Medlive Technology Co., Ltd. — Annual Report 2015

Mar 29, 2016

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

==> picture [235 x 57] intentionally omitted <==

HISENSE KELON ELECTRICAL HOLDINGS COMPANY LIMITED 海信科龍電器股份有限公司

(a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 00921)

ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015

All members (the “Directors”) of the board of directors (the “Board”) of Hisense Kelon Electrical Holdings Company Limited (the “Company” or “Hisense Kelon”) announce the annual audited results of the Company and its subsidiaries (collectively the “Group” or “Kelon”) for the year ended 31 December 2015 (the “Reporting Period”) together with the 2014 comparative figures, prepared in accordance with China Accounting Standards for Business Enterprises (“China Accounting Standards”). The following financial information is prepared in accordance with China Accounting Standards:

FINANCIAL INFORMATION PREPARED IN ACCORDANCE WITH CHINA ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES

(Unless otherwise specified, all amounts are denominated in RMB)

Consolidated Balance Sheet

Consolidated Balance Sheet
Item	Note	31 December 2015	31 December 2014
Assets
Current assets
Cash at bank and on hand		1,014,410,146.17	870,663,755.12
Financial assets at fair value through profit or lossforthe current period			162,460.00
Notes receivable		2,289,706,048.91	991,796,937.82
Accounts receivable	5	2,086,596,419.00	1,984,291,386.93
Prepayments		169,804,372.86	498,209,306.68
Others receivables		234,011,936.52	493,051,526.66
Inventories		2,270,139,557.55	2,915,921,775.81
Other current assets		467,872,305.65	287,019,824.65
Total current assets		8,532,540,786.66	8,041,116,973.67
Non-current assets
Financial assets available-for-sale		3,900,000.00	4,000,000.00

Page 1 of 45

Long-term equity investments		1,323,253,353.15	1,216,043,770.20
Investment properties		28,958,126.07	31,459,416.41
Fixed assets		3,529,787,697.68	2,932,039,091.41
Construction in progress		64,837,848.39	251,551,873.15
Disposal of fixed assets		1,468,664.05	134,612.95
Intangible assets		694,379,768.17	670,944,657.29
Long-term prepaid expenses		10,599,736.59	12,690,220.43
Deferred tax assets		103,091,058.77	106,813,348.23
Total non-current assets		5,760,276,252.87	5,225,676,990.07
Total assets		14,292,817,039.53	13,266,793,963.74
Liabilities and shareholders’ equity
Current liabilities
Short-term borrowings		223,496,764.71	253,985,142.45
Financial liabilities at fair value through pr ofit or lossforthe current period		9,767,732.75	7,391,136.66
Notes payable		2,931,174,504.52	1,528,195,526.41
Accountspayable	6	2,878,291,676.53	3,465,854,583.60
Advances from customers		712,934,326.56	765,881,375.85
Employee remunerations payable		250,749,290.94	249,664,285.98
Taxes payable		161,686,275.79	174,792,592.21
Interests payable
Dividends payable			2,067.02
Other payables		1,483,744,213.15	1,735,584,905.78
Other current liabilities		794,105,569.67	680,022,633.56
Total current liabilities		9,445,950,354.62	8,861,374,249.52
Non-current liabilities
Provisions		320,959,024.64	404,411,887.77
Deferred income		51,750,592.81	60,261,598.06
Deferred tax liability		347,710.13	165,600.70
Total non-current liabilities		373,057,327.58	464,839,086.53
Total liabilities		9,819,007,682.20	9,326,213,336.05
Shareholders’ equity
Share capital		1,362,725,370.00	1,358,495,560.00
Capital reserves		2,155,529,231.17	2,125,930,825.88
Other comprehensive incomes		11,482,265.05	39,990,884.45
Surplus reserves		240,622,313.49	145,189,526.48
Retained profits		273,658,518.74	-211,243,768.43

Page 2 of 45

Total equity attributable to shareholders of the Company		4,044,017,698.45	3,458,363,028.38
Minority interests		429,791,658.88	482,217,599.31
Total shareholders’ equity		4,473,809,357.33	3,940,580,627.69
Total liabilities and shareholders’ equity		14,292,817,039.53	13,266,793,963.74

Consolidated Income Statement
Item	Note	2015	2014
Operating revenue	7	23,471,602,857.98	26,534,420,935.55
Operating costs	7	18,440,738,979.66	20,784,712,962.70
Business taxes and surcharges		97,160,017.88	98,323,909.43
Selling and distribution expenses		4,308,881,508.98	4,388,690,223.86
General and administrative expenses		905,237,728.27	856,931,761.63
Financial expenses	8	-71,444,717.51	-3,966,187.82
Impairment losses on assets		4,670,866.73	58,625,706.01
Gain from changes in fair value		-2,539,056.09	-74,339,051.01
Investment gain	9	530,171,700.74	375,501,155.02
Including: Share of profit of associates and joint ventures		329,436,651.65	311,516,852.93
Operating profits		313,991,118.62	652,264,663.75
Non-operating income		326,848,455.27	124,362,153.94
Including:Gainson non-current assets		2,557,013.97	1,623,453.29
Non-operating expenses		17,185,413.56	5,391,172.93
Including: Losses on disposal of non-current assets		13,709,993.98	3,967,010.86
Total profits		623,654,160.33	771,235,644.76
Less: Income tax expenses	10	79,377,763.58	59,725,146.29
Net profits		544,276,396.75	711,510,498.47
Net profits of consolidated parties prior to consolidation
Net profit attributable to shareholders of the parent		580,335,074.18	672,478,632.35
Profit and loss of minority interests		-36,058,677.43	39,031,866.12
Earnings per share
Basic earnings per share	13	0.43	0.50
Diluted earnings per share	13	0.43	0.50
Other comprehensive income		-28,508,619.40	-359,473.40
(1) Items to be reclassified into profit and loss in subsequent accounting periods upon satisfaction of required conditions		-32,807,417.54	-359,473.40
(2) items not to be reclassified into profit and loss in subsequent		4,298,798.14

Page 3 of 45

accounting periods
Total comprehensive income		515,767,777.35	711,151,025.07
Total comprehensive income attributable to shareholders of the parent		551,826,454.78	672,119,158.95
Total comprehensive income attributable to minorityinterests		-36,058,677.43	39,031,866.12

Note:

1.General information

Hisense Kelon Electrical Holdings Company Limited (the “Company”) is a joint stock limited company incorporated in the People’s Republic of China (the “PRC”) on 16 December 1992. The Company’s overseas listed public shares (the “H Shares”) were listed on The Stock Exchange of Hong Kong Limited on 23 July 1996, whereas the Company’s domestic shares (the “A Shares”) were listed on the Shenzhen Stock Exchange on 13 July 1999.

On 29 January 2007, a share reform scheme (the “Reform of Non-tradable Shares Scheme”) was set up for converting the Company’s non-freely transferable domestic legal person shares into freely transferable A shares (“Transferable Shares”) and the scheme was approved and completed in the A shares general meeting , and further approved by Ministry of Commerce PRC on 22 March 2007.

On 31 August 2009, the Company constituted a major asset reorganization and entered into conditional sale and purchase agreement regarding the acquisition of the white goods assets and business (the “White Goods Business”) of Hisense Air-Conditioning(the “Acquisition”). The Acquisition was approved by the CSRC (China Securities Regulatory Commission) on 23 March 2010. On 10 June 2010, the Company allotted and issued 362,048,187 A shares to Hisense Air-Conditioning for the Acquisition.

On 18 June 2013, 612,316,909 restricted A shares of the Company held by Hisense Air-Conditioning were no longer subject to selling moratorium and were listed for trading.

On May 23, 2014, the exercise conditions are satisfied for the company's first exercise period of the first phase of stock option incentive plan. China Securities Depository and Clearing Corporation Limited Shenzhen branch has approved the registration, and the exercise of 4,480,810 new stocks has been approved for listing.

On 19 Jun 2015, the exercise conditions are satisfied for the company's second exercise period of the first phase of stock option incentive plan. China Securities Depository and Clearing Corporation Limited Shenzhen branch has approved the registration, and the exercise of 4,229,810 new stocks has been approved for listing.

As at 31 December 2015, the total number of issued shares of the Company was 1,362,725,370 and the registered capital of the Company was RMB1,362,725,370.00, of which Hisense Air-Conditioning held 612,316,909 shares, representing 44.93% of the Company’s total issued share capital and continued to be the immediate controlling shareholder.

In the opinion of the directors of the Company, as at 31 December 2015, Hisense Company Limited (“Hisense Group”), a state-owned enterprise incorporated in the PRC, is regarded as the ultimate controlling shareholder.

Page 4 of 45

The English names to which some of the companies are referred as in these financial statements represent management’s best efforts in translation as no English names have been registered for these companies. The Group, comprising the Company and its subsidiaries, is principally engaged in the manufacture and sale of refrigerators and air-conditioners.

The address of the registered office and principal place of business of the Company is No. 8 Ronggang Road, Ronggui, Shunde, Foshan, the PRC.

2.Basis of preparation

The financial statements are prepared based on going-concern assumption and actual transactions and events according to the Accounting Standards for Business Enterprises - Basic Standard (the Ministry of Finance Order No. 33 Issue, the Ministry of Finance Order No. 76 Amendment) issued by the Ministry of Finance, and 41 specific accounting standards , application guidelines for Accounting Standards for Business Enterprises, explanation of Accounting Standards for Business Enterprises and other relevant regulations (hereinafter collectively referred to as “Accounting Standards For Business Enterprises”) issued and revised on February 15, 2006 or later, and the Information Disclosure Regulations for Companies Publicly Issuing Securities No. 15 - General Provisions for Financial Statements (Revised 2014) issued by China Securities Regulatory Commission.

According to the relevant provisions of Accounting Standards for Business Enterprises, the Company’s financial accounting is conducted on accrual basis. Except for certain financial instruments, the financial statements take the historical cost as the accounting basis. If an asset is impaired, the provision for impairment shall be accrued in accordance with the relevant provisions.

The Company is listed in both Mainland and Hong Kong stock exchange, besides the abovementioned relevant regulations, the financial statements also comply with applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the disclosure requirements of the Hong Kong Companies Ordinance.

3.Significant changes in accounting policies

There are no significant changes in the accounting policies, accounting estimate applied in preparing of these financial statements.

4.Segment information

The Group manages its business by divisions which are organized by a mixture of both business lines and geographical areas. The information is reported internally to the Group’s most senior executive management for the purpose of resource allocation and performance assessment, the Group has identified the following three reportable segments: Refrigerators and washing machines, air-conditioners, and others (including product components and other electrical household appliances).

(1) Segment information as at and for the year is as follows:

Amount for current period	Refrigerators and washingmachines	Air- conditioners	Others	Elimination	Total
1. Revenue from external sales	11,555,814,929.64	8,986,110,462.69	1,261,753,115.53		21,803,678,507.86
2. Revenue from inter-segment sales			1,079,389,775.96	-1,079,389,775.96
3. Gain from investment in associates andjoint ventures	-67,586,516.45	397,299,600.52	-276,432.42		329,436,651.65

Page 5 of 45

4. Depreciation and amortization	313,722,331.33	194,093,039.02	95,198,586.07		603,013,956.42
5. Gain from changes in fair value	-1,047,895.89	-1,047,895.89	-443,264.31		-2,539,056.09
6. Impairment losses on assets	826,341.84	896,797.23	2,947,727.66		4,670,866.73
7. Total profits(Total losses)	119,249,485.09	274,892,882.63	272,497,698.63	-42,985,906.02	623,654,160.33
8. Income tax expenses	-7,795,680.15	65,156,537.50	22,016,906.23		79,377,763.58
9. Net profits (Net losses)	127,045,165.24	209,736,345.13	250,480,792.40	-42,985,906.02	544,276,396.75
10. Total assets	14,153,219,695.64	9,306,682,399.33	3,830,688,869.63	-12,997,773,925.07	14,292,817,039.53
11. Total liabilities	9,559,782,106.94	7,128,189,003.57	2,163,808,333.46	-9,032,771,761.77	9,819,007,682.20
12. Additions to other non-current assets other than long-term equity investments	34,127,280.60	359,832,752.77	33,529,646.48		427,489,679.85

Segment information as at and for last year is as follows:

