, Shanghai, and Shenzhen. The Company keeps close cooperation relationship with over 30 universities or research institutes inside and outside of China such as Tsinghua University, Zhejiang University, MIT, UCB, Stanford, etc. Meanwhile, the Company also pays attention to commercialize theR&D achievements. Based on user-centered design, the Company launched high-efficient cooling, heating, as well as Child Star air-conditioners, smart detergent auto-dispense washer/dryer combination, “Steaming Cubic” micro-wave oven, IH smart rice cooker, steaming auto-cleaning hoods, smart water heater and smart water purifier, etc. which are highly recognized by the consumers.
3. Midea has achieved its overseas OBM business positioning, replying on its world-leading manufacturing capability, scale advantages, diversified product mix as well as worldwide production facilities
With its world-leading production scale and experiences, diversified product mix, and worldwide manufacture facilities, Midea has built its rapid expansion capability in emerging markets which meanwhile strengthened its capabilities for competing in developed markets. In many product categories, Midea is one of the largest manufactures or branding sales worldwide. With such large scale production, the Company has its competitive advantages in high efficiency and cost saving which makes very hard for other manufacturers to compete. Overseas sales have accounted for over40% of the total revenue of the Company, and various products have been exported to over 200 countries and regions. Through long-term cooperation with international companies, Midea has gained deep understanding of product features and requirements for overseas markets. By way of setting up joint ventures, Midea has effectively enlarged its sales channels and improved its experiences in overseas markets and transformed its business mode from “exporting from China” to “local productions overseas”.
4. Midea has extensive and solid channels which secured stable growth for both online and offline
business development
2016 Semi-Annual Report of Midea Group Co., Ltd. After years of effort and development, Midea has shaped broad and deep channels nationwide. In the mature tier one and two markets, Midea has kept close cooperation with national large chain stores like Suning and Gome. In the large tier three and four markets, Midea mainly depends on flagship stores, specialty store, traditional channels as well as modern channels as enhancement. Channel retailing stores have covered tier one and two markets completely and95% of tier three and four markets.Midea’s competitive advantages in brands, products, offline channels and logistics capabilities have effectively strengthened its competitiveness in online sales. Midea has already become the largest home appliances manufacture for online sales.
5. Modern corporate governance and incentive schemes have formed solid foundation for the sustainable development of Midea
Midea pays high attention to its governance structure, risk control, as well as centralization and decentralization of powers. The Company has built an established professional manager system. Multidivisional structure has been in operation for many years, which adopts decentralization and performance-oriented incentive scheme, and has become the training and development platform for professional managers. The senior management of Midea are all professional managers and on average have worked at the Company for 15-20 years. They all have extensive industry and management experiences, deep understanding of global and Chinese home appliance industry and are able to guide the development of the Company to the right direction. Such governance structure secures the sustainable development of the Company.
Currently, senior management and core management personnel, via directly or indirectly holding Midea shares and participating in the share option plans or “Partnership Program”, have aligned their interests with shareholders, with incentive schemes combining both long-term and short-term interests. V Analysis of investments
1. External equity investments
(1) External investments
√ Applicable□ N/A
||||
|-|-|-|
|External investments|||
|Investment in the Reporting Period|Investment in the same period of last||
|||Change (%)|
|(RMB)|year (RMB)||

2016 Semi-Annual Report of Midea Group Co., Ltd.
||||
|-|-|-|
|4,767,935,220|965,815,780|393.67%|
|Investees’ profile|||
|||The Company’s investment as a|
|Name of investee|Main business|percentage of the investee’s total|
|||equity interests (%)|
|Toshiba Lifestyle Products & ServicesCorporation|Production and sale of homeappliances|80.10%|

(2) The Company's shareholdings in financial corporations
√ Applicable□ N/A
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|||||Shareh|||||||
|||||olding||Shareh|||||
|||||||||Gain or|||
|||Initial||percent||olding|||||
||||Number of||||Carrying|loss for|||
|||investme||age at|Number of|percent|||||
||||shares held||||value as at|the||Source|
|Company|Type of|nt||the|shares held|age at|||Account||
||||at the||||the end of|Reporting||of|
|name|company|amount||beginni|at the end of|the end|||ing title||
||||beginning of||||the period|Period||shares|
|||(RMB'000||ng of|the period|of the|||||
||||the period||||(RMB'000)|(RMB'000|||
|||)||the||period|||||
|||||||||)|||
|||||period||(%)|||||
|||||(%)|||||||
|GoldenEagleAssetManagement Co.,Ltd.|Fundcompany|50,000|50,000,000|20.00%|50,000,000|20.00%|38,377|3,932|Long-termequityinvestment|Promotersharesinestablishment|
|Bank ofJiangsuCo., Ltd.|Commercial bank|13,220|5,232,676|0.05%|5,232,676|0.05%|13,330||Long-termequityinvestment|Non-publicissue|
|HubeiBankCorporationLimited|Commercial bank|5,000|5,870,266|0.17%|5,870,266|0.17%|5,000||Long-termequityinvestment|Non-publicissue|
|FoshanShundeRural|Commercial bank|1,318,540|328,874,160|9.69%|373,085,433|9.69%|1,530,330|134,315|Long-termequity|Non-publicissue|

2016 Semi-Annual Report of Midea Group Co., Ltd.
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Commercial BankCompanyLimited|||||||||investment||
|ZhangshuShunyinCountyBankCompanyLimited|Commercial bank|6,000|6,000,000|6.00%|6,000,000|6.00%|6,000|-|Long-termequityinvestment|Non-publicissue|
|Fengcheng ShunyinCountyBankCompanyLimited|Commercial bank|6,000|6,000,000|6.00%|6,000,000|6.00%|6,000|-|Long-termequityinvestment|Non-publicissue|
|||1,398,76|||||||||
|Total|||401,977,102|--|446,188,375|--|1,599,037|138,247|--|--|
|||0|||||||||

Note: Bank of Jiangsu Co., Ltd. went public via the Shanghai Stock Exchange on 2 August 2016.
(3) Securities investments
□ Applicable√ N/A
No such cases in the Reporting Period.
(4) Shareholdings in other listed companies
□ Applicable√ N/A
No such cases in the Reporting Period.
2. Entrusted asset management, derivatives investments and entrusted loans
(1) Entrusted asset management
√ Applicable□ N/A
Unit: RMB'0,000
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Name|Related|Whethe||Value of|Commen||Method|Actual|Amount||Actual|
||||Product|||Terminati||||Projecte||
|of|party or|r it is a||entrusted|cement||of|principal|provided||gain or|
||||type|||on date||||d income||
|trustee|not|related-||assets|date||remune|amount|for||loss|

2016 Semi-Annual Report of Midea Group Co., Ltd.
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|||party|||||ration|recovere|impairme||amount|
|||transact||||||d for the|nt (if any)||for the|
|||ion||||||period|||period|
||||Bank|||||||||
||||||2016.01.|2016.12.3|As|||||
|Bank|No|No|financial|2,217,890||||963,252|-|4 9 , 3 2 0|49,320|
||||||01|1|agreed|||||
||||product|||||||||
|Total||||2,217,890|--|--|--|963,252|-|4 9 , 3 2 0|4 9 , 3 2 0|
|Source of entrusted assets||||All from the Company's own funds||||||||
|Cumulative amount of principals and||||||||||||
|||||0||||||||
|profits overdue||||||||||||
|Litigations involved (if applicable)||||N/A||||||||
|Disclosure date of the||||||||||||
|announcement about the board’s||||||||||||
|||||2016.03.26||||||||
|consent for the asset management||||||||||||
|entrustment (if any)||||||||||||
|Disclosure date of the||||||||||||
|announcement about the general||||||||||||
|||||2016.04.27||||||||
|meeting’s consent for the asset||||||||||||
|management entrustment (if any)||||||||||||

(2) Investments in derivative financial instruments
√ Applicable□ N/A
Unit: RMB'0,000
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||||||||||||Ratio of||
|||||||||||||investm||
|||||||||||||ent||
|||||||||||||amount||
|||Wh||||||||||||
|||||||||||||at the||
|||ethe|||||||Sold|||||
||||||||Investme|Purcha||||end of||
|||r it|||||||amou|Amount|Investme|||
||Rel||||||nt|sed||||the|Actual|
|||is a|Type|Initial|||||nt in|provide|nt|||
|Opera|ated||||Comme|Termina|amount|amount||||period|gain or|
|||relat|of|investme|||||the|d for|amount|||
|ting|part||||ncemen|tion|at the|in the||||to the|loss|
|||ed-p|deriva|nt|||||Repor|impairm|at the end|||
|party|y or||||t date|date|beginning|Reporti||||Compa|amount for|
|||arty|tive|amount|||||ting|ent (if|of the|||
||not||||||of the|ng||||ny's net|the period|
|||tran|||||||Perio|any)|period|||
||||||||period|Period||||assets||
|||sact|||||||d|||||
|||||||||||||at the||
|||ion||||||||||||
|||||||||||||end of||
|||||||||||||the||
|||||||||||||period||
|||||||||||||(%)||

2016 Semi-Annual Report of Midea Group Co., Ltd.
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Futur|||Futur|||||||||||
|es|||es||2016.01|2016.12||||||||
||No|No||748.20||||-|-|-|23.90|0.01%|895.70|
|comp|||contra||.01|.31|748.20|||||||
|any|||cts|||||||||||
||||Forwa|||||||||||
||||rd|||||||||||
||||||2016.01|2016.12||||||-27.55||
|Bank|No|No|forex|-8,414.40||||-|-|-|-50,875.4||-47,438.60|
||||||.01|.31|-8,414.40|||||%||
||||contra|||||||||||
||||cts|||||||||||
|||||||||||||-27.54||
|Total||||-7,666.20|--|--|-7,666.20|-|-|-|-50,851.5||-46,542.90|
|||||||||||||%||
|Source of derivatives||||||||||||||
|||||All from the Company's own funds||||||||||
|investment funds||||||||||||||
|Litigation involved (if||||||||||||||
|||||N/A||||||||||
|applicable)||||||||||||||
|Disclosure date of the||||||||||||||
|announcement about||||||||||||||
|the board’s consent for||||2016.03.26||||||||||
|the derivative||||||||||||||
|investment (if any)||||||||||||||
|Disclosure date of the||||||||||||||
|announcement about||||||||||||||
|the general meeting’s||||||||||||||
|||||2016.04.27||||||||||
|consent for the||||||||||||||
|derivative investment (if||||||||||||||
|any)||||||||||||||
|||||For the sake of eliminating the cost risk of the Company's bulk purchases of raw materials as a||||||||||
|||||result of significant fluctuations in raw material prices, the Company not only carried out futures||||||||||
|||||business for some of the materials, but also made use of bank financial instruments and||||||||||
|Risk analysis of||||promoted forex funds business, with the purpose of avoiding the risks of exchange and interest||||||||||
|positions held in||||rate fluctuation, realizing the preservation and appreciation of forex assets, reducing forex||||||||||
|derivatives during the||||liabilities, as well as achieving locked-in costs. The Company has performed sufficient||||||||||
|Reporting Period and||||evaluation and control against derivatives investment and position risks, details of which are||||||||||
|explanation of control||||described as follows:||||||||||
|measures (including but||||1. Legal risk: The Company's futures business and forex funds businesses shall be conducted||||||||||
|not limited to market||||in compliance with laws and regulations, with clearly covenanted responsibility and obligation||||||||||
|risk, liquidity risk, credit||||relationship between the Company and the agencies.||||||||||
|risk, operational risk||||Control measures: The Company has designated relevant responsible departments to enhance||||||||||
|and legal risk)||||learning of laws and regulations and market rules, conducted strict examination and verification||||||||||
|||||of contracts, defined responsibility and obligation well, and strengthened compliance check, so||||||||||
|||||as to ensure that the Company's derivatives investment and position operations meet the||||||||||
|||||requirements of the laws and regulations and internal management system of the Company.||||||||||

2016 Semi-Annual Report of Midea Group Co., Ltd.
|||
|-|-|
||2. Operational risk: Imperfect internal process, staff, systems and external issues may cause|
||the Company to suffer from loss during the course of its futures business and forex funds|
||business.|
||Control measures: The Company has not only developed relevant management systems that|
||clearly defined the assignment of responsibility and approval process for the futures business|
||and forex funds business, but also established a comparatively well-developed monitoring|
||mechanism, aiming to effectively reduce operational risk by strengthening risk control over the|
||business, decision-making and trading processes.|
||3. Market risk Uncertainties caused by changes in the prices of bulk commodity and exchange|
||rate fluctuations in foreign exchange market could lead to greater market risk in the futures|
||business and forex funds business. Meanwhile, inability to timely raise sufficient funds to|
||establish and maintain hedging positions in futures operations, or the forex funds required for|
||performance in forex funds operations being unable to be credited into account could also|
||result in loss and default risks.|
||Control measures: The futures business and forex funds business of the Company shall always|
||be conducted by adhering to prudent operation principles. For futures business, the futures|
||transaction volume and application have been determined strictly according to the|
||requirements of production & operations, and the stop-loss mechanism has been implemented.|
||Besides, to determine the prepared margin amount which may be required to be|
||supplemented, the futures risk measuring system has been established to measure and|
||calculate the margin amount occupied, floating gains and losses, margin amount available and|
||margin amount required for intended positions. As for forex funds business, a hierarchical|
||management mechanism has been implemented, whereby the operating unit which has|
||submitted application for funds business should conduct risk analysis on the conditions and|
||environment affecting operating profit and loss, evaluate the possible greatest revenue and|
||loss, and report the greatest acceptable margin ratio or total margin amount, so that the|
||Company can update operating status of the funds business on a timely basis to ensure proper|
||funds arrangement before the expiry dates.|
|Changes in market||
|price or fair value of||
|derivatives product||
||1. Gain/loss from futures hedging contracts incurred during the Reporting Period was|
|invested during the||
|Reporting Period:|RMB8,957,000;|
|specific methods used|2. Gain/loss from forward forex contracts incurred during the Reporting Period was|
|and relevant|RMB-474,386,000;|
|assumption and|3. Public quotations in futures market or forward forex quotations announced by the Bank of|
|parameter settings shall|China are used in the analysis of derivatives fair value.|
|be disclosed for||
|analysis of fair value of||
|derivatives||
|Explanation of||
|significant changes in|N/A|
|accounting policies and||

2016 Semi-Annual Report of Midea Group Co., Ltd.
|||
|-|-|
|specific financial||
|accounting principles in||
|respect of the||
|Company's derivatives||
|for the Reporting Period||
|as compared to the||
|previous Reporting||
|Period||
||The Company's independent directors are of the view that the futures hedging business is aneffective instrument for the Company to eliminate price volatility and implement risk preventionmeasures through enhanced internal control, thereby improving the operation andmanagement of the Company; the Company's foreign exchange risk management capabilitycan be further improved through the forex funds business, so as to maintain and increase thevalue of foreign exchange assets and the abovementioned investment in derivatives can helpthe Company to fully bring out its competitive advantages. Therefore, it is practicable for theCompany to carry out derivatives investment business, and the risks are controllable.|
|Special opinions||
|expressed by||
|independent directors||
|concerning the||
|Company's derivatives||
|investment and risk||
|control||

(3) Entrusted loans
□ Applicable√ N/A
No such cases in the Reporting Period.
3. Use of raised funds
□ Applicable√ N/A
No such cases in the Reporting Period.
4. Analysis to major subsidiaries and investees
√ Applicable□ N/A
Particulars about major subsidiaries and investees:
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||||Principal|Registered|Total||Operating|Operating|Net|
||Compa|||||Net assets||||
||||products|capital|assets||revenues|profits|profits|
|Company name|ny|Industry||||(RMB||||
||||or|(RMB'0,00|(RMB||(RMB|(RMB|(RMB|
||type|||||million)||||
||||services|0)|million)||million)|million)|million)|
|||Manufact||||||||
|Guangdong Midea||||||||||
|||uring of|Home|||||||
|Kitchen Appliances|Subsidi|||USD7,200.||||||
|||home|appliance||12,402|2,598|5,932|683|592|
|Manufacturing Co.,|ary|||00||||||
|||appliance|s|||||||
|Ltd.||||||||||
|||s||||||||

2016 Semi-Annual Report of Midea Group Co., Ltd.
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|||Manufact||||||||
|Guangdong Midea||uring of|Air|||||||
||Subsidi|||RMB85,40||||||
|Refrigeration||home|condition||29,875|3,561|15,100|935|818|
||ary|||0.00||||||
|Equipment Co., Ltd.||appliance|ers|||||||
|||s||||||||
|||Manufact||||||||
|Foshan Shunde Midea||||||||||
|||uring of|Home|||||||
|Electric Appliance|Subsidi|||USD4,200.||||||
|||home|appliance||6,934|1,839|3,461|713|617|
|Manufacturing Co.,|ary|||00||||||
|||appliance|s|||||||
|Ltd.||||||||||
|||s||||||||
|Wuhu Midea Kitchen &||Manufact||||||||
|Bathroom Electric||uring of||||||||
||Subsidi||Water|RMB6,000.||||||
|Appliances||home|||4,087|587|3,151|436|463|
||ary||heaters|00||||||
|Manufacturing Co.,||appliance||||||||
|Ltd.||s||||||||
|||Manufact||||||||
|Guangdong Midea||uring of|Air|||||||
||Subsidi|||RMB30,00||||||
|Heating & Ventilation||home|condition||6,141|1,140|5,047|663|594|
||ary|||0.00||||||
|Equipment Co., Ltd.||appliance|ers|||||||
|||s||||||||

5. Major investments not financed by raised funds
□ Applicable√ N/A
No such cases in the Reporting Period.
VI Forecast of business performance from January to September in 2016
Warning about an estimated major change in the aggregate net profit from the beginning of the year to the end of the next Reporting Period compared with the same period in the previous year and explanation for the change:
□ Applicable√ N/A
VII Explanations by the Board of Directors and the Supervisory Committee regarding the "non-standardauditor’s report" issued by the CPAs firm for the Reporting Period□ Applicable√ N/A
2016 Semi-Annual Report of Midea Group Co., Ltd. VIII Explanations by the Board of Directors regarding the "non-standardauditor’s report" issued by the CPAs firm for last year
□ Applicable√ N/A
IX Profit distribution plan carried out during the Reporting Period
Profit distribution plan carried out during the Reporting Period, especially the execution of or the adjustments to the parts in the plan about cash dividends and turning capital reserves into share capital:√ Applicable□ N/A
The 2015 Annual Plan for Profit Distribution& Conversion of Capital Reserves into Share Capital was carried out during the Reporting Period, which is detailed as follows: Based on its total of 4,267,391,228 shares, the Company would distribute a cash dividend of RMB12.00 (tax inclusive) per 10 shares to all shareholders, resulting in a total cash dividend payment of RMB5,120,869,473.60. The remaining undistributed profit would be carried forward for future distribution. And the Company would also increase shares of all shareholders by converting capital reserves into share capital on the basis of 5 additional shares for every 10 shares, representing a total increment of 2,133,695,614 shares.
The said plan was reviewed and approved at the Sixth Meeting of the Second Board of Directors on 24 March 2016 and later at the 2015 Annual General Meeting on 26 April 2016. And the Announcement on Implementation of the 2015 Annual Plan for Profit Distribution& Conversion of Capital Reserves into Share Capital was disclosed on 29 April 2016. The book closure date for this profit distribution& conversion of capital reserves into share capital was 5 May 2016, and the ex-right and ex-dividend date was 6 May 2016. The implementation of the said plan has been finished in the Reporting Period.
|||
|-|-|
|Special statement about the cash dividend policy||
|In compliance with the Company’s Articles of Association and the resolution of||
||Yes|
|the general meeting:||
|Specific and clear dividend standard and ratio:|Yes|
|Complete decision-making procedure and mechanism:|Yes|
|Independent directors fulfilled their responsibilities and played their due role:|Yes|
|Minority shareholders have the chance to fully express their opinion and desire||
||Yes|
|and their legal rights and interests were fully protected:||
|In adjustment or alteration of the cash dividend policy, the conditions and||
||N/A|
|procedure were in compliance with regulations and transparent:||

2016 Semi-Annual Report of Midea Group Co., Ltd. X Pre-plan for profit distribution and turning capital reserves into share capital for the Reporting Period
□ Applicable√ N/A
The Company plans not to distribute cash dividends or bonus shares or turn capital reserves into share capital for the first half of 2016.
XI Visitors in the Reporting Period
√ Applicable□ N/A
The Company attaches great importance to communication with investors. In the first half of 2016, it directly communicated with more than 700-person-time investors in various ways.
|||||||
|-|-|-|-|-|-|
||||||Main talking|
||||||points with|
||||Type of||investors and|
|Date|Place|Occasion||Visitor||
||||visitor||materials|
||||||provided by the|
||||||Company|
|2016-1-6|Hong Kong|Strategymeeting|Institution|Farallon, Acru Asset Management, BosValen AssetManagement, CICC AMD, CITIC SecuritiesInternational, China Huarong International, ChinaInnovation Capital, China International Fund, FirstBeijing, Fundatech Capital, Greenwoods AssetManagement Hk, Ing&Share Investment, PacificEagle, Pictet, Rays Capital Partners, ShenwanHongyuan Asset Management, Shinhan Bnp, SichuanGolden Nest Capital Management, Sinochem HKGroup, Summitview Capital, Telligent, TrivestAdvisors, Ward Ferry, Winnington Capital, YuantaFunds, LBN Advisers, Zeal Asset Management,Trilogy, Springs Capital, JP Morgan AssetManagement, FIL, Value Partners, Balyasny, BocomInternational Asset Management, CI Investments,CQS, Harvest Global, JK Capital, Lizard Investors,Modus, Neuberger Berman, Pinebridge, Samsung AM,Standard Pacific Capital, Och-Ziff|Main talkingpoints withinvestorsincluded: (1)industry anddevelopmentstatus; (2)condition ofbusiness anddevelopmentstrategies; (3)periodic reportreleased by othercompanies andother contentsinvolved.Materials:periodical report,announcementand otherinformationdisclosure.|
|2016-1-12|Beijing|Strategymeeting|Institution|Wellington Management, New Silk Road, Lone PineCapital, Khazanah Nasional, J.W.Childs, Invesco,Sirios Capital, Ariose Capital Management, CPPIB,QVT Financial, Landmark Group, Tairen Capital,Bayerninvest, Teng Yue Partners, Brilliance CM,||

2016 Semi-Annual Report of Midea Group Co., Ltd.
|||||||
|-|-|-|-|-|-|
|||||Impax AM, Baring AM, Wealth Oasis, AsiyaInvestments, Flowering Tree IM, Discovery BayCapital, Exabyte CM, China Investment Corporation,Hillhouse CM, Harvest FM, Manulife AM, GMT Capital,Prudence IM, Xingtai CM, Eastspring, Aberdeen AM|Exceptinstitutionalinvestors, theCompany paysgreat attention tocommunicationswith individualsand other minorityinvestors byphone, email andinteractiveplatform inreplying to allquestions andsuggestions thatneed specialattention.|
|2016-1-13|Shanghai|Strategymeeting|Institution|JP Morgan Asset Management, WellingtonManagement, FIL Investment Management, GoldmanSachs Investment Partners, Indus Capital, MatthewsAsia, Morgan Stanley Investment Management,Alliance Bernstein, Deprince Race & Zollo, YihengCapital, Capital World Investors, AR Capital,BlueCrest Capital, Carrhae, Columbia Threadneedle,Farallon Capital Asia Pte Ltd, Fidelity Management &Research, Marshall Wace Asia Limited, Prime CapitalManagement, Schroders, Barrow Hanley Mewhinnery& Srauss, Invesco, Kingsmesd Asset Management,Neuberger Berman, Oaktree Capital Management,Oxbow Capital Management, Pleiad Investment,Seatown, Zaaba Capital||
|2016-1-15|TheCompany|On-Sitesurvey|Institution|DBS Vickers||
|2016-1-15|TheCompany|Phone talk|Institution|Fidelity Fund||
|2016-1-20|TheCompany|Phone talk|Institution|Southeastern Asset Management||
|2016-1-21|TheCompany|Phone talk|Institution|Nan Shan Life Insurance||
|2016-1-21|TheCompany|On-Sitesurvey|Institution|Hanlun Investment||
|2016-1-26|TheCompany|On-Sitesurvey|Institution|Mingda Capital||
|2016-1-27|TheCompany|On-Sitesurvey|Institution|Mitsubishi UFJ International Investment Trust||
|2016-1-29|TheCompany|Phone talk|Institution|Fubon Securities||
|2016-3-28|TheCompany|Resultspresentation|Institution|Gold State Securities, Ginkgo Winfine Investment,Shangcheng Asset, Tebon Securities, Guohe Fund,ICBC, Industrial Securities, Banyan Partners,Shanghai Honghu Investment, CITIC Wings Asset,Capital International||
|2016-3-29|TheCompany|Phone talk|Institution|Guotai Investment, Fuh Hwa Securities InvestmentFund, MassMutual Mercuries Life, United InvestmentTrust, Franklin Huamei Investment Trust||
|2016-4-5|Hong Kong|Roadshow|Instituti|HSBC Global Asset Management, Value Partners||

2016 Semi-Annual Report of Midea Group Co., Ltd.
||||||
|-|-|-|-|-|
||||on|Limited, Zeal Asset Management, China Alpha Fund,UBS Global Asset Management, Point 72, Blue OceanAsset Management, CCB International AssetManagement, Q Fund Management, WinningtonCapital Limited, Zaaba Capital, China InternationalFund Management, Godman Sachs, Telligent, Light &Salt, Atlantis Investment Management Ltd|
|2016-4-6|Hong Kong|Roadshow|Institution|Fidelity International, JP Morgan Asset Management,Eton Park Capital, Acru Asset Management, BOCIPrudential, Goldman Sachs Asset Management, LBNAdvisers, Light & Salt Capital Management, OverlookInvestments, Springs Capital, Trilogy Partners,Neuberger Berman Asia, Summitview CapitalManagement, Fundatech Capital|
|2016-4-7|TheCompany|On-Sitesurvey|Institution|RBC Global|
|2016-4-7|TheCompany|Phone talk|Institution|Laxey Partners Limited (LPL), Somerset CapitalManagement LLP, Seafire Capital, Santa Lucia AssetManagement, Samoa Capital, Rays Capital, PrusikInvestment Management LLP, Threadneedle AssetManagement Ltd, M&G Investment ManagementLimited, JP Morgan Asset Mgmt UK Ltd (GEM Team),J O Hambro Capital Management Ltd, Ivaldi Capital,Investec Asset Management Ltd, HSBC Global AssetManagement (UK) Ltd, Bank Vontobel AG, Delta LloydAsset Management NV, Cederberg Capital UK LLP,Citic Securities, Carrhae Capital LLP, azValor AssetMangement|
|2016-4-8|TheCompany|On-Sitesurvey|Institution|Baillie Gifford|
|2016-4-8|TheCompany|Phone talk|Institution|Fidelity Fund|
|2016-4-11|TheCompany|Phone talk|Institution|American Century|
|2016-4-11|TheCompany|On-Sitesurvey|Institution|Stewart, Odey, Millennium, Shengshu Investment|
|2016-4-12|TheCompany|Phone talk|Institution|Indus Capital|
|2016-4-12|TheCompany|On-Sitesurvey|Institution|Fidelity Fund|
|2016-4-13|TheCompany|Phone talk|Institution|Fidelity Fund (London)|
|2016-4-14|The|On-Site|Instituti|Aberdeen|

2016 Semi-Annual Report of Midea Group Co., Ltd.
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|-|-|-|-|-|
||Company|survey|on||
|2016-4-21|TheCompany|On-Sitesurvey|Institution|Somerset Capital|
|2016-4-22|TheCompany|On-Sitesurvey|Institution|Canada Pension Fund Investment Company|
|2016-4-25|TheCompany|Phone talk|Institution|Broad Peak|
|2016-4-27|TheCompany|On-Sitesurvey|Institution|Capital, CLSA, DB, F&H Fund Management,Greenwood, GTM, HSBC, Modus Asset Management,Morgan Stanley, Neuberger Berman, Oberweis Asset,OTPP, Overlook Investments, PPLC, RobecoInvestment, UBS Asset Management, UG Investment,Ward Ferry, Essence Securities, Bisheng Investment,Deepwater Capital, Bosera Asset Management,Caihua Capital, Da Cheng Fund, Temasek, OrientalMarathon Investment, ESAM Asset, Fosun Group,Fidelity Fund, Fullgoal Ansheng, Hill House Capital,Guanjun Asset, Everbright Prudential, GF Securities,Guangzheng Hang Seng, Sinolink Securities, GuotaiJunan Securities, Haitong Securities Assets, XingzhiVenture Capital, Citibank, Harvest Fund, Gold StateSecurities, Neo-Criterion Capital, MacquarieSecurities, Mingda Asset Management, JP Morgan,Qianfang Fund, Rayfund, Cephei Capital, QianxinInvestment, Wanfeng Youfang Investment, ShenwanHongyuan, Shenwan Hongyuan Securities (HongKong), Schroeder, Taiping Asset Management(HongKong), Taikang Asset Management, Golden NestCapital, Industrial Securities, Yiheng Capital, YonganGainful Asset, Yongjin Investment, Yuanwang Asset,Changjiang Securities, Long-term Investment,Zheshang Securities, Galaxy Securities, CITICSecurities, Zhuhai Common Growth Fund|
|2016-4-28|Shenzhen|Strategymeeting|Institution|Shin Kong Life, Hua Nan Investment Trust, China LifeInsurance|
|2016-5-4|Hong Kong|Strategymeeting|Institution|Putnam, Baring Asset, Brilliance, Deepwater Capital,Fuh Hwa, Modus Asset, Robeco, Springboard, Trivest,Allianz Global, Bosvalen Asset, Central Asset, ChinaAsset, Edmond De Rothschild, OTPP, OberweisAsset, Rays Capital, Viking, Zeal Asset, Trilogy,HSBC, Och-Ziff, Acru Asset, Alphalex Capital, Asiya,BEA Union, CICC HKAM, Capital Group, Daiwa SBinvestments, Eastspring Investments, FranklinTempleton, Hedgestone Capital, JT Capital, Kontiki|

2016 Semi-Annual Report of Midea Group Co., Ltd.
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|-|-|-|-|-|
|||||Capital, Lockheed Martin, Marco Polo Pure AM,Minmetals Capital, Mirae Asset, Nexus IM, Nezu Asia,Oxbow Capital, Q Fund, RHB Asset, Senrigan Capital,Yiheng Capital, iVenture Investment|
|2016-5-6|Shenzhen|Strategymeeting|Institution|Doric Capital, Gemway Assets, Gsam gems team,Indus Capital, Pacific Alliance Im, Prudential FinancialSecurities, Newport Asia, Allianz Global Investors,Atlantis Im, BNP Paribas AM, Comgest, MacquariePrivate Wealth, Amundi Asset Management, ChinaAsset Management, Mirae AM, Point72 AssetManagement, UBP Asset Aanagement, J.P.MorganAM PRG|
|2016-5-9|Chengdu|Strategymeeting|Institution|Columbia Mgt Inv Advisers, Harvest GlobalInvestments, Invesco Advisors, Atlantic InvestmentManagement, Axa Investment Managers Asia,Henderson Global Investors, Wells CapitalManagement, Ruffer LLP, CIM InvestmentManagement, Allianz Global Investors Asia Pacific,Fidelity|
|2016-5-11|TheCompany|On-Sitesurvey|Institution|New Idea Investment|
|2016-5-12|Hong Kong|Strategymeeting|Institution|GIC, Capital World, Gavekal Asia, Morgan StanleyAM, Nezu Capital, JPMorgan AM, Capital ResearchGlobal, Baring AM, BEA Union IM, BlackRock IM, BNPParibas AM, China Investment, Comgest Far East,Fullerton Fund, Marshall Wace AM, Marshall WaceNorth America, Newton Inv Mgmt, RochkhamptonManagement HK, Samsung Investment, TrivestAdvisors, Acion Partners, Allianz RCM, BOCIPrudential AM, Everpoint AM, Indus Capital Mgmt,Janchor Partners, Pinebridge Investments Asia,Point72 AM, Rays Capital Partners, Schroder InvManagement HK, UBS wealth Management|
|2016-5-13|The U.S.|Roadshow|Institution|Wellington Management, Oaktree CapitalManagement, Thornburg Investment, HarvardManagement Co., Neon Liberty Capital Management,Tiger Pacific Capital, Caxton Associates LP, SanoorCapital, Indus Capital Partners, Ashmore EquitiesInvesment Management, Harding Loevner LP, RSInvestments, Arrowgrass, Moore Capital Management,Visium Asset Management, JPMorgan AssetManagement, Lazard Asset Management, AdventCapital Management LLC, Greyson CapitalManagement, Joho Capital LLC, GLG Partners,|