Amount for last period	Refrigerators and washingmachines	Air- conditioners	Others	Elimination	Total
1. Revenue from external sales	11,864,028,175.03	11,342,514,901.50	1,164,444,974.64		24,370,988,051.17
2. Revenue from inter-segment sales			1,167,709,264.45	-1,167,709,264.45
3. Gain from investment in associates andjoint ventures	-32,615,369.55	344,451,398.11	-319,175.63		311,516,852.93
4. Depreciation and amortization	340,888,192.48	160,804,441.46	-1,268,122.29		500,424,511.65
5. Gain from changes in fair value	-31,515,479.90	-29,910,879.16	-12,912,691.95		-74,339,051.01
6. Impairment losses on assets	23,811,177.70	36,884,260.65	-2,069,732.34		58,625,706.01
7. Total profit (Total loss)	139,168,506.62	522,949,903.74	163,603,402.85	-54,486,168.45	771,235,644.76
8. Income tax expenses	37,156,783.38	3,668,910.35	18,899,452.56		59,725,146.29
9. Net profit (Net loss)	102,011,723.24	519,280,993.39	144,703,950.29	-54,486,168.45	711,510,498.47
10. Total assets	11,997,088,181.69	9,477,802,119.66	3,682,785,008.26	-11,890,881,345.87	13,266,793,963.74
11. Total liabilities	8,145,845,933.47	7,351,150,477.03	2,394,229,900.30	-8,565,012,974.75	9,326,213,336.05
12. Increased amounts of other non-current assets other than long-term equityinvestments	285,719,193.14	421,677,482.96	78,411,251.21		785,807,927.31

(2)Geographic information

(2)Geographic information
Category	2015	2014
Revenues from domestic customers	14,266,558,516.03	17,178,988,978.86
Revenues from overseas customers	7,537,119,991.83	7,191,999,072.31
Total	21,803,678,507.86	24,370,988,051.17
Domestic non-current assets	5,749,543,669.67	5,212,995,836.79
Overseas non-current assets	10,732,583.20	12,681,153.28
Total	5,760,276,252.87	5,225,676,990.07

Page 6 of 45

The business of the Company is mainly operated in Mainland China, where the majority of non-current assets of the Company are held，therefore further detailed regional information is not required to be presented.

5.Accounts receivable

Normal credit term of 60 days is granted to customers. The Group allows a credit term no more than one year for large and well-established customers. Sales are usually settled by cash on delivery for small and new customers. Accounts receivables are non-interest bearing.

The aging of accounts receivable is analyzed as follows:

Item	31 December 2015	31 December 2014
Within three months	2,050,051,659.69	1,939,033,166.75
Over three months but within six months	33,702,888.63	41,524,824.98
Over six months but within one year	12,424,319.08	15,771,755.40
Over one year	115,640,119.80	134,718,629.69
Total	2,211,818,987.20	2,131,048,376.82
Less: provision for bad debts	125,222,568.20	146,756,989.89
	2,086,596,419.00	1,984,291,386.93

6.Accounts payable

The aging of accounts payable is analyzed as follows:

Item	31 December 2015	31 December 2014
Within one year	2,765,359,219.91	3,335,201,948.30
Over one year	112,932,456.62	130,652,635.30
Total	2,878,291,676.53	3,465,854,583.60

7.Operating revenues and costs

7.Operating revenues and costs
Item	2015	2014
Revenue from principal operations	21,803,678,507.86	24,370,988,051.17
Revenue from other operations	1,667,924,350.12	2,163,432,884.38
Total	23,471,602,857.98	26,534,420,935.55
Item	2015	2013
Cost of principal operations	16,966,319,509.39	18,762,900,237.84
Cost of other operations	1,474,419,470.27	2,021,812,724.86
Total	18,440,738,979.66	20,784,712,962.70

8.Financial expenses

8.Financial expenses
Item	2015	2014
Interest expenses	11,581,630.89	15,003,224.16
Less: interest income	5,689,252.09	3,791,604.77
Gain/(Loss) on Foreign Exchange	-57,267,840.76	-11,103,123.31
Others	-20,069,255.55	-4,074,683.90
Total	-71,444,717.51	-3,966,187.82

Page 7 of 45

9.Investment gain

(1) Particulars of investment gain

Item	2015	2014
Investment income arising from available-for-sale financial assets duringholding period	7,410,000.00	9,500,000.00
Gain from long-term equity investment by the equity method	329,436,651.65	311,516,852.93
Gain from disposal of long-term equity investment	135,654,196.76
Gain from disposal of financial assets held-for-trading	57,670,852.33	54,484,302.09
Total	530,171,700.74	375,501,155.02

(2) Investment income arising from available-for-sale financial assets during holding period

Investee	2015	2014
Qingdao Hisense International Marketing Co,.Ltd.	7,410,000.00	9,500,000.00
Total	7,410,000.00	9,500,000.00

(3) Gain from long-term equity investments by the equity method

Investee	2015	2014
Huayi Compressor		7,000,709.29
Hisense-Whirlpool	-67,586,516.45	-39,616,078.84
Attend Logistics Co,. Ltd.	-276,432.42	-319,175.63
Hisense Hitachi	397,299,600.52	344,451,398.11
Total	329,436,651.65	311,516,852.93

10.Income tax expenses

10.Income tax expenses
Item	2015	2014
Current income tax expenses	75,473,364.69	129,756,032.80
Including: PRC enterprise income taxes	75,129,488.44	125,223,500.64
Hong Kong profit taxes	343,876.25	4,532,532.16
Deferred tax expenses	3,904,398.89	-70,030,886.51
Total	79,377,763.58	59,725,146.29

The reconciliation from income tax calculated based on the applicable tax rates and total profits to the income tax expenses is as follows:

Item	2015
Total profits	623,654,160.33
Income tax expenses calculated at statutory (or applicable) tax rates	155,913,540.08
Tax effects of different tax rates applicable to certain subsidiaries	-7,434,861.15
Adjustments of income tax in previous period	6,069,222.49
Effects of non-taxable incomes	-84,107,742.03
Effects of non-deductible costs, expenses and losses	24,504,313.56
Effects of deductible losses not recognized as deferred tax assets in previous period	-154,149,055.09
Effects of deductible temporary differences or deductible losses not recognized as deferred taxassetsincurrent period	167,182,408.85

Page 8 of 45

Others

- 28,600,063.13 79,377,763.58

Income tax expenses

Certain subsidiaries have been recognized as “high technology” companies and are entitled to a preferential tax rate of 15% (2014: 15%).

Hong Kong Profits Tax is calculated at 16.5% (2014: 16.5%) of the estimated assessable profits.

Except as disclosed above, the Company and other group entities, which were established and operated in the PRC, are subject to EIT at a standard rate of 25% (2014: 25%).

11.Net current assets

11.Net current assets
Item	31 December 2015	31 December 2014
Current assets (Consolidated)	8,532,540,786.66	8,041,116,973.67
Less：Current liabilities (Consolidated)	9,445,950,354.62	8,861,374,249.52
Net current assets (Consolidated)	-913,409,567.96	-820,257,275.85
Current assets (the Company)	2,909,661,756.05	3,050,739,339.88
Less：Current liabilities (the Company)	2,335,475,827.76	2,894,421,008.43
Net Current assets (the Company)	574,185,928.29	156,318,331.45

12.Total assets less current liabilities

12.Total assets less current liabilities
Item	31 December 2015	31 December 2014
Total assets (Consolidated)	14,292,817,039.53	13,266,793,963.74
Less：Current liabilities (Consolidated)	9,445,950,354.62	8,861,374,249.52
Total assets less current liabilities (Consolidated)	4,846,866,684.91	4,405,419,714.22
Total assets (the Company)	7,078,766,344.72	7,138,546,340.56
Less：Current liabilities (the Company)	2,335,475,827.76	2,894,421,008.43
Total assets less current liabilities (the Company)	4,743,290,516.96	4,244,125,332.13

13.Earnings per share

(a)Basic earnings per share

The calculation of basic earnings per share is based on the consolidated net profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding:

Item	2015	2014
Consolidated net profit attributable to ordinary shareholders ofthe parent	580,335,074.18	672,478,632.35
Weighted average number of issued ordinary shares of the Company outstanding	1,360,962,949.17	1,356,645,223
Basic earnings per share	0.43	0.50

(b)Diluted earnings per share

The calculation of diluted earnings per share is based on the consolidated net profit attributable to ordinary shareholders of the parent adjusted for dilutive potential ordinary shares divided by the adjusted weighted average number of ordinary shares of the Company outstanding. For the years ended 31 December 2015 and 2014, there were no dilutive potential ordinary shares, and therefore the diluted earnings per share were same as the basic earnings per share.

Page 9 of 45

(c)Dividends

The Board proposed to pay a cash dividend of RMB1.5 (tax inclusive) per 10 shares held by all shareholders on the basis of the total share capital of 1,362,725,370 shares of the Company as at 31 December 2015, without bonus issue and not to issue shares by way of conversion of capital reserve. (2014: Nil).

MANAGEMENT DISCUSSION AND ANALYSIS

Ⅰ .Industry Overview

During the Reporting Period, unfavourable factors such as global economic slowdown, sluggish demand, increasing downward pressure on the economy, high inventory level in the industry, slower growth in the real estate market, etc. continued affecting the development of the white goods industry. Both the sales volume and amount of refrigerators and air-conditioners have decreased and the difficult condition for white goods enterprises continued. According to the statistics of China Market Monitor Company Limited (CMM), in 2015, the cumulative retail volume of the refrigerator industry recorded a year-to-year decrease of 4.76% and its cumulative retail amount decreased by 0.52% year-to-year; whereas the cumulative retail volume of the air-conditioner industry recorded a year-to-year drop of 4.10% and its cumulative retail amount decreased by 8.09% year-to-year. As to the export market, export revenue showed a declining trend due to the lack of momentum for the recovery of the global economy and the general weakness of non-US currencies. According to the Customs statistics on export, the export volume in 2015 for the refrigeration products recorded a year-to-year increase of 3.7%, and the export volume for the air-conditioning products recorded a year-to-year decrease of 5.7%.

As consumers have high demand for product function, quality and design, “demand for improvement” has undoubtedly become the new growth point in the demand for household appliances market. Therefore, accompanying the development in mobile Internet technologies and the upgrading of public consumption demand, “living room economics” has become the consensus for development of various white goods enterprises. White goods are further heading towards intelligentization, artization and high-end development.

Ⅱ .Analysis of the Company’s Operation Overall situation

During the Reporting Period, the Company upheld the operating directions of “building product advantages, enhancing sales capability, improving service quality, uplifting system efficiency and ensuring scale and efficiency” in performing various tasks. However, due to influence of factors such as weak market demand, high inventory level of the air-conditioner industry, slow improvement in the qualities of the Company’s channels and inadequate optimization of product structure, the economies of scale of the Company showed a decline. The Company recorded operating revenue of RMB 23,472 million and principal operating revenue of RMB 21,804 million, representing a year-to-year decrease of 10.53%, of which revenue from the refrigerator and washing machine business accounted for 53% of the principal operating revenue, representing a year-to-year decrease of 2.60%; revenue from the air-conditioner business accounted for 41.21%, representing a year-to-year decrease of 20.77%; the domestic sales business recorded a principal operating revenue of RMB 14,267 million, representing a year-to-year decrease of 16.95%, whereas the export sales business recorded a principal operating revenue of RMB 7,537 million, representing a year-to-year

Page 10 of 45

increase of 4.8%. The Company recorded net profits attributable to equity holders of the listed company of RMB 580 million, representing a year-to-year decrease of 13.70%. Earnings per share were RMB 0.43.

Technology orientation

The Company adhered to the development strategy of “Technology orientation and prudent operation”. Increasing the competitiveness of products through strengthening technological innovation and upgrading and raising the quality and added value of products has become an important measure for the Company in tackling difficult operating condition and industry upgrades.

During the Reporting Period, the refrigerator business of the Company continued to adhere to the direction of further improvement on the level of product intelligentization and user experience in its research and development. With focus on improving the technology in areas such as “energy efficiency”, “fresh-keeping”, “rapid refrigeration”, “vibration and noise reduction” and “intelligentization”, it was committed to technology innovations and function upgrades. In February 2015, the Company’s project named “Research and Application of European A++ High-end Air-cooled refrigerator energy-saving technology” won the 2014 Outstanding Technology Award of China National Light Industry Council. In April 2015, the Company announced the in-depth global strategic cooperation with Honeywell in which they would jointly promote the wider use of Solstice® liquid blowing agent（LBA）in refrigerator and freezer products, so as to further enhance the energy efficiency rating of its refrigeration products and reduce greenhouse gas emission, and continue to strengthen the Company’s leading position in energy saving for refrigeration products. In the China Refrigerator Industry Symposium in May 2015, “Ronshen” refrigerator won the grand award of the “Leading Brand in Fresh-keeping Technology in refrigerator industry” for its continuing technical innovations in fresh-keeping and moisturizing, the “Ronshen” 618 Litres cross-design four-door intelligent refrigerator won the unique award of “Cross-design four-door leading product” in the industry for its innovative structural design, advanced innovative technology and other leading advantages; the “Hisense” 612 Litres side-by-side refrigerator was awarded the “High-end Variable Frequency Product in Refrigerator Industry” with its distinctive advantages such as good cooling effect, strong fresh-keeping capabilities as well as low power consumption. In the “Press Conference of the Evaluation Results of the First Intelligent Household Appliances in China” jointly organized by China Quality Certification Centre and China Household Electrical Appliances Research Institute in July 2015, Hisense intelligent refrigerator was honoured with the award of “The Most Capable Intelligent Electrical Appliance in Self-Learning”. In October 2015, the Company’s own research and development project “Research and application of French-style frostless energy-saving refrigerator simulation technology”, was awarded the Third Prize of Technology Advancement by China Household Electrical Appliances Association.

During the Reporting Period, the air-conditioner business of the Company adhered to the development directions of “breakthrough in core technology, product innovation and customer satisfaction”, and achieved significant results in areas such as breakthrough in core technology and innovation of high-end products. In terms of breakthrough in core technology, the “variable vapour injection” (VVI) technology autonomously developed by the Company was successfully applied in inverter multi-connection products and low-temperature strong-heat heater products. As the problem of heat loss in air-conditioners under extreme temperatures was resolved with the VVI technology, the air-conditioner company was given the “technological advancement award” by the Chinese Association of Refrigeration. With the advantage of maintaining the inverting technology

Page 11 of 45

of air-conditioners, the Company reformed and upgraded the core technology of inverter for air-conditioner products. It successfully developed and launched the inverter technology of the 8[th] generation——“rapid inverter”, and took the lead in introducing the “6S Inverter Standards” covering 6 major areas of “rapid, energy efficiency, quietness, confidence, breadth and intelligence”, which raised the standards of inverter air-conditioners to a new level in the industry. In terms of high-end products, the Company launched Hisense Air-conditioners’ Apple Cloud Series T “Xuanzhuang” air-conditioners, which was the first 360-degree “Flip Turn” artistic cabinet air-conditioner in the industry. Hisense “Xuanzhuang” air-conditioners integrated various technologies such as “High Efficiency Centrifugal Air Passage”, “V-Shape High Efficiency Heat Converter”, “infrared thermal human body detection”, “IFD Purifying Technology”, “NANOE Anti-bacteria Technology” and “WIFI Intelligent Technology”. With its outstanding performance in five areas including “intelligence, energy efficiency, healthy living, aesthetics and quietness”, Hisense “Xuanzhuang” air-conditioners won the “Chinese Home Electrical Appliance Design Award” in the Appliance &electronics World Expo.

Refrigerator and washing machine business

During the Reporting Period, the Company’s refrigerator and washing machine business continued its strategy of high-end products and enhanced the product structure. The dual system and dual ion fresh-keeping 620 cross refrigerator was launched and the 375 Litres 5-door refrigerator products and a series of small French-style 4-door refrigerator products were newly launched, enriching the high-end product mix. According to the statistics of CMM, the retail market share of the French-style refrigerators in 2015 was 17.13%, representing a year-to-year increase of 2.02 percentage points. The price index of products under the brands of “Hisense refrigerator” and “Ronshen refrigerator” increased gradually. Due to the increasing downward pressure in the domestic economy and low demand, revenue from the refrigerator and washing machine business of the Company dropped, representing a year-to-year decrease of 2.60%. To maintain its profitability, the Company performed tasks to raise gross profit margin in all aspects such as product development, purchasing, manufacturing and sales. The year-to-year growth in the gross profit margin of refrigerator and washing machine was 1.40 percentage points in 2015. Besides, the Company actively explored the overseas market, promoting sales in overseas market comprehensively. According to the statistics of the Customs on export, the export volume of the refrigerator and washing machine products of the Company marked a year-to-year growth of 9.9% in 2015, outperforming the industry’s average growth of 3.7%.

Air-conditioner business

During the Reporting Period, due to the influence of factors such as sluggish market demand, high inventories level of the industry and price war, the scale ability and profitability of the air-conditioner business of the Company declined. Revenue of the air-conditioner business of the Company recorded a year-to-year decrease of 20.77%. The gross profit margin marked a year-to-year decrease of 3.38 percentage points. Facing such difficult environment, the Company actively adjusted the product structure, focused its efforts in the sector of intelligent inverting air-conditioners and adopted the strategy of “phasing out constant speed and popularizing intelligent air-conditioners”. In addition, the Company continued various foundation management tasks to strictly implement quality management. The quality of air-conditioner products of the Company continued to improve. In the Quality Month of China co-organized by 39 departments including the General Administration of Quality Supervision, Inspection and Quarantine, the Publicity Department, National Development and Reform Commission and Ministry of Industry and

Page 12 of 45

Information Technology, the Company was named as the “Typical Enterprise with Outstanding Quality and Integrity in China” and “Qualified Product with Overall Stable Performance in Quality Inspection in China”.

Ⅲ. ANALYSIS TO PRINCIPAL FINANCIALS DURING THE REPORTING PERIOD

( Ⅰ ) MAJOR ACCOUNTING DATA AND FINANCIAL INDICATORS

Did the Company make retrospective adjustment to or restatement of the accounting data of prior years due to changes in accounting policies and correction of accounting errors?

□Yes √No

			Increase or
			decrease as
Item	2015	2014		2013
			compared to last
			year (%)
Operating revenue (RMB)	23,471,602,857.98	26,534,420,935.55	-11.54	24,360,021,308.47
Net profits attributable to shareholders of listed	580,335,074.18	672,478,632.35
company (RMB)			-13.70	1,215,669,602.07
Net profits after deducting non-recurring profit
and loss attributable to shareholders of listed
company (RMB)	232,460,457.89	582,931,287.47	-60.12	1,077,904,382.91
Net cash flow from operating activities (RMB)	484,261,155.05	965,990,457.87	-49.87	218,798,349.53
Basic earnings per share (RMB/share)	0.43	0.50	-14.00	0.90
Diluted earnings per share (RMB/share)	0.43	0.50	-14.00	0.90
			-6.16percentage
Weighted average rate of return on net assets (%)
	15.49	21.65	points	56.78
			Increase or
			decrease as
Items	31 December 2015	31 December 2014	compared to end of	31 December 2013
			last year (%)
Total assets (RMB)	14,292,817,039.53	13,266,793,963.74	7.73	12,208,030,858.33
Net assets attributable to shareholders of listed	4,044,017,698.45	3,458,363,028.38
company (RMB)			16.93	2,748,731,080.83

QUARTERLY MAJOR FINANCIAL INDICATORS

	Unit: RMB	Unit: RMB	Unit: RMB	Unit: RMB
Item
	First Quarter	Second Quarter	Third Quarter	Fourth Quarter
Operating revenue (RMB)	6,430,772,090.41	7,180,376,529.48	5,616,212,947.84	4,244,241,290.25
Net profits attributable to shareholders of listed	224,500,108.92	281,217,624.98
company (RMB)			-46,017,112.95	120,634,453.23
Net profits after deducting non-recurring profit and
loss attributable to shareholders of listed company
(RMB)	90,810,688.39	196,717,257.46	-63,641,709.71	8,574,221.75
Net cash flowfromoperating activities (RMB)	-79,734,934.22	-119,429,911.07	197,676,500.75	485,749,499.59

( Ⅱ ) NON-RECURRING PROFIT AND LOSS ITEMS AND AMOUNTS

Unit: RMB

Item	Amount of 2015	Amount of 2014	Amount of 2013	Description
Profits or losses from disposal of non-current assets
(including the part written off for provision for impairment
on assets)	124,501,216.75	-2,343,557.57	296,087.55
Government grantsrecognizedinthe profits or losses	173,616,297.39	82,298,890.90	82,700,643.38

Page 13 of 45

(excluding government grants closely related to the
Company’s business and are received with fixed amounts or
with fixed percentage based on unified standards
promulgated by government)
Corporate restructuring costs (e.g. staff relocation costs and
costs during the course of integration)	-22,087,867.83	-36,817,863.11	-52,492,777.86
Reversal of provision for impairment loss of account
receivables subject to separate impairment testing		12,585,064.60	89,950,024.68
Other non-operating income and expenses other than the
aforementioned items	111,227,500.87	39,015,647.68	14,306,916.33
Less:Effect of income tax	33,493,517.67	15,218,459.01	4,249,768.03
Effect of minority interests (after tax)	5,889,013.22	-10,027,621.39	-7,254,093.11
Total	347,874,616.29	89,547,344.88	137,765,219.16

( Ⅲ ) ANALYSIS OF PRINCIPAL BUSINESS

1. Income

Is the Company’s income from sales of goods larger than its income from provision of services? √Yes □No

				Increase or decrease as
	Item (ten thousand
Industry Category		2015	2014	compared to corresponding
	units / sets)
				period last year (%)
	Sales volume	1,646	1,699	-3.12
Home appliances
	Production volume	1,570	1,731	-9.30
fi id
manuacturng nustry	Inventory volume	108	184	-41.30

Inventory volume decreased by 41.30% year-to-year, mainly due to the Company’s effort to clear inventories in order to avoid the risk of dropping prices of inventories during the Reporting Period.

2. Composition of operating revenue

Unit: RMB

	2015	2015	2014	2014
					Increase or decrease as
		Weight to
				Weight to operating	compared to
Item		i
		operatng	Amount	revenue	corresponding period
	Amount
		revenue		(%)）	last year (%)
		(%)）
Total of operating
revenue	21,803,678,507.86	100.00	24,370,988,051.17	100.00	-10.53
	By industry
Home appliances
manufacturing
industry	21,803,678,507.86	100.00	24,370,988,051.17	100.00	-10.53
	By product
Refrigerators and
washingmachines	11,555,814,929.64	53.00	11,864,028,175.03	48.68	-2.60
Air-conditioners	8,986,110,462.69	41.21	11,342,514,901.50	46.54	-20.77
Others	1,261,753,115.53	5.79	1,164,444,974.64	4.78	8.36
	By region
Domestic	14,266,558,516.03	65.43	17,178,988,978.86	70.49	-16.95
Overseas	7,537,119,991.83	34.57	7,191,999,072.31	29.51	4.80

3. Composition of operating Costs

Unit: RMB ten thousand

		2015	2015	2014	2014	Increase or decrease as
Industry Category	Item		Weight to		Weight to	compared to
		Amount
			operating costs	Amount	operating costs	corresponding period last

Page 14 of 45

			(%)		(%)	year (%)
	Raw materials	1,521,967.68	89.71	1,697,168.44	90.45	-0.74
Home appliances
	Staff wages	59,465.79	3.50	53,990.60	2.88	0.62
fi id
manuacturng nustry	Depreciation	45,550.18	2.68	36,722.00	1.96	0.72

4.Expenses

Unit: RMB ten thousand

Expense Item	2015	2014	Increase or decrease as compared to corresponding period last year (%)	Reason for the significant changes
Sales expense	430,888.15	438,869.02	-1.82	No significant change
Management expense	90,523.77	85,693.18	5.64	No significant change
Finance expense	-7,144.47	-396.62	N/A	Mainly due to the significant increase in the foreign exchange gain during the Reporting Period.
Income tax expense	7,937.78	5,972.51	32.91	Mainly due to the change in deferred tax assets during theReportingPeriod

5.Cash Flow

Unit: RMB ten thousand

			Increase or decrease as compared to
Item	2015	2014
			corresponding periodlast year(%)
Sub-total of cash inflows from operating activities	1,554,485.04	1,537,699.84	1.09
Sub-total of cash outflows from operating activities	1,506,058.92	1,441,100.80	4.51
Net cash flows from operating activities	48,426.12	96,599.05	-49.87
Sub-total of cash inflows from investing activities	33,989.84	10,764.75	215.75
Sub-totalofcashoutflowsfrom investing activities	64,965.90	76,618.68	-15.21
Net cash flows from investing activities	-30,976.06	-65,853.93	N/A
Sub-total of cash inflows from financing activities	147,903.15	138,115.72	7.09
Sub-total of cash outflows from financing activities	151,230.82	129,146.68	17.10
Net cash flows from financing activities	-3,327.67	8,969.04	-137.10
Net increase in cash and cash equivalents	14,212.04	39,705.16	-64.21

6. Research and development inputs

During the Reporting Period, the Company’s research and development focused on improving product performance, level of intelligentization and users’ experience, breaking through core technology, and strengthening high-end product line. We insisted on providing inputs in research and development and technology innovation of products in order to strengthen our products’ market competitiveness and the Company’s core competitiveness so as to support the Company’s industrial advancement with strong technologies.