2016 Semi-Annual Report of Midea Group Co., Ltd.
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|-|-|-|-|-|
|||||Truck Capital, Marvin & Palmer, Expedition InvestmentPartners, Global Thematic Partners, Kingdon CapitalManagement LLC, Teng Yue Partners,Oppenheimerfunds Inc, Kylin Management LLC,Lone Pine Capital, Franklin Mutual Advisors LLC,Fidelity Management and Research, Granite Point,Evergreen Investment Management Company LLC|
|2016-5-16|Shenzhen|Strategymeeting|Institution|Schroders, Wellington, Manulife Asset Management,Myriad Asset Management, J.P. Morgan AssetManagement, Columbia Threadneedle, NavigatorAsset Manegement, Thornburg InvestmentManagement, TPG-Axon, Allianz Global Investors,Matthews International Capital Management, PrinceStreet Capital Management, Value Partners|
|2016-5-16|TheCompany|On-Sitesurvey|Institution|E Fund Management|
|2016-5-18|TheCompany|On-Sitesurvey|Institution|Genesis|
|2016-5-19|TheCompany|On-Sitesurvey|Institution|Morvern Investments, WaveStone|
|2016-5-19|Shenzhen|Strategymeeting|Institution|Bosera Asset Management, Penghua Fund, EssenceSecurities, Invesco Great Wall, Great Wall Fund,Homeocapital, First Capital Securities, Yimin Fund,China-Europe Rabbit Fund Management, QianhaiAnkang Investment, Hengda Finance, Flying Financial,Jin Zhen Investment, Etock Capital, GR Asset,Foresea Life Insurance, Gold State Securities|
|2016-5-25|Beijing|Strategymeeting|Institution|Eastbay Asset Management, Henderson GlobalInvestors, Lone Pine Capital, Miura Global Partners,Turiya Capital Management, Keywise Capital, QVTFinancial, Goldman Sachs Investment Partners,Janchor Partners, Pleiad Investment Advisors, SagaTree Capital Advisors, State Street Global Advisors,Quest Management Inc, State Street Global Advisors,GIC, All-Stars Investment, Moore Capital, UBS AssetManagement, All-Stars Investment, NeubergerBerman Asia, Zaaba Capital, Cevian Capital, ArioseCapital, Boyu Capital, Nomura Asset Management,Norges Bank Investment Management, Ivaldi Capital,T Rowe Price, Ariose Capital, Janus Capital Group,Prime Capital Management, Coatue Management,China Asset Management, Robeco Groep, SPQ AsiaCapital, UG Investment Advisors, Ward FerryManagement, Oberweis Asset Management,|

2016 Semi-Annual Report of Midea Group Co., Ltd.
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|-|-|-|-|-|
|||||Composite Capital, JP Morgan Asset Management,Fidelity Worldwide Investment|
|2016-5-25|Singapore|Strategymeeting|Institution|Janus Capital, Putnam Investments, Point72 Asia,Goldman Sachs, Credit Suisse, CIMB Principal,Kingsmead, Millennium, Ellis Munro, Nomura, MFSInvestment, Old Mutual, Goldman Sachs, Broad Peak,Eastspring Investment, Bank Negara Malaysia,Southeastern Asset Management, Flowering TreeInvestment Management, Citic SecuritiesInternational, Prince Street, CPP Investment Board,Lion Global, Amundi, GIC, Fidelity, WellingtonManagement, Aberdeen, Seatown Holdings, ShawSpring, Truston, Fullerton Fund Management,Somerset Capital Management|
|2016-5-27|Hangzhou|Strategymeeting|Institution|Yinhua Fund, Chang Xin Assets Management,Fortune SG Fund,JIC Group, Tianhong AssetManagement, CUAM, Harvest Fund,Neuberger-Berman, Runhui Investment, NewThought, ABC-AC Fund, Pinpoint Investment,Khazanah Nasional Berhad,Temasek Holdings, FirstState Cinda Fund|
|2016-5-31|Shenzhen|Strategymeeting|Institution|Point72 AM, AP AM, China AM, DIAM, Comgest,Julius Baer Group Ltd, Modus AM, Prime CM, Q FundManagement, Marshall Wace, Capital Research AndManagement, Acion Partners, Broad Peak, KeywiseCM, Mirae Asset, Sumitomo Mitsui AM, TuriyaAdvisors, HSBC Global AM, Value Partners, LatimerLight Capital, Magnolia CM, Modus AM, SeatownHoldings, Serenity CM, Greenwoods AM, InvestecAM, Pinpoint AM|
|2016-6-1|TheCompany|Phone talk|Institution|Yulan Capital|
|2016-6-1|TheCompany|Phone talk|Institution|Davidson Kempner European Partners|
|2016-6-3|Shenzhen|Strategymeeting|Institution|SAIF Partners, Deutsche Bank, RHB AM, Fair ChinaFocus Fund, Farallon Capital, Taiping AM, OverlookInvestments|
|2016-6-6|TheCompany|On-Sitesurvey|Institution|Ellerston Capital|
|2016-6-7|Shenzhen|Strategymeeting|Institution|Atlantis Investment, Fullgoal Asset Management,Indus Capital, Lombard Odier, Blue Pool Capital,Elevation Capital Management, GemboomInvestment, Q Fund Management, Allianz Global|

2016 Semi-Annual Report of Midea Group Co., Ltd.
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|-|-|-|-|-|
|||||Investors, Balyasny (BAM) Asset Management, GlougCapital, Morgan Stanley, First State Stewart, Fidelity|
|2016-6-8|TheCompany|Phone talk|Institution|Yuanta Funds, China Life Insurance, FranklinInvestment Trust,KGI Research Department|
|2016-6-14|Beijing|Strategymeeting|Institution|NBIM, Fidelity Management&Research, C I Funds,CIC, GIC, Investec AM, JP.Morgan AM, Black CreekIM, GLG Partners(UK), Nezu Asia CM, TPG Capital,Fidelity International(UK), Bank Negara Malaysia,Mirae Asset Global, Public Mutual Bhd, York CapitalManagement, Mondrian Investment Partners|
|2016-6-15|Hong Kong|Strategymeeting|Institution|CouplandCardiff Management, Morgan Stanley,Keywise Capital Management, APG AssetManagement, Ellis Brandy Management, ApolloInvestment Management, Power Pacific Corporation,Deutsche Asset Management, GAM, Bosheng CapitalManagement, GMT Capital, Sumeru Capital, BankJulius Bar, Mirae Asset Global Investment, TTInternational, Black Creek Investment Management,GaveKal Capital, ClearBridge Investments, Q FundManagement, Millennium Capital Management, ChinaAsset Management|
|2016-6-15|Guangzhou|Roadshow|Institution|City National Rochdale|
|2016-6-15|Guangzhou|Roadshow|Institution|Wary Ferry|
|2016-6-16|TheCompany|Phone talk|Institution|Port Meadow Fund|
|2016-6-17|Chengdu|Strategymeeting|Institution|Hongde Fund, CICC Fund, Yinhua Fund, ICBC, CIFM,COAMC,Dacheng Fund|
|2016-6-22|Taiwan|Strategymeeting|Institution|Eastspring Investment, Cathay Insurance, MercuriesLife Insurance, Cathay United Bank, SinoPacSecurities, Development international,Venture Capital,Hequn Investment, China Trustee, Franklin HuameiInvestment Trust, Nomura Trust and Banking, YuandaSecurities, KCI Investment Consultant, FH Investment,Pramerica Investment Trust|
|2016-6-23|Shanghai|Strategymeeting|Institution|Neuberger Berman、Schroders、KB AssetManagement、Khazanah Nasional、Value Partners、Trivest, Spring River Capital,Perseverance Asset,Cathay Life Insurance, Yinhua Funds, UprigntFinance, Granford Capital, Yongling TonghuiFinance,tral Asset Investments,ChongyangInvestment, Fuhua Securities InvestmentTrust,Brilliance Capital,Starrock,Orchid Asia, Hongxi|

2016 Semi-Annual Report of Midea Group Co., Ltd.
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|-|-|-|-|-|
|||||Assets,Xinyuan Assets, Western Securities,ICBC-AXA Life, Taiping Fund Management,Bin YuanCapital, Point Assets, Fosun Group, Leadbank,Qianhai Highrun M&A Fund,Shanghai Xingzhi VentureCapital, Yuanshi Assets Management, Fenghe Asia,Asia Value Capital, Nomura Investment, Fubon LifeInsurance, Xingju Capital, Yong Peng Investment|
|2016-6-23|Beijing|Strategymeeting|Institution|Sunshine Assets, China Asset Management,ICBCCredit Suisse, Harvest Fund, Yinhua Fund, NCAM,Huashang Fund, Zhongyou Fund, China LifeInsurance, Taikang AMC|
|2016-6-27|TheCompany|Phone talk|Institution|Fubon Life Insurance, Nan Shan Life Insurance,Cathay Investment Trust, Cathay Life, Yuanta BaolaiInvestment Trust,Pramerica Investment Trust|
|2016-6-27|TheCompany|On-Sitesurvey|Institution|Cathay United Bank in Taiwan|
|2016-6-28|TheCompany|Phone talk|Institution|Sumitomo Trust & Banking|
|2016-6-28|TheCompany|On-Sitesurvey|Institution|Bosera Funds, Yinhua Fund, Changjin Investment,Elitimes, Huashang Investment, Guangdong JingyangInvestment|
|2016-6-28|TheCompany|On-Sitesurvey|Institution|Nomura Asset Management|
|2016-6-29|Shenzhen|Strategymeeting|Institution|Ruiquan Capital, Zhongrong International InvestmentTrust, Yimin Fund, Hongyi Assets, Qianhai LifeInsurance, Zhexin Yide, Jingtai Lifeng, QianhaiHousheng Assets, BNP PARIBAS, Guangcai Capital,Great Wall Securities, Baohong Assets Management,Qianhai Tianzu Capital, Shanghai Jinzhen Investment,Southern Ruitai, Huaxia Rongyi Shenzhen InvestmentDevelopment, Xinding Fund, Zhongtie BaoyingAssets,ABC, Shenzhen Warburg Investment, YoungyInvestment, Yixing Investment,Chuang Shijie Capital,Caitong Fund|

2016 Semi-Annual Report of Midea Group Co., Ltd. Section V Significant Events
I Corporate governance
The Company has been improving its corporate governance, building a modern corporate system and standardizing its operations in strict accordance with the Company Law, the Securities Law, the Code of Corporate Governance for Listed Companies of the China Securities Regulatory Commission and other applicable laws and regulations. The governance of the Company in the Reporting Period complied with the Company Law and the CSRC requirements.
II Lawsuits
Material lawsuits and arbitrations
□ Applicable√ N/A
No such cases in the Reporting Period.
Other lawsuits
□ Applicable√ N/A
III Media criticism
□ Applicable√ N/A
No such cases in the Reporting Period.
IV Bankruptcy and reorganization
□ Applicable√ N/A
No such cases in the Reporting Period.
V Asset transactions
1. Acquisition of assets
√ Applicable□ N/A
2016 Semi-Annual Report of Midea Group Co., Ltd.
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|-|-|-|-|-|-|-|-|-|-|-|
|||||||Net profit|||||
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|||||||||n)|||
|||||||profit (%)|||||
|ToshibaCorporation|A 80.1%stake ofToshibaLifestyleProducts&ServicesCorporation|331,470.84|Formalities for theequitytransfercompleted|IncreasingMidea’s globalinfluence andoverallcompetitiveness byimprovement inbrand,technology,channel,manufacturingcapability, etc.through thisacquisition|0|0|No|N/A|2016-07-01|www.cninfo.com.cn|

Note: The consolidated financial statements for the Reporting Period include the balance sheet of Toshiba Lifestyle Products& Services Corporation for Toshiba Lifestyle and the Company have completed the formalities for the said equity transfer on 30 June 2016.
2. Sale of assets
□ Applicable√ N/A
No such cases in the Reporting Period.
3. Business combination
□ Applicable√ N/A
No such cases in the Reporting Period.
2016 Semi-Annual Report of Midea Group Co., Ltd. VI Implementation of any equity incentive plan and its effects
√ Applicable□ N/A
A. Overview of the First Stock Option Incentive Plan
a. The Company convened the Sixth Meeting of the Second Board of Directors on 24 March 2016, at which the Proposal for the Adjustments to the Incentive Receivers and Their Exercisable Stock Options of the First Stock Option Incentive Plan was reviewed and approved. As such, it was agreed to adjust the incentive receivers and their exercisable stock options for the First Stock Option Incentive Plan due to the leave, position changes and failure in the performance appraisal of some incentive receivers. Upon the adjustments, the incentive receivers decreased from 626 to 562, and their unexercised stock options were adjusted to 58,155,600 (including the unexercised stock options from the first exercise period). The Proposal for Matters Related to the Stock Option Exercise for the Second Exercise Period of the First Stock Option Incentive Plan was also considered and approved. Due to the fact that the exercise conditions have grown mature for the second exercise period, a total of 559 qualified incentive receivers have been allowed to exercise 27,185,000 stock options in the second exercise period.
b. On 29 April 2016, the Announcement on Implementation of the 2015 Annual Plan for Profit Distribution& Conversion of Capital Reserves into Share Capital was disclosed by the Company, with a decision to distribute a cash dividend of RMB12.00 for every 10 shares to all the shareholders and increase shares of all shareholders by converting capital reserves into share capital on the basis of 5 additional shares for every 10 shares based on the total of 4,267,391,228 shares of the Company. The book closure date was 5 May 2016, and the ex-right and ex-dividend date was 6 May 2016.
The Company convened the Tenth Meeting of the Second Board of Directors on 9 May 2016, at which the Proposal for the Adjustments to the Number of Stock Options and the Exercise Price for the First Stock Option Incentive Plan was reviewed and approved. As the 2015 Annual Plan for Profit Distribution& Conversion of Capital Reserves into Share Capital had been carried out, the number of unexercised stock options for the First Stock Option Incentive Plan was changed from 58,155,600 to 87,233,400, the exercisable stock options for the second exercise period were revised from 27,185,000 to 40,777,500, and the exercise price was reduced from RMB17.72 per share to RMB11.01 per share.
c. Upon examination by the Shenzhen Stock Exchange and the Shenzhen branch of China Securities
2016 Semi-Annual Report of Midea Group Co., Ltd. Depository and Clearing Co., Ltd., the chosen and qualified incentive receivers for the First Stock Option Incentive Plan may choose to exercise their exercisable stock options in the second exercise period, which is from 7 June 2016 to 17 February 2018.
B. Overview of the Second Stock Option Incentive Plan
a. The Company convened the Tenth Meeting of the Second Board of Directors on 9 May 2016, at which the Proposal for the Adjustments to the Number of Stock Options and the Exercise Price for the Second Stock Option Incentive Plan was reviewed and approved. As the 2015 Annual Plan for Profit Distribution& Conversion of Capital Reserves into Share Capital had been carried out, the number of stock options for the Second Stock Option Incentive Plan was changed from 83,790,000 to 125,685,000, and the exercise price was reduced from RMB30.54 per share to RMB19.56 per share.
b. The Company convened the
13th
Meeting of the Second Board of Directors on 1 June 2016, at which the Proposal for the Adjustments to the Incentive Receivers and Their Exercisable Stock Options of the Second Stock Option Incentive Plan was reviewed and approved. As such, it was agreed to adjust the incentive receivers and their exercisable stock options for the Second Stock Option Incentive Plan due to the leave, position changes and failure in the performance appraisal of some incentive receivers. Upon the adjustments, the incentive receivers for the Second Stock Option Incentive Plan decreased from 733 to 639, and the exercisable stock options for the revised incentive receivers were also reduced from 125,685,000 to 108,705,000.
The Proposal for Matters Related to the Stock Option Exercise for the First Exercise Period of the Second Stock Option Incentive Plan was also considered and approved. Due to the fact that the exercise conditions have grown mature for the first exercise period, a total of 629 qualified incentive receivers have been allowed to exercise 35,895,000 stock options in the first exercise period.
c. Upon examination by the Shenzhen Stock Exchange and the Shenzhen branch of China Securities Depository and Clearing Co., Ltd., the chosen and qualified incentive receivers for the Second Stock Option Incentive Plan may choose to exercise their exercisable stock options in the first exercise period, which is from 28 June 2016 to 27 May 2018.
C. Overview of the Third Stock Option Incentive Plan
a. On 25 May 2016, the Third Stock Option Incentive Plan (Draft) and its Abstract of Midea Group Co., Ltd. was reviewed and approved at the
12th
Meeting of the Second Board of Directors, and the incentive
2016 Semi-Annual Report of Midea Group Co., Ltd. receiver list for the Third Stock Option Incentive Plan (Draft) was examined at the Ninth Meeting of the Second Supervisory Committee.
b. On 6 June 2016, the Company convened the Third Special General Meeting for 2016, at which the Third Stock Option Incentive Plan (Draft) and its Abstract, the Implementation and Appraisal Measures for the Third Stock Option Incentive Plan of Midea Group Co., Ltd., the Proposal for Asking the General Meeting to Authorize the Board to Handle Mattes Related to the Third Stock Option Incentive Plan and other relevant proposals were reviewed and approved.
c. In light of the authorization given at the Third Special General Meeting for 2016, the Company convened the
15th
Meeting of the Second Board of Directors on 28 June 2016, at which the Proposal for the Adjustments to the Incentive Receiver List and the Number of Granted Stock Options for the Third Stock Option Incentive Plan, the Proposal for the Determination of the Grant Date for the Third Stock Option Incentive Plan and the Proposal for the Grant-Related Matters for the Third Stock Option Incentive Plan were reviewed and approved. As such, the Company agreed to grant 127,290,000 stock options to 929 receivers on 28 June 2016.
VII Significant related-party transactions
1. Related-party transactions arising from routine operation
√ Applicable□ N/A
|||||||||||||||
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2016 Semi-Annual Report of Midea Group Co., Ltd.
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|Hefei|member|||||||||||||
|Huitong|||||||||||||www.|
||of the||Procure|||||||Payme||||
|New||Procur||Market||||||||2016-0|cninfo|
||||ment of||-|10,402.40|0.22%|40,000|No|nt after|-|||
|Materia|Compa|ement||price||||||||3-26|.com.|
||||goods|||||||delivery||||
|ls Co.,|||||||||||||cn|
||ny’s|||||||||||||
|Ltd.||||||||||||||
||actual|||||||||||||
||controll|||||||||||||
||er|||||||||||||
|Total||||--|--|128,863.60|--|165,500|--|--|--|--|--|
|Details of any sales return of a||||||||||||||
|||||N/A||||||||||
|large amount||||||||||||||
|Give the actual situation in the||||||||||||||
|Reporting Period (if any) where a||||||||||||||
|||||The associated amount limit between the Company and the related parties and the||||||||||
|forecast had been made for the||||||||||||||
|||||subsidiaries did not exceed the estimated total amounts of routine related-party||||||||||
|total amounts of routine||||||||||||||
|||||transactions by type.||||||||||
|related-party transactions by type||||||||||||||
|to occur in the current period||||||||||||||
|Reason for any significant||||||||||||||
|difference between the||||||||||||||
|||||N/A||||||||||
|transaction price and the market||||||||||||||
|reference price (if applicable)||||||||||||||

2. Related-party transactions regarding purchase and sales of assets
□ Applicable√ N/A
2016 Semi-Annual Report of Midea Group Co., Ltd. No such cases in the Reporting Period.
3. Related-party transitions arising from joint investments in external parties
□ Applicable√ N/A
No such cases in the Reporting Period.
4. Credits and liabilities with related parties
□ Applicable√ N/A
No such cases in the Reporting Period.
5. Other related-party transactions
√ Applicable□ N/A
The Proposal for the Related-Party Transaction Regarding Note Discounting for Infore Environment in 2016 and the Proposal for Related-party Transactions Regarding Making Deposits in and Securing Loans from Shunde Rural Commercial Bank in 2016 were reviewed and approved at the Sixth Meeting of the Second Board of Directors on 24 March 2016 and later at the 2015 Annual General Meeting on 26 April 2016.
In 2016, Midea Group Finance, a subsidiary of the Company, intends to provide note discounting services for Infore Environment and its subsidiaries, with the total amount of discounted notes expected not to exceed RMB1 billion and the interest charged not exceeding RMB20 million.
In 2016, the deposit balance of the Company in Shunde Rural Commercial Bank shall not exceed RMB5 billion and neither shall the credit balance provided by the bank to the Company exceed RMB3 billion Index to the announcements about the said related-party transactions disclosed
||||
|-|-|-|
|Announcement title|Disclosure date|Disclosure website|
|Announcement on the Related-Party Transaction RegardingNote Discounting for Infore Environment in 2016|2016-03-26|www.cninfo.com.cn|
|Announcement on Related-party Transactions RegardingMaking Deposits in and Securing Loans from Shunde RuralCommercial Bank|2016-03-26|www.cninfo.com.cn|

2016 Semi-Annual Report of Midea Group Co., Ltd. VIII Occupation of theCompany’s funds for non-operating purposes by the controlling shareholder and its related parties
□ Applicable√ N/A
IX Significant contracts and their execution
1. Trusteeship, contracting and leasing
(1) Trusteeship
□ Applicable√ N/A
No such cases in the Reporting Period.
(2) Contracting
□ Applicable√ N/A
No such cases in the Reporting Period.
(3) Leasing
□ Applicable√ N/A
No such cases in the Reporting Period.
2. Guarantees provided by the Company
√ Applicable□ N/A
Unit: RMB'0,000
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Guarantees provided by the Company and its subsidiaries for external parties (excluding those for subsidiaries)||||||||||
|||Disclosure||Actual|||||Guara|
|||date of the||occurrence|Actual||||ntee|
||||Line of||||Term of|||
|||guarantee||date (date|guarant|Type of||Due|for a|
|Guaranteed party|||guarante||||guarant|||
|||line||of|ee|guarantee||or not|related|
||||e||||ee|||
|||announce||agreement|amount||||party|
|||ment||signing)|||||or not|
|||||||Joint and|One|||
|Shanxi Huaxiang Group Co., Ltd.||2016-3-26|20,400|2016-1-28|18,300|several liability|year|No|No|
||||||Total actual external|||||
|Total external guarantee line||||||||||
||||||guarantee amount|||||
|approved during the Reporting|20,400||||||6,800|||
||||||during the Reporting|||||
|Period (A1)||||||||||
||||||Period (A2)|||||

2016 Semi-Annual Report of Midea Group Co., Ltd.
||||||||||
|-|-|-|-|-|-|-|-|-|
|Total approved external||||Total actual external|||||
|||||guarantee balance at|||||
|guarantee line at the end of the|20,400|||||18,300|||
|||||the end of the Reporting|||||
|Reporting Period (A3)|||||||||
|||||Period (A4)|||||
|Guarantees between the Company and its subsidiaries|||||||||
||Disclosure||Actual|||||Guara|
||date of the||occurrence|Actual||||ntee|
|||||||Term of|||
||guarantee|Line of|date (date|guarant|Type of||Due|for a|
|Guaranteed party||||||guarant|||
||line|guarantee|of|ee|guarantee||or not|related|
|||||||ee|||
||announce||agreement|amount||||party|
||ment||signing)|||||or not|
||||||Joint and|One|||
|Midea Group Finance Co., Ltd.|2016-3-26|1,095,800|2016-1-1|252,000|||No|No|
||||||several liability|year|||
|Midea Microcredit Co., Ltd.|2016-3-26|60,000|-|0|Ditto|Ditto|Ditto|Ditto|
|Foshan Shunde Midea|||||||||
||2016-3-26|30,000|-|0|Ditto|Ditto|Ditto|Ditto|
|Microcredit Co., Ltd.|||||||||
|Guangdong Midea Refrigeration|||||||||
||2016-3-26|1,095,100|2016-1-11|514,969|Ditto|Ditto|Ditto|Ditto|
|Equipment Co., Ltd.|||||||||
|Guangdong Midea Kitchen|||||||||
|Appliances Manufacturing Co.,|2016-3-26|718,500|2016-1-12|401,085|Ditto|Ditto|Ditto|Ditto|
|Ltd.|||||||||
|Guangdong Witt Vacuum|||||||||
|Electronics Manufacturing Co.,|2016-3-26|43,600|2016-1-1|1,372|Ditto|Ditto|Ditto|Ditto|
|Ltd.|||||||||
|Guangdong Midea Heating &|||||||||
||2016-3-26|293,700|2016-4-28|34,371|Ditto|Ditto|Ditto|Ditto|
|Ventilation Equipment Co., Ltd.|||||||||
|Midea Commercial Air|||||||||
|Conditioning Equipment Co.,|2016-3-26|14,400|-|0|Ditto|Ditto|Ditto|Ditto|
|Ltd., Guangdong Province|||||||||
|Guangdong Midea-SIIX|||||||||
||2016-3-26|12,000|-|0|Ditto|Ditto|Ditto|Ditto|
|Electronics Co., Ltd.|||||||||
|Guangdong Midea Consumer|||||||||
||2016-3-26|105,500|2016-6-28|2,389|Ditto|Ditto|Ditto|Ditto|
|Electric Manufacturing Co., Ltd.|||||||||
|Foshan Shunde Midea Electric|||||||||
|Appliance Manufacturing Co.,|2016-3-26|181,100|2016-1-12|66,631|Ditto|Ditto|Ditto|Ditto|
|Ltd.|||||||||
|Guangdong Midea Kitchen &|||||||||
|Bathroom Appliances|2016-3-26|10,000|-|0|Ditto|Ditto|Ditto|Ditto|
|Manufacturing Co., Ltd.|||||||||
|Foshan Shunde Midea Drinking|2016-3-26|19,300|2016-5-11|10,000|Ditto|Ditto|Ditto|Ditto|

2016 Semi-Annual Report of Midea Group Co., Ltd.
||||||||||
|-|-|-|-|-|-|-|-|-|
|Manufacturing Co., Ltd.|||||||||
|Foshan Midea Clear Lake Water|||||||||
|Purification Equipment|2016-3-26|9,800|-|0|Ditto|Ditto|Ditto|Ditto|
|Manufacturing Co., Ltd.|||||||||
|Guangdong Midea Environment|||||||||
|Appliances Manufacturing Co.,|2016-3-26|223,000|2016-1-12|103,809|Ditto|Ditto|Ditto|Ditto|
|Ltd.|||||||||
|Foshan Shunde Midea Washing|||||||||
|Appliance Manufacturing Co.,|2016-3-26|448,200|2016-3-29|194,604|Ditto|Ditto|Ditto|Ditto|
|Ltd.|||||||||
|Guangdong GMCC Refrigeration|||||||||
||2016-3-26|67,800|2016-4-27|24,990|Ditto|Ditto|Ditto|Ditto|
|Equipment Co., Ltd.|||||||||
|Guangdong GMCC Precise|||||||||
||2016-3-26|34,000|2016-1-1|462|Ditto|Ditto|Ditto|Ditto|
|Manufacture Co., Ltd.|||||||||
|Guangdong Welling Motor Co.,|||||||||
||2016-3-26|65,700|2016-1-1|397|Ditto|Ditto|Ditto|Ditto|
|Ltd.|||||||||
|Foshan Welling Electronic and|||||||||
||2016-3-26|10,000|2016-1-1|59|Ditto|Ditto|Ditto|Ditto|
|Electric Appliances Co., Ltd.|||||||||
|Foshan Welling Washer Motor|||||||||
||2016-3-26|118,000|2016-1-1|3,915|Ditto|Ditto|Ditto|Ditto|
|Manufacturing Co., Ltd.|||||||||
|Ningbo Midea Joint Materials|||||||||
||2016-3-26|66,000|2016-1-1|5,398|Ditto|Ditto|Ditto|Ditto|
|Supply Co. Ltd.|||||||||
|Foshan Welling Material Co., Ltd.|2016-3-26|21,000|2016-1-1|1,528|Ditto|Ditto|Ditto|Ditto|
|Guangzhou Kaizhao Trading|||||||||
||2016-3-26|18,000|-|0|Ditto|Ditto|Ditto|Ditto|
|Co., Ltd.|||||||||
|Foshan Midea Carrier|||||||||
|Refrigeration Equipment Co.,|2016-3-26|52,400|-|0|Ditto|Ditto|Ditto|Ditto|
|Ltd.|||||||||
|Guangdong Midea Group Wuhu|||||||||
|Refrigeration Equipment Co.,|2016-3-26|36,000|-|0|Ditto|Ditto|Ditto|Ditto|
|Ltd.|||||||||
|Wuhu GMCC Air Conditioning|||||||||
||2016-3-26|151,600|2016-1-1|1,645|Ditto|Ditto|Ditto|Ditto|
|Equipment Co., Ltd.|||||||||
|Hefei Midea Refrigerator Co.,|||||||||
||2016-3-26|43,600|2016-6-21|14,687|Ditto|Ditto|Ditto|Ditto|
|Ltd.|||||||||
|Hubei Midea Refrigerator Co.,|||||||||
||2016-3-26|10,000|2016-1-1|358|Ditto|Ditto|Ditto|Ditto|
|Ltd.|||||||||
|Hefei Hualing Co., Ltd.|2016-3-26|52,000|2016-1-1|280|Ditto|Ditto|Ditto|Ditto|
|Guangzhou Midea Hualing|2016-3-26|20,000|2016-1-1|507|Ditto|Ditto|Ditto|Ditto|

2016 Semi-Annual Report of Midea Group Co., Ltd.
||||||||||
|-|-|-|-|-|-|-|-|-|
|Refrigerator Equipment Co., Ltd.|||||||||
|Hefei Midea Heating &|||||||||
||2016-3-26|7,000|-|0|Ditto|Ditto|Ditto|Ditto|
|Ventilation Equipment Co., Ltd.|||||||||
|Hefei Midea-Bosch Air|||||||||
||2016-3-26|10,000|-|0|Ditto|Ditto|Ditto|Ditto|
|Conditioning Equipment Co., Ltd.|||||||||
|Wuhu Midea Kitchen &|||||||||
|Bathroom Electric Manufacturing|2016-3-26|6,000|2016-1-1|1,008|Ditto|Ditto|Ditto|Ditto|
|Co., Ltd.|||||||||
|Wuhu Midea Washing Appliance|||||||||
||2016-3-26|12,000|-|0|Ditto|Ditto|Ditto|Ditto|
|Manufacturing Co., Ltd.|||||||||
|Anhui GMCC Refrigeration|||||||||
||2016-3-26|10,000|2016-1-1|371|Ditto|Ditto|Ditto|Ditto|
|Equipment Co., Ltd.|||||||||
|Anhui GMCC Precise|||||||||
||2016-3-26|24,000|2016-6-23|13,086|Ditto|Ditto|Ditto|Ditto|
|Manufacture Co., Ltd.|||||||||
|Welling (Wuhu) Motor|||||||||
||2016-3-26|12,000|-|0|Ditto|Ditto|Ditto|Ditto|
|Manufacturing Co., Ltd.|||||||||
|Annto Logistics Co., Ltd.|2016-3-26|32,000|2016-1-1|1 0,168|Ditto|Ditto|Ditto|Ditto|
|Hefei Midea Washing Machine|||||||||
||2016-3-26|40,000|2016-6-28|0|Ditto|Ditto|Ditto|Ditto|
|Co., Ltd.|||||||||
|Jiangsu Midea Cleaning|||||||||
||2016-3-26|26,800|2016-6-20|762|Ditto|Ditto|Ditto|Ditto|
|Appliances Co., Ltd.|||||||||
|Jiangxi Midea Guiya Lighting|||||||||
||2016-3-26|5,500|-|0|Ditto|Ditto|Ditto|Ditto|
|Co., Ltd.|||||||||
|Changzhou Welling Motor|||||||||
||2016-3-26|12,000|-|0|Ditto|Ditto|Ditto|Ditto|
|Manufacturing Co., Ltd.|||||||||
|Midea International Holdings Ltd.|2016-3-26|2,436,256|2016-2-1|646,233|Ditto|Ditto|Ditto|Ditto|
|Midea International Trading Co.,|||||||||
||2016-3-26|70,000|2016-1-4|29,323|Ditto|Ditto|Ditto|Ditto|
|Ltd|||||||||
|Midea Electric Investment (BVI)|||||||||
||2016-3-26|27,000|-|0|Ditto|Ditto|Ditto|Ditto|
|Limited|||||||||
|Calpore Macao Commercial|||||||||
||2016-3-26|21,300|2016-1-4|1,944|Ditto|Ditto|Ditto|Ditto|
|Offshore Ltd.|||||||||
|Welling International Hong Kong|||||||||
||2016-3-26|24,000|-|0|Ditto|Ditto|Ditto|Ditto|
|Limited|||||||||
|Main Power Electrical Factory|||||||||
||2016-3-26|46,400|2016-1-6|16,592|Ditto|Ditto|Ditto|Ditto|
|Limited|||||||||
|Midea Electric Trading|||||||||
||2016-3-26|986,000|2016-1-1|115,432|Ditto|Ditto|Ditto|Ditto|
|(Singapore) Co. Pte. Ltd.|||||||||

2016 Semi-Annual Report of Midea Group Co., Ltd.
|||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Midea Consumer Electric||||||||||||||||
|||2016-3-26||21,000|-||0||Ditto||Ditto||Ditto||Ditto|
|(Vietnam) Co., Ltd.||||||||||||||||
|Springer Carrier Ltda.||2016-3-26|||-||0||Ditto||Ditto||Ditto||Ditto|
|||||130,000||||||||||||
|Climazon Industrial Ltda.||2016-3-26|||-||0||Ditto||Ditto||Ditto||Ditto|
|Carrier S.A||2016-3-26|||-||0||Ditto||Ditto||Ditto||Ditto|
|||||12,000||||||||||||
|Carrier Fueguina S.A.||2016-3-26|||-||0||Ditto||Ditto||Ditto||Ditto|
|Carrier(Chile) S.A.||2016-3-26||14,000|-||0||Ditto||Ditto||Ditto||Ditto|
|Midea Electrics Netherlands B.V.||2016-3-26||14,000|-||0||Ditto||Ditto||Ditto||Ditto|
|Midea America Corp.||2016-3-26||35,000|-||0||Ditto||Ditto||Ditto||Ditto|
|PT.Midea Planet Indonesia Co.,||||||||||||||||
|||2016-3-26||35,000|-||0||Ditto||Ditto||Ditto||Ditto|
|Ltd||||||||||||||||
|MIDEA Scott & English Electroni||||||||||||||||
|||2016-3-26||14,000|-||0||Ditto||Ditto||Ditto||Ditto|
|cs Sdn Bhd||||||||||||||||
|Midea America(Cananda) Corp.||2016-3-26||7,000|-||0||Ditto||Ditto||Ditto||Ditto|
|Midea Middle East||2016-3-26||36,000|-||0||Ditto||Ditto||Ditto||Ditto|
|Midea Europe GmbH||2016-3-26||14,000|-||0||Ditto||Ditto||Ditto||Ditto|
|Midea Italia S.R.L.||2016-3-26||14,000|-||0||Ditto||Ditto||Ditto||Ditto|
|Midea México, S. DE R.L. DE||||||||||||||||
|||2016-3-26||21,000|-||0||Ditto||Ditto||Ditto||Ditto|
|C.V.||||||||||||||||
|Orient Household Appliances||||||||||||||||
|||2016-3-26||14,000|-||0||Ditto||Ditto||Ditto||Ditto|
|Ltd.||||||||||||||||
|Toshiba Lifestyle Products &||||||||||||||||
|||2016-6-30||1,040,512|-||0||Ditto||Ditto||Ditto||Ditto|
|Services Corporation||||||||||||||||
||||||||Total actual guarantee|||||||||
|Total guarantee line for subsidiaries approved|||||||amount for subsidiaries|||||||||
|||||10,355,868|||||||3,356,973|||||
|during the Reporting Period (B1)|||||||during the Reporting|||||||||
||||||||Period (B2)|||||||||
||||||||Total actual guarantee|||||||||
|Total approved guarantee line for subsidiaries|||||||balance for subsidiaries|||||||||
|||||10,355,868|||||||2,470,373|||||
|at the end of the Reporting Period (B3)|||||||at the end of the|||||||||
||||||||Reporting Period (B4)|||||||||
|Guarantees between subsidiaries||||||||||||||||
||Disclosuredate of the|||||||||||||||
||||Actual|||||||||||Guarant||
||||occurrence|||Actual||||||||ee for a||
||guarantee|Line of||||||Type of||Term of||Due or||||
|Guaranteed party|||date (date of|||guarantee||||||||related||
||line|guarantee||||||guarantee||guarantee||not||||
||||agreement|||amount||||||||party or||
||announcement|||||||||||||||
||||signing)|||||||||||not||

2016 Semi-Annual Report of Midea Group Co., Ltd.
|||||
|-|-|-|-|
|N/A||||
|Total guarantee amount (total of the above-mentioned three kinds of guarantees)||||
|||Total actual guarantee||
|Total guarantee line approved||||
|||amount during the||
|during the Reporting Period|10,376,268||3,363,773|
|||Reporting Period||
|(A1+B1+C1)||||
|||(A2+B2+C2)||
|||Total actual guarantee||
|Total approved guarantee line at||||
|||balance at the end of the||
|the end of the Reporting Period|10,376,268||2,488,673|
|||Reporting Period||
|(A3+B3+C3)||||
|||(A4+B4+C4)||
|Proportion of the total actual guarantee amount (A4+B4+C4)||||
|||44.98%||
|in net assets of the Company||||
|Of which:||||
|Amount of guarantees provided for shareholders, the actual||||
|||0||
|controller and their related parties (D)||||
|Amount of debt guarantees provided directly or indirectly for||||
|||2,388,736||
|entities with a liability-to-asset ratio over 70% (E)||||
|Portion of the total guarantee amount in excess of 50% of||||
|||0||
|net assets (F)||||
|Total amount of the three kinds of guarantees above||||
|||2,388,736||
|(D+E+F)||||
|Joint responsibilities possibly borne or already borne in the||||
|||N/A||
|Reporting Period for undue guarantees (if any)||||
|Provision of external guarantees in breach of the prescribed||||
|||N/A||
|procedures (if any)||||

(1) Illegal provision of guarantees for external parties
□ Applicable√ N/A
No such cases in the Reporting Period.
3. Other significant contracts
□ Applicable√ N/A
No such cases in the Reporting Period.
4. Other significant transactions
□ Applicable√ N/A
No such cases in the Reporting Period.
2016 Semi-Annual Report of Midea Group Co., Ltd. X Undertakings made by the Company and its shareholders interested in5% or more of the shares of the Company made in the Reporting Period or subsisting to the Reporting Period
√ Applicable□ N/A
||||||||
|-|-|-|-|-|-|-|
||Underta|Type of|||||
|Undertaki||||Undertakin|||
||king|undertaki|Details of undertaking||Term|Particulars on the performance|
|ng||||g date|||
||giver|ng|||||
||Controll||1. Midea Holding and He Xiangjian have undertaken as follows:||||
||ing||Within 36 months from the listing date of Midea Group's stocks,||36 months from||
||shareho||they will neither transfer or entrust others to manage their||the day of Midea||
|||Share||||1. There has been no violation of this|
||lder,||directly and indirectly held shares of Midea Group issued prior|2013.03.28|Group’s listing||
|||lock-up||||undertaking.|
||actual||to this issuance, nor sell them to Midea Group. If they break the||(2013.09.18-201||
|Undertaki|||||||
||controll||above undertaking, they will assume all liabilities arising||6.09.18)||
|ng made|||||||
||er||therefrom.||||
|in offering|||||||
||||2. Midea Holding and He Xiangjian have undertaken as follows:||||
|document|||||||
||||He Xiangjian, Midea Holding and their controlled enterprises||||
|s or|Controll||||||
||||will remain independent from Midea Group in respect of||||
|sharehold|ing||||||
|||Maintena|personnel, finance, assets, business and institutions, in||||
|ing|shareho||||||
|||nce of|accordance with relevant laws and regulations and regulatory|||2. There has been no violation of this|
|alternatio|lder,|||2013.03.28|Long-standing||
|||independ|documents. They will faithfully fulfill the above undertaking, and|||undertaking.|
|n|actual||||||
|||ence|assume the corresponding legal liability. If they fail to fulfill their||||
|document|controll||||||
||||obligations and responsibilities conferred by the undertaking,||||
|s|er||||||
||||they will bear the corresponding legal liabilities according to||||
||||relevant laws, rules, regulations and regulatory documents.||||
||Controll|Avoiding|3. In order to avoid possible competition within the industry||||
|||||||3. There has been no violation of this|
||ing|competiti|between Midea Group and Midea Holding and its controlled|2013.03.28|Long-standing||
|||||||undertaking.|
||shareho|on within|enterprises as well as He Xiangjian, his immediate family and||||

2016 Semi-Annual Report of Midea Group Co., Ltd.
||||
|-|-|-|
|lder,|the|his controlled companies, Midea Holding and He Xiangjian|
|actual|industry|have undertaken as follows:|
|controll||(1) None of the entities or individuals mentioned above is or will|
|er||be engaged in the same or similar business as the existing|
|||main business of Midea Group and its controlled companies.|
|||They are not or will not be engaged or participate in such|
|||business that is competitive to the existing main business of|
|||Midea Group and its controlled companies by controlling other|
|||economic entities, institutions or economic organizations;|
|||(2) If Midea Group and its controlled companies expand their|
|||business on the basis of the existing ones to those where the|
|||above mentioned related entities or individuals are already|
|||performing such production and operations, as long as He|
|||Xiangjian is still the actual controller of Midea Group, and Midea|
|||Holding the controlling shareholder, they will agree on solving|
|||the problem of competition within the industry arising therefrom|
|||within a reasonable period;|
|||(3) If Midea Group and its controlled companies expand their|
|||business scope on the basis of the existing ones to those where|
|||the above mentioned related subjects have not gone into|
|||production or operation, as long as He Xiangjian is still the|
|||actual controller of Midea Group, and Midea Holding the|
|||controlling shareholder, they would undertake as not to engage|
|||in competitive business to the new ones of Midea Group and its|
|||controlled companies;|
|||(4) In accordance with effective laws, regulations or other|
|||regulatory documents of People's Republic of China, as long as|
|||Midea Holding is identified as the controlling shareholder of|
|||Midea Group, and He Xiangjian the actual controller, they will|

2016 Semi-Annual Report of Midea Group Co., Ltd.
|||||||
|-|-|-|-|-|-|
|||not change or terminate this undertaking.||||
|||(5) Midea Holding and He Xiangjian shall faithfully fulfill the||||
|||above undertaking, and assume the corresponding legal||||
|||responsibilities. If they fail to fulfill their obligations and||||
|||responsibilities conferred by the undertaking, they would bear||||
|||the corresponding legal responsibilities according to relevant||||
|||laws, rules, regulations and regulatory documents.||||
|||4. In order to regulate matters of related transactions that may||||
|||occur in the future between Midea Group and Midea Holding||||
|||and its controlled companies as well as He Xiangjian, his||||
|||immediate family and his controlled companies, Midea Holding||||
|||and He Xiangjian have undertaken as follows:||||
|||(1) They will regulate any related transactions with Midea||||
|||Group and its controlled companies using their utmost efforts to||||
|||reduce them. For unavoidable related transactions with Midea||||
|Controll||||||
|||Group and its controlled companies, including but not limited to||||
|ing|Regulatio|||||
|||commodity trading, providing services to each other or as||||
|shareho|n of|||||
|||agent, they will sign legal normative agreements with Midea|||4. There has been no violation of this|
|lder,|related||2013.03.28|Long-standing||
|||Group, and go through approval procedures in accordance with|||undertaking.|
|actual|transactio|||||
|||related laws, regulations, rules, other regulatory documents,||||
|controll|ns|||||
|||and relevant provisions of the Articles of Association of Midea||||
|er||||||
|||Group. They guarantee to offer fair prices for related||||
|||transactions, and fulfill the information disclosure obligations in||||
|||respect of the related transactions according to related laws,||||
|||regulations, rules, other regulatory documents, and relevant||||
|||provisions of the Articles of Association of Midea Group. They||||
|||also guarantee not to illegally transfer the funds or profits from||||
|||Midea Group, or damage the interests of its shareholders at||||
|||their advantages during the related transactions.||||

2016 Semi-Annual Report of Midea Group Co., Ltd.
|||||||
|-|-|-|-|-|-|
|||(2) They shall fulfill the obligation of withdrawing from voting||||
|||that involves the above mentioned related transactions at the||||
|||general meeting of Midea Group;||||
|||(3) The related subject mentioned above shall not require||||
|||Midea Group to offer more favorable conditions than those to||||
|||any independent third party in any fair market transactions.||||
|||(4) In accordance with effective laws, regulations or other||||
|||regulatory documents of People's Republic of China, as long as||||
|||Midea Holding is identified as the controlling shareholder of||||
|||Midea Group, and He Xiangjian the actual controller, they shall||||
|||not change or terminate this undertaking.||||
|||(5) Midea Holding and He Xiangjian will faithfully fulfill the||||
|||above undertaking and assume the corresponding legal||||
|||liabilities. If they fail to fulfill their obligations and responsibilities||||
|||conferred by the undertaking, they will bear the corresponding||||
|||legal responsibilities according to relevant laws, rules,||||
|||regulations and regulatory documents.||||
|||5. On 4 January 2001, the Midea Trade Union Committee||||
||On Midea|||||
|||signed the "Equity Transfer Contract" with five people, namely||||
||Trade|||||
|||He Xiangjian, Chen Dajiang, Feng Jingmei, Chen Kangning and||||
|Controll|Union|||||
|||Liang Jieyin, where it transferred all its limited equity of Midea||||
|ing|Committe|||||
|||Group (22. 85%) respectively to those five people. According to|||5. So far, this shareholding transfer has not|
|shareho|e|||||
|||the confirmation letter issued by members of the Midea Trade|||brought about any loss caused by any dispute|
|lder,|transferri||2013.03.28|Long-standing||
|||Union Committee at that time, the equity transfer price was|||or potential disputes. There has been no|
|actual|ng its|||||
|||determined after mutual discussion on the basis of their true|||violation of this undertaking.|
|controll|limited|||||
|||opinions, therefore there was no dispute or potential dispute.||||
|er|equity of|||||
|||On 28 June, 2013, Foshan Shunde Beijiao General Union,||||
||Midea|||||
|||superior department of Midea Trade Union Committee, issued a||||
||Group|||||
|||confirmation letter to the fact that the Midea Trade Union||||

2016 Semi-Annual Report of Midea Group Co., Ltd.
|||||||
|-|-|-|-|-|-|
|||Committee funded the establishment of Midea Group Co., Ltd.||||
|||In addition the letter also confirmed that the council of Midea||||
|||Trade Union Committee is entitled to dispose any property of||||
|||the committee, and such property disposal does not need any||||
|||agreement from all staff committee members.||||
|||Midea Holding and He Xiangjian, respectively the controlling||||
|||shareholder and actual controller of Midea Group Co., Ltd. have||||
|||undertaken as follows: For any loss to Midea Group caused by||||
|||any dispute or potential dispute arising from the matters of||||
|||equity transfer mentioned above, they are willing to assume full||||
|||liability for such loss.||||
||Issues|||||
||about|||||
||Payment|||||
|||6. Midea Holding and He Xiangjian have undertaken to be liable||||
||of the|||||
|||for (1) paying such expenses and related expenses on time||||
||Staff|||||
|Controll||based on the requirements of relevant state departments if||||
||Social|||||
|ing||Midea Group is required to be liable for the payment of staff|||6. So far, the payment of the staff social|
||Insurance|||||
|shareho||social insurance, housing provident fund and the payment|||insurance and the housing provident fund has|
||and the|||||
|lder,||required by relevant state authorities prior to this merger, (2)|2013.03.28|Long-standing|not brought about any controversy or potential|
||Housing|||||
|actual||paying corresponding compensation for all direct and indirect|||disputes. There has been no violation of this|
||Provident|||||
|controll||losses incurred by Midea Group and its subsidiaries due to this|||undertaking.|
||Fund|||||
|er||merger, (3) indemnifying and holding harmless Midea Group||||
||involved|||||
|||and its subsidiaries in time from such expenses when Midea||||
||in Midea|||||
|||Group and its subsidiaries are required to pay them in advance.||||
||Group's|||||
||Overall|||||
||Listing|||||
|Controll|Issues|7. Undertakings on issues about asset alteration, asset flaw and|||7.1 The Process of Property Ownership|
||||2013.03.28|Long-standing||
|ing|about|house leasing of Midea Group and its subsidiaries|||Certificate:|

2016 Semi-Annual Report of Midea Group Co., Ltd.
|||||
|-|-|-|-|
|shareho|asset|Midea Holding and He Xiangjian have undertaken as follows:|The Report discloses that the Company is trying to|
|lder,|alteration,|(1) Midea Holding will do its utmost to assist and urge Midea|get the Property Ownership Certificate for 177 of its|
|actual|asset|Group (including its subsidiaries) to complete renaming|properties, which cover an area of 2,148,485.65|
|controll|flaw and|procedures of related assets, such as land, housing,|square meters. So far, 62 applications have been|
|er|house|trademarks, patents and stock rights, declared in the related|approved, the total area covers 2,086,357.42|
||leasing of|files of this merger. Midea Holding will be liable for all|square meters, which accounts for 97.11% of total|
||Midea|compensations of losses caused by issues about renaming|area. Another property with an area of 1,966.69|
||Group|procedures of related assets mentioned above to Midea Group.|square meters (0.09% of the total area) has been|
||and its||disposed. The remaining 114 properties, spanning|
|||(2) Midea Holding shall do its utmost to assist Midea Group||
||subsidiari||an area of 60,161.54 square meters account for|
|||(including its subsidiaries) to apply for ownership certificates of||
||es||2.8% of the total area. These properties are all|
|||land and housing or property declared in related files of this||
|||merger.|small unit size auxiliary facilities such as security|
||||booth, transformer room, power room, pump room,|
|||(3) Midea Holding shall assist Midea Group (including its||
||||gas station and so on, for which property|
|||subsidiaries) to re-apply for corresponding construction||
||||ownership certificates cannot be granted or applied|
|||procedures and apply for their ownership certificates for houses||
||||for. So far these 114 properties have not been|
|||without complete procedures, as happened in the past, to apply||
||||required to be dismantled by competent|
|||for the ownership certificate. If the competent authorities||
||||departments so that these buildings are still in|
|||requires Midea Group to dismantle buildings that cannot||
||||regular use, which has not brought about any|
|||acquire the re-application for real estate registration||
||||controversy or any company loss caused by|
|||procedures, Midea Holding shall do its utmost to provide||
||||disputes. There has been no violation of this|
|||assistance and be liable for any related expenses used in||
||||undertaking.|
|||dismantling such buildings by Midea Group (including its||
||||7.2 The Use of Rental Houses of This Company|
|||subsidiaries).||
|||(4) Under any circumstances that Midea Group suffers from|The Report discloses that as of 31 December|
|||losses incurred from no longer using these properties or||
||||2012, our company used 113 leasing houses in|
|||presently using the land or house above due to failing to obtain||
||||total, of which our company cannot get the property|
|||or collect in time the ownership certificates of the land or house||
||||certificate of 100 leasing houses from the leasing|
|||above or any losses caused by any other reasons, Midea||
||||party. So far the contracts of 90 out of the 113|
|||Holding shall compensate any loss for these reasons in time||
||||rental houses have not been signed to extend the|

2016 Semi-Annual Report of Midea Group Co., Ltd.
|||
|-|-|
|and in full. Midea Holding shall compensate the actual loss|leasehold. The property certificate of 1 of the|
|Midea Group suffers from any circumstances above resulting in|remaining 23 houses has been obtained while the|
|penalties subjected to from competent authorities or through|other 22 certificates have not been obtained yet.|
|claims from any other third party.|These 22 rental houses have not rendered our|
|(5) Based on issues of defective house leasing declared in|company any economic loss or penalty caused by|
|related files of this merger, Midea Holding shall provide|defective property rights, which result in removing|
|sufficient compensations for all economic losses incurred by|to other rental houses. There has been no violation|
|Midea Group (including its subsidiaries) where the leasehold|of this undertaking.|
|relations above become invalid or other disputes occur, which|7.3 Land Use Rights of Leasing Use|
|are caused by rights claims from a third party or by means of an||
||The "Report" discloses that as of 31 December,|
|administrative authority exercising a right and therefore results||
||2012, our company has had one case of using|
|in any economic losses due to eviction from rental houses, or||
||rental houses, covering a total area of 57,506.95|
|any penalties subjected to by competent government||
||square meters for which the lessor of the rental|
|departments or any recourse from related parties.||
||land mentioned above did not provide any legal|
|(6) Based on the issues of defective land leasing declared in||
||ownership files showing or detailing ownership of|
|related files of this merger, when leasehold relations become||
||this land. So far this rental land has not rendered|
|invalid caused by defects of land leasing or when other disputes||
||our company any controversy or any loss caused|
|occur, resulting in any economic losses to Midea Group||
||by disputes. There has been no violation of this|
|(including its subsidiaries) or through any penalties||
||undertaking.|
|administered by competent government departments. Likewise||
||7.4 The Procedures of Renaming Land Owner|
|if the lessor cannot compensate for losses caused by such||
|defective leasing, Midea Holding shall compensate Midea|Under Process Caused by the Alteration of the|
|Group for losses caused by such defective land leasing.||
||Company's Name|
|Midea Holding and He Xiangjian will compensate any losses of||
|Midea Group where a violation of guarantees and undertakings|The Report discloses that there are still 10 cases in|
|referred to previously occurs or such guarantees and|the process of registering a new land owner|
|undertakings are not consistent with the reality.|caused by changing the company's name and its|
||subsidiaries. So far, five cases have been|
||approved and the other five cases are still under|

2016 Semi-Annual Report of Midea Group Co., Ltd.
||||||||
|-|-|-|-|-|-|-|
|||||||review, which have not rendered any loss to the|
|||||||company. There has been no violation of this|
|||||||undertaking.|
|||||||7.5 Processing the Renaming Procedures of|
|||||||Some Trademarks|
|||||||So far, 8 of the 62 trademarks cases involved in the|
|||||||Report have applied for cancellation of the subjects|
|||||||through their owners and these trademarks shall|
|||||||no longer be in use. The company will not apply for|
|||||||the renaming procedures for those trademarks.|
|||||||The renaming procedures of the remaining 54|
|||||||cases have been processed and this undertaking|
|||||||has been fulfilled. There has been no violation of|
|||||||this undertaking.|
||||Shareholders of Midea Group Ningbo Meicheng, Fang Hongbo,||||
||||Huang Jian, Cai Qiwu, Yuan Liqun, Huang Xiaoming, Li||||
||||||36 months from||
||||Jianwei, Zheng Weikang promise that since Midea Group was||||
||Other||||the day of Midea||
|||Share|listed on the Shenzhen Stock Exchange, transferring shares or|||There has been no violation of this|
||shareho|||2013.03.28|Group’s listing||
|||lock-up|delegating others to manage their shares with either direct or|||undertaking.|
||lders||||(2013.09.18-201||
||||indirect ownership of Midea Group, issued before this time, has||||
||||||6.09.18)||
||||been forbidden for 36 months. Midea Group is not allowed to||||
||||buy back those shares either.||||
|Undertaki|||1. In strict accordance with the rules of the CSRC, the||The||
|ngs given|The||Shenzhen Stock Exchange and the Company regarding the use||undertakings||
|||Private|||||
|in time of|Compa||of raised funds, the Company shall have a special account for|2015.06.15|shall expire|This undertaking has expired.|
|||issue|||||
|IPO or|ny||its raised funds and use the funds only for the previously set||when the raised||
|refinancin|||purposes.||funds have been||

2016 Semi-Annual Report of Midea Group Co., Ltd.
||||||||
|-|-|-|-|-|-|-|
|g|||2. The funds raised in this private issue (after the issue||used up.||
||||expenses) shall all be used as working capital.||||
||||3. The Company shall not use the funds raised in this private||||
||||issue to make any financial investment such as purchasing||||
||||held-for-trading financial assets and available-for-sale financial||||
||||assets, lending the funds to others and entrusted investments||||
||||or to directly or indirectly invest in marketable securities.||||
||||||36 months from||
||||Xiaomi Technology has given an undertaking that it shall not||||
||||||the listing date of||
||Xiaomi||transfer the shares that it had subscribed for in this private|||There has been no violation of this|
|||Private|||||
||Technol||offering with Midea Group within 36 months from the completion|2015.06.26|this private|undertaking.|
|||issue|||||
||ogy||date of this offering (26 June 2015, the listing date for this||offering, i.e. to||
||||offering).||||
||||||26 June 2018||
|Whether|||||||
|the|||||||
|undertaki|||||||
||Yes||||||
|ng is|||||||
|fulfilled|||||||
|on time|||||||
|Specific|||||||
|reasons|||||||
|for failing|N/A||||||
|to fulfill|||||||
|any|||||||

2016 Semi-Annual Report of Midea Group Co., Ltd.
||
|-|
|undertaki|
|ng and|
|plan for|
|the next|
|step|

2016 Semi-Annual Report of Midea Group Co., Ltd. XI Engagement and disengagement of the CPAs firm
Has the semi-annual financial report been audited by a CPAs firm?
□ Yes√ No
This semi-annual report has not been audited by a CPAs firm.
XII Punishments and rectifications
□ Applicable√ N/A
XIII Delisting risk due to violation of laws or regulations
□ Applicable√ N/A
XIV Other significant events
√ Applicable□ N/A
The proposals for the tender offer to acquire shares of KUKA Aktiengesellschaft have been considered and approved at the
11th
and
12th
meetings of the Second Board as well as the Third Special General Meeting in 2016. The Company intends to make a cash tender offer of 115 euro/share to acquire KUKA shares via its wholly-owned foreign subsidiary MECCA, with the funds needed sourced from syndicated loans and theCompany’s own funds.
On 15 June 2016, the Federal Financial Supervisory Authority of Germany reviewed and approved the tender offer documents (in German), which were issued by the Company on the following day.
Regarding the opinions ofKUKA’s board of supervisors and executive board as to the tender offer, as well as the Investment Agreement signed between the Company and KUKA, the Company disclosed the Indicative Announcement of Midea Group Co., Ltd. on Progress on the Tender Offer to Acquire KUKA Aktiengesellschaft Shares on www.cninfo.com.cn dated 29 June 2016.
As the tender offer period ended on 4 August 2016, holders of81.04% ofKUKA’s outstanding shares had decided to accept the tender offer. Adding the13.51% stake that the Company had held in KUKA before the tender offer, the Company would hold94.55% in total ofKUKA’s outstanding shares provided the acquisition is successfully completed.
On 10 August 2016, the Company received the Notice of No Further Examination (SFLCSH[2016] Document No. 224) from the Anti-monopoly Bureau under the Ministry of Commerce, which gave a
2016 Semi-Annual Report of Midea Group Co., Ltd. green light to the acquisition as the Bureau reviewed the concentration of undertakings involved. On 20 August 2016 (19 August 2016 in Frankfurt time), one of the conditions for theacquisition—“The Federal Ministry for Economic Affairs and Energy of Germany raises no objection against theacquisition”—was satisfied.
On 27 August 2016, the condition regarding the U.S. antitrust scrutiny has also been met.
The acquisition is still subject to the antitrust review by the E.U., Russia, Brazil and Mexico, as well as the approval of the Committee on Foreign Investment in the United States and the Directorate of Defense Trade Controls of the U.S.. The long stop date of the transaction is 31 March 2017.
XV Corporate bonds
□ Applicable√ N/A
No such corporate bonds that are publicly offered and listed on the stock exchange, and were undue before the approval date of this Report or were due but could not be redeemed in full.
2016 Semi-Annual Report of Midea Group Co., Ltd. Section VI Changes in Shares and Particulars about
Shareholders
I Changes in shares
Unit: share
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||Before||Increase/decrease (+, -)|||||After||
|||||Bonus|Capitalization|||||
|||Proportion|||||||Proportion|
||Number||New issue|share|of capital|Other|Subtotal|Number||
|||(%)|||||||(%)|
|||||s|reserves|||||
|I Restricted||||||||||
||2,026,343,750|47.49%|0|0|1,013,371,875|401,725|1,013,773,600|3,040,117,350|47.32%|
|shares||||||||||
|1. Shares held||||||||||
|by the|0|0.00%|0|0|0|0|0|0|0.00%|
|government||||||||||
|2. Shares held||||||||||
|by state-owned|0|0.00%|0|0|0|0|0|0|0.00%|
|corporations||||||||||
|3. Shares held||||||||||
|by other||||||||||
||2,026,343,750|47.49%|0|0|1,013,371,875|401,725|1,013,773,600|3,040,117,350|47.32%|
|domestic||||||||||
|investors||||||||||
|Among which:||||||||||
|Shares held by||||||||||
||1,626,250,000|38.11%|0|0|813,125,000|0|813,125,000|2,439,375,000|37.97%|
|domestic||||||||||
|corporations||||||||||
|Shares||||||||||
|held by||||||||||
||400,093,750|9.38%|0|0|200,246,875|401,725|200,648,600|600,742,350|9.35%|
|domestic||||||||||
|individuals||||||||||
|4. Shares held||||||||||
|by foreign|0|0.00%|0|0|0|0|0|0|0.00%|
|investors||||||||||
|Among which:||||||||||
|Shares held by||||||||||
||0|0.00%|0|0|0|0|0|0|0.00%|
|foreign||||||||||
|corporations||||||||||
|Shares|0|0.00%|0|0|0|0|0|0|0.00%|

2016 Semi-Annual Report of Midea Group Co., Ltd.
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|held by foreign||||||||||
|individuals||||||||||
|II||||||||||
|Non-restricted|2,240,495,699|52.51%|24,399,196|0|1,120,323,739|-401,725|1,144,321,210|3,384,816,909|52.68%|
|shares||||||||||
|1. RMB||||||||||
||2,240,495,699|52.51%|24,399,196|0|1,120,323,739|-401,725|1,144,321,210|3,384,816,909|52.68%|
|ordinary shares||||||||||
|2. Domestically||||||||||
|listed foreign|0|0.00%|0|0|0|0|0|0|0.00%|
|shares||||||||||
|3. Overseas||||||||||
|listed foreign|0|0.00%|0|0|0|0|0|0|0.00%|
|shares||||||||||
|4. Other|0|0.00%|0|0|0|0|0|0|0.00%|
|III Total shares|4,266,839,449|100.00%|24,399,196|0|2,133,695,614|0|2,158,094,810|6,424,934,259|100.00%|

 Reasons for the changes in the shares:
√ Applicable□ N/A
1. Supervisor Ms. Mai Yufen increased her shareholding by 2,300 shares on 17 May 2016.
2. As the 2015 Annual Plan for Profit Distribution& Converting Capital Reserves into Share Capital has been carried out, and stock option exercise is allowed for the First and Second Stock Option Incentive Plans, the total shares of the Company have increased from 4,266,839,449 to 6,424,934,259.
Approval of changes in the shares:
□ Applicable√ N/A
Transfer of share ownership:
□ Applicable√ N/A
Effects of the changes in shares on the basic earnings per share, diluted earnings per share, net assets per share attributable to the ordinary shareholders of the Company and other financial indexes for the last year and the last reporting period:
√ Applicable□ N/A
In the Reporting Period, the total shares of the Company increased from 4,266,839,449 to 6,424,934,259 as stock option exercise was allowed for the First and Second Stock Option Incentive
Plans and the 2015 Annual Plan for Profit Distribution& Converting Capital Reserves into Share Capital
2016 Semi-Annual Report of Midea Group Co., Ltd. was carried out. And the effects of these changes in the shares on the basic earnings per share, diluted earnings per share, net assets per share attributable to the ordinary shareholders of the Company and other financial indexes for the last year and the last reporting period are as follows:
Unit: RMB/share
|||||
|-|-|-|-|
||2015||First half of 2016|
|Index|Calculated on the previous|Calculated on the new total||
||||Calculated on the new total shares|
||total shares|shares||
|Basic earnings pershare||||
||2.99|1.98|1.48|
|Diluted earnings pershare||||
||2.99|1.98|1.48|
|Net assets per share||||
||11.53|7.66|8.61|

Other information that the Company considers necessary or is required by the securities regulatory authorities to disclose:
□ Applicable√ N/A
Changes in the total shares, the shareholder structure and the asset and liability structure:
√ Applicable□ N/A
The total shares of the Company were 4,266,839,449 at the beginning of the Reporting Period. Due to the profit distribution and conversion of capital reserves into share capital for 2015 as well as the 551,779 exercised incentive stock options before that, the total shares increased to 6,401,086,842. After that, another 23,847,417 incentive stock options were exercised before the end of the Reporting Period. As such, the total shares rose to 6,424,934,259 at the end of the Reporting Period.
II Total number of shareholders and their shareholdings
Unit: share
|||||
|-|-|-|-|
|Total number of ordinary||||
|||Total number of preference shareholders with resumed||
|shareholders at the end of the|91,660||0|
|||voting rights at the period-end (if any) (see note 8)||
|Reporting Period||||

2016 Semi-Annual Report of Midea Group Co., Ltd.
||||||||||
|-|-|-|-|-|-|-|-|-|
|Shareholdings of the ordinary shareholders with a stake of over 5% or the top 10 ordinary shareholders|||||||||
|||||Increas|||Pledged or frozen||
|||||e/decre|||shares||
|||Shareh||ase|Number of|Number of|||
||||Total ordinary||||||
|Name of|Nature of|olding||during|restricted|non-restricte|||
||||shares held at||||||
|shareholder|shareholder|percent||the|ordinary|d ordinary|Status of|Number of|
||||the period-end||||||
|||age (%)||Reporti|shares held|shares held|shares|shares|
|||||ng|||||
|||||Period|||||
|Midea Holding Co.,Ltd.|Domesticcorporation|34.93%|2,244,375,000||2,244,375,000||||
||||||||Pledged|854,955,000|
|China SecuritiesFinance CorporationLimited|Domesticcorporation|2.87%|184,076,580|||184,076,580|||
|Rongrui EquityInvestment (Zhuhai)Partnership (limitedpartnership)|Domesticcorporation|2.63%|168,900,000|||168,900,000|||
|Fang Hongbo|Domesticindividual|2.13%|136,990,492||135,000,000|1,990,492|||
|Tianjin CDH JiataiEquity InvestmentPartnership (limitedpartnership)|Domesticcorporation|1.82%|117,000,000|||117,000,000|||
|Huang Jian|Domesticindividual|1.75%|112,500,000||112,500,000||||
|Ningbo MaysunEquity InvestmentPartnership (limitedpartnership)|Domesticcorporation|1.75%|112,500,000||112,500,000||||
|Yuan Liqun|Domesticindividual|1.41%|90,750,000||90,000,000|750,000|||
|CDH M-Tech (HK)Co., Ltd.|Foreigncorporation|1.40%|90,000,000|||90,000,000|||
|CDH Spark (HK)Co., Ltd.|Foreigncorporation|1.34%|86,250,000|||86,250,000|||
|Strategic investors or ordinary|||||||||
|corporations becoming top-10|||||||||
|||N/A|||||||
|ordinary shareholders due to|||||||||
|placing of new shares (if any) (see|||||||||

2016 Semi-Annual Report of Midea Group Co., Ltd.
||||||
|-|-|-|-|-|
|note 3)|||||
|Related-parties or|||||
||CDH Jiatai, CDH M-Tech and CDH Spark, which hold a total of 4.56% shares in Midea||||
|acting-in-concert parties among|||||
||Group, are related parties.||||
|the shareholders above|||||
|Shareholdings of the top 10 non-restricted ordinary shareholders|||||
|||Number of non-restricted|Type of shares||
|Name of shareholder||ordinary shares held at the|||
||||Type|Number|
|||period-end|||
|China Securities Finance Corporation Limited||184,076,580|RMB ordinary share|184,076,580|
|Rongrui Equity Investment (Zhuhai) Partnership(limited partnership)||168,900,000|||
||||Ditto|168,900,000|
|Tianjin CDH Jiatai Equity Investment Partnership(limited partnership)||117,000,000|||
||||Ditto|117,000,000|
|CDH M-Tech (HK) Co., Ltd.||90,000,000|Ditto|90,000,000|
|CDH Spark (HK) Co., Ltd.||86,250,000|Ditto|86,250,000|
|Central Huijin Asset Management Co., Ltd.||78,474,900|Ditto|78,474,900|
|He Xiangjian||77,334,548|Ditto|77,334,548|
|Hillhouse Capital Management Limited||69,891,138|Ditto|69,891,138|
|Merrill Lynch International||58,604,495|Ditto|58,604,495|
|UBS AG||52,663,841|Ditto|52,663,841|
|||CDH Jiatai, CDH M-Tech and CDH Spark are related parties. Meanwhile,|||
|||Mr. He Xiangjian and Midea Holding Co., Ltd. are acting-in-concert parties|||
|Related-parties or acting-in-concert parties|||||
|||as Mr. He is the controlling shareholder of the latter. Apart from that, the|||
|among the top ten non-restricted ordinary|||||
|||Company does not know whether there are other related parties among|||
|shareholders and between the top ten|||||
|||other shareholders of tradable shares and whether other shareholders of|||
|non-restricted ordinary shareholders and the top|||||
|||tradable shares belong to parties acting in concert as prescribed in the|||
|ten ordinary shareholders|||||
|||Administrative Measures for Information Disclosure for Shareholding|||
|||Alteration in a Listed Company.|||
|Explanation on the top 10 ordinary shareholders|||||
|participating in securities margin trading (if any)||N/A|||
|(see note 4)|||||