Description of research and development inputs of the Company

			Proportion of change
	2015	2014
			（%）
Number of research and development staff	995	1009	-1.39
Proportion of number of research and development staff	3.02	2.92	0.10
Amount of research and development inputs (RMB)	507,821,663.05	552,285,511.98	-8.05
Proportion of research and development inputs to operating revenue	2.16	2.08	0.08
Amount ofcapitalizedresearchand developmentinputs (RMB)	0	0	0
Proportion of capitalized research and development inputs to research
and development inputs	0	0	0

Page 15 of 45

( Ⅳ ) DESCRIPTION OF INDUSTRIES, PRODUCTS OR REGIONS ACCOUNTING FOR 10% OR ABOVE OF THE REVENURE OR PROFITS FROM OPERATING BUSINESSES OF THE COMPANY

Unit: RMB

					Increase or	Increase or
				Increase or decrease	decrease in costs	decrease in
	Revenue from	Costs of	Gross	in revenue from	of operating	gross profit
	operating	operating	profit	operating businesses	businesses as	margin as
Item
	businesses	businesses	margin	as compared to	compared to	compared to
			(%)	corresponding	corresponding	corresponding
				period last year (%)	period last year	period last year
					(%)	(%)
	By industry
Home appliances
manufacturing industry	21,803,678,507.86	16,966,319,509.39	22.19	-10.53	-9.58	-0.82
	By product
Refrigerators and
washingmachines	11,555,814,929.64	8,866,010,017.35	23.28	-2.60	-4.34	1.40
Air-conditioners	8,986,110,462.69	7,133,925,803.36	20.61	-20.77	-17.25	-3.38
Others	1,261,753,115.53	966,383,688.68	23.41	8.36	10.58	-1.54
	By region
Domestic	14,266,558,516.03	10,386,859,889.56	27.19	-16.95	-15.96	-0.86
Overseas	7,537,119,991.83	6,579,459,619.83	12.71	4.80	2.75	1.74

( Ⅴ ) ASSETS AND LIABILITIES POSITION

Significant changes in asset items

Unit: RMB

Items	At the end of 2015	At the end of 2015	At the end of 2014	At the end of 2014	Change in proportion (%)	Explanation of significant changes
	Amount	Percentage tor total assets (%)	Amount	Percentage to total assets (%)
Cash at bank and on hand	1,014,410,146.17	7.10	870,663,755.12	6.56	0.54	No significant change
Notes receivable	2,289,706,048.91	16.02	991,796,937.82	7.48	8.54	Mainly due to payment via the issuance of notes payable and retention of notes receivable during theReportingPeriod
Accounts receivable	2,086,596,419.00	14.60	1,984,291,386.93	14.96	-0.36	No significant change
Prepayments	169,804,372.86	1.19	498,209,306.68	3.76	-2.57	Mainly due to the decrease in prepayments of construction fees during theReportingPeriod
Other Receivables	234,011,936.52	1.64	493,051,526.66	3.72	-2.08	Mainly due to the other receivables from Greencool Companies were audited and written off during the Reporting Period
Inventories	2,270,139,557.55	15.88	2,915,921,775.81	21.98	-6.10	No significant change
Other current assets	467,872,305.65	3.27	287,019,824.65	2.16	1.11	Mainly due to purchase of asset management products from the banks at the end of the Reporting Period
Investment properties	28,958,126.07	0.20	31,459,416.41	0.24	-0.04	No significant change
Long-term equity investment	1,323,253,353.15	9.26	1,216,043,770.20	9.17	0.09	No significant change

Page 16 of 45

Fixed assets	3,529,787,697.68	24.70	2,932,039,091.41	22.10	2.60	No significant change
Construction in progress	64,837,848.39	0.45	251,551,873.15	1.90	-1.45	Mainly due to the completion of construction in progress and their transfer into fixed assets and intangible assets during the Reporting Period
Short-term borrowings	223,496,764.71	1.56	253,985,142.45	1.91	-0.35	No significant change
Notes payable	2,931,174,504.52	20.51	1,528,195,526.41	11.52	8.99	Mainly due to the increase in issuance of electronic acceptance bills during the Reporting Period

(VI) ASSETS AND LIABILITIES MEASURED AT FAIR VALUE

Unit: RMB

Items	Amount at the beginning of the period	Gain or loss from change in fair value during the period	Accumulated changes in fair value	Impairme nt provided	Amount purchased during the	Amoun t sold during the period	Amount at the end of the period
			accounted in	during the	period
			equity	period
Financial assets
1. Financial assets measured at fair value where changes in fair value are accounted for as gain or loss of the period (excluding derivative financial assets)	162,460.00	-162,460.00
2. Derivative financial assets
3. Financial assets available for sale
Subtotal of financial assets
Investment Properties
Productive biological assets
Others
Total	162,460.00	-162,460.00
Financial liabilities	-7,391,136.66	-2,376,596.09					-9,767,732.75

(VII) CORE COMPETITIVENESS ANALYSIS

1. Technological advantages

Page 17 of 45

The Company adheres to its development strategy of “technology orientation” and focuses on “energy-saving by inverter technology” and “green and environmental friendliness” to build its core competitiveness through continual innovations in technologies and products. The Company has top-notch research and development institutions including State-level enterprise technology center, enterprise post-doctoral scientific research station, State-recognized laboratory, and Guangdong Provincial Key Research and Development Center of Engineering Science, and an industry-leading research and development team with thousands of technical personnel. The Company is always committed to enhance its self-driven innovation capacity, strives to enhance the performance and level of intelligentization of its products, in order to improve its core competitiveness and its products’ market competitiveness and provide strong technical support for the Company’s industrial advancement.

2. Brand advantages

The three brand names used in refrigerator and air-conditioner products of the Company, namely “Hisense”, “Ronshen” and “Kelon”, have good brand reputation and market base. Among these brands, the market share of “Hisense” invertor air-conditioners had ranked first in China for thirteen consecutive years, while the market share of “Ronshen” refrigerators had ranked first in China for eleven years. “High technology and high quality” reflects the Company’s core brand value. At the same time, the Company gradually accelerates the progress of internationalization, and continues to promote the internationalization of its own brands. From a global market perspective, Hisense’s own brand air-conditioner products ranked fifth in the global market share and its own brand refrigerator and freezer products ranked sixth in the global market share.

( Ⅷ ) Major subsidiaries and companies in which the Company has equity interest

								Operating
					Total assets	Net assets			Operating	Net profits
Name of	Company	Major		Registere				revenue
					(RMB ten	(RMB ten			profit (RMB	(RMB ten
company	type	business		d capital				(RMB ten
					thousand)	thousand)			ten thousand)	thousand)
								thousand)
	A company in	Production
	which the	and sale of
				US$46
Hisense Hitachi	Company has	commercial
				million
	equity interest	air-conditione
		rs			447,848.72	252,669.55		480,934.20	95,485.75	84,648.57
Acquisition and disposal of subsidiaries √Applicable□Not applicable					during the	Reporting Period
Name of company			Means of acquisition and disposal of subsidiaries during theReportingPeriod				Effect on the overall production, operation and results
Jiangmen Hisense Electrical Appliances Co., Ltd.			Newly established				Meeting the Company's production needs.
Foshan Shunde Kelon Household Electrical Appliance Company Limited			Cancellation				Cancellation of such company would not cause any material effect on the Company’s overall production, operationandresults.
Hisense Home Appliance (Europe) Research &Development Center GmbH			Equity transfer				Transfer of such company would not cause any material effect on the Company’s overall production, operation and results.

( Ⅸ )Material changes of major assets

Major assets	Description of the material changes
Equity assets	No significant change

Page 18 of 45

Fixed assets	No significant change
Intangible assets	No significant change
	Decrease which was mainly due to the completion of construction in progress and
Projects in progress
	theirtransfer intofixed assets andintangible assets during theReportingPeriod.

( Ⅹ )Analysis of non-core businesses

• √Applicable □Not applicable

	Unit:RMB	Unit:RMB	Unit:RMB	Unit:RMB
Item	Amount	% of total profits	Description of forming reasons	Sustainability
			Mainly due to the income from equity
			investment recognized according to equity
Investment income
			method of accounting.
	530,171,700.74	85.01		Yes
			Mainly due to the change in recognized income
Fair value gain/ loss
	-2,539,056.09	-0.41	of forward foreign exchange business	Yes
			Mainly due to the recognized accounts
Asset impairment loss			receivable, inventories and impairment loss for
	4,670,866.73	-0.75	the long-term assets	No
			Mainly due to the gain on disposal of long-term
Non-operating income
	326,848,455.27	52.41	assets and the receipt ofgovernment subsidy	No
			Mainly due to the loss on disposal of long-term
Non-operating expense
	17,185,413.56	-2.76	assets	No

Ⅳ .Outlook

Looking ahead into 2016, the recovery of the global economy lacks momentum and the downward pressure of the domestic economy will intensify. The RMB exchange rate will be exposed to higher risks and there will be further pressure on export costs. Unfavourable environment such as the high inventory level of the domestic air-conditioner industry will continue to be a huge burden on the operation and development of the Company. However, given the economic recovery in developed countries such as the US, implementation of new energy efficiency standards for domestic refrigerator products, liberalization of improving residential housing policy and the development of mobile Internet etc., there will be plenty of room for the development and upgrade of white goods enterprises.

In 2016, the Company will firmly uphold the operating strategies of “adhering to high-end awareness, highlighting product advantages, consolidating market network, enhancing system efficiency, exploring international market and ensuring economies of scale” to capture the opportunities of sector technical upgrades and functional upgrades of products in order to strive for steady increase in its scale, performance and market share through implementation of the followings:

1. to adhere to the development strategy of high-end products and highlight the advantage of product differentiation. Through measures such as replenishing high-end core talents, adjusting and developing incentive mechanism and strengthening co-operation internally and externally, the Company will greatly improve the planning and developing capability of high-end products and more high-end products will come on stream. Product sophistication level will continue to be enhanced and product quality will be improved and enhanced. The Company will continue promoting star models and keymodels, and enhancing user’s awareness of high-end brands of Hisense products. Leveraging on the “Hisense Cloud” platform under the Hisense Group, the intelligent operation platform of system grading products will be built and the intelligentization of single products will be upgraded to intelligentization of systems by connecting those areas such as operation and use of products, online sales and maintenance service through such platform. The

Page 19 of 45

promotion of inverting strategy for air-conditioner products will continue unflinchingly and gradually phase out constant speed products. Through differentiation in appearance and intelligent 2.0 upgrade, the comparative advantage of products will be built and inverters will become more sophisticated.

1. to increase the sales capability. The business sense of branch offices will be guided and strengthened by improving the incentive scheme of branch offices. The high-end development of prototypes, image improvement to end-users and more innovative media will be promoted. Investment efficiency of the brand will be enhanced and brand building will be accelerated. Criteria of quality customers will be set for improving the composition of customers and the proportion of high-end products will be raised. More efforts will be put on the construction of core network and exclusive stores and refinement of sales channels so as to increase per store productivity. More agency channels will be developed to enhance the market scale in third and fourth tier markets and the e-commerce team and quality of online promotion will be improved. Operating efficiency and sales revenue per person will be improved by closing those under-performing stores, adjusting the management model of office and building an information system platform.

2. to take “customer satisfaction” as our fundamental starting point, set appraisal indicators of process and improve the NPS management system; to optimize our net promotion value of products through improvement of the entire process from product planning, design, manufacturing, quality control, logistics, sales to service; to optimize the service network, improve the standard of service, build the core image of service provider and promote the market reputation of the brand; to accelerate the process of handling service information through whole-process supervision using the information service platform.

3. to strive to expand the overseas market. The Company will be leveraging the opportunity of Hisense Group enhancing its efforts on sports marketing and sponsoring the European Cup and other famous sports events, focusing on planning products for overseas sales and high-end promotion, increasing product efficiency, reducing the proportion of non-performing and less popular models, driving up quantity of high-end products and improving the composition of overseas sales of products. Promotion mechanism for end-users will be built and the proportion of its own brand will be enhanced.

4. to continue the work of raising production efficiency. Product generalization and standardization will be strengthened and manufacturing efficiency will be improved through improving the craftsmanship and automation; structure of personnel will be improved and staff capability will be raised, accelerating the progress of informatization projects, rapidly raising the level of informatization and optimizing workflow and organization structure; management efficiency will be increased; and platform and system for sales efficiency will be built through measures such as reforming the sales model and enhancing sales ability to enhance sales efficiency.