Whether any of the top 10 common shareholders or the top 10 non-restricted common shareholders of the Company conducted any promissory repo during the Reporting Period:
□ Yes√ No
No such cases in the Reporting Period.
2016 Semi-Annual Report of Midea Group Co., Ltd. III Change of the controlling shareholder and the actual controller
Change of the controlling shareholder in the Reporting Period
□ Applicable√ N/A
No such cases in the Reporting Period.
Change of the actual controller in the Reporting Period
□ Applicable√ N/A
No such cases in the Reporting Period.
IV Shareholding increase schemes proposed or implemented by the shareholders and their acting-in-concert parties during the Reporting Period
□ Applicable√ N/A
No such cases in the Reporting Period to the best knowledge of the Company.
2016 Semi-Annual Report of Midea Group Co., Ltd. Section VII Preference Shares
□ Applicable√ N/A
No preference shares in the Reporting Period.
2016 Semi-Annual Report of Midea Group Co., Ltd. Section VIII Information about Directors, Supervisors and Senior Management
I Changes in the shareholdings of the directors, supervisors and senior management√ Applicable□ N/A
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|||||||||Restricted||
||||Shares|Shares|Shares|||||
||||||||Restricted|shares||
||||held at|increased|decrease|Shares|||Restricted|
|||Incumb|||||shares held|granted in||
||||the|in the|d in the|held at the|||shares held at|
|Name|Office title|ent/|||||at the|the||
||||period-b|Reporting|Reporting|period-en|||the period-end|
|||Former|||||period-begin|Reporting||
||||eginning|Period|Period|d (share)|||(share)|
||||||||ning (share)|Period||
||||(share)|(share)|(share)|||||
|||||||||(share)||
|Jiang|Company|Incumb||||||||
||||125,000|0|31,250|140,625|0|0|0|
|Peng|Secretary|ent||||||||
|||Incumb||||||||
|Mai Yufen|D irector||0|2,300|0|2,300|0|0|0|
|||ent||||||||

Note: Company Secretary Mr. Jiang Peng held 125,000 shares in the Company at the beginning of the Reporting Period, which were later reduced by 31,250 shares on 3 May 2016. As the ex-dividend and ex-right date for the 2015 Annual Plan for Profit Distribution& Conversion of Capital Reserves into Share Capital was 6 May 2016, the shares that Mr. Jiang held at the end of the Reporting Period were 140,625.
II Changes in the directors, supervisors and senior management
√ Applicable□ N/A
||||||
|-|-|-|-|-|
|||Type of|||
|Name|Office title||Date|Reason|
|||change|||
|Xu Hai|Director|Left|2016-04-26|Personal reason|
||Director, Vice Presidentand CFO||||
|Yuan Liqun||Left|2016-07-15|Personal reason|
|Xiao|||||
||CFO|Elected|2016-07-15|Hired as a senior executive|
|Mingguang|||||

2016 Semi-Annual Report of Midea Group Co., Ltd. Section IX Financial Report
I Audit report
Has the semi-annual report 2016 been audited by a CPAs firm?
□ Yes√ No
The 2016 Semi-annual Financial Report of the Company has not been audited by a CPAs firm. II Financial Report
2016 Semi-Annual Report of Midea Group Co., Ltd. MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY BALANCE SHEETS
AS AT 30 JUNE 2016
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for referenceonly]
|||||||
|-|-|-|-|-|-|
|ASSETS|Note|30 June 2016|31 December 2015|30 June 2016|31 December 2015|
|||Consolidated|Consolidated|Company|Company|
|Current assets:||||||
|Cash at bank and on hand|4(1)|15,053,792|11,861,977|28,646,017|14,213,747|
|Deposits with central bank|4(2)|1,645,422|1,048,045|-|-|
|Deposits with banks and otherfinancial institutions|4(3)|10,088,472|4,062,807|-|-|
|Derivative financial assets||7,366|158,822|-|-|
|Notes receivable|4(4)|14,987,218|12,889,151|1,952,867|727,218|
|Accounts receivable|4(5)|13,293,123|10,371,718|-|-|
|Advances to suppliers|4(6)|1,610,332|988,625|14,670|8,915|
|Loans and advances|4(7)|11,106,777|6,608,705|-|-|
|Dividends receivable||4,993|-|1,469,769|290,245|
|Other receivables|4(5), 18(1)|971,743|1,101,339|12,168,410|7,461,039|
|Inventories|4(8)|9,559,232|10,448,937|-|-|
|Other current assets|4(9)|38,505,777|33,827,580|22,440,285|21,059,789|
|Total current assets||116,834,247|93,367,706|66,692,018|43,760,953|
|Non-current assets：||||||
|Available-for-sale financialassets|4(10)|5,761,718|3,289,954|18,118|9,000|
|Long-term receivables||38,307|-|-|-|
|Long-term equity investments|4(11), 18(2)|3,108,646|2,888,274|23,188,174|23,126,546|
|Investment properties||146,657|150,803|278,603|286,272|
|Fixed assets|4(12)|21,000,004|18,729,881|1,069,814|1,107,082|
|Construction in progress|4(13)|1,041,482|954,761|741,595|543,588|
|Intangible assets|4(14)|6,071,589|3,392,402|243,590|248,482|
|Goodwill|4(15)|4,862,150|2,393,066|-|-|
|Long-term prepaid expenses||673,381|781,359|49,030|57,393|
|Deferred income tax assets|4(16)|2,723,079|2,223,999|74|7,961|
|Other non-current assets|4(9)|5,241,487|669,730|4,382,900|-|
|Total non-current assets||50,668,500|35,474,229|29,971,898|25,386,324|
|TOTAL ASSETS||167,502,747|128,841,935|96,663,916|69,147,277|

 Legal representative: Principal in charge of accounting function: Head of accounting department: Fang Hongbo Xiao Mingguang Chen Lihong
2016 Semi-Annual Report of Midea Group Co., Ltd. MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY BALANCE SHEETS(CONT’D)
AS AT 30 JUNE 2016
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for referenceonly]
|||||||
|-|-|-|-|-|-|
|LIABILITIES AND SHAREHOLDERS'EQUITY|Note|30 June 2016|31 December 2015|30 June 2016|31 December 2015|
|||Consolidated|Consolidated|Company|Company|
|Current liabilities:||||||
|Short-term borrowings|4(19)|14,445,419|3,920,933|1,800,000|1,290,000|
|Borrowings from central bank||45,740|-|-|-|
|Customer deposits and deposits frombanks and other financial institutions||72,521|52,000|-|-|
|Derivative financial liabilities||463,180|33,377|-|22,671|
|Financial assets sold under repurchaseagreements||662,915|651,784|-|-|
|Notes payable|4(20)|19,451,346|17,078,520|-|-|
|Accounts payable|4(21)|21,679,892|17,448,684|9,163|9,403|
|Advances from customers|4(22)|4,089,800|5,616,361|-|-|
|Employee benefits payable|4(23)|1,903,728|2,229,332|1,924|13,411|
|Taxes payable|4(24)|2,710,469|1,607,181|39,758|52,656|
|Interest payable||54,969|9,343|168,706|200,090|
|Dividends payable||316,140|118,851|-|-|
|Other payables|4(25)|1,638,785|1,139,306|67,414,909|45,166,453|
|Current portion of non-current liabilities||103,594|-|-|-|
|Other non-current liabilities|4(26)|25,328,073|22,098,177|2,128,726|5,106|
|Total current liabilities||92,966,571|72,003,849|71,563,186|46,759,790|
|Non-current liabilities:||||||
|Long-term borrowings|4(27)|2,084,043|90,061|-|-|
|Debentures payable|4(28)|4,599,303|-|-|-|
|Long-term payables||531,882|-|-|-|
|Payables for specific projects||500|500|-|-|
|Provisions||219,222|38,893|-|3,800|
|Deferred revenue||440,253|479,352|-|-|
|Long-term employee benefits payable|4(29)|1,491,094|-|-|-|
|Deferred income tax liabilities|4(16)|1,687,545|40,464|-|-|
|Other non-current liabilities||823,206|157,194|-|-|
|Total non-current liabilities||11,877,048|806,464|-|3,800|
|Total liabilities||104,843,619|72,810,313|71,563,186|46,763,590|
|Shareholders' equity:||||||
|Share capital|4(30)|6,424,934|4,266,839|6,424,934|4,266,839|
|Capital surplus|4(31)|12,832,003|14,511,190|4,685,903|6,370,934|
|Other comprehensive income|4(32)|205,563|(1,071,151)|10,429|21,006|
|General reserve||118,624|118,624|-|-|
|Surplus reserve|4(33)|1,846,523|1,846,523|1,846,523|1,846,523|
|Undistributed profits|4(34)|33,905,451|29,529,827|12,132,941|9,878,385|
|Total equity attributable to shareholdersof the parent company||55,333,098|49,201,852|25,100,730|22,383,687|
|Minority interests||7,326,030|6,829,770|-|-|
|Total shareholders' equity||62,659,128|56,031,622|25,100,730|22,383,687|
|TOTAL LIABILITIES ANDSHAREHOLDERS' EQUITY||167,502,747|128,841,935|96,663,916|69,147,277|

Legal representative: Principal in charge of accounting function: Head of accounting department:
Fang Hongbo Xiao Mingguang Chen Lihong
2016 Semi-Annual Report of Midea Group Co., Ltd. MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY INCOME STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2016
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for referenceonly]
|||||||
|-|-|-|-|-|-|
|Item|Note|For the six months ended 30 June||||
|||2016|2015|2016|2015|
|||Consolidated|Consolidated|Company|Company|
|1. Total revenue||78,007,516|82,875,070|588,251|469,983|
|Including: Operating revenue|4(35), 18(3)|77,522,287|82,509,144|588,251|469,983|
|Interest income|4(36)|479,576|363,832|-|-|
|Fee and commissionincome||5,653|2,094|-|-|
|2.Total cost of sales||(66,818,413)|(73,632,411)|(759,589)|(669,306)|
|Including: Cost of sales|4(35)|(54,866,160)|(59,878,906)|(13,648)|(14,341)|
|Interest expenses|4(36)|(261,318)|(317,071)|-|-|
|Fee and commissionexpenses||(1,387)|(888)|-|-|
|Taxes and surcharges|4(3 7)|(467,762)|(568,636)|(3,335)|(938)|
|Selling and distributionexpenses|4(38)|(8,185,178)|(8,986,099)|-|-|
|General and administrativeexpenses|4(39)|(3,690,059)|(3,604,757)|(338,538)|(265,620)|
|Financial expenses|4(40)|905,261|778|(404,035)|(388,213)|
|Asset impairment loss|4(41)|(251,810)|(276,832)|(33)|(194)|
|Add: (Losses)/gains on changes infair value|4(42)|(525,089)|(217,464)|22,673|6,626|
|Investment income|4(43), 18(4)|714,082|1,181,205|7,558,711|4,808,389|
|Including: Share of profit of associates andjoint ventures||200,742|43,127|131,111|6,062|
|3. Operating profit||11,378,096|10,206,400|7,410,046|4,615,692|
|Add: Non-operating income|4(44)|903,272|650,591|1,837|50,144|
|Including: Gains on disposal of non-current assets||3,548|38,173|-|18,814|
|Less: Non-operating expenses|4(45)|(103,799)|(100,416)|(1,557)|(4,459)|
|Including: Losses on disposal of non-current assets||(32,149)|(77,445)|(1,547)|(3,734)|
|4. Total profit||12,177,569|10,756,575|7,410,326|4,661,377|
|Less: Income tax expenses|4(46)|(1,946,671)|(1,808,007)|(34,901)|(117,035)|
|5. Net profit||10,230,898|8,948,568|7,375,425|4,544,342|
|Including: Net profit of the investee before the combinationdate||-|-|-|-|
|Attributable to shareholders of theparent company||9,496,493|8,324,123|7,375,425|4,544,342|
|Minority interests||734,405|624,445|-|-|
|6. Other comprehensive income net of tax||1,347,262|123,525|(10,577)|-|
|Attributable to shareholders of the parentcompany||1,276,714|214,758|(10,577)|-|
|(1) Other comprehensive income items which will not bereclassified subsequently to profit or loss||-|-|-|-|
|(2) Other comprehensive income items which will bereclassified subsequently to profit or loss||1,276,714|214,758|(10,577)|-|
|1) Share of the other comprehensive income of theinvestee accounted for using equity method which willbe reclassified subsequently to profit and loss||(65,706)|(5,421)|(10,577)|-|
|2) Changes in fair value of available-for-sale financialassets||1,082,507|10,918|-|-|
|3) Losses or profits arising from the reclassification ofheld-to-maturity investments into available-for-salefinancial assets||-|-|-|-|
|4) Effective portion of cash flow hedging gains or losses||145,603|360,415|-|-|
|5) Translation of foreign currency financial statements||114,310|(151,154)|-|-|
|Attributable to minority shareholders||70,548|(91,233)|-|-|
|7. Total comprehensive income||11,578,160|9,072,093|7,364,848|4,544,342|
|Attributable to shareholders of the parent company||10,773,207|8,538,881|7,364,848|4,544,342|
|Attributable to minority shareholders||804,953|533,212|-|-|
|8. Earnings per share:|||(Restated)|||
|(1) Basic earnings per share|4(47)|1.48|1.32|NA|NA|
|(2) Diluted earnings per share|4(47)|1.48|1.31|NA|NA|

Legal representative: Principal in charge of accounting function: Head of accounting department:
Fang Hongbo Xiao Mingguang Chen Lihong
2016 Semi-Annual Report of Midea Group Co., Ltd. MIDEA GROUP CO., LTD.
CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2016
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for referenceonly]
|||||||
|-|-|-|-|-|-|
|Item|Note|For the six months ended 30 June||||
|||2016|2015|2016|2015|
|||Consolidated|Consolidated|Company C|ompany|
|1. Cash flows from operating activities:||||||
|Cash received from sales of goods or rendering ofservices||67,859,148|60,039,035|-|-|
|Net increase in customer deposits and deposits frombanks and other financial institutions||-|-|-||
|Net increase in deposits with central bank anddeposits with banks and other financial institutions||20,521|13,707|-|-|
|Net increase in borrowings from central bank||45,740|-|-|-|
|Cash received from interest, fee and commission||493,143|365,927|-|-|
|Refund of taxes and surcharges||2,797,186|2,127,730|-|-|
|Cash received relating to other operating activities|4(48 )(a)|1,537,990|1,746,301|21,775,704|14,694,988|
|Sub-total of cash inflows||72,753,728|64,292,700|21,775,704|14,694,988|
|Cash paid for goods and services||(39,448,768)|(32,721,673)|-|-|
|Net decrease in customer deposits and deposits frombanks and other financial institutions||-|-|-|-|
|Net decrease in loans and advances||(4,588,457)|(2,923,618)|-|-|
|Net decrease in deposits with central bank anddeposits with banks and other financial institutions||(454,933)|(349,941)|-|-|
|Cash paid for interest, fee and commission||(262,705)|(317,960)|-|-|
|Cash paid to and on behalf of employees||(5,660,543)|(6,130,766)|(97,184)|(145,199)|
|Payments of taxes and surcharges||(4,743,106)|(5,135,146)|(42,490)|(12,465)|
|Cash paid relating to other operating activities|4(48 )(b)|(9,466,053)|(7,897,923)|(4,533,614)|(1,786,333)|
|Sub-total of cash outflows||(64,624,565)|(55,477,027)|(4,673,288)|(1,943,997)|
|Net cash flows from operating activities|4(48 )(c)|8,129,163|8,815,673|17,102,416|12,750,991|
|2. Cash flows from investing activities:||||||
|Cash received from disposal of investments||28,775,253|6,737|17,722,372|12,000|
|Cash received from returns on investments||824,805|1,042,100|6,531,603|4,004,819|
|Net cash received from disposal of fixed assets,intangible assets and other long-term assets||16,919|205,285|110|354|
|Net cash received from disposal of subsidiaries andother business units||272,899|-|-|-|
|Cash received relating to other investing activities||-|-|-|-|
|Sub-total of cash inflows||29,889,876|1,254,122|24,254,085|4,017,173|
|Cash paid to acquire fixed assets, intangible assetsand other long-term assets||(1,076,411)|(1,166,631)|(217,976)|(239,059)|
|Cash paid to acquire investments||(43,293,409)|(8,915,487)|(21,275,146)|(6,049,973)|
|Net cash paid to acquire subsidiaries and otherbusiness units||(1,856,787)|2,895|-|-|
|Cash paid relating to other investing activities||-|-|-|-|
|Sub-total of cash outflows||(46,226,607)|(10,079,223)|(21,493,122)|(6,289,032)|
|Net cash flows from investing activities||(16,336,731)|(8,825,101)|2,760,963|(2,271,859)|
|3. Cash flows from financing activities:||||||
|Cash received from capital contributions||45,552|1,493,431|29,742|1,479,971|
|Including: Cash received from capitalcontributions by minorityshareholders of subsidiaries||15,810|13,460|-|-|
|Cash received from borrowings||27,806,076|12,782,285|1,800,000|-|
|Cash received from issuance of short-term financingbonds||1,999,500|-|1,999,500|-|
|Cash received relating to other financing activities||-|-|-|-|
|Sub-total of cash inflows||29,851,128|14,275,716|3,829,242|1,479,971|
|Cash repayments of borrowings||(11,044,612)|(9,388,064)|(1,290,000)|(500,000)|
|Cash repayments of short-term financing bonds||-|-|-|-|
|Cash payments for interest expenses and distributionof dividends or profits||(5,560,069)|(4,614,944)|(5,782,143)|(4,965,193)|
|Including: Cash payments for dividends orprofits to minority shareholders ofsubsidiaries||(297,841)|(378,347)|-|-|
|Cash payments relating to other financing activities||-|-|-|-|
|Sub-total of cash outflows||(16,604,681)|(14,003,008)|(7,072,143)|(5,465,193)|
|Net cash flows from financing activities||13,246,447|272,708|(3,242,901)|(3,985,222)|
|4. Effect of foreign exchange rate changes on cashand cash equivalents||70,620|(28,373)|-|-|
|5. Net increase in cash and cash equivalents||5,109,499|234,907|16,620,478|6,493,910|
|Add: Cash and cash equivalents at beginning ofperiod||5,187,317|5,272,238|6,245,008|6,879,717|
|6. Cash and cash equivalents at end of period||10,296,816|5,507,145|22,865,486|13,373,627|

2016 Semi-Annual Report of Midea Group Co., Ltd. MIDEA GROUP CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2016
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for referenceonly]
||||||||||
|-|-|-|-|-|-|-|-|-|
|Item|Current figure||||||||
||Attributable to shareholders of the parent company||||||Minorityinterests|Totalshareholders'equity|
||Share capital|Capital surplus|Othercomprehensiveincome|Surplus reserve|General reserve|Undistributedprofits|||
|1. Balance at end of last year|4,266,839|14,511,190|(1,071,151)|1,846,523|118,624|29,529,827|6,829,770|56,031,622|
|Add: Changes in accounting policies|-|-|-|-|-|-|-|-|
|2. Balance at beginning of current year|4,266,839|14,511,190|(1,071,151)|1,846,523|118,624|29,529,827|6,829,770|56,031,622|
|3. Movements for current year|2,158,095|(1,679,187)|1,276,714|-|-|4,375,624|496,260|6,627,506|
|(1) Total comprehensive income|-|-|1,276,714|-|-|9,496,493|804,953|11,578,160|
|(2) Capital contribution and withdrawalby shareholders|24,399|455,587|-|-|-|-|238,620|718,606|
|1) Capital contribution by shareholders|24,399|330,897|-|-|-|-|15,810|371,106|
|2) Business combinations|-|-|-|-|-|-|192,263|192,263|
|3) Share-based payment included inshareholders' equity|-|124,690|-|-|-|-|30,547|155,237|
|4) Others|-|-|-|-|-|-|-|-|
|(3) Profit distribution|-|-|-|-|-|(5,120,869)|(548,703)|(5,669,572)|
|1) Appropriation to surplus reserve|-|-|-|-|-|-|-|-|
|2) Appropriation to general reserve|-|-|-|-|-|-|-|-|
|3) Profit distribution to shareholders|-|-|-|-|-|(5,120,869)|(548,703)|(5,669,572)|
|4) Others|-|-|-|-|-|-|-|-|
|(4) Transfer within shareholders' equity|2,133,696|(2,133,696)|-|-|-|-|-|-|
|1) Transfer from capital surplus to sharecapital|2,133,696|(2,133,696)|-|-|-|-|-|-|
|2) Transfer from surplus reserves topaid-in capital|-|-|-|-|-|-|-|-|
|3) Surplus reserves used to offsetaccumulated losses|-|-|-|-|-|-|-|-|
|4) Others|-|-|-|-|-|-|-|-|
|(5) Special reserve|-|-|-|-|-|-|-|-|
|1) Increase in current period|-|-|-|-|-|-|-|-|
|2) Usage in current period|-|-|-|-|-|-|-|-|
|(6) Others|-|(1,078)|-|-|-|-|1,390|312|
|4. Balance at end of current period|6,424,934|12,832,003|205,563|1,846,523|118,624|33,905,451|7,326,030|62,659,128|

 Legal representative: Principal in charge of accounting function: Head of accounting department:
Fang Hongbo Xiao Mingguang Chen Lihong
2016 Semi-Annual Report of Midea Group Co., Ltd. MIDEA GROUP CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2016
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for referenceonly]
||||||||||
|-|-|-|-|-|-|-|-|-|
|Item|Comparative figure||||||||
||Attributable to shareholders of the parent company||||||Minorityinterests|Totalshareholders'equity|
||Share capital|Capitalsurplus|Othercomprehensiveincome|Surplus reserve|General reserve|Undistributedprofits|||
|1. Balance at end of last year|4,215,808|13,024,883|(774,299)|1,189,791|-|21,814,316|6,260,955|45,731,454|
|Add: Changes in accounting policies|-|-|-|-|-|-|-|-|
|2. Balance at beginning of current year|4,215,808|13,024,883|(774,299)|1,189,791|-|21,814,316|6,260,955|45,731,454|
|3. Movements for current year|51,031|1,486,307|(296,852)|656,732|118,624|7,715,511|568,815|10,300,168|
|(1) Total comprehensive income|||(296,852)|-|-|12,706,725|745,319|13,155,192|
|(2) Capital contribution and withdrawal byshareholders|51,031|934,455|-|-|-|-|400,768|1,386,254|
|1) Capital contribution by shareholders|80,623|1,667,248|-|-|-|-|244,910|1,992,781|
|2) Business combinations|-|-|-|-|-|-|106,106|106,106|
|3) Share-based payment included inshareholders' equity|-|237,613|-|-|-|-|49,752|287,365|
|4) Others|(29,592)|(970,406)|-|-|-|-|-|(999,998)|
|(3) Profit distribution|-|-|-|656,732|118,624|(4,991,164)|(577,272)|(4,793,080)|
|1) Appropriation to surplus reserve|-|-|-|656,732|-|(656,732)|-|-|
|2) Appropriation to general reserve|-|-|-|-|118,624|(118,624)|-|-|
|3) Profit distribution to shareholders|-|-|-|-|-|(4,215,808)|(577,272)|(4,793,080)|
|4) Others|-|-|-|-|-|-|-|-|
|(4) Transfer within shareholders' equity|-|-|-|-|-|-|-|-|
|1) Transfer from capital surplus to sharecapital|-|-|-|-|-|-|-|-|
|2) Transfer from surplus reserves topaid-in capital|-|-|-|-|-|-|-|-|
|3) Surplus reserves used to offsetaccumulated losses|-|-|-|-|-|-|-|-|
|4) Others|-|-|-|-|-|-|-|-|
|(5) Special reserve|-|-|-|-|-|-|-|-|
|1) Increase in current period|-|-|-|-|-|-|-|-|
|2) Usage in current period|-|-|-|-|-|-|-|-|
|(6) Others|-|551,852|-|-|-|(50)|-|551,802|
|4. Balance at end of current period|4,266,839|14,511,190|(1,071,151)|1,846,523|118,624|29,529,827|6,829,770|56,031,622|

 Legal representative: Principal in charge of accounting function: Head of accounting department:
Fang Hongbo Xiao Mingguang Chen Lihong
2016 Semi-Annual Report of Midea Group Co., Ltd. MIDEA GROUP CO., LTD.
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2016
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for referenceonly]
|||||||||
|-|-|-|-|-|-|-|-|
|Item|Current figure|||||||
||Share capital|Capital surplus|Othercomprehensiveincome|Special reserve|Surplus reserve|Undistributed profits|Total shareholders'equity|
|1. Balance at end of last year|4,266,839|6,370,934|21,006|-|1,846,523|9,878,385|22,383,687|
|Add: Changes in accounting policies|-|-|-|-|-|-|-|
|2. Balance at beginning of current year|4,266,839|6,370,934|21,006|-|1,846,523|9,878,385|22,383,687|
|3. Movements for current year|2,158,095|(1,685,031)|(10,577)|-|-|2,254,556|2,717,043|
|(1) Total comprehensive income|-|-|(10,577)|-|-|7,375,425|7,364,848|
|(2) Capital contribution and withdrawal byshareholders|24,399|259,248|-|-|-|-|283,647|
|1) Capital contribution by shareholders|24,399|330,897|-|-|-|-|355,296|
|2) Capital contribution by holders of otherequity instruments|-|-|-|-|-|-|-|
|3) Share-based payment included inshareholders' equity|-|(71,649)|-|-|-|-|(71,649)|
|4) Others|-|-|-|-|-|-|-|
|(3) Profit distribution|-|-|-|-|-|(5,120,869)|(5,120,869)|
|1) Appropriation to surplus reserve|-|-|-|-|-|-|-|
|2) Profit distribution to shareholders|-|-|-|-|-|(5,120,869)|(5,120,869)|
|3) Others|-|-|-|-|-|-|-|
|(4) Transfer within shareholders' equity|2,133,696|(2,133,696)|-|-|-|-|-|
|1) Transfer from capital surplus to sharecapital|2,133,696|(2,133,696)|-|-|-|-|-|
|2) Transfer from surplus reserves topaid-in capital|-|-|-|-|-|-|-|
|3) Surplus reserves used to offsetaccumulated losses|-|-|-|-|-|-|-|
|4) Others|-|-|-|-|-|-|-|
|(5) Special reserve|-|-|-|-|-|-|-|
|1) Increase in current year|-|-|-|-|-|-|-|
|2) Utilisation in current year|-|-|-|-|-|-|-|
|(6) Others|-|189,417|-|-|-|-|189,417|
|4. Balance at end of current year|6,424,934|4,685,903|10,429|-|1,846,523|12,132,941|25,100,730|

 Legal representative: Principal in charge of accounting function: Head of accounting department:
Fang Hongbo Xiao Mingguang Chen Lihong
2016 Semi-Annual Report of Midea Group Co., Ltd. MIDEA GROUP CO., LTD.
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2016
(All amounts in RMB'000 Yuan unless otherwise stated)
[English translation for referenceonly]
|||||||||
|-|-|-|-|-|-|-|-|
|Item|Comparative figure|||||||
||Share capital|Capital surplus|Othercomprehensiveincome|Special reserve|Surplus reserve|Undistributed profits|Total shareholders'equity|
|1. Balance at end of last year|4,215,808|5,356,080|-|-|1,189,791|7,282,924|18,044,603|
|Add: Changes in accounting policies|-|-|-|-|-|-|-|
|2. Balance at beginning of current year|4,215,808|5,356,080|-|-|1,189,791|7,282,924|18,044,603|
|3. Movements for current year|51,031|1,014,854|21,006|-|656,732|2,595,461|4,339,084|
|(1) Total comprehensive income|-|-|21,006|-|-|6,567,314|6,588,320|
|(2) Capital contribution and withdrawal byshareholders|51,031|1,017,698|-|-|-|-|1,068,729|
|1) Capital contribution by shareholders|80,623|1,667,248|-|-|-|-|1,747,871|
|2) Capital contribution by holders of otherequity instruments|-|-|-|-|-|-|-|
|3) Share-based payment included inshareholders' equity|-|320,856|-|-|-|-|320,856|
|4) Others|(29,592)|(970,406)|-|-|-|-|(999,998)|
|(3) Profit distribution|-|-|-|-|656,732|(4,872,540)|(4,215,808)|
|1) Appropriation to surplus reserve|-|-|-|-|656,732|(656,732)|-|
|2) Profit distribution to shareholders|-|-|-|-|-|(4,215,808)|(4,215,808)|
|3) Others|-|-|-|-|-|-|-|
|(4) Transfer within shareholders' equity|-|-|-|-|-|-|-|
|1) Transfer from capital surplus to sharecapital|-|-|-|-|-|-|-|
|2) Transfer from surplus reserves topaid-in capital|-|-|-|-|-|-|-|
|3) Surplus reserves used to offsetaccumulated losses|-|-|-|-|-|-|-|
|4) Others|-|-|-|-|-|-|-|
|(5) Special reserve|-|-|-|-|-|-|-|
|1) Increase in current year|-|-|-|-|-|-|-|
|2) Utilisation in current year|-|-|-|-|-|-|-|
|(6) Others|-|(2,844)|-|-|-|900,687|897,843|
|4. Balance at end of current year|4,266,839|6,370,934|21,006|-|1,846,523|9,878,385|22,383,687|

 Legal representative: Principal in charge of accounting function: Head of accounting department:
Fang Hongbo Xiao Mingguang Chen Lihong
2016 Semi-Annual Report of Midea Group Co., Ltd. 1 General information
The operational activities of Midea Group Co. Ltd. (hereinafter referred to as "the Company") and its subsidiaries (collectively referred to as the “Group”) are principally engaged in the manufacturing and sale of household electrical appliances, motors and related components and rendering of logistics services. Other operations includes sale, wholesale and processing of raw materials of household electrical appliances and financial business, which includes customer deposits, interbank lending, consumption credit ,buyer’s credit and finance lease.
The Company was promoted and set up by the Council of Trade Unions of GD Midea Group Co. Ltd., and was registered in Market Safety Supervision Bureau of Shunde District, Foshanon 7 April 2000, with its headquarters located in Shunde District, Foshan. On 31 December 2011, the Company was transformed into a limited liability company. On 29 July 2013, the Company was approved to acquire additional interests in Guangdong Midea Electric Co., Ltd.(广东美的电器股份有限公司), a subsidiary listed on Shenzhen Stock Exchange. On 18 September 2013, theCompany’s shares became listed on Shenzhen Stock Exchange through share issuance and share exchange.
As at 30 June 2016, the Company's registered capital is RMB6,424,934,259 and the total number of shares in issue is 6,424,934,259, of which 3,040,117,350 shares are restricted tradable shares and 3,384,816,909 shares are unrestricted tradable shares.
The detailed information of major subsidiaries included in the consolidation scope in current year is set out in Note 5 and 6. Entities newly included in the consolidation scope in current year include Guangdong Midea Kucheng Electric Appliance Manufacturing Co., Ltd., Guangdong Midea Commercial Factoring Co., Ltd., Toshiba Lifestyle Products& Services Corporation(hereinafter referred to as "TLSC") (please refer to Note 5(1) and (2)(a) for details). The detailed information of subsidiaries no longer included in the consolidation scope in current year is set out in Note 5(2) (b). These financial statements were authorised for issue by theCompany’s Board of Directors on 29 August 2016.
2 Summary of significant accounting policies and accounting estimates
The Group determines specific accounting policies and accounting estimates based on the features of production and operation, mainly including the recognition method of provision for bad debts of accounts receivable (Note 2(10)), valuation method of inventory (Note 2(12)), depreciation of fixed assets and amortisation of intangible assets (Note 2(15) and (18)), and recognition time of revenue (Note 2(27)).
Critical judgements applied by the Group in determining significant accounting policies are set out in Note 2(32).
(1) Basis of preparation
The financial statements are prepared in accordance with the Accounting Standard for Business Enterprises - Basic Standard, and the specific accounting standards and other relevant regulations issued by the Ministry of Finance on 15 February 2006 and in subsequent periods (hereafter collectively referred to as “the Accounting Standards for Business Enterprises” or “CAS”). The financial statements have been prepared in accordance with the Accounting Standards for Business Enterprises No.32 - Interim financial standards issued by the Ministry of Finance, and should be read in conjunction with theGroup’s annual financial statements for the year ended 31 December 2015. The financial statements are prepared on a going concern basis.
(2) Statement of compliance with the Accounting Standards for Business Enterprises
The financial statements of the Company for the six months ended 30 June 2016 are in compliance with the Accounting Standards for Business Enterprises, and truly and completely present the Consolidated and the Company's financial position as at 30 June 2016 and their financial performance, cash flows and other information for the period then ended.
2016 Semi-Annual Report of Midea Group Co., Ltd. (3) Accounting period
TheCompany’s accounting year starts on 1 January and ends on 31 December.
(4) Recording currency
The recording currency of the Company is the Renminbi (“RMB”) and the financial statements are presented in RMB. The Company and its subsidiaries determine their recording currency based on the valuation and settlement currency of their main operating revenues and expenses. As the recording currency of some of the Company's subsidiaries is not RMB, the Company translates the foreign currency financial statements of such subsidiaries in the preparation of financial statements (Note 2(8) (b)).
(5) Business combinations
(a) Business combinations involving enterprises under common control
The consideration paid and net assets obtained by the absorbing party in a business combination are measured at the carrying amount. The difference between the carrying amount of the net assets obtained from the combination and the carrying amount of the consideration paid for the combination is treated as an adjustment to capital surplus (share premium). If the capital surplus (share premium) is not sufficient to absorb the difference, the remaining balance is adjusted against retained earnings. Costs directly attributable to the combination are included in profit or loss in the period in which they are incurred. Transaction costs associated with the issue of equity or debt securities for the business combination are included in the initially recognised amounts of the equity or debt securities. (b) Business combinations involving enterprises not under common control
The cost of combination and identifiable net assets obtained by the acquirer in a business combination are measured at fair value at the acquisition dates. Where the cost of the combination exceeds theacquirer’s interest in the fair value of theacquiree’s identifiable net assets, the difference is recognised as goodwill; where the cost of combination is lower than theacquirer’s interest in the fair value of theacquiree’s identifiable net assets, the difference is recognised in profit or loss for the current period. Costs directly attributable to the combination are included in profit or loss in the period in which they are incurred. Transaction costs associated with the issue of equity or debt securities for the business combination are included in the initially recognised amounts of the equity or debt securities. For business combinations achieved by stages involving enterprises not under common control, previously-held equity in the acquiree is remeasured at its fair value at the acquisition dates, and the difference between its fair value and carrying amount is included in investment income for the current period in consolidated financial statements. Where the previously-held equity in the acquiree involves other comprehensive income under equity method andshareholders’ equity changes other than those arising from the net profit or loss, other comprehensive income and profit distribution, the related other comprehensive income and other shareholders' equity changes are transferred into income for the current period to which the acquisition dates belongs, excluding those arising from changes in the investee's remeasurement of net liability or net asset related to the defined benefit plan. The excess of the sum of fair value of the previously-held equity and fair value of the consideration paid at the acquisition dates over share of fair value of identifiable net assets acquired from the subsidiary is recognised as goodwill.
(6) Preparation of consolidated financial statements
The consolidated financial statements comprise the financial statements of the Company and all of its subsidiaries.
Subsidiaries are consolidated from the date on which the Group obtains control and are de-consolidated from the date that such control ceases. For a subsidiary that is acquired in a business combination involving enterprises under common control, it is included in the consolidated financial statements from the date when it, together with the Company, comes under common control of the ultimate controlling party. The portion of the net profits realised before the combination date is
presented separately in the consolidated income statement.
2016 Semi-Annual Report of Midea Group Co., Ltd. In preparing the consolidated financial statements, where the accounting policies and the accounting periods of the Company and subsidiaries are inconsistent, the financial statements of the subsidiaries are adjusted in accordance with the accounting policies and the accounting period of the Company. For subsidiaries acquired from business combinations involving enterprises not under common control, the individual financial statements of the subsidiaries are adjusted based on the fair value of the identifiable net assets at the acquisition dates.
All significant intra-group balances, transactions and unrealised profits are eliminated in the consolidated financial statements. The portion ofsubsidiaries’ equity and the portion of asubsidiaries’ net profits and losses and comprehensive incomes for the period not attributable to Company are recognised as minority interests and presented separately in the consolidated financial statements under equity, net profits and total comprehensive income respectively. Unrealised profits and losses resulting from the sale of assets by the Company to its subsidiaries are fully eliminated against net profit attributable to shareholders of the parent company. Unrealised profits and losses resulting from the sale of assets by a subsidiary to the Company are eliminated and allocated between net profit attributable to shareholders of the parent and minority interests in accordance with the allocation proportion of the parent in the subsidiary. Unrealised profits and losses resulting from the sale of assets by one subsidiary to another are eliminated and allocated between net profit attributable to shareholders of the parent and minority interests in accordance with the allocation proportion of the parent in the subsidiary. If the accounting treatment of a transaction which considers the Group as an accounting entity is different from that considers the Company or its subsidiaries as an accounting entity, it is adjusted from the perspective of the Group.
(7) Recognition criteria of cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits that can be readily drawn on demand, and short-term and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
(8) Foreign currency translation
(a) Foreign currency transaction
Foreign currency transactions are translated into RMB using the exchange rates prevailing at the dates of the transactions.
At the balance sheet date, monetary items denominated in foreign currencies are translated into RMB using the spot exchange rates on the balance sheet date. Exchange differences arising from these translations are recognised in profit or loss for the current period, except for those attributable to foreign currency borrowings that have been taken out specifically for the acquisition or construction of qualifying assets, which are capitalised as part of the cost of those assets. Non-monetary items denominated in foreign currencies that are measured at historical costs are translated at the balance sheet date using the spot exchange rates at the date of the transactions. The effect of exchange rate changes on cash is presented separately in the cash flow statement.
(b) Translation of foreign currency financial statements
The asset and liability items in the balance sheets for overseas operations are translated at the spot exchange rates on the balance sheet date. Among theshareholders’ equity items, the items other than “undistributed profits” are translated at the spot exchange rates of the transaction dates. The income and expense items in the income statements of overseas operations are translated at the spot exchange rates of the transaction dates. The differences arising from the above translation are presented in other comprehensive income. The cash flows of overseas operations are translated at the spot exchange rates on the dates of the cash flows. The effect of exchange rate changes on cash is presented separately in the cash flow statement.
(9) Financial instrument
(a) Financial assets
2016 Semi-Annual Report of Midea Group Co., Ltd. (i) Classification of financial assets
Financial assets are classified into the following categories at initial recognition: financial assets at fair value through profit or loss, loans and receivables and available-for-sale financial assets. The classification of financial assets depends on theGroup’s intention and ability to hold the financial assets.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for the purpose of selling in the short term.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, including cash at bank and on hand, deposits with central bank, deposits with banks and other financial institutions, loans and advances, interest receivable, dividends receivable, accounts receivable and structural deposits with banks
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are either designated in this category or not classified in any of the other categories at initial recognition. Available-for-sale financial assets are included in other current assets on the balance sheet if management intends to dispose of them within 12 months after the balance sheet date.
(ii) Derivative financial instruments
The derivative financial instruments held or issued by the Group are mainly used in controlling risk exposures. Derivative financial instruments are initially recognised at fair value on the day when derivatives transaction contract was signed, and subsequently measured at fair value. The derivative financial instruments are recorded as assets when they have a positive fair value and as liabilities when they have a negative fair value.
The recognition of changes in fair value of derivative financial instruments depends on whether such derivative financial instruments are designated as hedging instruments and meet requirements for hedging instruments, and depends on the nature of hedged items in this case. For derivative financial instruments that are not designated as hedging instruments and fail to meet requirements on hedging instruments, including those held for the purpose of providing hedging against specific risks in interest rate and foreign exchange but not conforming with requirements of hedge accounting, the changes in fair value are recorded in gains or losses arising from changes in fair value in the consolidated income statement.
At the inception of the transaction, the Group officially designates the hedging relations between hedging instruments and hedged items and documents the hedging relations, risk management objectives and hedging strategies. The Group also makes written assessment of the effectiveness of hedging instruments in offsetting changes in the fair value or cash flow of hedged items. These criteria should be met before hedging accounting is determined as applicable to such hedges.
Cash flow hedge
Cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability (such as all or some future interest payments on variable rate debt) or a highly probable forecast transaction that could ultimately affect the profit or loss.
The effective portion of changes in the fair value of hedging instruments that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated in equity in the “capital reserve”. The ineffective portion is recognised immediately in the profit or loss.
2016 Semi-Annual Report of Midea Group Co., Ltd. Amounts accumulated in equity are reclassified to the profit or loss in the same periods when the hedged item affects the profit or loss.
When a hedging instrument expires or is sold, or the hedge designation is revoked or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss on the hedging instrument existing in equity at that time remains in equity and is reclassified to the profit or loss when the forecast transaction ultimately occurs. When a forecast transaction is no longer expected to occur, the cumulative gain or loss existing in equity is immediately transferred to the profit or loss. (iii) Recognition and measurement
Financial assets are recognised at fair value on the balance sheet when the Group becomes a party to the contractual provisions of the financial instrument. In the case of financial assets at fair value through profit or loss, the related transaction costs incurred at the time of acquisition are recognised in profit or loss for the current period. For other financial assets, transaction costs that are attributable to the acquisition of the financial assets are included in their initially recognised amounts.
Financial assets at fair value through profit or loss and available-for-sale financial assets are subsequently measured at fair value. Investments in equity instruments are measured at cost when they do not have a quoted market price in an active market and whose fair value cannot be reliably measured. Receivables and held-to-maturity investments are measured at amortised cost using the effective interest method.
Gains or losses arising from change in the fair value of financial assets at fair value through profit or loss are recognised in profit or loss. Interests and cash dividends received during the period in which such financial assets are held, as well as the gains or losses arising from disposal of these assets are recognised in profit or loss for the current period.
Gains or losses arising from change in fair value of available-for-sale financial assets are recognised directly in equity, except for impairment losses and foreign exchange gains and losses arising from translation of monetary financial assets. When such financial assets are derecognised, the cumulative gains or losses previously recognised directly into equity are recycled into profit or loss for the current period. Interests on available-for-sale investments in debt instruments calculated using the effective interest method during the period in which such investments are held and cash dividends declared by the investee on available-for-sale investments in equity instruments are recognised as investment income, which is recognised in profit or loss for the period.
(iv) Impairment of financial assets
The Group assesses the carrying amounts of financial assets other than those at fair value through profit or loss at each balance sheet date. If there is objective evidence that a financial asset is impaired, an impairment loss is provided for...
Objective evidence indicating impairment of financial assets refers to the matter that actually occurs after the initial recognition of financial assets, it will affect estimated future cash flows of financial assets, and its impact can be reliably measured.
Objective evidence indicating impairment of available-for-sale investments in equity instruments includes a significant or prolonged decline in the fair value of an investment in an equity instrument. The Group reviews available-for-sale investments in equity instruments on an individual basis at the balance sheet date. If the fair value of an equity instrument investment at the balance sheet date is lower than50% (inclusive) of its initial cost for more than 12 months (inclusive), it indicates that the impairment has occurred. If the fair value at the balance sheet date is lower than20% (inclusive) but no more than50%, the Group considers other relevant factors, such as price fluctuation rate, to determine whether an impairment of equity instrument investment occurs. The Group calculates the initial investment cost of available-for-sale equity instruments by using weighted average method. When an impairment loss on a financial asset carried at amortised cost has occurred, the amount of loss is provided for at the difference between theasset’s carrying amount and the present value of its estimated future cash flows (excluding future credit losses that have not been incurred). If there is
objective evidence that the value of the financial asset recovered and the recovery is related
2016 Semi-Annual Report of Midea Group Co., Ltd. objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed and the amount of reversal is recognised in profit or loss.
If an impairment loss on available-for-sale financial assets measured at fair value incurs, the cumulative losses arising from the decline in fair value that had been recognised directly in shareholders' equity are transferred out from equity and into impairment loss. For an investment in debt instrument classified as available-for-sale on which impairment losses have been recognised, if, in a subsequent period, its fair value increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the previously recognised impairment loss is reversed into profit or loss for the current period. For an investment in an equity instrument classified as available-for-sale on which impairment losses have been recognised, the increase in its fair value in a subsequent period is recognised directly in equity.
If an impairment loss on an available-for-sale financial asset measured at cost incurs, the amount of loss is measured at the difference between theasset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. The previously recognised impairment loss will not be reversed in subsequent periods. The previously recognised impairment loss will not be reversed in subsequent periods.
Please refer to Note 2(10) for accounting policies related to impairment of receivables.
(v) Derecognition of financial assets
A financial asset is derecognised when any of the below criteria is met: (1) the contractual rights to receive the cash flows from the financial asset expire; (2) the financial asset has been transferred and the Group transfers substantially all the risks and rewards of ownership of the financial asset to the transferee; or (3) the financial asset has been transferred and the Group has not retained control of the financial asset, although the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset.
On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received and the cumulative changes in fair value that had been recognised directly in equity, is recognised in profit or loss.
(b) Financial liabilities
Financial liabilities are classified into two categories at initial recognition: financial liabilities at fair value through profit or loss and other financial liabilities. The Group's financial liabilities include derivative financial liabilities, accounts payable, notes payable, borrowings, customer deposits and deposits from banks and other financial institutions, financial assets sold under repurchase agreements and interest payable.
Payables comprise accounts payable, other payables and other current liabilities, and are recognised at fair value at initial recognition. Payables are subsequently measured at amortised cost using the effective interest method.
Borrowings and debentures payable are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Other financial liabilities with maturities no more than one year (inclusive) are classified as current liabilities. Other financial liabilities with maturities over one year but are due within one year (inclusive) since the balance sheet date are classified as the current portion of non-current liabilities. Others are classified as non-current liabilities.
A financial liability (or a part of a financial liability) is derecognised when all or part of the obligation is extinguished. The difference between the carrying amount of the financial liability or the derecognised part of the financial liability and the consideration paid is recognised in profit or loss.
(c) Determination of fair value of financial instruments
2016 Semi-Annual Report of Midea Group Co., Ltd. The fair value of a financial instrument that is traded in an active market is determined at the quoted price in the active market. The fair value of a financial instrument that is not traded in an active market is determined by using a valuation technique. In valuation, the Group uses a valuation technique that is applicable in the current situation and supported by adequate available data and other information, selects inputs with the same characteristics as those of assets or liabilities considered in relevant trade of assets or liabilities by market participants, and maximises the use of relevant observable inputs. The Group uses unobservable inputs when relevant observable inputs are not available or feasible.
(10) Provision for bad debts of receivables
Receivables comprise accounts receivable and other receivables. Accounts receivable arising from sales of goods or rendering of services are initially recognised at fair value of the contractual payments from the buyers or service recipients.
(a) Receivables with amounts that are individually significant and subject to separate assessment for provision for bad debts
Receivables with amounts that are individually significant are subject to separate assessment for impairment. If there exists objective evidence that the Group will not be able to collect the amount under the original terms, a provision for impairment of that receivable is made.
The judgement standard for individually significant amount is an individual amount exceeding RMB5,000,000 for accounts receivable and RMB500,000 for other receivables.
The Group makes provision for bad debts for those individually significant amounts based on the amount by which the present value of the future cash flows expected to be derived from the receivable is below its carrying amount
(b) Accounts receivable and other receivables that are subject to provision for bad debts on the grouping basis
Receivables with amounts that are not individually significant and those receivables that have been individually assessed for impairment and have not been found impaired are classified into certain groupings based on their credit risk characteristics. The provision for bad debts is determined based on the historical loss experience for the groupings of receivables with similar credit risk characteristics, taking into consideration of the current circumstances.
The Group assesses the recovery risk of receivables based on the characteristics of different regions. The Company's subsidiaries in Mainland China classify the credit risk groupings by taking the ageing of receivables as the risk characteristics and determine different provision ratios based on business features.
Within 6 6 months to
months 1 year 1 to 2 years 2 to 3 years 3 to 5 years Over 5 years Air-conditioner motors
and related components 5% 5% 10% 30% 50% 100% Refrigerator motors and
related components 5% 5% 10% 30% 50% 100% Washing machine motors
and related components 5% 5% 10% 30% 50% 100% Small household
appliances 5% 5% 10% 30% 50% 100% Logistics and transport 0% 5% 10% 30% 50% 100% Motor 0% 5% 10% 30% 50% 100% Others 5% 5% 10% 30% 50% 100% The Company's subsidiaries in Hong Kong, Macau, Singapore and Japan make bad debts provision for receivables on an individual basis.
The Company's subsidiaries in Brazil make no bad debts provision for receivables with the ageing within 1 year and adopt100% provision ratio for those with the ageing over 1 year.
2016 Semi-Annual Report of Midea Group Co., Ltd. (c) Accounts receivable and other receivables with amounts that are not individually significant but subject to separate assessment for provision for bad debts
The reason for making separate assessment for provision for bad debts is that there exists objective evidence that the Group will not be able to collect the amount under the original terms of the receivable.
The provision for bad debts is determined based on the amount by which the present value of the future cash flows expected to be derived from the receivable is below its carrying amount. (d) When the Group transfers the accounts receivable to the financial institutions without recourse, the difference between the proceeds received from the transaction and their carrying amounts and the related taxes is recognised in profit or loss for the current period.
(11) Provision for bad debts of loans and advances
The provision for bad debts of loans and advances is provided by five classes of ending balances of loans and advances
(12) Inventories
(a) Classification of inventories
Inventories, including raw materials, consigned processing materials, low value consumables, work in progress, finished goods, etc., are measured at the lower of cost and net realisable value. (b) Costing of inventories
Cost is determined using the first-in first-out method when issued. The cost of finished goods and work in progress comprises raw materials, direct labour and systematically allocated production overhead based on the normal production capacity.
(c) Basis for determining net realisable values of inventories and method for making provision for decline in the value of inventories
Inventories are initially measured at cost. The cost of inventories comprises purchase cost, processing cost and other expenditures to bring the inventories to current site and condition.
On the balance sheet date, inventories are measured at the lower of cost and net realisable value. Net realisable value is determined based on the estimated selling price in the ordinary course of business, less the estimated costs to completion and estimated costs necessary to make the sale and related taxes.
Provision for decline in the value of inventories is determined at the excess amount of the cost as calculated based on the classification of inventories over their net realisable value, and are recognised in profit or loss for the current period.
(d) Inventory system
The Group adopts the perpetual inventory system.
(e) Amortisation methods of low value consumables and packaging materials
Low value consumables are expensed in full when issued and recognised in cost of related assets or in profit or loss for the current period.
(13) Long-term equity investments
Long-term equity investments comprise theCompany’s long-term equity investments in its
subsidiaries, and theGroup’s long-term equity investments in its associates and joint venture.
2016 Semi-Annual Report of Midea Group Co., Ltd. Subsidiaries are the investees over which the Company is able to exercise control. A joint venture is a joint arrangement which is structured through a separate vehicle over which the Group has joint control together with other parties and only has rights to the net assets of the arrangement based on legal forms, contractual terms and other facts and circumstances. Associates are the investees that the Group has significant influence on their financial and operating policies.
Investments in subsidiaries are presented in theCompany’s financial statements using the cost method, and are adjusted to the equity method when preparing the consolidated financial statements. Investments in a joint venture and associates are accounted for using the equity method.
(a) Determination of investment cost
For long-term equity investments acquired through a business combination: for long-term equity investments acquired through a business combination involving enterprises under common control, the investment cost shall be the absorbingparty’s share of the carrying amount ofshareholders’ equity of the party being absorbed at the combination date; for long-term equity investment acquired through a business combination involving enterprises not under common control, the investment cost shall be the combination cost. For business combinations achieved by stages involving enterprises not under common control, the initial investment cost accounted for using the cost method is the sum of carrying amount of previously-held equity investment and additional investment cost. Including:
For previously-held equity accounted for using the equity method, the accounting treatment of related other comprehensive income from disposal of the equity is carried out on a same basis with the investee's direct disposal of related assets or liabilities. Shareholders' equity, which is recognised due to changes ininvestee’sshareholders’ equity other than those arising from the net profit or loss, other comprehensive income and profit distribution, is accordingly transferred into profit or loss in the period in which the investment is disposed.
For investment in previously-held equity accounted for using the recognition and measurement standards of financial instruments, the initial investment cost accounted for using the cost method is the sum of carrying amount of previously-held equity investment and additional investment cost. The difference between the fair value and carrying amount of investment in previously-held equity and accumulated fair value changes previously recognised into other comprehensive income are all transferred into current investment income when accounted for using the cost method.
For long-term equity investments acquired not through a business combination: for long-term equity investment acquired by payment in cash, the initial investment cost shall be the purchase price actually paid; for long-term equity investments acquired by issuing equity securities, the initial investment cost shall be the fair value of the equity securities issued.
(b) Subsequent measurement and recognition of related profit and loss
For long-term equity investments accounted for using the cost method, they are measured at the initial investment costs, and cash dividends or profit distribution declared by the investees are recognised as investment income in profit or loss.
For long-term equity investments accounted for using the equity method, where the initial investment cost of a long-term equity investment exceeds theGroup’s share of the fair value of theinvestee’s identifiable net assets at the acquisition date, the long-term equity investment is measured at the initial investment cost; where the initial investment cost is less than theGroup’s share of the fair value of theinvestee’s identifiable net assets at the acquisition date, the difference is included in profit or loss and the cost of the long-term equity investment is adjusted upwards accordingly.
For long-term equity investments accounted for using the equity method, the Group recognises the investment income according to its share of net profit or loss of the investee. The Group discontinues recognising its share of net losses of an investee after the carrying amount of the long-term equity investment together with any long-term interests that, in substance, form part of theinvestor’s net investment in the investee are reduced to zero. However, if the Group has obligations for additional losses and the criteria with respect to recognition of provisions under the accounting standards on contingencies are satisfied, the Group continues recognising the investment losses and the provisions.
The changes in theshareholders’ equity of the investee other than those arising from the net profit or
2016 Semi-Annual Report of Midea Group Co., Ltd. loss, other comprehensive income and profit distribution, are recognised in theGroup’s equity and the carrying amounts of the long-term equity investment are adjusted accordingly. The carrying amount of the investment is reduced by theGroup’s share of the profit distribution or cash dividends declared by an investee. The unrealised profits or losses arising from the intra-group transactions amongst the Group and its investees are eliminated in proportion to theGroup’s equity interest in the investees, and then based on which the investment gains or losses are recognised. For the loss on the intra-group transaction amongst the Group and its investees attributable to asset impairment, any unrealised loss is not eliminated.
(c) Basis for determining existence of control, jointly control or significant influence over investees Control is the power to govern an investee and obtain variable returns from participating the investee's activities, and the ability to utilise the power of an investee to affect its returns.
Joint control is the contractually agreed sharing of control over an arrangement, and relevant economic activity can be arranged upon the unanimous approval of the Group and other participants sharing of control rights.
Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.
(d) Impairment of long-term equity investments
The carrying amounts of long-term equity investments in subsidiaries, joint venture and associates are reduced to the recoverable amounts when the recoverable amounts are below their carrying amounts (Note 2(20)).
(14) Investment properties
Investment properties, including land use rights that have already been leased out, buildings that are held for the purpose of leasing and buildings that are being constructed or developed for future use for leasing, are measured initially at cost. Subsequent expenditures incurred in relation to an investment property are included in the cost of the investment property when it is probable that the associated economic benefits will flow to the Group and their costs can be reliably measured; otherwise, the expenditures are recognised in profit or loss in the period in which they are incurred.
The Group adopts the cost model for subsequent measurement of investment properties. Buildings and land use rights are depreciated or amortised to their estimated net residual values over their estimated useful lives. The estimated useful lives, the estimated net residual values that are expressed as a percentage of cost and the annual depreciation (amortisation) rates of investment properties are as follows:
Estimated useful Estimated net Annual lives residual value depreciation (amortisation) rates Buildings 20 to 40 years 5% 2.38% to4.75% Land use rights 40 to 50 years - 2% to2.5% When an investment property is transferred to owner-occupied properties, it is reclassified as fixed asset or intangible asset at the date of the transfer. When an owner-occupied property is transferred out for earning rentals or for capital appreciation, the fixed asset or intangible asset is reclassified as investment properties at its carrying amount at the date of the transfer. At the time of transfer, the property is recognised based on the carrying amount before transfer.
The investment properties' estimated useful lives, the estimated net residual values and the depreciation (amortisation) methods applied are reviewed and adjusted as appropriate at each year-end.
An investment property is derecognised on disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. The net amount
2016 Semi-Annual Report of Midea Group Co., Ltd. of proceeds from sale, transfer, retirement or damage of an investment property after deducting its carrying amount and related taxes and expenses is recognised in profit or loss for the current period. (15) Fixed assets
(a) Recognition and initial measurement of fixed assets
Fixed assets comprise buildings, lands with permanent ownership, machinery and equipment, motor vehicles, computers and electronic equipment and office equipment.
Fixed assets are recognised when it is probable that the related economic benefits will flow to the Group and the costs can be reliably measured. The initial cost of purchased fixed assets include purchase price, related taxes and expenditures that are attributable to the assets incurred before the assets are ready for their intended use. The initial cost of self-constructed fixed assets is determined based on Note 2(15).
Subsequent expenditures incurred for fixed assets are included in the cost of fixed assets when it is probable that the associated economic benefits will flow to the Group and the related cost can be reliably measured. The carrying amount of the replaced part is derecognised. All the other subsequent expenditures are recognised in profit or loss in the period in which they are incurred.
(b) Depreciation methods of fixed assets
Fixed assets are depreciated using the straight-line method to allocate the cost of the assets to their estimated residual values over their estimated useful lives. For the fixed assets that have been provided for impairment loss, the related depreciation charge is prospectively determined based upon the adjusted carrying amounts over their remaining useful lives.
The estimated useful lives, the estimated residual values expressed as a percentage of cost and the annual depreciation rates of the Group's fixed assets are as follows:
Estimated useful Estimated net Annual depreciation Classes lives residual value rates Buildings
20 to 40 years 0% or5% 5% to2.38% Machinery and equipment 8 to 18 years 0% or5% 12.5% to5.28% Motor vehicles 2 to 20 years 0% or10% 50% to5% Electronic equipment and other
equipment 2 to 13 years 0% or10% 50% to7.69% The estimated useful lives and the estimated net residual values of the Group's fixed assets and the depreciation methods applied to the assets are reviewed, and adjusted as appropriate at each year-end.
(c) Basis for identification and measurement of fixed assets held under finance leases
A lease that transfers substantially all the risks and rewards incidental to ownership of an asset is a finance lease. Fixed asset under finance leases is recorded at an amount equal to the lower of the fair value of the leased asset and the present value of the minimum lease payments. The difference between the recorded amount of the leased asset and the minimum lease payments is accounted for as unrecognised finance charge.
Fixed assets under finance leases are subject to the same depreciation policy as for fixed assets that are self-owned. If it can be reasonably assured that the ownership of the leased asset will be transferred to the Group when the lease expires, the asset is depreciated over its estimated useful life. Otherwise, the asset is depreciated over the shorter of the lease period and the expected useful life. (d) The carrying amount of a fixed asset is reduced to the recoverable amount when the recoverable amount is below the carrying amount (Note 2(20)).
(d) Disposal of fixed assets
2016 Semi-Annual Report of Midea Group Co., Ltd. A fixed asset is derecognised on disposal or when no future economic benefits are expected from its use or disposal. The amount of proceeds from disposals on sale, transfer, retirement or damage of a fixed asset net of its carrying amount and related taxes and expenses is recognised in profit or loss for the current period.
(16) Construction in progress
Construction in progress is measured at actual cost. Actual cost comprises construction costs, installation costs, borrowing costs that are eligible for capitalisation and other costs necessary to bring the fixed assets ready for their intended use. Construction in progress is transferred to fixed assets when the assets are ready for their intended use, and depreciation begins from the following month. The carrying amount of construction in progress is reduced to the recoverable amount when the recoverable amount is below the carrying amount (Note 2(20)).
(17) Borrowing costs
The borrowing costs that are directly attributable to the acquisition and construction of a fixed asset that needs a substantially long period of time for its intended use commence to be capitalised and recorded as part of the cost of the asset when expenditures for the asset and borrowing costs have been incurred, and the activities relating to the acquisition and construction that are necessary to prepare the asset for its intended use have commenced. The capitalisation of borrowing costs ceases when the asset under acquisition or construction becomes ready for its intended use and the borrowing costs incurred thereafter are recognised in profit or loss for the current period. Capitalisation of borrowing costs is suspended during periods in which the acquisition or construction of a fixed asset is interrupted abnormally and the interruption lasts for more than 3 months, until the acquisition or construction is resumed.
For the specific borrowings obtained for the acquisition or construction of a fixed asset qualifying for capitalisation, the amount of borrowing costs eligible for capitalisation is determined by deducting any interest income earned from depositing the unused specific borrowings in the banks or any investment income arising on the temporary investment of those borrowings during the capitalisation period. For the general borrowings obtained for the acquisition or construction of a fixed asset qualifying for capitalisation, the amount of borrowing costs eligible for capitalisation is determined by applying the weighted average effective interest rate of general borrowings, to the weighted average of the excess amount of cumulative expenditures on the asset over the amount of specific borrowings. The effective interest rate is the rate at which the estimated future cash flows during the period of expected duration of the borrowings or applicable shorter period are discounted to the initial amount of the borrowings. (18) Intangible assets
Intangible assets include land use rights, patents and others, and are measured at cost.
(a) Land use rights
Land use rights are amortised on the straight-line basis over their approved use period of 40 to 50 years. If the acquisition costs of the land use rights and the buildings located thereon cannot be reasonably allocated between the land use rights and the buildings, all of the acquisition costs are recognised as fixed assets.
(b) Patents and non-patent technologies
Patents are amortised on a straight-line basis over the statutory period of validity, the period as stipulated by contracts or the beneficial period.
(c) Trademarks
Purchased trademarks are measured at cost upon acquisition. Trademarks obtained from business combinations involving enterprises not under common control are recognised at fair value upon evaluation. Trademarks are amortised on the straight-line basis over the expected useful life of 40
years.
2016 Semi-Annual Report of Midea Group Co., Ltd. (d) Periodical review of useful life and amortisation method
For an intangible asset with a finite useful life, review of its useful life and amortisation method is performed at each year-end, with adjustment made as appropriate.
(e) Research and development(“R&D”)
The expenditure on an internal research and development project is classified into expenditure on the research phase and expenditure on the development phase based on its nature and whether there is material uncertainty that the research and development activities can form an intangible asset at end of the project.
Expenditure on the planned investigation, evaluation and selection for theR&D of production processes or products is expenditure on the research phase, which is recognised in profit or loss in the period in which it is incurred. Expenditure on design and test for the final application of theR&D of production processes or products before mass production is expenditure on the development phase, which is capitalised only if all of the following conditions are satisfied:
 TheR&D of production processes or products has been fully justified by technical team; The budget on theR&D of production processes or products has been approved by the management;
 It's been proved by previous market research analysis that the products produced by the production processes have marketing capabilities;
 There are sufficient technical and financial resources to support theR&D of production processes or products and subsequent mass production; and
 Expenditure attributable to theR&D of production processes or products can be reliably measured.
Other development expenditures that do not meet the conditions above are recognised in profit or loss in the period in which they are incurred. Development costs previously recognised as expenses are not recognised as an asset in a subsequent period. Capitalised expenditure on the development phase is presented as development costs in the balance sheet and transferred to intangible assets at the date that the asset is ready for its intended use.
(f) Impairment of intangible assets
The carrying amount of intangible assets is reduced to the recoverable amount when the recoverable amount is below the carrying amount (Note 2(20)).
(19) Long-term deferred expenses
Long-term prepaid expenses include the expenditure for improvements to fixed assets held under operating leases, and other expenditures that have been incurred but should be recognised as expenses over more than one year in the current and subsequent periods. Long-term prepaid expenses are amortised on the straight-line basis over the expected beneficial period and are presented at actual expenditure net of accumulated amortisation.
(20) Impairment of long-term assets
Fixed assets, construction in progress, intangible assets with finite useful lives, investment properties measured using the cost model and long-term equity investments in subsidiaries, joint ventures and associates are tested for impairment if there is any indication that the assets may be impaired at the balance sheet date. Intangible assets not ready for their intended use are tested at least annually for impairment, irrespective of whether there is any indication that it may be impaired. If the result of the impairment test indicates that the recoverable amount of an asset is less than its carrying amount, a provision for impairment and an impairment loss are recognised for the amount by which theasset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of anasset’s fair value less costs to sell and the present value of the future cash flows expected to be derived from
the asset. Provision for asset impairment is determined and recognised on the individual asset basis.
If it is not possible to estimate the recoverable amount of an individual asset, the recoverable amount
2016 Semi-Annual Report of Midea Group Co., Ltd. of a group of assets to which the asset belongs is determined. A group of assets is the smallest group of assets that is able to generate independent cash inflows.
Goodwill that is separately presented in the financial statements is tested at least annually for impairment, irrespective of whether there is any indication that it may be impaired. In conducting the test, the carrying value of goodwill is allocated to the related asset groups or groups of asset groups which are expected to benefit from the synergies of the business combination. If the result of the test indicates that the recoverable amount of an asset group or group of asset groups, including the allocated goodwill, is lower than its carrying amount, the corresponding impairment loss is recognised. The impairment loss is first deducted from the carrying amount of goodwill that is allocated to the asset group or group of asset groups, and then deducted from the carrying amounts of other assets within the asset groups or groups of asset groups in proportion to the carrying amounts of assets other than goodwill.
Once the above asset impairment loss is recognised, it will not be reversed for the value recovered in the subsequent periods.
(21) Employee benefits
Employee benefits include short-term employee benefits, post-employment benefits, termination benefits and other long-term employee benefits provided in various forms of consideration in exchange for service rendered by employees or compensations for the termination of employment relationship. (a) Short-term employee benefits
Short-term employee benefits include employee wages or salaries, bonus, allowances and subsidies, staff welfare, premiums or contributions on medical insurance, work injury insurance and maternity insurance, housing funds, union running costs and employee education costs, and short-term paid absences. The employee benefit liabilities are recognised in the accounting period in which the service is rendered by the employees, with a corresponding charge to the profit or loss for the current period or the cost of relevant assets. Non-monetary benefits are measured at their fair value. (b) Post-employment benefits
The Group classifies post-employment benefit plans as either defined contribution plans or defined benefit plans. Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into a separate fund and will have no obligation to pay further contributions; and defined benefit plans are post-employment benefit plans other than defined contribution plans. During the reporting period, the Group's post-employment benefits mainly include basic pensions and unemployment insurance, both of which belong to the defined contribution plans.
Basic pensions
Employees of the Group participate in the defined basic pension insurance plan set up and administered by local labour and social protection authorities. Basic pensions are provided for monthly according to stipulated bases and proportions to local labour and social security institutions. When employees retire, the relevant local authorities are obliged to pay the basic pensions to them. The amounts based on the above calculations are recognised as liabilities in the accounting period in which the service has been rendered by the employees, with a corresponding charge to the profit or loss for the current period or the cost of relevant assets.
(c) Termination benefits
The Group provides compensation for terminating the employment relationship with employees before the end of the employment contracts or as an offer to encourage employees to accept voluntary redundancy before the end of the employment contracts. The Group recognises a liability arising from compensation for termination of the employment relationship with employees, with a corresponding charge to profit or loss at the earlier of the following dates: 1) when the Group cannot unilaterally withdraw the offer of termination benefits because of an employment termination plan or a curtailment proposal; 2) when the Group recognises costs or expenses related to the restructuring that involves the payment of termination benefits
Early retirement benefits
2016 Semi-Annual Report of Midea Group Co., Ltd. The Group offers early retirement benefits to those employees who accept early retirement arrangements. The early retirement benefits refer to the salaries and social security contributions to be paid to and for the employees who accept voluntary retirement before the normal retirement date prescribed by the State, as approved by the management. The Group pays early retirement benefits to those early retired employees from the early retirement date until normal retirement date. The Group accounts for the early retirement benefits in accordance with the treatment of termination benefits, in which the salaries and social security contributions to be paid to and for the early retired employees from the off-duty date to the normal retirement date are recognised as liabilities with a corresponding charge to the profit or loss for the current period. The differences arising from the changes in the respective actuarial assumptions of the early retirement benefits and the adjustments of benefit standards are recognised in profit or loss in the period in which they occur.
The termination benefits expected to be paid within one year since the balance sheet date are classified as current liabilities.
(d) Defined benefit plans
TLSC, a subsidiary of the Group, provides supplementary retirement benefit to the staff in addition to the insurance system required by the countries it operatesSuch benefit belongs to defined benefit plans. The defined benefit liability recognised in the balance sheet is the present value of the defined benefit obligation less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method at the similar interest rates of state bonds with similar obligation term and currency. Service cost relating to supplementary retirement benefit (including current service costs, past service costs and gains or losses upon settlement) and net interest are recognised in profit or loss in the current period or related asset cost, and the changes arising from the recalculation of net liability or net assets of the defined benefit plan are recognised in other comprehensive income.
(22) Financial assets sold under repurchase agreements
Assets sold under agreements to repurchase at a specific future date are not derecognised from the balance sheet. The corresponding proceeds are recognised on the balance sheet under “Repurchase agreements”. The difference between the sale price and the repurchase price is treated as interest expense and is accrued over the life of the agreement using the effective interest method. (23) General reserve
General reserve is the reserve appropriated from net profits to cover part of unidentified potential losses, on the basis of the estimated potential risk value of risk assets assessed by the standardised approach, which is deducted from recognised provision for impairment losses on loans. Risk assets include loans and advances, available-for-sale financial assets, long-term equity investments, deposits with banks and other financial institutions and other receivables of subsidiary engaged in financial business.
(24) Dividend distribution
Cash dividend is recognised as a liability for the period in which the dividend is approved by theshareholders’ meeting.
(25) Provisions
Provisions for product warranties, onerous contracts etc. are recognised when the Group has a present obligation, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the obligation can be measured reliably.
A provision is initially measured at the best estimate of the expenditure required to settle the related present obligation. Factors surrounding a contingency, such as the risks, uncertainties and the time value of money, are taken into account as a whole in reaching the best estimate of a provision. Where the effect of the time value of money is material, the best estimate is determined by discounting the
2016 Semi-Annual Report of Midea Group Co., Ltd. related future cash outflows. The increase in the discounted amount of the provision arising from passage of time is recognised as interest expense.
The carrying amount of provisions is reviewed at each balance sheet date and adjusted to reflect the current best estimate.
(26) Share-based payment
(a) Type of share-based payment
Share-based payment is a transaction in which the entity acquires services from employees as consideration for equity instruments of the entity or by incurring liabilities for amounts based on the equity instruments. Equity instruments include equity instruments of the Company, its parent company or other accounting entities of the Group. Share-based payments are divided into equity-settled and cash-settled payments. TheGroup’s share-based payments are equity-settled payments. Equity-settled share-based payment
TheGroup’s share option plan is the equity-settled share-based payment in exchange of employees' services and is measured at the fair value of the equity instruments at grant date. The equity instruments are exercisable after services in vesting period are completed or specified performance conditions are met. In the vesting period, the services obtained in current period are included in relevant cost and expenses at the fair value of the equity instruments at grant date based on the best estimate of the number of exercisable equity instruments, and capital surplus is increased accordingly. If the subsequent information indicates the number of exercisable equity instruments differs from the previous estimate, an adjustment is made and, on the exercise date, the estimate is revised to equal the number of actual vested equity instruments. On the exercise date, the recognised amount calculated based on the number of exercised equity instruments is transferred into share capital. (b) Determination of the fair value of equity instruments
The Group determines the fair value of share options using option pricing model, which is Black - Scholes option pricing model.
(c) Basis for determining best estimate of exercisable equity instruments
At the end of each balance sheet date in the vesting period, the Group revises its estimates of the number of options that are expected to vest based on the best estimate taking into consideration of subsequent information newly acquired, such as change in number of exercisable employees. On the exercise date, the final number of estimated exercisable equity instruments is consistent with the number of exercised equity instruments.
(d) Accounting treatment related to the exercise of share options
On the exercise date, the Group recognises share capital and share premium based on the actual exercise. At the same time, capital surplus recognised in the vesting period are carried forward. (27) Revenue
The amount of revenue is determined in accordance with the fair value of the consideration received or receivable for the sales of goods and services in the ordinary course of theGroup’s activities. Revenue is shown net of discounts, rebates and returns.
Revenue is recognised when the economic benefits associated with the transaction will flow to the Group, the related revenue can be reliably measured, and the specific revenue recognition criteria have been met for each type of theGroup’s activities as described below:
(a) Sales of goods
The Group are principally engaged in the manufacturing and sales of home appliances and mechanical and electrical products (namely large household appliances, small household appliances and motors).
2016 Semi-Annual Report of Midea Group Co., Ltd. Revenue from domestic sales is recognised when 1) the goods are delivered to buyers by the Group pursuant to contracts; 2) the amount of revenue is confirmed; 3) payments for goods are collected or receipts are acquired; and 4) the related economic benefits will flow to the Group; and the related costs can be measured reliably. Upon confirming the acceptance, the buyer has the right to sell the products at its discretion and takes the risks of any price fluctuations and obsolescence and loss of the products.
Revenue from overseas sales is recognised when 1) the goods have left the port and obtain the bill of lading pursuant to contracts; 2) the amount of revenue is confirmed; 3) payments for goods are collected or obtain related receipts; and 4) the related economic benefits will flow to the Group and the related costs can be measured reliably.
(b) Rendering of services
Revenue from transportation service, storage service and distribution service as provided by the Group is recognised when the services are completed.
(c) Interest income
Interest income from financial instruments is calculated by effective interest method and recognised in profit or loss for the current period. Interest income comprises premiums or discounts, or the amortisation based on effective rates of other difference between the initial carrying amount and the due amount of interest-earning assets.
The effective interest method is a method of calculating the amortised cost of a financial asset or liability and the interest income or expense based on effective rates. Actual interest rate is the rate at which the estimated future cash flows during the period of expected duration of the financial instruments or applicable shorter period are discounted to the current carrying amount of the financial instruments. When calculating the effective interest rate, the Group estimates cash flows by considering all contractual terms of the financial instrument (e.g. early repayment options, similar options, etc.), but without considering future credit losses. The calculation includes all fees and interest paid or received that are an integral part of the effective interest rate, transaction costs, and all other premiums or discounts.
Interest income from impaired financial assets is calculated at the interest rate that is used for discounting estimated future cash flow when measuring the impairment loss.
(d) Dividend income
Dividend income is recognised when the right to receive dividend payment is established. (e) Rental income
Rental income from investment prosperities is recognised in the income statement on a straight-line basis over the lease period.
(f) Fee and commission income
Fee and commission income is recognised in profit or loss for the current period when the service is provided. The Group defers the initial charge income or commitment fee income arising from the forming or acquisition of financial assets as the adjustment to effective interest rate. If the loans are not lent when the loan commitment period is expired, related charges are recognised as fee and commission income.
2016 Semi-Annual Report of Midea Group Co., Ltd. (28) Government grants
Government grants are transfers of monetary or non-monetary assets from the government to the Group at nil consideration, including refund of taxes and financial subsidies, etc.
A government grant is recognised when the conditions attached to it can be complied with and the government grant can be received. For a government grant in the form of transfer of monetary assets, the grant is measured at the amount received or receivable. For a government grant in the form of transfer of non-monetary assets, it is measured at fair value; if the fair value is not reliably determinable, the grant is measured at nominal amount.
Government grants related to assets are grants that are acquired by an enterprise and used for acquisition, construction or forming long-term assets in other ways. Government grants related to income are government grants other than government grants related to assets.
A government grant related to an asset is recognised as deferred income, and evenly amortised to profit or loss over the useful life of the related asset. Government grants measured at nominal amounts are recognised immediately in profit or loss for the current period.
For government grants related to income, where the grant is a compensation for related expenses or losses to be incurred by the Group in the subsequent periods, the grant is recognised as deferred income, and included in profit or loss over the periods in which the related costs are recognised; where the grant is a compensation for related expenses or losses already incurred by the Group, the grant is recognised immediately in profit or loss for the current period.
(29) Deferred income tax assets and deferred income tax liabilities
Deferred income tax assets and deferred income tax liabilities are calculated and recognised based on the differences arising between the tax bases of assets and liabilities and their carrying amounts (temporary differences). Deferred income tax asset is recognised for the tax losses that can be carried forward to subsequent years for deduction of the taxable profit in accordance with the tax laws. No deferred t income tax liability is recognised for a temporary difference arising from the initial recognition of goodwill. No deferred income tax asset or deferred income tax liability is recognised for the temporary differences resulting from the initial recognition of assets or liabilities due to a transaction other than a business combination, which affects neither accounting profit nor taxable profit (or deductible tax loss). At the balance sheet date, deferred income tax assets and deferred income tax liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled.
Deferred income tax assets are only recognised for deductible temporary differences, deductible tax losses and tax credits to the extent that it is probable that taxable profit will be available in the future against which the deductible temporary differences, tax losses and tax credits can be utilised. Deferred income tax liabilities are recognised for temporary differences arising from investments in subsidiaries, associates and a joint venture, except where the Group is able to control the timing of reversal of the temporary difference, and it is probable that the temporary difference will not reverse in the foreseeable future. When it is probable that the temporary differences arising from investments in subsidiaries, associates and a joint venture will be reversed in the foreseeable future and that the taxable profit will be available in the future against which the temporary differences can be utilised, the corresponding deferred income tax assets are recognised.
Deferred income tax assets and liabilities are offset when:
2016 Semi-Annual Report of Midea Group Co., Ltd. The deferred income taxes are related to the same tax payer within the Group and the same taxation authority; and,
 That tax payer within the Group has a legally enforceable right to offset current tax assets against current tax liabilities.
(30) Leases
(a) Operating leases
Rental expenses for assets held under operating leases are recognised as the cost of relevant assets or expenses on a straight-line basis over the lease period. Contingent rentals are recognised as profit and loss for the current period when incurred.
Fixed assets leased out under operating leases, other than investment prosperities (Note 2(14)), are depreciated in accordance with the depreciation policy stated in Note 2(15)(b) and provided for impairment loss in accordance with the policy stated in Note 2(20). Rental income from operating leases is recognised as revenue on a straight-line basis over the lease period. Initial direct costs in large amount arising from assets leased out under operating leases are capitalised when incurred and recognised as profit and loss for the current period over the lease period on a same basis with revenue recognition; initial direct costs in small amount are directly recognised as profit and loss for the current period. Contingent rentals are recognised as profit and loss for the current period when incurred.
(b) Finance leases
The leased asset is recognised at the lower of the fair value of the leased asset and the present value of the minimum lease payments. The difference between the recognised amount of the leased asset and the minimum lease payments is accounted for as unrecognised finance charge and is amortised using effective interest method over the period of the lease. A long-term payable is recorded at the amount equal to the minimum lease payments less the unrecognised finance charge.
(31) Segment information
The Group identifies operating segments based on the internal organisation structure, management requirements and internal reporting system, and discloses segment information of reportable segments which is determined on the basis of operating segments.
An operating segment is a component of the Group that satisfies all of the following conditions: (1) the component is able to earn revenue and incur expenses from its ordinary activities; (2) whose operating results are regularly reviewed by theGroup’s management to make decisions about resources to be allocated to the segment and to assess its performance, and (3) for which the information on financial position, operating results and cash flows is available to the Group. If two or more operating segments have similar economic characteristics and satisfy certain conditions, they are aggregated into one single operating segment.
(32) Critical accounting estimates and judgements
The Group continually evaluates the critical accounting estimates and key judgements applied based on historical experience and other factors, including expectations of future events that are believed to be reasonable.
2016 Semi-Annual Report of Midea Group Co., Ltd. (a) Critical accounting estimates and key assumptions
The critical accounting estimates and key assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next accounting year are outlined below:
(i) Income taxes
The Group is subject to income taxes in numerous jurisdictions. There are many transactions and events for which the ultimate tax determination is uncertain during the ordinary course of business. Significant judgement is required from the Group in determining the provision for income taxes in each of these jurisdictions. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred income tax provisions in the period in which such determination is made.
(ii) Provision for impairment of goodwill
The Group tests annually goodwill for impairment. The recoverable amount of asset groups inclusive of goodwill is the present value of the future cash flows expected to be derived from them. These calculations require use of estimates.
If management revises the gross margin that is used in the calculation of the future cash flows of asset groups, and the revised gross margin is lower than the one currently used, the Group would need to recognise further impairment against goodwill.
If management revises the pre-tax discount rate applied to the discounted cash flows, and the revised pre-tax discount rate is higher than the one currently applied, the Group would need to recognise further impairment against goodwill.
If the actual gross margin/pre-tax discount rate is higher/lower thanmanagement’s estimates, the impairment loss of goodwill previously provided for is not allowed to be reversed by the Group. (iii) Provisions for sales rebates, installation expenses and maintenance expenses.
The relevant expenditures, including sales rebates to the buyers, product installation expenses and maintenance expenses during the warranty period, are accrued when the Group recognises revenue from sales of products. The provisions for such expenditures involve management's judgements and estimates, the key factors mainly include the buyers' completion of agreed performance indicators, the unit historical and expected installation costs of products, the expected claim rate for maintenance, market conditions and the stock level kept in sale channel. The estimation basis is reviewed on an on-going basis and revised where appropriate. When the actual outcome or expectation in the future is different from the original estimate, such differences will impact the carrying amount of the provisions and the provision amount charged/reversed in the period in which such estimate has been changed.
(iv) Fair value of financial instruments
The fair value of a financial instrument that is not traded in an active market is determined by using a valuation technique. Valuation techniques include discounted cash flow model analysis, etc. The Group makes estimates in terms of future cash flow, credit risk, market volatility and correlation for valuation. These estimates are uncertain and changes in them will impact the fair value of financial instruments.
2016 Semi-Annual Report of Midea Group Co., Ltd. (v) Supplementary retirement benefit for retired staff
The Group assumes supplementary retirement benefit for retired staff, i.e. the liability of defined benefit plans, the present value of which is depended on multiple actuarial assumptions, including discount rate. Any changes in such assumptions will affect the carrying amount of liability of defined benefit plans.
The Group will re-evaluate the discount rate adopt for calculating the present value of liability of defined benefit plans each year. When re-evaluating, the Group refers to interest rates of state bonds with similar currency and payment term used for the payment of supplementary benefit for retired staff in the future.
3 Taxation
(1) Main tax category and rate
Category Tax base Tax rate5%,12.5%,15%, Corporate income tax 16.5%,17%,20%, (a) Levied based on taxable income 25%,31.5% or34% Taxable value-added amount (Tax payable is
calculated using the taxable sales amount
Value-added tax multiplied by the applicable tax rate less3%,5%,6%,11% or (VAT) deductible VAT input of the current period) 17% City maintenance and
construction tax The amount of VAT paid 5% or7% Educational
surcharge The amount of VAT paid 3% or5% Local education
surcharge The amount of VAT paid 2% Price-based property is subject to a1.2% tax rate
after a30% cut in the original price of property.
Rental-based is subject to12% tax rate for the
Property tax rental income. 1.2% or12% (a) Notes to the corporate income tax rate of the principal tax payers with different tax rates
(a-1) The following subsidiaries of the Company are subject to a corporate income tax rate of15% in 2016 as they have qualified as high-tech enterprises and obtained the High-tech Enterprise Certificate. No. of the Certificate of the Effective Name of tax payer
High-tech Enterprise Dates of issuance period Guangdong GMCC Refrigeration Equipment
Co., Ltd. GR201444000397 10 October 2014 3 years Guangdong Midea Heating& Ventilation
Equipment Co., Ltd. GF201544000292 20 October 2015 3 years Foshan Shunde Midea Electric Appliance
Manufacturing Co., Ltd. GR201544001470 10 October 2015 3 years Guangdong Midea Kitchen Appliances
Manufacturing Co., Ltd. GR201544000202 30 September 2015 3 years Guangdong Midea Refrigeration Equipment Co.,
Ltd. GR201444000965 10 October 2014 3 years
2016 Semi-Annual Report of Midea Group Co., Ltd. Hefei Midea Refrigerator Co., Ltd. GR201434001001 21 October 2014 3 years Chongqing Midea General Refrigeration
Equipment Co., Ltd. GF201451100044 14 October 2014 3 years Hefei Hualing Co., Ltd. GR201434000715 21 October 2014 3 years Hubei Midea Refrigerator Co., Ltd. GF201442000015 14 October 2014 3 years Wuxi Little Swan Company Limited GR201532000606 6 July 2015 3 years Foshan Shunde Midea Washing Appliance
Manufacturing Co., Ltd. GR201444001324 10 October 2014 3 years Guangdong Witt Vacuum Electronics
Manufacturing Co., Ltd. GR201444000159 10 October 2014 3 years Jiangxi Midea Guiya lighting Co., Ltd. GR201436000009 9 April 2014 3 years Wuhu Midea Kitchen& Bathroom Electric
Manufacturing Co., Ltd. GF201434000129 2 July 2014 3 years Annto Logistics Company Limited GF201534000356 19 June 2015 3 years Foshan Welling Washer Motor Manufacturing
Co., Ltd. GR201444000608 10 October 2014 3 years Guangdong Welling Motor Manufacturing Co.,
Ltd. GR201444000268 10 October 2014 3 years Welling (Wuhu) Motor Manufacturing Co., Ltd. GR201434000371 2 July 2014 3 years Jiangsu Midea Cleaning Appliance Company
Limited GF201432000806 5 August 2014 3 years Hefei Midea Washing Machine Co., Ltd. GR201434000147 2 July 2014 3 years Wuxi Filin Electronics Co., Ltd. GR201532000917 6 July 2015 3 years Wuxi Little Swan General Appliance Co., Ltd. GR201532000557 6 July 2015 3 years Guangzhou Hualing Refrigeration Equipment
Co., Ltd. GR201444000463 10 October 2014 3 years Handan Midea Refrigeration Equipment Co.,
Ltd. GR201413000242 19 September 2014 3 years Midea Group Wuhan Refrigeration Equipment
Co., Ltd. GR201442000091 14 October 2014 3 years Wuhu Meizhi Air-Conditioning Equipment Co.,
Ltd. GR201434001064 21 October 2014 3 years The Certificate of the High-tech Enterprise of following are due in 2016: Anhui GMCC Refrigeration Equipment Co., Ltd., Anhui GMCC Precision Manufacturing Co., Ltd., Huaian Weiling Motor Manufacturing Co., Ltd. and Hefei Midea Heating& Ventilation Equipment Co., Ltd. These subsidiaries are still in the progress of extending the certificates and are expected to be entitled to preferential tax treatment for High-tech Enterprise.
(a-2) The application for corporate income tax preferential treatment of Chongqing Midea Refrigeration Equipment Co., Ltd., the Company's subsidiary, was approved by the State Administration of Taxation of Chongqing Economical and Technological Development Zone on 3 June 2014. The subsidiary is subject to corporate income tax at the rate of15% in 2016.
(a-3) The Company's subsidiaries in Mainland China other than those mentioned in (a-1), (a-2) and (a-3) are subject to corporate income tax rate of25%.
(a-4) Calpore Macao Commercial Offshore Limited, the Company's subsidiary in Macau, is exempted from income supplement tax for profits gained from its offshore business pursuant to Article 12 in Chapter 2 of Decree-Law No. 58/99/M issued by Macao Special Administrative Region on 13 October 1999. (a-5) In August 2008, Midea Electric Appliance (Singapore) Co., Ltd., the Company's subsidiary, was awarded with the Certificate of Honor for Development and Expansion (NO.587) by the Singapore Economic Development Board, which approves that qualified income exceeding a certain amount is subject to corporate income tax of5% while the unqualified income is subject to the corporate income tax rate of17%. Midea Electric Appliance (Singapore) Co., Ltd., the Company's subsidiary, is subject to corporate income of17%.
(a-6) The Company's subsidiaries in Hong Kong are subject to Hong Kong profits tax of16.5%. Such subsidiaries include Midea International Trade Co., Ltd., Midea International Corporation Limited, Midea Appliance Investment (Hong Kong) Ltd., Gold Emperor Enterprises Ltd., Chairing Holding Ltd., Shi Ji Kaili household air-conditioning Co., Ltd., Midea Refrigeration (Hong Kong) Ltd., Welling Holding Limited (Hong Kong) and Welling International Hong Kong Ltd (HK).
2016 Semi-Annual Report of Midea Group Co., Ltd. (a-7) The Company's subsidiaries in BVI and Cayman Islands are exempted from corporate income tax. Such subsidiaries include Mecca International (BVI) Limited, Titoni Investments Development Ltd., Midea Holdings (BVI) Ltd., Midea Electric Investment (BVI) Limited, Welling Holding (BVI) Ltd. and Midea Holding (Cayman Islands) Ltd.
(a-8) Springer Carrier Ltda., the Company's subsidiaries in Brazil, is subject to Brazil corporate income tax of34%.
(a-9) TLSC, a Japan-located subsidiary of the Company, is subject to Japan corporate income tax of31.5%. 4 Notes to the consolidated financial statements
(1) Cash at bank and on hand
||
|-|
|Ending balance|
|2,930|
|14,575,149|
|475,713|
|15,053,792|
|6,832,506|