5. Strictly control overdue account receivables and abnormal appropriation, reduce capital risk, accelerate capital flow and strengthen cost control.

FINAL DIVIDEND

The Group recorded net profit attributable to shareholders of the listed company of RMB 580 million for the year ended 31 December 2015. The Board proposed to pay a cash dividend of RMB1.5 (tax inclusive) per 10 shares held by all shareholders on the basis of the total share capital

Page 20 of 45

of 1,362,725,370 shares of the Company as at 31 December 2015, without bonus issue and not to issue shares by way of conversion of capital reserve (no dividend was paid by the Group for the year ended 31 December 2014).

LIQUIDITY AND SOURCES OF FUNDS

For the year ended 31 December 2015, net cash generated from operating activities of the Group amounted to approximately RMB 484 million (2014: net cash generated from operating activities amounted to approximately RMB 966 million).

As at 31 December 2015, the Group had bank deposits and cash (including pledged bank balances) amounting to approximately RMB 1,014 million (2014: RMB 871 million), and bank loans amounting to approximately RMB 223 million (2014: RMB 254 million).

Total capital expenditures of the Group for the year ended 31 December 2015 amounted to approximately RMB 450 million (2014: RMB 766 million).

HUMAN RESOURCES AND EMPLOYEES’ REMUNERATION

As at 31 December 2015, the Group had approximately 32,935 employees, mainly comprising 4,718 technical staff, 15,145 sales representatives, 387 financial staff, 849 administrative staff and 11,836 production staff. The Group had 7 employees with a doctorate degree, 373 with a master’s degree and 3,909 with a bachelor’s degree. For the year ended 31 December 2015, the Group’s staff payroll amounted to RMB 2,508 million (corresponding period in 2014 amounting to RMB 2,483 million).

EMPLOYEES’ TRAINING AND REMUNERATION POLICY

Employees and people are the basis for corporate development. Leveraging on the platform provided by Hisense College, the Company has established a three-level training system, a well-rounded curriculum system and a training regulation system and actively promoted the building up of teacher resources internally and externally, so as to effectively support the development of the Company's management and technical personnel and achieve value-added human resources. Every year, the Company will formulate education and training programs for the employees based on the annual operational strategy and human resources development needs. The Company has provided 4,309 courses in total during the Reporting Period, and the number of participants reached 136,542. The courses are mainly of enterprise management type, craftsmanship and quality type, corporate culture type, manufacturing type, or technology research and development type, etc., covering employees at different levels, ranging from ground level staff responsible for work such as front-line production and marketing to senior management.

The Company adopts a position-based remuneration policy for its staff. Staff remuneration is determined by reference to the relative importance of and responsibility assumed by the position and other performance factors.

CHARGE ON THE GROUP’S ASSETS

As at 31 December 2015, the Group’s property, plant and equipment (including leasehold land held for own use), investment properties and trade receivables of approximately RMB 324 million (31 December 2014: RMB 254 million) were pledged as security for the Group’s borrowings.

Page 21 of 45

EXPOSURE TO EXCHANGE RATE FLUCTUATION AND ANY RELATED HEDGE

Since part of the purchase and the majority of the overseas sales of the Group during the Reporting Period were denominated in foreign currency, the Group is exposed to certain risk of exchange rate fluctuation. The Group has used financial instruments such as import/export documentary bills and forward contracts for exchange rate hedging purpose.

PUBLIC FLOAT

The Directors confirm that as at 29 March 2016, based on publicly available information and to the best of their knowledge, 25% or above of the total issued share capital of the Company are held by the public. Therefore, the public float of the Company satisfies the requirement stipulated under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Hong Kong Listing Rules”).

AUDIT COMMITTEE

The ninth session of the audit committee of the Company has reviewed the final results of the Group for the year ended 31 December 2015.

CAPITAL EXPENDITURE

The Group expects that the capital expenditure for 2016 will be approximately RMB 84 million. The Group has sufficient funds to meet the funding requirement for capital expenditure plans and daily operations.

TRUST DEPOSITS

As at 31 December 2015, the Group did not have any trust deposits with any financial institutions in the PRC. All of the Group’s deposits have been deposited in commercial banks and other financial institutions in the PRC and Hong Kong.

LIQUIDITY, FINANCIAL RESOURCES AND CAPITAL STRUCTURE

As at 31 December 2015, the Group did not have any long-term bank borrowings and its cash and cash equivalents amounted to RMB 1,014 million (2014: RMB 871 million), of which more than RMB 964 million are denominated in Renminbi.

As at 31 December 2015, the Group’s current liabilities amounted to RMB 9,446 million, non-current liabilities amounted to RMB 373 million, and shareholders’ equity attributable to the shareholders of the Company amounted to RMB 4,044 million. Details of the Group’s capital structure are set out in the financial statements which will be contained in the annual report of the Company.

GEARING RATIO

As at 31 December 2015, the Group’s gearing ratio (calculated according to the formula: total liabilities /total assets）was 68.70% (2014: 70.30%).

INDEPENDENCE OF THE INDEPENDENT NON-EXECUTIVE DIRECTORS

The ninth session of the Board has received a written confirmation from each of the independent non-executive Directors in respect of their independence in accordance with the requirements

Page 22 of 45

provided under Rule 3.13 of the Hong Kong Listing Rules. The Company considers that all the independent non-executive Directors of the ninth session of the Board meet the relevant requirements under Rule 3.13 of the Hong Kong Listing Rules and considers them to be independent.

SERVICE CONTRACTS OF DIRECTORS AND SUPERVISORS

None of the Directors and the supervisors of the Company has a service contract with any member of the Group which is not determinable by the Group within one year without payment of compensation (other than statutory compensation).

DIRECTORS’ AND SUPERVISORS’ INTERESTS IN CONTRACTS

The Directors of the ninth session of the Board and the supervisors of the Company do not and did not directly or indirectly hold any material interests in any contract of significance of the Company or its subsidiaries subsisting during or at the end of the year 2015.

REVIEW OF CONTINUING CONNECTED TRANSACTIONS BY INDEPENDENT NON-EXECUTIVE DIRECTORS

The independent non-executive Directors of the ninth session of the Board have reviewed the continuing connected transactions of the Group for the year 2015, and confirmed that these transactions were conducted in the ordinary course of business of the Group in accordance with the relevant agreements governing them and on normal commercial terms which were fair and reasonable and in the interest of the shareholders of the Company as a whole.

REVIEW OF CONTINUING CONNECTED TRANSACTIONS BY AUDITORS

After auditing the continuing connected transactions of the Group, the auditors of the Company confirmed that the relevant continuing connected transactions of the Group have been approved by the Board, were carried out in accordance with the Company’s pricing policies pursuant to the terms of the agreements of the relevant transactions, and have not exceeded the caps disclosed in the previous announcements.

MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (“Model Code”) as set out in the Hong Kong Listing Rules as its code for securities transaction by Directors. After having made specific enquiries to the Directors, all Directors of the Board confirmed that they had acted in full compliance with the Model Code during their term of office.

SHARE CAPITAL STRUCTURE

As at 31 December 2015, the share capital structure of the Company was as follows:

Class of shares	Number of shares	Percentage to the total issued share capital
H shares	459,589,808	33.73%
A shares	903,135,562	66.27%

Page 23 of 45

Total 1,362,725,370 100.00%

TOP TEN SHAREHOLDERS

As at 31 December 2015, there were 30,441 shareholders of the Company (the “Shareholders”) in total, of which the top ten Shareholders were as follows:

				Percentage to	No. of
			Percentage to
				the relevant	shares held
	Nature of	No. of shares	the total
Name of Shareholder				class of issued	subject to
	Shareholder	held	issued shares
				shares of the	trading
			of the Company
				Company	moratorium
Qingdao Hisense Air-conditioning Company Limited	State-owned legal person	612,316,909	44.93%	67.80%	0
HKSCC Nominees Limited Note 1	Foreign legal person	459,151,768	33.69%	99.90%	0
Cental Huijin Investment Ltd.	Domestic non-state-owne d legal person	26,588,700	1.95%	2.94%	0
China Securities Finance Corporation Limited	Domestic non-state-owne dlegalperson	18,379,176	1.35%	2.04%	0
Zhang Shao Wu	Domestic naturalperson	7,200,000	0.53%	0.80%	0
ICBC Credit Suisse Fund - Agricultural Bank of China - ICBC Credit Suisse China Securities Financial Asset Management Plan	Other	6,518,300	0.48%	0.72%	0
Central European Fund - Agricultural Bank of China - Central European China Securities Financial Asset ManagementPlan	Other	6,518,300	0.48%	0.72%	0
Boshi Fund - Agricultural Bank of China - Boshi China Securities Financial Asset ManagementPlan	Other	6,518,300	0.48%	0.72%	0
Dacheng Fund - Agricultural Bank of China - Dacheng China Securities Financial AssetManagementPlan	Other	6,518,300	0.48%	0.72%	0
Jiashi Fund - Agricultural Bank of China - Jiashi China Securities Financial Asset Management Plan	Other	6,518,300	0.48%	0.72%	0
Guangfa Fund - Agricultural Bank of China - Guangfa China Securities Financial AssetManagementPlan	Other	6,518,300	0.48%	0.72%	0
Huaxia Fund - Agricultural	Other	6,518,300	0.48%	0.72%	0

Page 24 of 45

Bank of China - Huaxia China Securities Financial AssetManagementPlan
Yinhua Fund - Agricultural Bank of China - Yinhua China Securities Financial Asset Management Plan	Other	6,518,300	0.48%	0.72%	0
Yifangda Fund - Agricultural Bank of China - Yifangda China Securities Financial AssetManagementPlan	Other	6,518,300	0.48%	0.72%	0
Southern Fund - Agricultural Bank of China - Southern China Securities Financial Asset Management Plan	Other	6,518,300	0.48%	0.72%	0

Notes:

1. The shares held by HKSCC Nominees Limited are held on behalf of a number of its account participants, among which, Hisense (Hong Kong) Company Limited, a party acting in concert with the controlling shareholder of the Company, increased its holding of H shares of the Company by 16,291,000H shares during the Reporting Period, representing 1.20% of the total number of shares of the Company. Hisense (Hong Kong) Company Limited is the holder of 81,160,000 H shares in total at the end of the Reporting Period, representing 5.96% of the total number of shares of the Company;

2. At the end of the month prior to the date of publication of this results announcement on 29 March 2016, there were 30,811 shareholders of ordinary shares of the Company in total;

3. Zhang Shao Wu, a shareholder of the Company, holds 7,200,000 shares of the Company through customer credit trading guarantee securities account in Guosen Securities Company Limited.

SHAREHOLDINGS OF THE TOP TEN SHAREHOLDERS OF TRADABLE SHARES

Name of Shareholders	Number of tradable shares held	Class of shares
Qingdao Hisense Air-conditioning Company Limited	612,316,909	RMB ordinary shares
HKSCC Nominees Limited	459,151,768	Overseas listed foreign shares
Cental Huijin Investment Ltd.	26,588,700	RMB ordinary shares
China Securities Finance Corporation Limited	18,379,176	RMB ordinary shares
Zhang Shao Wu	7,200,000	RMB ordinary shares
ICBC Credit Suisse Fund - Agricultural Bank of China - ICBC Credit Suisse China Securities Financial Asset Management Plan	6,518,300	RMB ordinary shares
Central European Fund - Agricultural Bank of China - Central EuropeanChina SecuritiesFinancial AssetManagementPlan	6,518,300	RMB ordinary shares
Boshi Fund - Agricultural Bank of China - Boshi China SecuritiesFinancial AssetManagementPlan	6,518,300	RMB ordinary shares
DachengFund - Agricultural Bank of China - DachengChina	6,518,300	RMB ordinary

Page 25 of 45

SecuritiesFinancial AssetManagementPlan		shares
Jiashi Fund - Agricultural Bank of China - Jiashi China SecuritiesFinancial AssetManagementPlan	6,518,300	RMB ordinary shares
Guangfa Fund - Agricultural Bank of China - Guangfa China SecuritiesFinancial AssetManagementPlan	6,518,300	RMB ordinary shares
Huaxia Fund - Agricultural Bank of China - Huaxia China SecuritiesFinancial AssetManagementPlan	6,518,300	RMB ordinary shares
Yinhua Fund - Agricultural Bank of China - Yinhua China SecuritiesFinancial AssetManagementPlan	6,518,300	RMB ordinary shares
Yifangda Fund - Agricultural Bank of China - Yifangda China SecuritiesFinancial AssetManagementPlan	6,518,300	RMB ordinary shares
Southern Fund - Agricultural Bank of China - Southern China Securities Financial Asset Management Plan	6,518,300	RMB ordinary shares

Note : The Company is not aware whether any of the top ten holders of tradable shares is connected with each other or any of them is a party acting in concert with any of the other nine shareholders within the meaning of 《上市公司收購管理辦法》 (Administrative Measures for the Takeover of Listed Companies).

INTERESTS AND SHORT POSITIONS OF SUBSTANTIAL SHAREHOLDERS IN THE SHARES AND UNDERLYING SHARES

So far as is known to the Directors, supervisors and the chief executive of the Company, as at 31 December 2015, the following persons (other than the Directors, supervisors and the chief executive of the Company) had interests or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (“SFO”), or which were recorded in the register required to be kept under section 336 of the SFO, or as otherwise notified to the Company and The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”):

Long position or short position in the shares of the Company

Capacity	Type of shares	Number of shares held	Percenta ge of the respectiv e type of shares	Percentag e of the total number of shares in issue
Beneficialowner	Ashares	612,316,909(L)	67.80%	44.93%
Interest of controlled corporation	Ashares	612,316,909(L)	67.80%	44.93%
Interest of controlled corporation	Ashares	612,316,909(L)	67.80%	44.93%
Beneficialowner	Hshares	81,160,000 (L)	17.66%	5.96%

Page 26 of 45

Qingdao Hisense Electric Holdings Company Limited Note 1	Interest of controlled corporation	Hshares	81,160,000 (L)	17.66%	5.96%
Hisense Company Limited Note 1	Interest of controlled corporation	Hshares	81,160,000 (L)	17.66%	5.96%
Prime Capital Management Company Limited Note 2	Investmentmanager	Hshares	57,886,691(L)	12.60%	4.25%
Citigroup Inc.Note3	Person having security interests in shares and custodian corporation/ approved lending agent	Hshares	27,066,610(L) 2,467,000(S) 2,049,000(P)	5.88(L) 0.53(S) 0.44(P)	1.99% 0.18% 0.15%

The letter “L” denotes a long position, the letter “S” denotes a short position and the letter “P” denotes lending pool.

Notes:

1. Qingdao Hisense Air-conditioning Company Limited is a company directly owned as to 93.33% by Qingdao Hisense Electric Holdings Company Limited, whereas Hisense (Hong Kong) Company Limited is a company directly owned as to 100% by Qingdao Hisense Electric Holdings Company Limited. Qingdao Hisense Electric Holdings Company Limited is in turn owned as to 32.36% by Hisense Company Limited. By virtue of the SFO, Qingdao Hisense Electric Holdings Company Limited and Hisense Company Limited were deemed to be interested in the same parcel of A shares of which Qingdao Hisense Air-conditioning Company Limited was interested and in the same parcel of H shares of which Hisense (Hong Kong) Company Limited was interested ；

2. Prime Capital Management Company Limited was interested in a total of 57,886,691 H shares in the capacity of an investment manager by virtue of the SFO.

3. By virtue of the SFO, Citigroup Inc. was interested in these H shares, in which Citigroup Global Markets Limited was interested in the long position of 22,522,610 H shares; Citigroup Global Markets Hong Kong Limited was interested in the long position of 2,495,000H shares and the short position of 2,467,000 H shares and Citibank N.A. was interested in the long position of 2,049,000H shares. Among such interests in the H shares, Citigroup Inc. was interested in the long position of 25,017,610 H shares as person having security interests, the long position of 2,049,000 H shares as custodian corporation or approved lending agent and the short position of 2,467,000 H shares as interest of controlled corporation.

Save as disclosed above, as at 31 December 2015, in so far as the Directors, supervisors and chief executive of the Company are aware, there was no other interest and/or short position held by any person in the shares and underlying shares of the Company which were recorded in the register required to be kept by the Company pursuant to section 336 of the SFO.

PARTICULARS OF THE CONTROLLING SHAREHOLDERS OF THE COMPANY

• (a) Qingdao Hisense Air-Conditioning Company Limited, the controlling shareholder of the Company, was incorporated on 17 November 1995. Its registered address is Changsha Road, Hi-tech Industrial Zone, Qingdao, the PRC and the legal representative is Mr. Tang Ye Guo and its registered capital is RMB674.79 million. Its business scope is the development and

Page 27 of 45

manufacture of air-conditioning products and injection moulds and the provision of after-sale repairing services for its products (Permit/licence shall be obtained for the operation of the businesses above if they fall into the requirements of licensure).

• (b) The beneficial controller of the Company is Hisense Company Limited, which was incorporated in August 1979 with its registered address at No. 17 Donghai West Road, Shinan, Qingdao. Mr. Zhou Houjian is the legal representative of Hisense Company Limited and its registered capital is RMB806.17 million. The scope of business includes: the entrusted operation of state-owned assets; the manufacture and sales of TV sets, refrigerators, freezers, washing machines, small household appliances, disc players, audio sets, broadcasting appliances, air-conditioners, electronic computers, telephones, communication products, internet products and electronic products and the provision of related services; the development of software and the provision of internet services; the technological development and the provision of consultation services; the self-operated import and export business (with its operation subject to the list of projects as approved by the MOFTEC); the foreign economic and technical cooperation (with its operation subject to the list of projects as approved by the MOFTEC); operation of property rights transaction and provision of brokerage and information services; provision of industrial travel agency services; provision of relevant business trainings, property management, leasing of tangible property and leasing of immovable property (Permit/licence shall be obtained for the operation of the businesses above if they fall into the requirements of licensure).

• (c) The ultimate beneficial controller of the Company is the State-owned Assets Supervision and Administration Commission of Qingdao Municipal People’s Government.

• (d) Relationship between the Company and its beneficial controllers:

==> picture [458 x 198] intentionally omitted <==

----- Start of picture text -----

State-owned Assets Supervision and Administration Commission of
Qingdao Municipal People’s Government
100%
Hisense Company Limited
32.36% 100%
Hisense (Hong Kong)
Qingdao Hisense Electric Holdings Company Limited Company Limited
93.33%
Qingdao Hisense Air-Conditioning Company Limited
44.93% 5.96%
Hisense Kelon Electrical Holdings Company Limited
----- End of picture text -----

• (e) During the Reporting Period, there was no change in the controlling shareholders of the Company.

INTERESTS OF DIRECTORS, SUPERVISORS AND CHIEF EXECUTIVES IN THE SHARES, UNDERLYING SHARES AND DEBENTURES

As at 31 December 2015, save as disclosed below and in the sub-section “Movements of the share options during the Reporting Period” under the section headed “Summary on adoption of first share option incentive scheme and the grant thereunder”, none of the members of the Board, supervisors and the chief executive of the Company held any interests or short positions in any shares,

Page 28 of 45

underlying shares and debentures of the Company and any of its associated corporations (within the meaning of Part XV of the SFO), as recorded in the register required to be maintained by the Group pursuant to section 352 of the SFO or as otherwise notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code.

Long position in the shares of the Company

Name of Director	Nature of interest	Number of shares	Percentage to the total issued shares of the Company	Percentage to the relevant class of issued shares of the Company
Tang Ye Guo	Beneficial owner	1,260,000 A Shares (Note 1)	0.09%	0.14%
Jia Shao Qian	Beneficial owner	828,000 A Shares (Note 2)	0.06%	0.09%
Wang Zhi Gang	Beneficial owner	120,600 A Shares (Note 3)	0.009%	0.013%

Notes:

1. Of these 1,260,000 A Shares, 831,600 A Shares were beneficially owned by Mr. Tang Ye Guo and he was also interested in share options to subscribe for 428,400 A Shares of the Company (representing approximately 0.03% of the total issued share capital of the Company and approximately 0.05% of the total issued A shares of the Company as at the 31 December 2015).

2. Of these 828,000 A Shares, 539,060 A Shares were beneficially owned by Mr. Jia Shao Qian and he was also interested in share options to subscribe for 288,940 A Shares of the Company (representing approximately 0.02% of the total issued share capital of the Company and approximately 0.03% of the total issued A shares of the Company as at the 31 December 2015).

3. Of these 120,600 A Shares, 59,400 A Shares were beneficially owned by Mr. Wang Zhi Gang and he was also interested in share options to subscribe for 61,200 A Shares of the Company (representing approximately 0.004% of the total issued share capital of the Company and approximately 0.007% of the total issued A shares of the Company as at the 31 December 2015).

MAJOR CUSTOMERS AND SUPPLIERS

During the year ended 31 December 2015, the aggregate amount of the Group’s purchases from the top five suppliers was RMB 2,651 million, representing 15.63% of the total purchase amount of the Group for the year and the aggregate sales amount to the top five customers was RMB 6,442 million, representing 29.55% of the total sales amount of the Group for the year.

PURCHASE, SALE OR REDEMPTION OF SHARES

During the Reporting Period, neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company’s listed securities.

AUDITOR

On 26 June 2015, as considered and approved at the shareholders’ general meeting, the Company agreed to re-appoint Ruihua Certified Public Accountants as the auditor of the Company for the financial year of 2015, and the Board was authorized to fix their remuneration.

PRE-EMPTIVE RIGHTS

Page 29 of 45

There is no provision for pre-emptive rights under the Articles of Association of the Company or the relevant PRC laws.

TAXATION

Pursuant to the relevant tax regulations, the Company is required to withhold and pay corporate income tax at the rate of 10% when distributing dividends to non-resident enterprise shareholders whose names appear on the H- share register of members.

SUMMARY ON ADOPTION OF FIRST SHARE OPTION INCENTIVE SCHEME AND THE GRANT THEREUNDER

(1) Purpose of the Scheme

The first share option incentive scheme (the “Scheme”) was adopted by the Company on 1 August 2011. The Scheme is formulated to further refine the management structure of the Company, provide long-term rewards and retention incentives for the senior and mid-level management, key technical, sales and management personnel of the Company, fully motivate their pro-activeness and creativity, closely correlate their interests with the long term development of the Company, and allow sustainable development of the Company.

The participants include the directors of the Company (exclusive of the independent directors and external directors who are not officers of Hisense Group and its subsidiaries (other than the Company and its subsidiaries), senior management (including president, vice president, financial controller, secretary to the Board, company secretary and other officers which are regarded as senior management under the Articles of Association) of the Company, mid-level management staff of the Company and its subsidiaries, and such key technical personnel of the Company and its subsidiaries as determined by the Board.

(2) Movements of the share options during the Reporting Period

	(2) Moveme	nts of the share	options durin	g the Reporti	ng Period
N o.	Name	Position	Outstanding share options as at 1 January 2015 (’0000 shares)	Number of share options exercised during the Reporting Period (’0000 shares)	Number of share options lapsed during the Reporting Period (’0000 shares)	Number of share options cancelled during the Reporting Period (’0000 shares)	Outstandin g share options as at 31 December 2015 (’0000 shares)
1	Tang Ye Guo	Chairman	84.42	41.58	-	-	42.84
2	Jia Shao Qian	Director, Vice-President	56.994	28.10	-	-	28.894
3	Wang Zhi Gang	Director, Vice-President	12.06	5.94	-	-	6.12
4	Xiao Jian Lin	Former Director, former President	55.476 （Note 2）	-	55.476	55.476	N/A
5	Mid level management staff and key personnel		789.559	347.361	71.365	71.365	370.833
	Total		998.509	422.981	126.841	126.841	448.687

Notes:

Page 30 of 45

1. All share options available for issue under the Scheme have been granted.

2. Mr. Xiao Jian Lin has resigned from his positions as director and president on 17 March 2015.

(3) The grant date and the exercise price of the share options

• The grant date of the share options is 31 August 2011 and the exercise price is RMB7.65 per share.

(4) Validity period of the share options

The validity period of the share options under the grant shall be a term of 5 years commencing from the grant date.

(5) Exercise Arrangement

The exercise of the share options under the grant is subject to a restriction period of 2 years, during which period the rights are not exercisable.

Subject to the fulfillment of the exercise conditions, the share options under the grant can be exercised in batches after the expiry of the 2-year period from the grant date according to the following exercise arrangement:

• i. 33% of the share options granted to each participant shall become exercisable on the trading day immediately after the second anniversary of the grant date (2 September 2013) until the trading day falling on the fifth anniversary of the grant date (31 August 2016);

• ii. another 33% of the share options granted to each participant shall become exercisable on the trading day immediately after the third anniversary of the grant date (1 September 2014) until the trading day falling on the fifth anniversary of the grant date (31 August 2016); and

• iii. the remaining 34% of the share options granted to each participant shall become exercisable on the trading day immediately after the fourth anniversary of the grant date (1 September 2015) until the trading day falling on the fifth anniversary of the grant date (31 August 2016).