 (a) As at 30 June 2016, cash at bank includes fixed deposits with the term of over three months, amounting to RMB9,405,237,000 (31 December 2015: RMB9,001,934,000).
(b) Other cash balances mainly include deposits for bank acceptance note and letter of credit (2) Cash due from central bank
||
|-|
|Ending balance|
|1,418,859|
|226,563|
|1,645,422|

 (a) Statutory reserve with central bank represents the statutory reserve deposited inPeople’s Bank of China by the financial enterprise in accordance with relevant regulations, which are calculated at7.5% and5% for eligible RMB deposits and foreign currency deposits, receptively, and are not available for use in theGroup’s daily operations.
(3) Deposits with banks and other financial institutions
||
|-|
|Ending balance|
|10,088,472|

2016 Semi-Annual Report of Midea Group Co., Ltd. As at 30 June 2016, deposits with banks and other financial institutions include time deposits with the term of over three months, amounting to RMB5,330,000,000 (31 December 2015: RMB1,400,000,000). (4) Notes receivable
||
|-|
|Ending balance|
|14,987,218|

 (a) As at 30 June 2016, the Group's pledged notes receivable are as follows:
Notes receivable Item pledged
Bank acceptance notes 2,401,373 (b) As at 30 June 2016, the Group's notes receivable that are not mature but have been endorsed to other parties, or that have been discounted are as follows:
||
|-|
|Derecognised|
|29,337,720|

 (5) Receivables
(a) Accounts receivable
||
|-|
|Ending balance|
|14,074,911|
|(781,788)|
|13,293,123|

 The ageing analysis of accounts receivable is as follows:
|||
|-|-|
||Ending balance|
||13,787,321|
||188,256|
||47,395|
||32,032|
|3 to 5 years||
||19,907|
||14,074,911|

 As at 30 June 2016, the Group has no overdue accounts receivable with significant amount. Accounts receivable are analysed by categories as follows:
2016 Semi-Annual Report of Midea Group Co., Ltd.
||||||||
|-|-|-|-|-|-|-|
|Ending balance|||||||
|Book balance||Provision for baddebts||Book balance|||
|Amount|% oftotalbalance|Amount|Ratio|Amount|% of totalbalance|Amount|
|7,170|0.05%|7,170|100.00%|-|-|-|
|14,059,301|99.89%|766,226|5.45%|10,961,426|99.85%|593,762|
|8,440|0.06%|8,392|99.43%|16,792|0.15%|12,738|
|14,074,911|100.00%|781,788|5.55%|10,978,218|100.00%|606,500|

 Accounts receivable that the related provision for bad debts is provided on grouping basis using the ageing analysis method are analysed as follows:
||||||
|-|-|-|-|-|
|Ending balance|||||
|Book balance|Provision for bad debts||Book balance||
|Amount|Amount|Ratio|Amount|Amount|
|13,785,660|570,984|4.14%|10,718,211|403,660|
|174,375|113,183|64.91%|102,186|76,371|
|47,378|35,256|74.41%|84,473|63,191|
|31,981|26,896|84.10%|49,444|43,428|
|19,907|19,907|100.00%|7,112|7,112|
|14,059,301|766,226|5.45%|10,961,426|593,762|

 The provision for bad debts reversed for the first-half year is RMB35,423,000.
The accounts receivable as written off by the Group for the first-half year are arising from transactions with third parties and there's no written-off accounts receivable with amounts that are individually significant. As at 30 June 2016, the top 5 accounts receivable assembled by debtors are analysed as follows:
||
|-|
|Amount|
|2,198,262|

 The Group has no accounts receivable derecognised due to transfer of financial assets in current year. (b) Other receivables
||
|-|
|Ending balance|
|996,032|
|(24,289)|
|971,743|

 Other receivables mainly include current accounts, petty cash to staff and deposits.
The ageing of other receivables is analysed as follows:
2016 Semi-Annual Report of Midea Group Co., Ltd.
||
|-|
|Ending balance|
|969,391|
|15,181|
|3,362|
|8,098|
|996,032|

 Other receivables are analysed by category as follows:
||||||||
|-|-|-|-|-|-|-|
|Ending balance|||||||
|Book balance||Provision for bad debts||Book balance|||
|Amount|% of totalbalance|Amount|Ratio|Amount|% of totalbalance|Amount|
|261,646|26.27%|950|0.36%|13,486|1.16%|1,329|
|733,564|73.65%|22,517|3.07%|1,148,394|98.84%|59,212|
|822|0.08%|822|100.00%|-|-|-|
|996,032|100.00%|24,289|2.44%|1,161,880|100.00%|60,541|

 As at 30 June 2016, other receivables with amounts that are individually significant and that the related provision for bad debts is provided on the individual basis are analysed as follows:
||||
|-|-|-|
|Ending balance|Provision for baddebts|Ratio|
|260,696|-|0%|
|950|950|100%|
|261,646|950||

The provision for bad debts reversed in current year is RMB40,544,000.
Other receivables as written off by the Group in current year are arising from transactions with third parties and there's no written-off other receivables with amounts that are individually significant. As at 30 June 2016, the top 5 other receivables assembled by debtors are analysed as follows:
||
|-|
|Amount|
|520,503|

 As at 30 June 2016, the Group' has no significant government grants recognised at amounts receivable.
(6) Advances to suppliers
||
|-|
|Ending balance|
|1,610,332|

2016 Semi-Annual Report of Midea Group Co., Ltd. (a) The ageing of advances to suppliers is analysed below:
||||
|-|-|-|
|Ending balance|||
|Amount|% of total balance|Amount|
|1,572,833|97.67%|937,986|
|31,855|1.98%|29,852|
|2,901|0.18%|7,739|
|2,743|0.17%|13,048|
|1,610,332|100.00%|988,625|

 As at 30 June 2016, advances to suppliers over 1 year with a carrying amount of RMB37,499,000 (31 December 2015: RMB50,639,000) are mainly unsettled advances paid for raw materials.
As at 30 June 2016, the top five balances of advances to suppliers assembled by debtors are summarised as follows:
||
|-|
|Amount|
|524,472|

 (7) Loans and advances
(a) Financial enterprises' loans and advances analysed to individual and corporation are as follows:
||
|-|
|Ending balance|
|400,819|
|10,863,098|
|4,429,753|
|6,433,345|
|11,263,917|
|(157,140)|
|11,106,777|

 (b) Financial enterprises' loans and advances analysed by type of collateral held or other credit enhancements are as follows:
||
|-|
|Ending balance|
|1,365,126|
|1,388,573|
|8,510,218|
|11,263,917|
|(157,140)|
|11,106,777|

 (8) Inventories
(a) Inventories are classified as follows:
||||||
|-|-|-|-|-|
|Ending balance|||||
|Book balance|Provision fordecline in thevalue ofinventories|Carryingamount|Book balance|Provision fordecline in thevalue ofinventories|

2016 Semi-Annual Report of Midea Group Co., Ltd.
||||||
|-|-|-|-|-|
|||6,778,001|||
|2,217,677|(14,003)|2,203,674|1,648,630|(15,030)|
|390,523|-|390,523|504,454|(742)|
|155,345|-|155,345|194,009|(149)|
|31,689|-|31,689|204|-|
|9,716,823|(157,591)|9,559,232|10,580,905|(131,968)|

 (b) Provision for decline in the value of inventories is analysed as follows:
||||
|-|-|-|
|Openingbalance|Increase in current period|Decrease, reversal or write-off incurrent period|
|116,047|87,426|(59,885)|
|15,030|6,336|(7,363)|
|149|-|(149)|
|742|-|(742)|
|131,968|93,762|(68,139)|

 (c) Provision for decline in the value of inventories are as follows:
||
|-|
|Basis for provision for decline in thevalue of inventories|
|Stated at the lower of cost and netrealisable value|
|Stated at the lower of cost and netrealisable value|

 (9) Other current assets
||
|-|
|Ending balance|
|504,714|
|2,185,779|
|8,408,212|
|26,786,165|
|620,907|
|38,505,777|

 (a) As at 30 June 2016, all wealth management products listed under other current assets are due within one year, mainly including principal non-guaranteed products of RMB26,786,165,000 (31 December 2015: principal non-guaranteed products of RMB18,136,831,000 and principal guaranteed products of RMB100,000,000) (Note 15(1)).
(b) Wealth management products due over one year purchased by the Company is listed under other non-current assets, with ending balance of RMB4,432,900,000 (31 December 2015: Nil).
(10) Available-for-sale financial assets
||
|-|
|Ending balance|
|4,254,812|

2016 Semi-Annual Report of Midea Group Co., Ltd. - Available-for-sale equity
instruments (b) 1,506,906 1,427,510 Total 5,761,718 3,289,954 (a) As at 30 June 2016, the cost of available-for-sale financial assets measured at fair value is RMB2,992,837,000 and the accumulative amount recorded in other comprehensive income is RMB1,261,975,000.
(b) The available-for-sale financial assets measured at cost mainly include the unlisted equity investments held by the Group which are not quoted in an active market and whose fair value cannot be reliably measured as the range of the reasonable estimated fair value is wide and probabilities ofthese estimates cannot be reasonably determined. The Group has no plan to dispose these investments. As at 30 June 2016, the available-for-sale financial assets measured at cost are mainly the investments in Xiaomi Corporation with the amount of RMB1,325,080,000.
(c) The increase in available-for-sale financial assets measured at fair value in current period mainly refers to the purchasing of shares of KUKA Aktiengesellschaft (hereinafter referred to as "KUKA") and floating profits of shares of KUKA on the market.
(11) Long-term equity investments
Long-term equity investments are classified as follows:
||
|-|
|Ending balance|
|2,734,672|
|373,974|
|-|
|3,108,646|

2016 Semi-Annual Report of Midea Group Co., Ltd. (Continued table)
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Openingbalance|Movements for current period||||||||Endingbalance|
||Increase inInvestment|Decrease ininvestment|Share of netprofit usingthe equitymethod|Adjustmentin othercomprehensive income|Otherchanges inequity|Cashdividends orprofitsdeclared|Provisionforimpairment|Others||
|1,515,228|-|-|134,315|(14,749)|-|(104,464)|-|-|1,530,330|
|316,506|-|-|18,248|(51,274)|-|(15,837)|-|12,481|280,124|
|280,274|-|-|16,250|-|-|-|-|-|296,524|
|-|158,325|-|-|-|-|-|-|-|158,325|
|398,130|2,700|-|3,691|317|40|(2,000)|-|66,491|469,369|
|378,136|-|-|28,238|-|-|(32,400)|-|-|373,974|
|2,888,274|161,025|-|200,742|(65,706)|40|(154,701)|-|78,972|3,108,646|