Where the participant is a director or member of the senior management, share options of not less than 20% of the total share options granted to such participant can only be exercised after the participant has reached a pass grade or above in the performance appraisal for his/ her employment (or office).

In addition, during the validity period of the share options, the maximum gain which the participants can obtain from the share option incentives shall not exceed 40% of their remuneration level (inclusive of the gain from the share option incentives) when the share options were granted. In the event that the gain from the share option incentive exceeds the above proportion, share options which have not been exercised will not be exercised.

Unless approved in the general meeting, the aggregate number of underlying shares which may be acquired by any participant through the Scheme or other effective share option incentive schemes of the Company (if any) at any time shall not exceed 1% of the Company’s total share capital of the same class, and the maximum entitlement which may be granted to a participant (including exercised, cancelled and outstanding share options) within any 12-month period shall not exceed 1% of the Company’s total share capital of the same class.

Page 31 of 45

(6) Determination method of exercise price

The exercise price of the grant is the higher of the following two prices: (i) the closing price of the A shares on the last trading day immediately preceding the date of the announcement of the summary of the Scheme (that is, 29 November 2010), which was RMB7.65 per share; and (ii) the average closing price of the A shares during the last 30 trading days immediately preceding the date of announcement of the summary of the Scheme, which was RMB7.37 per share. Therefore, the exercise price is RMB7.65 per share.

(7) Effect of the Company’s share option incentive scheme on the financial position for the Reporting Period

In accordance with the requirements of the First Share Option Incentive Scheme of Hisense Kelon Electrical Holdings Company Limited (Revised Draft), the Company has elected to use the Black-Scholes option pricing model to calculate the fair value of the share options granted under the Scheme. According to the calculation by such pricing model, the Company recognized an expense of RMB -29.34 million in total in relation to this share option incentive scheme.

PARTICULARS OF MATERIAL CONNECTED TRANSACTIONS OF THE COMPANY DURING THE REPORTING PERIOD

(I) 2 December 2014, the Company entered into the Business Co-operation Framework Agreement, Business Framework Agreement 1, Business Framework Agreement 2 and the Purchase Financing Agency Framework Agreement with Hisense Group, Hisense Electric, Hisense Hitachi, Hisense–Whirlpool and Hisense Hong Kong respectively.

Hisense Air-conditioning is a connected person of the Company by virtue of being a substantial shareholder of the Company, holding approximately 44.93% (then owned approximately 45.07% of the issued shares of the Company as at the date of the agreement) of the issued shares of the Company and Hisense Hong Kong holds approximately 5.96% (then owned approximately 3.97% of the issued shares of the Company as at the date of the agreement) of the issued shares of the Company. As Hisense Group is the indirect holding company of Hisense Air-conditioning and Hisense Hong Kong and Hisense Electric is owned as to 39.35% (then owned as to 40.37% as at the date of the agreement) by Hisense Group, Hisense Group, Hisense Electric and their respective subsidiaries (including without limitation Hisense Marketing and its subsidiaries) are connected persons of the Company according to the Hong Kong Listing Rules. As certain directors of the Company are also senior management of Hisense Hitachi and Hisense–Whirlpool, Hisense Hitachi and Hisense–Whirlpool are connected persons of the Company according to the Rules Governing the Listing of Stocks on the Shenzhen Stock Exchange.

Details of the Business Co-operation Framework Agreement with Hisense Group and Hisense Electric, Business Framework Agreement 1 with Hisense Hitachi and Business Framework Agreement 2 with Hisense-Whirlpool can be found in the announcement and the circular published on the website of the Hong Kong Stock Exchange (http://www.hkex.com.hk) on 2 December 2014 and 19 December 2014 respectively.

As Hisense Group is the beneficial controller of both Hisense Hong Kong and the Company, Hisense Hong Kong is a connected person of the Company under the Rules Governing the Listing

Page 32 of 45

of Stocks on the Shenzhen Stock Exchange. Hisense Hong Kong is also a connected person of the Company pursuant to Chapter 14A of the Hong Kong Listing Rules. Since the financial assistance arrangement under the Purchase Financing Agency Framework Agreement would be for the benefit of the Company on normal commercial terms where no security over the assets of the Company was to be granted in respect of the financial assistance, such arrangement was exempt from the reporting, announcement and independent shareholders’ approval requirements pursuant to the Hong Kong Listing Rules. Details of the Purchase Financing Agency Framework Agreement can be found in the announcement published on the website of the Hong Kong Stock Exchange (http://www.hkex.com.hk) on 2 December 2014.

The above transactions (other than the Business Framework Agreement 1 with Hisense Hitachi and the Business Framework Agreement 2 with Hisense-Whirlpool) constitute continuing connected transactions under Chapter 14A of the Hong Kong Listing Rules. The Company confirmed that it had complied with the disclosure requirements in accordance with Chapter 14A of the Hong Kong Listing Rules for the relevant connected transactions (other than the Purchase Financing Agency Framework Agreement which is exempt from the reporting, announcement and independent shareholders’ approval requirements pursuant to the Hong Kong Listing Rules). Specific information of the Business Co-operation Framework Agreement is set out as follows:

The Business Co-operation Framework Agreement with Hisense Group and Hisense Electric

On the one hand, the supply of home electrical appliances, raw materials and parts and components, equipment and moulds by the Group to Hisense Group, Hisense Electric and/or their respective subsidiaries can help to lower the production costs of the Group as a result of the increase in production level, which in turn enhance the market competitiveness of the Group’s products. At the same time, the Group can continue to develop overseas market and enhance brand competitiveness and awareness. The Group can also increase market share by selling products through the online platform of Hisense Group and Hisense Electric which reduces the product circulation links. Provision of services to Hisense Group and/or its subsidiaries will increase the income of the Group. On the other hand, taking into account the product quality, prices and services provided by Hisense Group, Hisense Electric and/or their respective subsidiaries, purchases of home electrical appliances, equipment, raw materials and parts and components from Hisense Group, Hisense Electric and/or their respective subsidiaries and engagement of their services can meet the manufacture needs of the Company and the development of related business, and can also help reduce costs. Hisense Marketing, a subsidiary of Hisense Group, has over 10 years’ experience in overseas operations, professional expertise and mature market network and channels in overseas market. By engaging the export agency services of Hisense Group and/or its subsidiaries which will provide professional management services to the Group for its development of the international market, the Group can largely reduce costs which would have to be committed for running the operation by itself, and use the available resources on the research and development and the quality warranties for the products to be exported, which will be beneficial to the Group in enhancing the stable development of its export business at the same time. As such, the Company entered into the Business Co-operation Framework Agreement with Hisense Group and Hisense Electric, the principal terms of which are as follows:

• (1) The Business Co-operation Framework Agreement shall commence from the date of approval of the Business Co-operation Framework Agreement by the independent shareholders (that is,

Page 33 of 45

21 January 2015) until 31 December 2015, which can be terminated before its expiration by mutual agreement of the parties.

• (2) Pricing for the purchase of home electrical appliances between the Group on the one hand and Hisense Group, Hisense Electric and/or their respective subsidiaries on the other hand is determined by commercial negotiation between the parties according to the principles of fairness and reasonableness mainly with reference to the market price of similar home electrical appliances from time to time. Pricing for the purchase of raw materials, equipments, parts and components between the Group on the one hand and Hisense Group, Hisense Electric and/or their respective subsidiaries on the other hand is determined by commercial negotiation between the parties according to the principles of fairness and reasonableness. Pricing for the supply of moulds by the Group to Hisense Group, Hisense Electric and/or their respective subsidiaries is the market price determined by the open bidding process. Pricing for the provision of services between the Group on the one hand and Hisense Group, Hisense Electric and/or their respective subsidiaries on the other hand is determined by commercial negotiations according to the principles of fairness and reasonableness between the parties with reference to the market price for the provision of similar services in the industry. The fees payable by the Group for the provision of the agency services for export for the white goods of the Group is calculated by multiplying the Group’s revenue from export of the relevant type of products (which shall be the final amount of revenue for sales by the Group to third party customers in RMB) with an export agency fee percentage. Taking into consideration the audited rate of the charges actually incurred by Hisense Marketing and/or its subsidiaries for providing agency services for export to the Group for the period from March 2011 to June 2012, the rate of the charges actually incurred during the first half of 2012 (being 7.24%) shall be used as the base percentage and the corresponding profit margin for export agency services payable by the Group to Hisense Group and/or its subsidiaries shall be determined according to the growth rate of the revenue from export subject to the export agency services in 2015, pursuant to which the export agency fee percentage during the term of the Business Co-operation Framework Agreement shall also be determined as provided in the table below

Growth rate of the revenue from export subject to the export agency services	Corresponding profit margin for export agency services	Corresponding export agency fee percentage
Below 0%	0%	7.24%
0-5% (inclusive of5%)	0.5%	7.74%
5-10% (inclusive of 10%)	0.8%	8.04%
10-15% (inclusive of 15%)	1%	8.24%
Above15%	1.1%	8.34%

Note: Growth rate of the revenue from export subject to the export agency services = (the Group’s audited revenue from export subject to the export agency services in 2015 - the Group’s audited revenue from export subject to the export agency services in 2012) / the Group’s audited revenue from export subject to the export agency services in 2012.

• (3) Payment term(s) for the transactions between the Group on the one hand and Hisense Group,Hisense Electric and/or their respective subsidiaries on the other hand shall be in accordance with the payment term(s) as stipulated in the definitive contract(s) to be signed by the

Page 34 of 45

relevant parties thereto. The fees for the provision of the agency services for export of the white goods products of the Group will be calculated on a monthly basis and the relevant members of the Group should pay the monthly fee for the preceding month by way of telegraphic transfer or bills.

• (4) The annual caps under the Business Co-operation Framework Agreement are shown in the table below:

below:
	Unit:RMB(tenthousand)	(exclusive value-added tax)
Types of connected transactions	Division by products or services	Connected person	Annual cap
Sale of products and materials	Sale of home electrical appliances products by the Group	Hisense Group	298,520
		Hisense Electric	8
	Sale of equipment by the Group	Hisense Group	800
	Sale of moulds by the Group	Hisense Group	25,400
		Hisense Electric	9,600
	Sale of raw materials, parts and components by the Group	Hisense Group	5,695
		Hisense Electric	1,010
Provision of services	Provision of loading and unloading, design, equipment rental and property services by the Group	Hisense Group	719
Purchase of products and materials	Purchase of home electrical appliances products by the Group	Hisense Group	60
		Hisense Electric	20
	Purchase of raw materials, parts and components by the Group	Hisense Group	1,706
		Hisense Electric	1,859
Receipt of services	Receipt of material processing, installation and maintenance, property, medical, leasing, design, inspection, agency services for import and export, property construction, management consultancy, technical support and information system maintenance by the Group	Hisense Group	16,681
	Receipt of property services by the Group	Hisense Electric	1,031
	Receipt of agency services for export of the white goods by the Group	Hisense Group	43,933

(II) During the Reporting Period, certain connected transactions in relation to ordinary operation have been entered into, details of which are as follows:

Page 35 of 45

Connected parties	Type of connected transaction	Particulars of connected transaction	Pricing principle of connected transaction	Connected transaction amount (RMB ten thousand)	Percentage of total amount of similar transactions (%)
HisenseElectric	Purchase	Finished goods	Agreed price	5.53	-
Hisense Group	Purchase	Finished goods	Agreed price	59.72	-
Hisense-Whirlpool	Purchase	Finished goods	Agreed price	17,442.71	0.95
HisenseHitachi	Purchase	Finished goods	Agreed price	15.72	-
HisenseElectric	Purchase	Materials	Agreed price	1,410.93	0.08
Hisense Group	Purchase	Materials	Agreed price	1,227.21	0.07
Hisense-Whirlpool	Purchase	Materials	Agreed price	567.69	0.03
HisenseHitachi	Purchase	Materials	Agreed price	550.30	0.03
HisenseElectric	Receipt ofservices	Receipt of services	Agreed price	795.98	0.04
Hisense Group	Receipt ofservices	Receipt of services	Agreed price	37,874.05	2.05
HisenseHongKong	Receipt of purchase financing agency services	Receipt of purchase financing agency services	Agreed price	16,731.11	0.91
HisenseElectric	Sale	Finished goods	Agreed price	7.87	-
Hisense Group	Sale	Finished goods	Agreed price	236,263.26	10.07
HisenseHitachi	Sale	Finished goods	Agreed price	15,610.51	0.67
HisenseElectric	Sale	Materials	Agreed price	944.48	0.04
Hisense Group	Sale	Materials	Agreed price	1,556.25	0.07
Hisense-Whirlpool	Sale	Materials	Agreed price	370.73	0.02
HisenseHitachi	Sale	Materials	Agreed price	231.27	0.01
HisenseElectric	Sale	Moulds	Market price	7,971.22	0.34
Hisense Group	Sale	Moulds	Market price	19,453.96	0.83
Hisense-Whirlpool	Sale	Moulds	Market price	393.15	0.02
HisenseHitachi	Sale	Moulds	Market price	1,218.26	0.05
Hisense Group	Provision of services	Provision of services	Agreed price	460.38	0.02
Hisense-Whirlpool	Provision of services	Provision of services	Agreed price	174.42	0.01

As at the end of the Reporting Period, the Company and its subsidiaries had the balance of deposit of RMB 790.8131 million and interest income received of RMB 5.0134 million, the actual balance of loan of RMB 0, balance of electronic bank acceptance bill of RMB1,862.0898 million, and the handling fee for opening accounts for electronic bank acceptance bill of RMB1.6370 million with Hisense Finance. The actual amount of discounted interest for the provision of draft discount services was RMB 0, the actual amount involved for the provision of settlement and sale of foreign exchange services was US$139.4417 million and the actual service fee paid for the provision of agency services such as settlement services for receipt and payment of funds was RMB 0.3497 million.