2016 Semi-Annual Report of Midea Group Co., Ltd. (12) Fixed assets
||||||
|-|-|-|-|-|
|Buildings|Land|Machinery andequipment|Motorvehicles|Electronicequipment andother equipment|
|14,807,945|-|13,987,827|461,966|2,355,860|
|635,839|748,540|2,138,342|17,449|194,703|
|80,492|-|450,364|13,131|158,288|
|70,576|-|156,113|1,106|6,272|
|471,083|748,540|1,531,865|1,170|12,529|
|13,688|-|-|2,042|17,614|
|(239,307)|-|(162,139)|(24,806)|(71,213)|
|(233,553)|-|(143,115)|(24,806)|(71,213)|
|(300)|-|-|-|-|
|(5,454)|-|(19,024)|-|-|
|29,412|-|56,121|576|8,697|
|15,233,889|748,540|16,020,151|455,185|2,488,047|
|4,150,347|-|6,691,015|324,228|1,702,719|
|361,216|-|682,042|28,696|200,282|
|347,529|-|682,042|28,423|190,910|
|13,687|-|-|273|9,372|
|(16,830)|-|(149,572)|(22,200)|(75,838)|
|(14,946)|-|(138,272)|(22,200)|(75,838)|
|(1,884)|-|(11,300)|-|-|
|13,674|-|32,799|425|5,201|
|4,508,407|-|7,256,284|331,149|1,832,364|
|3,918|-|11,165|65|260|
|-|-|2,338|11|-|
|-|-|2,338|11|-|
|-|-|(108)|(9)|(36)|
|-|-|(108)|(9)|(36)|
|3,918|-|13,395|67|224|
|10,721,564|748,540|8,750,472|123,969|655,459|
|10,653,680|-|7,285,647|137,673|652,881|

 (a) For the half year of 2016, the depreciation of fixed assets amounts to RMB1,248,904,000 (for the half year of 2015: RMB1,110,996,000) and is fully included in income statement.
(b) As at 30 June 2016, the Company is still in the course of obtaining the ownership certificate for the fixed asset with a carrying amount of RMB482,182,000.
(c) The increase in the ending balance of fixed assets compared with the opening balance is mainly due to the Company's consolidation of TLSC, which includes fixed assets rented by TLSC under finance leases
arrangement.
2016 Semi-Annual Report of Midea Group Co., Ltd. (13) Construction in progress
(a) Movement of significant projects of construction in progress
|||||||||
|-|-|-|-|-|-|-|-|
|Openingbalance|Increase incurrentperiod|Transfer tofixed assets|Otherdecrease|Endingbalance|Accumulativeamount ofcapitalisedborrowingcosts|Including:Borrowingcostscapitalised incurrent year|Capitalisationrate|
|100,377|9,790|(106,030)|-|4,137|-|-||
|32,811|562|(5,892)|-|27,481|-|-||
|37,689|21,758|(59,447)|-|0|3,859|618|6%|
|18,708|12,512|(24)|(33)|31,163|-|-||
|120,276|25,569|-|-|145,845|-|-||
|311,160|54,349|-|-|365,509|-|-||
|333,740|199,356|(62,674)|(3,075)|467,347|1,799|-|6%|
|954,761|323,896|(234,067)|(3,108)|1,041,482|5,658.00|618.00||

As at 30 June 2016, there's no provision for impairment of construction in progress with the ending balance consistent with the carrying amount; and the cost of construction in progress matches the budget amount. The projects are carried out on schedule.
2016 Semi-Annual Report of Midea Group Co., Ltd. (14) Intangible assets
||||||
|-|-|-|-|-|
|Land userights|Non-patents|Patents|Trademarks|Others|
|3,845,232|169,867|-|-|60,086|
|3,846|48,792|159,725|2,560,385|4,944|
|-|1,314|-|-|-|
|2,590|29,553|159,725|2,560,385|-|
|1,256|17,925|-|-|4,944|
|(30,656)|(5,251)|-|-|(20,280)|
|(30,055)|(1,076)|-|-|-|
|(601)|(4,175)|-|-|(20,280)|
|990|12,101|-|-|2|
|3,819,412|225,509|159,725|2,560,385|44,752|
|544,852|115,412|-|-|22,519|
|39,785|6,912|-|-|1,633|
|39,425|5,567|-|-|1,163|
|360|1,345|-|-|470|
|(465)|-|-|-|(1,344)|
|(465)|-|-|-|-|
|-|-|-|-|(1,344)|
|-|8,889|-|-|1|
|584,172|131,213|-|-|22,809|
|-|-|-|-|-|
|-|-|-|-|-|
|-|-|-|-|-|
|-|-|-|-|-|
|-|-|-|-|-|
|-|-|-|-|-|
|3,235,240|94,296|159,725|2,560,385|21,943|
|3,300,380|54,455|-|-|37,567|

 (a) For the half year of 2016, the amortisation of intangible assets amounts to RMB46,155,000 (for the half year of 2015: RMB45,663,000).
(b) As at 30 June 2016, the Company is still in course of obtaining the title certificates for land use rights with a carrying amount of about RMB20,478,000.
(c) The increase in the ending balance of intangible assets compared with the opening balance is mainly due to the consolidation of TLSC.
(d) As at 30 June 2016, there's no provision for impairment of intangible assets.
2016 Semi-Annual Report of Midea Group Co., Ltd. (15) Goodwill
|||||
|-|-|-|-|
|Openingbalance|Increase|Difference ontranslation offoreigncurrencyfinancialstatements|Others|
|4,817|-|-|-|
|13,732|-|-|-|
|46,788|-|-|-|
|11,436|-|-|-|
|10,161|-|-|-|
|4,107|-|-|-|
|8,210|-|-|-|
|472,813|-|-|-|
|25,828|-|-|-|
|788|-|-|-|
|14,269|-|-|-|
|34,374|-|-|-|
|1,326,932|-|-|-|
|54,427|-|-|-|
|4,639|-|-|-|
|329,957|-|-|-|
|29,467|-|-|-|
|321|-|-|-|
|-|2,469,084|-|-|
|2,393,066|2,469,084|-|-|

 The increase in the ending balance compared with the opening balance is mainly due to the Company's consolidation of TLSC.
(16) Deferred income tax assets and deferred income tax liabilities
(a) Deferred income tax assets without taking into consideration the offsetting of balances
||||
|-|-|-|
|Ending balance|||
|Deductible temporarydifferences|Deferred income taxassets|Deductible temporarydifferences|
|765,332|218,324|632,957|
|921,504|184,013|637,300|
|191,733|33,876|177,487|
|11,310,697|2,029,406|9,996,930|
|1,203,316|257,460|1,194,030|
|14,392,582|2,723,079|12,638,704|

(b) Deferred income tax liabilities without taking into consideration the offsetting of balances
Deferred income tax Ending balance Opening balance
2016 Semi-Annual Report of Midea Group Co., Ltd.
||||
|-|-|-|
|||Taxabletemporarydifferences|
|4,850,702|1,547,652|221,255|
|441,203|139,893|44,102|
|5,291,905|1,687,545|265,357|

 The increase in the ending balance of deferred income liabilities compared with the opening balance is mainly due to the evaluation appreciation in the consolidation of TLSC.
(c) As at 30 June 2016, there's no significant offset item in deferred income tax assets and
liabilities.
(17) Details of provision for asset impairments
|||||
|-|-|-|-|
|Openingbalance|Increasein currentperiod|Decrease in current period||
|||Reversal|Write-off|
|685,995|405,596|(76,533)|(51,841)|
|606,500|261,170|(35,423)|(50,459)|
|18,954|138,752|(566)|-|
|60,541|5,674|(40,544)|(1,382)|
|131,968|93,762|(51,096)|(17,043)|
|100|-|-|-|
|15,408|2,349|-|(153)|
|12,576|-|-|-|
|846,047|501,707|(127,629)|(69,037)|

 (18) Assets with ownership or use right restricted
As at 30 June 2016, details of assets with restricted ownership are as follows:
||
|-|
|Ending balance|
|9,742,011|
|1,418,859|
|5,330,000|
|2,401,373|
|18,892,243|

 (19) Short-term borrowings
||
|-|
|Ending balance|
|889,454|
|11,242,463|
|-|
|2,313,502|

2016 Semi-Annual Report of Midea Group Co., Ltd. Total 14,445,419 3,920,933 (a) As at 30 June 2016, the annual interest rate range of short-term borrowings is from1% to8% (31 December 2015: from1% to8%).
(20) Notes payable
||
|-|
|Ending balance|
|19,451,346|

 (21) Accounts payable
||
|-|
|Ending balance|
|18,748,749|
|2,931,143|
|21,679,892|

 (a) As at 30 June 2016, accounts payable with ageing over 1 year with a carrying amount of RMB480,373,000 (31 December 2015: RMB821,705,000) are mainly unsettled accounts payable for materials.
(22) Advances from customers
||
|-|
|Ending balance|
|4,089,800|

 (a) As at 30 June 2016, accounts payable with ageing over 1 year with a carrying amount of RMB49,969,000 (31 December 2015: RMB64,267,000) are mainly unsettled advances on sales.
(23) Employee benefits payable
||
|-|
|Ending balance|
|1,799,715|
|104,013|
|1,903,728|

 (a) Short-term employee benefits
||||
|-|-|-|
|Opening balance|Increase incurrent period|Decrease in currentperiod|
|1,951,015|4,077,982|(4,604,310)|
|87,873|393,052|(252,963)|
|13,989|168,580|(167,403)|
|12,725|138,173|(142,533)|
|1,039|20,536|(15,145)|
|225|9,871|(9,725)|
|15,284|104,537|(103,459)|
|17,918|29,955|(28,976)|
|28,117|298,617|(230,093)|
|2,114,196|5,072,723|(5,387,204)|

2016 Semi-Annual Report of Midea Group Co., Ltd. (24) Taxes payable
||
|-|
|Ending balance|
|674,541|
|1,746,749|
|289,179|
|2,710,469|

(25) Other payables
||
|-|
|Ending balance|
|705,871|
|297,745|
|163,240|
|471,929|
|1,638,785|

(a) As at 30 June 2016, other payables with ageing over 1 year with a carrying amount of RMB70,536,000 (31 December 2015: RMB244,788,000) are mainly deposit and security deposit payable, which are unsettled for related projects that are uncompleted.
(b) The increase in the ending balance of other payables compared with the opening balance is mainly due to the consolidation of TLSC.
(26) Other current liabilities
||
|-|
|Ending balance|
|1,355,981|
|14,532,683|
|4,500,368|
|562,784|
|1,999,500|
|-|
|2,376,757|
|25,328,073|

(a) On 16 June 2016, the Company issued super& short-term commercial paper, with annual interest of2.92%.
(27) Long-term borrowings
||
|-|
|Ending balance|
|81,194|
|2,002,849|
|2,084,043|

(a) As at 30 June 2016, the annual interest rate range of long-term borrowings is from0.4% to4.5% (31 December 2015: from2.09% to4.5%).
(28) Debentures Payable
||||||
|-|-|-|-|-|
|Openingbalance|Issuanceduring currentperiod|Interest accruedat par value|Amortisationof premiumand discount|Repaymentduringcurrentperiod|

2016 Semi-Annual Report of Midea Group Co., Ltd.
||||||
|-|-|-|-|-|
|-|4,641,840||42,537||
|-|4,641,840|9,187|42,537|-|

The related information of debentures is outlined as follows:
||||
|-|-|-|
|Par value|Issuing date|Maturity date|
|4,641,840|03 June 2016|03 June 2019|
|4,641,840|||

 (a) Midea Investment and Development Co., Ltd., a wholly-owned subsidiary of the Company, issued there-year corporate debentures amounting to USD700 million on 3 June 2016, which was calculated at a yearly simple interest with a fixed yearly rate of 2.375. Interest was payable every half year, and was guaranteed by Midea Group Co., Ltd.
(29) Long-term employee benefits payable
||
|-|
|Ending balance|
|1,491,094|

 (a) Defined benefit plans arise from the TLSC, and refer to the staffs in TLSC appointed by Toshiba Group.
(30) Share capital
||||||
|-|-|-|-|-|
|Openingbalance|Movements for the year ended 31 December 2014||||
||Transfer fromcapital surplus topaid-in capital|Exercise ofshare options|Desterilisation|Subtotal|
||(a)|(b)|||
|2,026,343|1,013,172||602|1,013,774|
|2,240,496|1,120,524|24,399|(602)|1,144,321|
|4,266,839|2,133,696|24,399|-|2,158,095|

 (a) Pursuant to the Plan for Profit Distribution and Transfer from Capital Surplus to Share Capital for 2015 approved by the general meeting for 2015 dated 26 April 2016, capital surplus of RMB2,133,695,614 is transferred to share capital.
(b) Pursuant to the first share option incentive plan as approved at the first extraordinary general meeting for 2014 dated 17 February 2014 (the "First Options Incentive Programme"), the Company grants 99,863,000 share options with an exercise price of RMB17.72 to 691 employees. Under the circumstance that specified performance conditions are met, one third of the total share options granted will become effective after 1 year, 2 years and 3 years, respectively, since 18 February 2014. For the half year of 2016, the total number of shares exercised by the granted employees is 23,388,146 and RMB23,388,146 is recognised as share capital, RMB305,526,000 is recognised as capital surplus (share premium) and RMB67,708,000 is transferred from capital surplus (others) to capital surplus (share premium).
Pursuant to the second share option incentive plan as approved at the first extraordinary general
meeting for 2015 dated 25 May 2015 (the "Second Options Incentive Programme"), the Company
grants 83,790,000 share options with an exercise price of RMB30.54 to 733 employees. Under the
circumstance that specified performance conditions are met, one third of the total share options
granted will become effective after 1 year, 2 years and 3 years, respectively, since 27 May 2015. For
the half year of 2016, the total number of shares exercised by the granted employees is 1,011,050 and
2016 Semi-Annual Report of Midea Group Co., Ltd. RMB1,011,050 is recognised as share capital, RMB25,371,000 is recognised as capital surplus (share premium) and RMB6,606,000 is transferred from capital surplus (others) to capital surplus (share premium).
(31) Capital surplus
||||
|-|-|-|
|Opening balance|Increase incurrent period|Decrease incurrent period|
|11,088,036|330,897|2,133,696|
|388,604|199,004|74,314|
|3,034,550|308|1,386|
|14,511,190|530,209|2,209,396|

 (a) The increase in share premium arises from the exercise of share options with the amount of RMB330,897,000. The decrease in share premium arises from the share capital transferred from capital surplus with the amount of RMB2,133,696,000.
(b) The increase in share option incentive plan arises from the share option expenses attributable to shareholders' equity of the parent company with the amount of RMB199,004,000. The decrease in share option incentive programme arises from the transfer of RMB74,314,000 share options to share premium due to exercise of share option.
(32) Other comprehensive income
||||||||
|-|-|-|-|-|-|-|
|Other comprehensive income in the balancesheet|||||||
|Openingbalance|Attributable tothe parentcompany aftertax|Endingbalance|Amountbeforeincome taxfor currentperiod|Less:Reclassifications of previousothercomprehensive income toprofit or loss|Less:Incometaxexpenses|Attributableto the parentcompanyafter tax|
|(1,242)|(65,706)|(66,948)|(65,706)|-|-|(65,706)|
|160,706|1,082,507|1,243,213|1,133,617|28,819|6,399|1,082,507|
|(194,762)|145,603|(49,159)|(52,701)|(202,106)|5,803|145,603|
|(1,035,853)|114,310|(921,543)|170,967|-|-|114,310|
|(1,071,151)|1,276,714|205,563|1,186,177|(173,287)|12,202|1,276,714|

 (33) Surplus reserve
||||
|-|-|-|
|Opening balance|Increase incurrent period|Decrease incurrent period|
|1,846,523|-|-|

2016 Semi-Annual Report of Midea Group Co., Ltd. (34) Undistributed profits
||
|-|
|Current figure|
|29,529,827|
|9,496,493|
|5,120,869|
|-|
|33,905,451|

 (a) Ordinary share dividends distributed in current year
Pursuant to the Plan for Profit Distribution and Transfer from Capital Surplus to Share Capital for 2015 approved by the general meeting for 2015 dated 26 April 2016, the Company distributes a cash dividend to the shareholders at RMB1.2 per share, amounting to RMB5,120,869,000 calculated by 4,267,391,228 issued shares (2015: RMB1.00 per share, amounting to RMB4,215,808,000).
(35) Operating revenue and cost of sales
||
|-|
|Current figure|
|71,567,026|
|5,955,261|
|77,522,287|

||
|-|
|Current figure|
|49,721,730|
|5,144,430|
|54,866,160|

 (a) Revenue and cost of sales from main operations
||||
|-|-|-|
|Current figure|||
|Revenue|Cost of sales|Revenue|
|48,282,097|33,090,488|54,499,204|
|34,199,997|22,894,273|42,816,687|
|6,701,367|4,955,414|6,027,599|
|7,380,733|5,240,801|5,654,918|
|20,368,484|14,182,924|19,327,756|
|2,011,351|1,612,042|2,039,514|
|905,094|836,276|838,438|
|71,567,026|49,721,730|76,704,912|

 For the half year of 2016, cost of sales is mainly material costs and labour costs, which accounts for over80% of total cost of sales from main operations (for the half year of 2015:
over80%).
(b) Revenue and cost of sales from other operations
2016 Semi-Annual Report of Midea Group Co., Ltd.
||||
|-|-|-|
|Current figure|||
|Revenue|Cost of sales|Revenue|
|5,506,428|5,024,891|5,287,407|
|448,833|119,539|516,825|
|5,955,261|5,144,430|5,804,232|

 For the half year of 2016, cost of sales from other operations is mainly material costs, which accounts for over80% of total cost of sales from other operations (for the half year of 2015: over80%).
(36) Interest income/(expenses)
Interest income and expenses arising from daily financial business of financial enterprises are presented asfollows；
||
|-|
|Current figure|
|458,674|
|210,644|
|248,030|
|20,902|
|479,576|
|(261,318)|

(37) Business tax and surcharges
||
|-|
|Current figure|
|258,806|
|190,093|
|18,863|
|467,762|

(38) Selling and distribution expenses
||
|-|
|Current figure|
|8,185,178|

For the half year of 2016, selling and distribution expenses are mainly maintenance and installation expenses, advertisement and promotion fee, transportation and storage fee, employee benefits and rental expenses, which account for over80% of total selling and distribution expenses (for the half year of 2015: over80%).
(39) General and administrative expenses
||
|-|
|Current figure|
|3,690,059|

For the half year of 2016, general and administrative expenses are mainly employee
benefits,R&D expenditures, expenses of depreciation and amortisation, technical
2016 Semi-Annual Report of Midea Group Co., Ltd. maintenance expenses and administrative office expenses, which account for over80% of total general and administrative expenses (for the half year of 2015: over80%).
(40) Financial expenses
The Group's financial expenses, other than those arising from financial business (Note 4(35)), are presented as follows:
||
|-|
|Current figure|
|264,840|
|(570,745)|
|(692,672)|
|93,316|
|(905,261)|

 (41) Asset impairment loss
||
|-|
|Current figure|
|130,371|
|25,210|
|-|
|2,349|
|93,880|
|251,810|

(42) Gains/(losses) on changes in fair value
||
|-|
|Current figure|
|(525,089)|

(43) Investment income
||
|-|
|Current figure|
|493,198|
|(14,501)|
|200,742|
|34,643|
|714,082|

There is no restriction on recovery of investment income in the Group.
(44) Non-operating income
|||
|-|-|
|Current figure|Comparative figure|
|3,548|38,173|
|3,548|29,166|
|-|9,007|
|762,724|509,576|
|137,000|102,842|
|903,272|650,591|

2016 Semi-Annual Report of Midea Group Co., Ltd. (45) Non-operating expenses
|||
|-|-|
|Current figure|Comparative figure|
|32,149|77,445|
|32,123|77,151|
|26|294|
|10,264|10,078|
|61,386|12,893|
|103,799|100,416|

 (46) Income tax expenses
||
|-|
|Current figure|
|2,233,781|
|(287,110)|
|1,946,671|

 The reconciliation from income tax calculated based on the applicable tax rates and total profit presented in the consolidated financial statements to the income tax expenses is listed below:
||
|-|
|Current figure|
|12,177,569|
|3,044,392|
|(1,029,606)|
|(55,800)|
|(53,257)|
|60,369|
|(6,571)|
|5,894|
|(18,750)|
|1,946,671|

 (47) Calculation of basic and diluted earnings per share
(a) Basic earnings per share
Basic earnings per share are calculated by dividing consolidated net profit attributable to ordinary shareholders of the parent company by the weighted average number of outstanding ordinary shares
|||||
|-|-|-|-|
|Unit|Current figure|||
|RMB'000||||
|||9,496,493|8,324,123|
|Thousandshares||||
|||6,400,970|6,327,186|
|RMB pershare||||
|||1.48|1.32|

(b) Diluted earnings per share are calculated by dividing consolidated net profit attributable to
ordinary shareholders of the parent company by the diluted weighted average number of
outstanding ordinary shares:
2016 Semi-Annual Report of Midea Group Co., Ltd.
|||||
|-|-|-|-|
|Unit|Current figure|||
|RMB'000||||
|||9,496,493|8,324,123|
|Thousandshares||||
|||6,400,970|6,327,186|
|Thousandshares||||
|||18,074|30,946|
|Thousandshares||||
|||6,419,044|6,358,132|
|RMB pershare||||
|||1.48|1.31|

 As the Company's capital surplus in transferred into share capital in current year, the amount of basic and diluted earnings per share over the same period of last year has been reinstated. (48) Notes to the consolidated cash flow statement
(a) Cash received relating to other operating activities
||
|-|
|Current figure|
|879,790|
|423,739|
|116,164|
|118,297|
|1,537,990|

 (b) Cash paid relating to other operating activities
||
|-|
|Current figure|
|1,872,868|
|6,707,172|
|886,013|
|9,466,053|

 (c) Supplementary information to the consolidated cash flow statement
Reconciliation of net profit to cash flow from operating activities is as follows:
||
|-|
|Current figure|
|10,230,898|
|251,810|
|1,572,255|
|28,601|
|525,089|
|(273,692)|
|(714,082)|

2016 Semi-Annual Report of Midea Group Co., Ltd. Share option expenses 229,551 113,453
||
|-|
|(356,685)|
|(1,391)|
|2,264,446|
|(10,458,499)|
|4,830,862|
|8,129,163|
|10,296,816|
|5,187,317|
|-|
|-|
|5,109,499|

(d) Acquisition of subsidiaries
Item Current figure
Cash and cash equivalents paid in current year for business
combinations occurred in current period 3,314,708
Including: TLSC 3,314,708
Less: Cash and cash equivalents held by the subsidiaries at the
acquisition dates 1,457,921
Including: TLSC 1,457,921
Net cash paid for acquisition of the subsidiaries 1,856,787
Net assets of the subsidiaries acquired
As at the acquisition
Item dates in 2016
Current assets 4,744,752
Non-current assets 5,824,985
Current liabilities (3,710,935)
Non-current liabilities (5,154,901) (e) Composition of cash and cash equivalents
||
|-|
|Current figure|
|2,930|
|5,169,912|
|138,939|
|226,563|
|4,758,472|
|10,296,816|

2016 Semi-Annual Report of Midea Group Co., Ltd. (49) Monetary items denominated in foreign currencies
|||
|-|-|
|Foreign currencybalance at end of period|Exchange rates|
|401,534|6.6312|
|223,320|0.8547|
|35,824|7.3750|
|22,840,960|0.0645|
|45,932|2.0641|
|NA|NA|
|7,884|6.6312|
|123,203|6.6312|
|7,429|7.3750|
|890,877|6.6312|
|56,621|0.8547|
|107,931|7.3750|
|16,646,519|0.0645|
|329,388|2.0641|
|NA|NA|
|7,770|6.6312|
|111,379|0.8547|
|6,246|7.3750|
|1,068,082|0.0645|
|65,560|2.0641|
|NA|NA|

2016 Semi-Annual Report of Midea Group Co., Ltd. (Continued table)
|||
|-|-|
|Foreign currencybalance at end of period|Exchange rates|
|266,788|6.6312|
|86,000|0.8547|
|NA|NA|
|242,399|6.6312|
|46,380|0.8547|
|2,004|7.3750|
|25,288,240|0.0645|
|36,167|2.0641|
|NA|NA|
|20,591|6.6312|
|26,178|0.8547|
|899|7.3750|
|5,313,010|0.0645|
|780|2.0641|
|NA|NA|
|95,000|0.8547|
|271,111|7.3750|
|1,354|2.0641|
|NA|NA|

 5 Changes in consolidation scope
(1) Business combinations involving enterprises not under common control
(a) Business combinations involving enterprises not under common control incurred in current year.
|||||
|-|-|-|-|
|Nature of business|Time of acquisition|Acquisition cost|% interestacquired|
|Production and sale ofhousehold appliances|30 June 2016|RMB3,314,708,418|80.10%|

|||||
|-|-|-|-|
|Recognition basis ofacquisition dates|Revenues ofacquirees from theacquisition dates tothe period-end|Net profit ofacquirees from theacquisition dates tothe period-end|Cash flowsfrom operatingactivities ofacquirees fromthe acquisitiondates to theperiod-end|
|Effective acquisition ofcontrol right|-|-|-|

 Pursuant to the agreement between the Company and Toshiba Corporation, after 8 years since the transaction date, both parties will have call option and put option at the pre-determined price for the remainingshares(19.9%) respectively. In accordance with this agreement, it is likely that the Company will obtain the remaining19.9% of shares, so the Company considers that calculation of the goodwill arising from acquisition and corresponding accounting treatment should be at the basis of100% shares acquisition.
2016 Semi-Annual Report of Midea Group Co., Ltd. (b) Details of costs of combination and good will are as follows:
Item TLSC
Costs of combination -
Cash consideration 3,314,708
Future consideration 666,012
Total cost of combination 3,980,720
Less: Share of fair value of the
identifiable net assets obtained 1,511,636
Goodwill 2,469,084
(c) Assets and liabilities of acquirees at acquisition dates are as follows:
||
|-|
|Fair value at acquisitiondates|
|4,744,752|
|5,824,985|
|(3,710,935)|
|(5,154,901)|
|1,703,901|

 The negative net assets of TLSC mainly arises from provision for impairment of long-term assets in prior years.
The fair value of the assets and liabilities of TLSC at the acquisition date are determined by the Group using valuation techniques. The valuation method and critical assumptions applied are as follows:
Land is mainly appraised with market approach, which adjusts the difference between the evaluated assets and similar assets by comparing the current trading price or selling price of similar assets in the open market, to determine the value of evaluated assets.
Buildings and machinery and equipment are mainly appraised with cost approach, which uses the current replacement cost excluding wastage to determine the value of evaluated assets, with basic calculation formula of evaluated equipment value equalling the total price times comprehensive newness rate. Part of calculation results should be reviewed in conjunction with market approach.
Intangible assets (trademarks and patents) are mainly evaluated with license fee saving approach, which uses the appropriate discount rate to discount the saved license fee arising from the right to use related assets each year over the remaining using period of trademarks/patents, to arrive at the present value on base date of assets evaluation.
The main assumptions applied in calculation of discounted future cash flows of trademarks and patents are as follows:
|||
|-|-|
|2017|2018|
|10%|16%|
|22%|24%|
|8.5%|8.5%|

(2) Changes in consolidation scope due to other reasons
(a) Increase of consolidation scope
2016 Semi-Annual Report of Midea Group Co., Ltd.
||||
|-|-|-|
|Acquisitionmethod of theequity|Acquisitiontime-point of theequity|Contributedamount|
|Establishment|June 2016|23,622|
|Establishment|January 2016|100,000|

 (b) Decrease of consolidation scope
Decrease of consolidation scope mainly includes deregistration and sales of subsidiaries. Details are as follows:
||||
|-|-|-|
|Disposalmethod of theequity|Disposaltime-point ofthe equity|Net assets ondisposal date|
|Deregistration|April 2016|4,132|
|Sales|April 2016|261,514|

2016 Semi-Annual Report of Midea Group Co., Ltd. 6 Interest in other entities
(1) Interests in subsidiaries
(a) Information of significant subsidiaries
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||Major businesslocation||Place ofregistration||Nature of business||Shareholding (%)|||
||||||||Direct|Indirect||
||Hefei, PRC||Hefei, PRC||Manufacture of refrigerator||75%|25%||
||Foshan, PRC||Foshan, PRC||Manufacture of air conditioner||60%|-||
||Foshan, PRC||Foshan, PRC||Manufacture of air conditioner||73%|7%||
||Wuhan, PRC||Wuhan, PRC||||73%|7%||
|Midea Group Wuhan Refrigeration Equipment Co., Ltd.||||||Manufacture of air conditioner||||
||Wuhu, PRC||Wuhu, PRC||Manufacture of air conditioner||73%|7%||
||Foshan, PRC||Foshan, PRC||Manufacture of air conditioner||90%|10%||
||Ningbo, PRC||Ningbo, PRC||Manufacture of air conditioner||100%|-||
||Singapore||Singapore||Export trading||-|100%||
||Wuhu, PRC||Wuhu, PRC||Manufacture of small householdappliances||-|100%||
||Wuxi, PRC||Wuxi, PRC||Manufacture of washing machine||38%|15%||
||Foshan, PRC||Foshan, PRC||Manufacture of motors||-|69%||
||Foshan, PRC||Foshan, PRC||Manufacture of small householdappliances||-|100%||
||Foshan, PRC||Foshan, PRC||Manufacture of small householdappliances||-|100%||
||Wuhu, PRC||Wuhu, PRC||Cargo storage and transportation||55%|25%||
||Foshan, PRC||Foshan, PRC||Financial industry||95%|5%||
|Wuhu Meizhi Air-Conditioning Equipment Co., Ltd.||Wuhu, PRC||Wuhu, PRC||Manufacture of air conditioner|88%|12%|Establishment|
|Zhejiang GMCC Compressor Co., Ltd||Ningbo, PRC||Ningbo, PRC||Manufacture of air conditioner|100%|-|Establishment|
|Wuhu Midea Kitchen & Bathroom Electric Manufacturing||||||Manufacture of small household|90%|10%|Business combination involving|
|Co., Ltd.||Wuhu, PRC||Wuhu, PRC||appliances|||enterprises under common control|

 (a) Information of significant subsidiaries (Cont'd)
||||||||
|-|-|-|-|-|-|-|
|||||Shareholding (%)|||
||||Nature of||||
|Name of Subsidiaries|Major business location|Place of registration|business|Direct|Indirect|Acquisition method|

2016 Semi-Annual Report of Midea Group Co., Ltd.
||||||||||
|-|-|-|-|-|-|-|-|-|
||Foshan, PRC||Foshan, PRC|||30%|70%|Business combinations|
|||||||||involving enterprises not|
|Foshan Shunde District Midea Petty Loan Co., Ltd.|||||Financial industry|||under common control|
||Wuhu, PRC||Wuhu, PRC|||5%|95%|Business combinations|
|||||||||involving enterprises not|
|Midea Petty Loan Co., Ltd.|||||Financial industry|||under common control|
|||||||-|100%|Business combination|
||||||Cargo storage|||involving enterprises under|
|Hefei Annto Logistics Co., Ltd.||Hefei, PRC||Hefei, PRC|and transportation|||common control|
|||The British Virgin||The British Virgin||-|100%||
|MECCA INTERNATIONAL (BVI) LIMITED||Islands||Islands|Investment|||Establishment|
|||||||-|51%|Business combinations|
||||||Manufacture of air|||involving enterprises not|
|South American Holding Co.II B.V||Brazil||Netherlands|conditioner|||under common control|
||||||Manufacture of|-|80.1%|Business combinations|
||||||household|||involving enterprises not|
|TLSC||Japan||Japan|appliances|||under common control|

 (b) Subsidiaries that have significant minority interests
||||
|-|-|-|
|Shareholding ofminorityshareholders|Total profit or lossattributable tominorityshareholders incurrent period|Dividends distributed tominority interests incurrent period|
|20%|12,925|46,626|
|20%|28,151|46,149|
|20%|163,625|143,288|
|47%|276,059|179,601|
|40%|50,193|45,328|
|49%|(91,303)|-|
|40%|63,682|-|
|20%|37,415|5,438|
|31%|121,563|49,886|

2016 Semi-Annual Report of Midea Group Co., Ltd. (2) Information of enterprise group
The major financial information of the subsidiaries that have significant minority interests is listed below:
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Ending balance|||||||||||
|Currentassets|Non-currentassets|Total assets|Currentliabilities|Non-currentliabilities|Totalliabilities|Currentassets|Non-currentassets|Total assets|Currentliabilities|Non-currentliabilities|
|10,804,195|623,683|11,427,878|10,484,339|-|10,484,339|11,985,129|642,113|12,627,242|11,548,308|-|
|1,166,705|360,820|1,527,525|809,952|-|809,952|2,068,234|377,247|2,445,481|1,643,602|-|
|27,583,555|2,291,170|29,874,725|26,283,242|30,527|26,313,769|26,446,641|2,338,070|28,784,711|25,359,562|30,460|
|13,907,482|1,575,300|15,482,782|9,120,028|38,979|9,159,007|12,752,480|1,575,176|14,327,656|8,298,112|41,816|
|3,974,342|701,697|4,676,039|2,898,816|344|2,899,160|3,223,492|668,582|3,892,074|2,127,737|3,870|
|2,294,536|638,057|2,932,593|2,493,107|3,091|2,496,198|2,823,102|462,988|3,286,090|2,704,748|6,137|
|1,399,907|54,670|1,454,577|871,406|-|871,406|846,723|54,389|901,112|452,206|96|
|1,983,538|2,286,498|4,270,036|3,292,494|6,640|3,299,134|1,265,400|2,288,272|3,553,672|2,742,785|8,020|
|4,876,654|1,633,695|6,510,349|2,480,193|31,231|2,511,424|4,683,680|1,655,305|6,338,985|2,543,690|35,004|

||||||||
|-|-|-|-|-|-|-|
|Current figure|||||||
|Revenue|Net profit|Total comprehensiveincome|Cash flows from operatingactivities|Revenue|Net profit|Total comprehensiveincome|
|4,744,044|94,724|94,724|853,687|11,528,484|367,049|367,049|
|2,637,359|140,753|140,753|873,994|4,497,527|133,754|133,754|
|15,100,437|818,125|818,125|(5,107,950)|18,367,648|825,684|825,078|
|7,984,787|664,923|701,188|1,607,097|6,101,904|498,509|498,482|
|3,509,078|125,483|120,769|(72,374)|4,023,165|105,295|107,590|
|1,237,026|(186,334)|(151,518)|(186,658)|1,979,894|(130,144)|(130,144)|
|1,102,390|132,696|132,407|43,984|1,020,930|98,008|101,451|
|4,107,019|219,142|219,142|200,668|2,063,887|109,538|109,538|
|3,943,392|386,836|386,836|(344,511)|3,992,399|321,759|321,621|

2016 Semi-Annual Report of Midea Group Co., Ltd. (3) Interests in associates and a joint venture
The impact of theGroup’s associates and joint venture on the Group is not significant. Summarised information is as follows:
||
|-|
|Ending balance|
|3,108,646|
|200,742|
|(65,706)|
|135,036|

 (i) The net profit and other comprehensive income have taken into account the impacts of both the fair value of the identifiable assets and liabilities upon the acquisition of investment and accounting policies unifying.
7 Segment information
The reportable segments of the Group are the business units that provide different products or service, or operate in the different areas. Different businesses or areas require different technologies and marketing strategies, the Group, therefore, separately manages the production and operation of each reportable segment and evaluates their operating results respectively, in order to make decisions about resources to be allocated to these segments and to assess their performance.
The Group identified 6 reportable segments as follows:
- Air conditioning and parts segment
- Refrigerators and parts segment
- Washing machines and parts segment
- Small appliances segment
- Electric machine segment
- Logistics segment
Inter-segment transfer prices are determined by reference to selling prices to third parties. The assets are allocated based on the operations of the segment and the physical location of the asset. The liabilities are allocated based on the operations of the segment. Expenses indirectly attributable to each segment are allocated to the segments based on the proportion of eachsegment’s revenue.
Operating expenses include cost of sales, interest expenses, fee and commission expenses, business taxes and surcharges, selling and distribution expenses, general and administrative expenses, financial expenses and asset impairment losses.
2016 Semi-Annual Report of Midea Group Co., Ltd. 8 Segment reporting
(a) Information on the profit or loss, assets and liabilities of reported segment
Segment information for the half year of 2016 and as at 30 June 2016 is as follows:
Current figure
|||||||||
|-|-|-|-|-|-|-|-|
|Air-conditionermotors andrelatedcomponents|Refrigeratormotors andrelatedcomponents|Washing machinemotors and relatedcomponents|Smallhouseholdappliances|Motor|Logistics|Others|Elimination|
|38,298,229|7,230,353|8,026,957|20,719,144|2,336,073|905,198|491,562|-|
|185,483|13,758|15,229|67,136|1,607,320|1,277,353|627,540|(3,793,819)|
|(32,456,401)|(6,492,768)|(7,270,836)|(17,584,482)|(3,533,186)|(2,090,926)|(1,179,851)|3,790,037|
|6,027,311|751,343|771,350|3,201,798|410,207|91,625|(60,749)|(3,782)|
|86,197,460|14,990,117|20,528,557|62,363,466|7,503,284|3,655,308|69,628,298|(97,363,743)|
|65,357,748|9,525,782|11,651,355|48,681,127|2,511,424|2,595,346|68,466,067|(103,945,230)|
|298,447|-|-|2,700|318,922|-|2,488,577|-|
|16,204|-|-|-|16,135|-|168,403|-|
|497,946|2,600,314|2,255,523|3,348,660|120,346|70,071|412,958|-|
|117,455|13,433|27,934|(13,757)|11,374|(3,423)|97,895|899|
|716,766|177,538|82,637|377,191|88,910|45,805|83,408|-|

 (a) Information on the profit or loss, assets and liabilities of reported segment(Cont’d)
Segment information for the half year of 2015 and as at 30 June 2015 is as follows:
2016 Semi-Annual Report of Midea Group Co., Ltd. Comparative figure
|||||||||
|-|-|-|-|-|-|-|-|
|Air-conditionermotors andrelatedcomponents|Refrigeratormotors andrelatedcomponents|Washingmachine motorsand relatedcomponents|Small householdappliances|Motor|Logistics|Others|Elimination|
|46,877,053|6,455,582|6,129,704|19,773,347|2,232,471|838,439|568,474|-|
|88,170|5,257|6,289|2,192|1,759,929|1,225,449|311,166|(3,398,452)|
|(41,336,354)|(5,947,896)|(5,596,301)|(17,577,826)|(3,701,322)|(2,038,908)|(929,979)|3,496,175|
|5,628,869|512,943|539,692|2,197,713|291,078|24,980|(50,339)|97,723|
|83,840,421|8,748,702|11,288,808|33,692,911|7,464,862|3,620,941|103,220,718|(110,094,676)|
|62,952,872|4,615,427|5,882,185|22,166,008|2,938,133|2,356,274|82,665,440|(94,243,077)|
|274,055|-|2,727|-|296,404|-|332,970|-|
|11,733|-|(123)|-|23,922|-|7,595|-|
|588,278|133,485|43,313|358,850|97,417|84,016|283,779|-|
|203,574|17,252|(1,325)|28,228|2,870|19,246|54,734|(47,747)|
|636,499|179,699|72,632|229,650|72,950|61,858|190,646|-|

2016 Semi-Annual Report of Midea Group Co., Ltd. (b) Geographical area information
TheGroup’s revenue from external customers domestically and in foreign countries or geographical areas, and the total non-current assets other than available-for-sale financial assets and deferred income tax assets located domestically and in foreign countries or geographical areas (including Hong Kong, Macau, Singapore, Japan, Brazil, etc.) are as follows:
||
|-|
|Current figure|
|46,668,922|
|31,338,594|
|78,007,516|

||
|-|
|Current figure|
|28,960,862|
|8,751,634|
|37,712,496|

 9 Related parties and significant related party transactions
(1) Information of the parent company
(a) General information of the parent company
|||
|-|-|
|Relationship|Place ofregistration|
|Controllingshareholder|Shunde District,Foshan|

 TheCompany’s ultimate controlling person is Mr. He Xiangjian.
(b) Registered capital and changes in registered capital of the parent company
Name of the parent company Registered capital Midea Holding Co., Ltd. 330,000 (c) The percentages of shareholding and voting rights in the Company held by the parent company
||||||
|-|-|-|-|-|
|30 June 2016|||||
|Shareholding (%)||Voting rights(%)|Shareholding (%)||
|Direct|Indirect||Direct|Indirect|
|34.93%|-|34.93%|35.07%|-|

 (2) Information of the Company's subsidiaries
Please refer to Note 6(1) for the information of theCompany’s main subsidiaries.
2016 Semi-Annual Report of Midea Group Co., Ltd. (3) Information of other related parties
Name of other related parties Relationship
Under common control of the direct relatives of the Guangzhou Wellkey Electrician Material Co., Ltd. Company's ultimate controlling shareholders Under common control of the direct relatives of the Anhui Wellkey Electrician Material Co., Ltd. Company's ultimate controlling shareholders Under common control of the direct relatives of the Infore Investment Holding Group Co., Ltd. Company's ultimate controlling shareholders Under common control of the Company's actual Foshan Shunde Midea Development Co., Ltd. controlling persons
Under common control of the Company's actual Foshan Midea Real Estate Development Co., Ltd. controlling persons
Shanxi Huaxiang Group Co., Ltd Associates of subsidiaries controlled by the Company Foshan Micro Midea Filter MFG Co., Ltd. Associates of the Company
Under common control of the Company's actual Guangdong Midea Property Co., Ltd. controlling persons
Foshan Shunde Rural Commercial Bank Co., Ltd. Associates of the Company
(4) Information of related party transactions
The following related party transactions are conducted in accordance with normal commercial terms or relevant agreements.
(a) Purchase of goods:
||||
|-|-|-|
|Content ofrelated partytransactions|Pricing policies ofrelated partytransactions|Currentfigure|
|Purchase ofgoods|Agreed price|104,024|
|Purchase ofgoods|Agreed price|476,574|
|Purchase ofgoods|Agreed price|82,158|
|Purchase ofgoods|Agreed price|468,116|
|Purchase ofgoods|Agreed price|-|
|Purchase ofgoods|Agreed price|708,038|
|||1,838,910|

 (b) Guarantee
The Group as the guarantee provider
||||
|-|-|-|
|Guaranteedamount|Commencementdate|Maturity date|
|183,000|01 January 2016|31 December2016|

 (c) Investment income
|||
|-|-|
|Content|Current figure|
|Wealth managementproduct|44,400|

(5) Receivables from and payables to related parties
Receivables from related parties:
2016 Semi-Annual Report of Midea Group Co., Ltd.
|||
|-|-|
|Related parties|Ending balance|
|Guangzhou Wellkey Electrician Material Co., Ltd.|-|
|Foshan Micro Midea Filter MFG Co., Ltd.|-|
|Hefei Orinko Plastics Group.|23,811|
||23,811|

|||
|-|-|
|Related parties|Ending balance|
|Foshan Shunde Rural Commercial Bank Co., Ltd.|2,200,000|

|||
|-|-|
|Related parties|Ending balance|
|Foshan Shunde Rural Commercial Bank Co., Ltd.|1,379,700|

 Payables to related parties:
||||
|-|-|-|
|Related parties||Ending balance|
|Guangzhou Wellkey Electrician Material Co., Ltd.||103,337|
||Foshan Micro Midea Filter MFG Co., Ltd.|14,501|
|Shanxi Huaxiang Group Co., Ltd||27,939|
|Hefei Orinko Plastics Group.||-|
|Anhui Wellkey Electrician Material Co., Ltd.||24,994|
|Foshan Midea Real Estate Development Co., Ltd.||-|
|||170,771|

 10 Share-based payment
(1) Pursuant to the third share option incentive plan (the “Third Share Option Incentive Plan”) approved at the third extraordinary general meeting for 2016 dated 6 June 2016, the Company grants 127,290,000 share options with exercise price of RMB21.35 to 929 employees. Under the circumstance that the Company meets expected performance, 1/3 of the total share options granted will become effective after 1 year, 2 years and 3 years respectively since 28 June 2016. Determination method for fair value of share options at the grant date
Exercise price of options RMB21.35 Effective period of options: 5 years Current price of underlying
shares: RMB23.35 Estimated fluctuation rate of share
price: 40.81% Estimated dividend rate: 3.75% Risk-free interest rate within
effective period of options: 2.37% The fair value of the Third Share Option Incentive Plan calculated pursuant to the above parameters is: RMB774,462,000.
2016 Semi-Annual Report of Midea Group Co., Ltd. (2) Movements of share options during the half year
||
|-|
|For the half year of (share options inthousands)|
|203,595|
|127,290|
|(24,675)|
|-|
|306,210|

 The number of outstanding share options at beginning of year is adjusted based on the transfer of capital surplus into share capital (10 for 5) according to the audited number of last year, and the number after adjustment is 203,595,000.
As at 30 June 2016, the maturity date of the First Option Incentive Plan is 17 February 2019, the maturity date of the Second Option Incentive Plan is 27 May 2020, and the maturity date of the Third Option Incentive Plan is on 28 June 2021.
(3) Impact of share-based payment transactions on financial position and financial performance. For the half year of 2016, the total share option expenses recognised under share option incentive plan are RMB229,551,000. As at 30 June 2016, the balance relating to the option incentive plan and provided for in capital surplus was RMB513,294,000.
11 Contingencies
The amount in tax disputes in a Brazilian subsidiary with51% interests held by the Company is about BRL584 million (approximately equivalent to RMB1,205 million) (Some cases have lasted for more than ten years. The above amount includes the principal and related interest). As at 30 June 2016, relevant cases are still at court. With reference to judgements of third-party attorneys, management considers that there is no need to make provisions.
12 Commitments
(1) Operating lease commitments
The Group has no significant operating lease commitments at the balance sheet date.
13 Subsequent events
(a) Acquisition of KUKA
The Company's agreements regarding tender offer of shares of KUKA were approved by the Company's eleventh meeting of the second board of directors on 19 May 2016, twelfth meeting of the second board of directors on 26 May 2016 and the third extraordinary general meeting on 7 June 2016. The Company proposed tender offer by MECCA, a overseas wholly-owned subsidiary of the Company, to acquire the shares of KUKA at a cash consideration of EUR115 per share. KUKA 's three major business segments are as follows: 1) Kuka robotics segment is mainly engaged in the development, manufacturing and sales of core robots as well as related services and controllers; 2) Kuka system segment is mainly engaged in the design and construction of automated manufacturing system; 3) Swisslog segment is mainly engaged in the provision of solutions forR&D Innovation automation in other fields.
As at 4 August 2016, this tender offer term expired, and KUKA shareholders could not continue to
sell shares regarding this tender offer. Upon completion the tender offer, as the Company has
previously held13.51% shares of KUKA, plus the shares acquired through this tender offer, the
Group will hold 37,605,732 shares of KUKA in total, namely,94.55% of KUKA's issued shares.
2016 Semi-Annual Report of Midea Group Co., Ltd. On 10 August 2016, the Company received Notice of Not Implementing Further Examination(SHANGFANLONGCHUSHENHAN[2016] No.224) Issued by Anti-Monopoly Bureau of Ministry of Commerce of China, which passed the review of operators' concentration involved in this tender offer and permitted the implementation of this tender offer.
As at 20 August 2016, Beijing time, "No objection to this acquisition from Federal Ministry for Economic Affairs and Energy of Germany", one of the requirements of the completion of this tender offer, has been satisfied. This tender offer still needs anti-monopoly review by EU, USA, Russia, Brazil and Mexico, as well the review by the Committee on Foreign Investment in the United States (“CFIUS”) and Directorate of Defense Trade Controls (DDTC), and the above government approvals need to be completed before 31 March 2017 at the latest.
(b) Acquisition of Clivet
On 21 June 2016, the Company enter into an agreement withBellò Family to acquire80% shares of Clivet, a central air-conditioning enterprise in Italy. As at the reporting date, such transaction still needs regular anti-monopoly review, and it is estimated to be completed before end of year. 14 Leases
The Group leases in certain fixed assets under finance leases. The future minimum lease payments of the finance leases are summarised in the following table:
Ending balance
Within 1 year 113,718 Over 1 year 583,864 697,582 At end of period, the balance of unrecognised financing charge amounts to RMB62,106,000. 15 Financial risk
The Group is exposed to various financial risks in the ordinary course of business, mainly including
 Foreign exchange risk
 Interest rate risk
 Credit risk
 Liquidity risk
The following mainly relates to the above risk exposures and relevant causes, objectives, policies and process of risk management and method of risk measurement, etc.
The objective of the Group's risk management is to seek balance between risk and income, minimising the adverse impact of financial risks on the Group's financial performance. Pursuant to the risk management objective, the Group has made risk management policies to identify and analyse the risks it is exposed to and set appropriate risk resistant level and design relevant internal control procedures to monitor theGroup’s risk level. The Group reviews regularly these risk management policies and relevant internal control systems to adapt to changes in market condition or its operating activities.
(1) Market risk
(a) Foreign exchange risk
TheGroup’s major operational activities are carried out in Mainland China and a majority of the transactions are denominated in RMB. The Group is exposed to foreign exchange risk arising
from the recognised assets and liabilities, and future transactions denominated in foreign
2016 Semi-Annual Report of Midea Group Co., Ltd. currencies, primarily with respect to US dollars. TheGroup’s finance department at its headquarters is responsible for monitoring the amount of assets and liabilities, and transactions denominated in foreign currencies to minimise the foreign exchange risk. Therefore, the Group enters into forward exchange contracts or currency swap contracts to mitigate the foreign exchange risk.
(b) Interest rate risk
The Group's interest rate risk arises from interest bearing borrowings including long-term borrowings and debentures payable. Financial liabilities issued at floating rates expose the Group to cash flow interest rate risk. Financial liabilities issued at fixed rates expose the Group to fair value interest rate risk. The Group determines the relative proportions of its fixed rate and floating rate contracts depending on the prevailing market conditions.
TheGroup’s finance department at its headquarters continuously monitors the interest rate position of the Group. Increases in interest rates will increase the cost of new borrowing and the interest expenses with respect to theGroup’s outstanding floating rate borrowings, and therefore could have a material adverse effect on theGroup’s financial position. The Group makes adjustments timely with reference to the latest market conditions and may enter into interest rate swap agreements to mitigate its exposure to interest rate risk.
As at 30 June 2016, if interest rates on the floating rate borrowings had risen or fallen by 50 basis points while all other variables had been held constant, theGroup’s net profit would have decreased or increased by approximately RMB11,205,000.
(2) Credit risk
Credit risk is managed on the grouping basis. Credit risk mainly arise from cash at bank, deposits with central bank, deposits with banks and other financial institutions, notes receivable, accounts receivable, interest receivable, loans and advances, other receivables and other structural deposits in current assets.
The Group expects that there is no significant credit risk associated with cash at bank, deposits with central bank and deposits with banks and other financial institutions since they are deposited at state-owned banks and other medium or large size listed banks. Management does not expect that there will be any significant losses from non-performance by these counterparties.
In addition, the Group has policies to limit the credit exposure on notes receivable, accounts receivable, interest receivable, loans and advances, other receivables and other structural deposits in current assets. The Group assesses the credit quality of and sets credit limits on its customers by taking into account their financial position, the availability of guarantee from third parties, their credit history and other factors such as current market conditions. The credit history of the customers is regularly monitored by the Group. In respect of customers with a poor credit history, the Group will use written payment reminders, or shorten or cancel credit periods, to ensure the overall credit risk of the Group is limited to a controllable extent.
(3) Liquidity risk
Cash flow forecasting is performed by each subsidiary of the Group and aggregated by theGroup’s finance department in its headquarters. TheGroup’s finance department at its headquarters monitors rolling forecasts of the Group's short-term and long-term liquidity requirements to ensure it has sufficient cash and securities that are readily convertible to cash to meet operational needs, while maintaining sufficient headroom on its undrawn committed borrowing facilities from major financial institutions so that the Group does not breach borrowing limits or covenants on any of its borrowing facilities to meet the short-term and long-term liquidity requirements.
The financial liabilities of the Group at the balance sheet date are analysed by their maturity date below at their undiscounted contractual cash follows:
2016 Semi-Annual Report of Midea Group Co., Ltd.
|||||
|-|-|-|-|
|Within 1 year|1 to 2 years|2 to 5 years|Over 5 years|
|14,603,389|-|-|-|
|19,451,346|-|-|-|
|21,638,590|13,067|14,141|14,094|
|54,969|-|-|-|
|316,140|-|-|-|
|1,578,669|26,329|25,126|8,661|
|45,740|-|-|-|
|72,521|-|-|-|
|463,180|-|-|-|
|662,915|-|-|-|
|103,594|-|-|-|
|25,328,073|-|-|-|
|183,000|-|-|-|
|71,322|40,882|2,002,814|-|
|110,244|110,244|4,752,084|-|
|84,683,692|190,522|6,794,165|22,755|

 16 Fair value estimates
The level in which fair value measurement is categorised is determined by the level of the fair value hierarchy of the lowest level input that is significant to the entire fair value measurement: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.
(1) Assets and liabilities measured at fair value on a recurring basis
As at 30 June 2016, the assets and liabilities measured at fair value on a recurring basis by the above three levels are analysed below:
Fair value at end of period
||||
|-|-|-|
|Level 1|Level 2|Level 3|
|-|7,366|-|
|-|-|26,786,165|
|-|-|4,432,900|
|4,254,812|-|-|
|4,254,812|7,366|31,219,065|
|-|463,180|-|

2016 Semi-Annual Report of Midea Group Co., Ltd. The Group takes the date on which events causing the transfers between the levels take place as the timing specific for recognising the transfers. In current year, there was no significant transfer of fair value measurement level of the above financial instruments.
The fair value of financial instruments traded in an active market is determined at the quoted market price; and the fair value of those not traded in an active market is determined by the Group using valuation technique. The valuation models used mainly primarily comprise discounted cash flow model and market comparable corporate model. Inputs of valuation technique mainly comprise risk-free interest rate, estimated interest rate and estimated annual yield.
There is no change in the valuation technique for the fair value of theGroup’s financial instruments in current year.
Item -- Available-for-sale equity instruments
Opening balance 18,136,831 Purchases 22,178,900 Sales (9,632,520) Total gains of current period
Investment income recognised in income statement 493,198 Gains recognised in other comprehensive income 42,656 Ending balance 31,219,065 There is no change in the valuation technique for the fair value of theGroup’s financial instruments in current year.
The changes in Level 3 financial assets are analysed below:
Inputs
Relationship
30 June 2016 Valuation with fair Observable/ Fair value technique Name Range value unobservable Available-for-sale
financial assets -
Other current assets Estimated
and other non-current Discounted annual 3.5% to
assets 31,219,065 cash flows yield 6.8% Positive Unobservable Assets and liabilities subject to level 2 fair value measurement are mainly forward exchange contracts and are evaluated by market approach.
(2) Assets and liabilities not measured at fair value but disclosed
The Group's financial assets and financial liabilities measured at amortised cost mainly include: cash at bank and on hand, deposits with central bank, deposits with banks and other financial institutions, notes receivable, accounts receivable, loans and advances, other receivables, other current assets (excluding those mentioned in Note 15(1)), accounts payable, notes payable, short-term borrowings, long-term borrowings, customer deposits and deposits from banks and other financial institutions, financial assets sold under repurchase agreements, interest payable and other current liabilities, etc.
Carrying amounts of theGroup’s financial assets and financial liabilities as at 30 June 2016 and 31 December 2015 approximate their fair value.
17 Capital management
TheGroup’s capital management policies aim to safeguard theGroup’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, refund capital to shareholders, issue new shares or sell assets to reduce debts.
The Group is not subject to external mandatory capital requirements, and monitors capital
structure on the basis of gearing ratio (total assets total liabilities).
2016 Semi-Annual Report of Midea Group Co., Ltd. As at 30 June 2016 and 31 December 2015, the Group's gearing ratio is as follows:
||||
|-|-|-|
|Ending balance|||
||104,843,619|72,810,313|
||167,502,747|128,841,935|
||62.59%|56.51%|

 18 Notes to the parentcompany’s financial statements
(1) Other receivables
|||||
|-|-|-|-|
|Ending balance||||
||12,167,533||7,460,438|
||1,173||864|
||12,168,706||7,461,302|
||(296|)|(263)|
||12,168,410||7,461,039|

 (a) Other receivables are analysed by ageing as follows:
||||||
|-|-|-|-|-|
|Ending balance|||||
||5,314,562||7,461,224||
||6,854,126||60||
||-||18||
||18||-||
||12,168,706||7,461,302||
||(296|)|(263|)|
||12,168,410||7,461,039||

 (b) Other receivables are analysed by categories as follows:
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Ending balance||||||||||||||
|Book balance||||Provision for bad debts||||Book balance||||||
|Amount||% of totalbalance||Amount||Ratio||Amount||Ratio|Amount|||
||12,162,977||99.95%||-||-||7,456,182|99.93%||-|-|
||5,729||0.05%||296||5.17%||5,120|0.07%||263|5.14%|
||12,168,706||100.00%||296||0.002%||7,461,302|100.00%||263|0.004%|

 (c) Other receivables that the related provision for bad debts is provided on grouping basis using the ageing analysis method are analysed as follows:
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Ending balance||||||||||
|Book balance||Provision for bad debts||||Book balance||||
|Amount||Amount||Ratio||Amount||Amount||
||5,680||284||5.00%||5,042|252|5.00%|
||31||3||10.00%||60|6|10.00%|
||-||-||-||18|5|30.00%|

2016 Semi-Annual Report of Midea Group Co., Ltd.
|||||||
|-|-|-|-|-|-|
|18|9|50.00%|-|-|-|
|5,729|296|5.17%|5,120|263|5.14%|

 (d) As at 30 June 2016, other receivables from the top five debtors are analysed as below:
||||||||
|-|-|-|-|-|-|-|
|Nature ofreceivables|Book balance||Ageing|% of total otherreceivables|||
|Temporarypaymentsreceivable|||1 to 2 years||||
|||6,854,095|||56.33%|-|
|Temporarypaymentsreceivable|||Within 1 year||||
|||2,200,000|||18.08%|-|
|Temporarypaymentsreceivable|||Within 1 year||||
|||84,012|||0.69%|-|
|Temporarypaymentsreceivable|||Within 1 year||||
|||67,489|||0.55%|-|
|Temporarypaymentsreceivable|||Within 1 year||||
|||43,220|||0.36%|-|
|||9,248,816|||76.00%|-|

(2) Long-term equity investments
Long-term equity investments are classified as follows:
||||
|-|-|-|
|Ending balance|||
||21,517,042|21,466,087|
||1,297,158|1,282,323|
||373,974|378,136|
||23,188,174|23,126,546|
||-|-|
||23,188,174|23,126,546|

2016 Semi-Annual Report of Midea Group Co., Ltd. (2) Long-term equity investments(Cont’d))
(a) Subsidiaries
||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Opening balance||Movements for current year||||||||||Endingbalance|||
|||Increase inInvestment||Movements due toshare-basedpayments||Decrease ininvestment||Merger||Others|||||
||2,668,161||-||11,855||-||-||-||2,680,016|143,369|
||1,427,988||-||1,416||-||-||-||1,429,404|264,050|
||1,048,377||-||1,944||-||-||-||1,050,321|813,339|
||833,204||-||1,353||-||-||-||834,557|229,198|
||803,508||-||1,594||-||-||-||805,102|479,111|
||2,449,000||-||-||-||-||-||2,449,000|-|
||730,244||-||3,069||-||-||-||733,313|798,828|
||797,083||-||64,580||-||-||-||861,663|523,000|
||466,642||-||4,120||-||-||-||470,762|14,955|
||569,430||-||-||-||-||-||569,430|23,431|
||481,635||-||1,269||-||-||-||482,904|349,352|
||487,678||-||4,537||-||-||-||492,215|116,058|
||422,082||-||893||-||-||-||422,975|60,220|
||436,562||-||6,681||-||-||-||443,243|-|
||345,570||-||3,010||-||-||-||348,580|170,184|
||312,668||-||2,002||-||-||-||314,670|-|
||309,682||-||14,012||-||-||-||323,694|716,945|
||236,543||-||-||-||-||-||236,543|-|
||176,974||-||-||-||-||-||176,974|-|
||136,745||-||-||-||-||-||136,745|-|
||124,030||-||1,954||-||-||-||125,984|-|
||117,000||-||-||-||-||-||117,000|4,147|

 (2) Long-term equity investments(Cont’d))
(a) Subsidiaries (Cont'd)
2016 Semi-Annual Report of Midea Group Co., Ltd.
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Opening balance||Movements for current year||||||||||Endingbalance||
|||Increase inInvestment||Movements due toshare-basedpayments||Decrease ininvestment||Merger||Others||||
||105,722||-||4,443||-||-||-|110,165|-|
||95,000||-||-||-||-||-|95,000|474,110|
||115,946||-||8,966||-||-||-|124,912|67,993|
||96,712||-||4,454||-||-||-|101,166|231,608|
||69,870||-||5,687||-||-||-|75,557|168,445|
||54,000||-||-||-||-||-|54,000|15,988|
||50,817||-||635||-||-||-|51,452|501,624|
||53,276||-||3,053||-||-||-|56,329|105,579|
||47,500||-||-||-||-||-|47,500|-|
||38,438||-||-||-||-||-|38,438|35,606|
||36,062||-||-||-||-||-|36,062|-|
||35,204||-||1,988||-||-||-|37,192|-|
||38,205||-||-||(38,205)||-||-|-|-|
||13,736||-||514||-||-||-|14,250|18,254|
||82||-||-||-||-||-|82|-|
||124,542||-||3,222||-||-||-|127,764|130,876|
||100,000||-||-||-||-||-|100,000|1,330|
||35,000||-||-||-||-||-|35,000|-|
||1,880,041||-||-||-||-||-|1,880,041|-|
||20,000||-||-||-||-||-|20,000|5,623|
||93,527||-||1,205||-||-||-|94,732|54,742|
||196,196||-||137||-||-||-|196,333|-|

 (2) Long-term equity investments(Cont’d))
(a) Subsidiaries(Cont’d)
||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Opening balance||Movements for current year||||||||||Ending balance|||
|||Increase inInvestment||Movements due toshare-basedpayments||Decrease ininvestment||Merger||Others|||||
||985,464||-||7,563||-||-||-||993,027|-|

2016 Semi-Annual Report of Midea Group Co., Ltd.
||||||||||
|-|-|-|-|-|-|-|-|-|
|56,223|-|-|-||-|-|56,223|43,738|
|34,468|-|636|-||-|-|35,104|-|
|56,836|-|935|-||-|-|57,771|3,000|
|60,015|-|-|-||-|-|60,015|-|
|80,000|-|-|-||-|-|80,000|-|
|292,317|-|5,819|-||-|-|298,136|-|
|404,716|-|4,908|-||-|-|409,624|-|
|79,551|-|661|-||-|-|80,212|-|
|61,337|-|6,571|-||-|-|67,908|539,274|
|100,000|-|-|(100,000|)|-|-|-|-|
|161,270|-|1,097|-||-|-|162,367|-|
|53,207|-|-|-||-|-|53,207|-|
|41,357|-|-|-||-|-|41,357|-|
|12,020|-|-|-||-|-|12,020|-|
|67,635|-|-|-||-|-|67,635|-|
|55,031|-|-|-||-|-|55,031|1,812|
|7,000|-|-|-||-|-|7,000|-|
|100,759|-|465|-||-|-|101,224|-|
|73,769|-|1,912|-||-|-|75,681|-|
|2,430|-|-|-||-|-|2,430|-|
|21,466,087|-|189,160|(138,205|)|-|-|21,517,042|7,105,789|

 (2) Long-term equity investments(Cont’d))
(b) Associates and joint ventures
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Openingbalance|Movements for the current period||||||||Endingbalance|
||Increase inInvestment|Decrease ininvestment|Share of netprofit using theequity method|Adjustment inothercomprehensiveincome|Other changesin equity|Cash dividends orprofits declared|Provision forimpairment|Others||
|926,792|-|-|97,024|(10,654)|-|(75,461)|-|-|937,701|
|100,331|-|-|203|-|-|-|-|-|100,534|
|34,367|-|-|3,932|77|-|-|-|-|38,376|
|31,672|-|-|3,088|-|-|(2,000)|-|-|32,760|

2016 Semi-Annual Report of Midea Group Co., Ltd. Co., Ltd.
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|179,391|-|-|(1,180)|-|-|-|-|-|178,211|
|9,770|-|-|(194)|-|-|-|-|-|9,576|
|378,136|-|-|28,238|-|-|(32,400)|-|-|373,974|
|1,660,459|-|-|131,111|(10,577)|-|(109,861)|-|-|1,671,132|

 (3) Revenue
Revenue mainly comprises other operating income including the brand royalty income, rental income and management fee income, etc. obtained by the parent company form the subsidiaries.
(4) Investment income
|||||
|-|-|-|-|
|Current figure||||
||7,105,789||4,071,858|
||425,882||611,607|
||131,111||6,062|
||(104,071|)|-|
||-||118,862|
||7,558,711||4,808,389|

There is no significant restriction on repatriation of the Company's investment income.
2016 Semi-Annual Report of Midea Group Co., Ltd. 1 Details of non-recurring profit or loss.
|||||
|-|-|-|-|
|Currentfigure||||
||6,042|(45,668|)|
||762,724|485,176||
||-|-||
||-|682,954||
||-|-||
||-|17||
||-|-||
||(539,590)|95,857||
||-|341||
||67,147|82,747||
||296,323|1,301,424||
||(30,545)|(287,750|)|
||130,471|(122,589|)|
||396,249|891,085||

 Basis of preparation of details of non-recurring profit or loss:
Pursuant to the requirements of the Explanatory Announcement for Information Disclosure of Companies Offering Securities to the Public No.1 - Non-recurring Profit or Loss (2008) issued by China Securities Regulatory Commission (“CSRC”), non-recurring profit or loss refers to profit or loss arising from transactions and events that are not directly related to theCompany’s normal course of business and that are related to theCompany’s normal course of business but have impact on the right judgement of theCompany’s operation performance and profitability of users of the financial statements due to special nature and occasional occurrence.
2 Return on net asset and earnings per share
The Group's return on net asset and earnings per share calculated pursuant to the Compilation Rules for Information Disclosure of Companies Offering Securities to the Public No.9 - Calculation and Disclosure of Return on Net Asset and Earnings per Share (revised in 2010) issued by CSRC and relevant requirements of accounting standards are as follows:
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Return on net asset(%)|||||||||||
|||||Basic earnings per share|||||||
|Currentfigure||Comparativefigure||Currentfigure||Comparativefigure||Currentfigure|||
||17.64%||19.62%||1.48||1.32||1.48|1.31|
||16.90%||17.52%||1.42||1.17||1.42|1.17|

2016 Semi-Annual Report of Midea Group Co., Ltd. Section X Documents Available for Reference
1. The original of the 2016 Semi-Annual Report of Midea Group Co., Ltd. signed by the legal representative;
2. The financial statements signed and stamped by the legal representative, the financial head and the person-in-charge of the accounting work;
3. The originals of all company documents and announcements that have been
disclosed to the public via newspaper designated for information disclosure during the Report Period.
4. The electronic version of the 2016 Semi-Annual Report of Midea Group Co., Ltd. that is released on http://www.cninfo.com.cn.
Midea Group Co., Ltd. Legal Representative: Fang Hongbo 31 August 2016