(III) During the Reporting Period, the Company and its connected persons (within the meaning under Chapter 14A of the Hong Kong Listing Rules) have entered into the following agreements, involving transactions between the Group and the relevant connected persons

Page 36 of 45

after the Reporting Period:

N o.	Agreement	Counterpa rty to the agreement	Particulars of connected transactions	Annual cap
1	Business Co-operation Framework Agreement dated 10November 2015	Hisense Group and Hisense Electric	Purchase of home electrical appliances by the Group	RMB920,000
			Purchase of raw materials, parts and components by the Group	RMB35,850,000
			Receipt of services by the Group	RMB201,340,000
			Receipt of agency services for export of white goods products by the Group	RMB399,000,000
			Supply of home electrical appliances by the Group	RMB3,594,500,000
			Supply of equipment by the Group	RMB3,690,000
			Supply of moulds by the Group	RMB347,380,000
			Supply of raw materials, parts and components by the Group	RMB93,340,000
			Provision of services by the Group	RMB23,700,000
2	Financial Services Agreement dated 10 November2015	Hisense Finance	Receipt of deposit services, loan and electronic bank acceptance bill (電子銀 行承兌匯票) services, draft discount services (票據貼現服務), settlement and sale of foreign exchange services (結售 匯服務) and agency services such as settlement services for receipt and payment of funds (資金收支結算等代 理類服務)	Deposit services: RMB1,500,000,000(inclusive of interest); loan and electronic bank acceptance bill services: RMB3,000,000,000 (inclusive of interest and service charges); draft discount services: RMB50,000,000; settlement and sale of foreign exchange services: US$700,000,000; agency services such as settlement services for receipt and payment of funds: RMB3,000,000
3	Purchase Financing Agency Framework Agreement dated 10 November2015	Hisense Hong Kong	Receipt of financing agency services by the Group to purchase imported raw materials, components and equipment	US$60,000,000

The term of the Business Co-operation Framework Agreement and the Purchase Financing Agency Framework Agreement commences from 1 January 2016 until 31 December 2016, whereas the term of the Financial Services Agreement commences from 1 January 2016 until 31 December 2017. The relationship between the Group on one hand and Hisense Group, Hisense Electric, Hisense Finance and Hisense Hong Kong on the other hand has been disclosed above.

Page 37 of 45

Details of the agreements can be found in the announcement and the circular published on the website of the Hong Kong Stock Exchange (http://www.hkex.com.hk) on 10 November 2015 and 2 December 2015 respectively.

CORPORATE GOVERNANCE CODE

To the best knowledge and information of the Company, during the Reporting Period, the Company has complied with the code provisions in the Corporate Governance Code as set out in Appendix 14 to the Hong Kong Listing Rules.

PUBLICATION OF ANNUAL REPORT ON THE INTERNET WEBSITES OF THE HONG KONG STOCK EXCHANGE AND THE COMPANY

All information about the annual report as required by Appendix 16 to the Hong Kong Listing Rules will be published on the Hong Kong Stock Exchange’s website (http://www.hkex.com.hk) and the Company’s website (http://www.kelon.com) in due course.

By Order of the Board Hisense Kelon Electrical Holdings Company Limited Tang Ye Guo Chairman

Foshan City, Guangdong, the PRC, 29 March 2016

As at the date of this announcement, the Company’s directors are Mr. Tang Ye Guo, Mr. Liu Hong Xin, Mr. Lin Lan, Mr. Jia Shao Qian, and Mr. Wang Zhi Gang; and the Company’s independent non-executive directors are Mr. Xu Xiang Yi, Mr. Wang Xin Yu and Mr. Wang Ai Guo.

NOTE: SUPPLEMENTARY INFORMATION AS REQUIRED BY THE HONG KONG STOCK EXCHANGE IN RELATION TO THE COMPANY’S A SHARE ANNUAL RESULTS ANNOUNCEMENT

Ⅰ .PARTICULARS OF THE REMUNERATION OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT OF THE COMPANY

						Total amount of	Whether
						remuneration	receive
				Commencement	Termination	before tax	remuneration
Name	Position	Gender	Age	date of Term of	date of Term	received from	from
				Office	of Office	the	connected
						Company(RMB	party of the
						ten thousand)	Company
Tang Ye Guo	Chairman	Male	53	2006.6.26.	2018.6.25.	99.97	No
Liu Hong Xin	Director	Male	49	2015.6.26.	2018.6.25.	0	Yes
Lin Lan	Director	Male	58	2006.6.26.	2018.6.25.	0	Yes
	Director			2015.6.26.	2018.6.25.
Jia Shao Qian	Vice President	Male	43	2007.1.30.	2018.6.25.	93.24	No
	Director			2015.12.28.	2018.6.25.
Wang Zhi Gang	Vice President	Male	46	2015.11.10.	2018.6.25.	98.33	No
	Independent
	non-executive
Xu Xiang Yi	Director	Male	60	2012.6.26.	2018.6.25.	9	No

Page 38 of 45

	Independent
	non-executive
Wang Ai Guo	Director	Male	51	2011.1.20.	2018.6.25.	9	No
	Independent
	non-executive
Wang Xin Yu	Director	Male	45	2011.9.26.	2018.6.25.	24	No
	Chairman of
	Supervisory
Liu Zhen Shun	Committee	Male	46	2014.1.10.	2018.6.25.	0	Yes
Yang Qing	Supervisor	Male	42	2015.12.28.	2018.6.25.	0	Yes
Fan Wei	Supervisor	Female	50	2015.6.26.	2018.6.25.	30.56	No
Dai Hui Zhong	President	Male	50	2016.1.27.	2018.6.25.	0	Yes
	Person in charge of
Gao Yu Ling	finance	Female	35	2015.12.28	2018.6.25.	0	Yes
Xia Feng	Secretary to the Board	Male	39	2010.8.27.	2018.6.25.	36.63	No
Wong Tak Fong	Company Secretary	Female	48	2012.6.26.	2018.6.25.	16.17	No
Yu Shu Min	Former Director	Female	64	2006.6.26.	2015.11.9.	0	Yes
	Former Director			2011.1.20.	2015.3.16.
Xiao Jian Lin	Former President	Male	48	2014.3.27.	2015.3.16.	34.44	No
	Former Director			2014.6.26.	2016.1.26.
Tian Ye	Former President	Male	41	2015.3.17.	2016.1.26.	109.75	No
	Former Director			2014.6.26.	2015.6.7.
Huang Xiao Jian	Former Vice President	Male	57	2014.3.27.	2015.6.7.	46.30	No
Zhang Jian Jun	Former Supervisor	Male	42	2012.6 26	2015.1.14	0	No
ShuPeng	FormerSupervisor	Male	41	2015.1.15	2015.6.25	11.76	No
	Former Person in
Li Jun	charge of finance	Female	41	2012. 8 .15	2015.3.16	17.30	No
	Former Person in
Li Hua	charge of finance	Male	42	2015.3.17.	2015.12.27.	36.48	No

Ⅱ. The decision-making procedures and basis of determination of the remuneration of the Directors, supervisors and senior management are as follows:

-The remuneration of the Directors of the Company is determined based on suggestions made to the Board by the remuneration and appraisal committee of the Board on the basis of the duties of the Directors and the remuneration level of other listed companies in the same industry, and is subject to consideration and approval by the Board and the shareholders at general meetings;

The remuneration of the supervisors is determined based on suggestions made by the supervisory committee on the basis of the duties of the supervisors and the remuneration level of other listed companies in the same industry and is subject to consideration and approval by the Board and the shareholders at general meetings;

The remuneration and appraisal committee of the Board makes remuneration suggestion to the Board based on the senior management’s experience, responsibilities undertaken for operation under his/ her management, risk, pressure and his/ her contribution to the Company, which is determined and approved by the Board. The final remuneration received by the senior management is also linked with his/her annual performance review.

The Company determines and pays the remuneration of the Directors, supervisors and senior management in accordance with the above requirements and procedures.

Ⅲ .MATERIAL LITIGATIONS AND ARBITRATIONS OF THE COMPANY

Page 39 of 45

√ Applicable □ Not applicable

General status of the litigation (arbitration)	Amount	Whether a		Results and
		liability is			Execution of the
	involved		Progress of the litigation	effects of the
		expected			judgment of the
	(RMB ten		(arbitration)	litigation
		to be			litigation (arbitration)
	thousand)			(arbitration)
		incurred
A series of related party transactions and unusual cash flows occurred between the Greencool Companies and the Company during the period from October 2001 to July 2005. In addition, during the period, the Greencool Companies, through certain specific third party companies such as Tianjin Lixin Commercial Trading Development Company Limited, were involved in a series of unusual cash flow with the Company. The Company has instituted proceedings against the Greencool Companies for such transactions and unusual cash flows as well as the suspectedfund embezzlements.
			On 26 January 2015, the
			relevant subsidiaries of the
			Company received the
			execution judgments of	Progress of the	As at the date hereof,
			(2009) Fo Zhong Fa Zhi Zi	litigation will not	the Company has not
			No. 236 and (2010) Fo	affect the profits	yet received
	72,541.44	No	Zhong Fa Zhi Zi No. 32	and losses of the	execution judgment
			from the Foshan	Company for	for 1 case involving
			Intermediate Court, which	such period.	Greencool
			provide the execution		Companies.
			procedure of the above 2
			mentioned cases have been
			concluded in accordance
			with the law.

Ⅳ .SHAREHOLDINGS IN OTHER LISTED COMPANIES HELD BY THE COMPANY

Stock code		Initial investment	Shareholding percentage in the company	Carrying amount at the end of the period	Profit and loss for the Reporting Period (RMB ten thousand)	Changes in ownership interests for the Reporting Period (RMB ten thousand)
		cost (RMB ten
	Stock abbreviation	thousand)
			（%）	(RMB ten
				thousand)
000404	Huayi Compressor	—	—	—	—	—

In order to better leverage on the shares of Huayi Compressor held by the Company, the Company reduced the shareholding of Huayi Compressor by disposing a total of 20,928,506 shares during the Reporting Period. The corresponding cost of long-term equity investment of RMB81.8907 million was released and an investment gain of RMB135.5490 million was recognised. After the present disposal, the Company no longer holds shares in Huayi Compressor.

Ⅴ .PARTICULARS OF GUARANTEES

Unit: RMB ten thousand

External guarantee given by the Company and its subsidiaries (excluding guarantees for its subsidiaries)	External guarantee given by the Company and its subsidiaries (excluding guarantees for its subsidiaries)	External guarantee given by the Company and its subsidiaries (excluding guarantees for its subsidiaries)	External guarantee given by the Company and its subsidiaries (excluding guarantees for its subsidiaries)	External guarantee given by the Company and its subsidiaries (excluding guarantees for its subsidiaries)	External guarantee given by the Company and its subsidiaries (excluding guarantees for its subsidiaries)	External guarantee given by the Company and its subsidiaries (excluding guarantees for its subsidiaries)	External guarantee given by the Company and its subsidiaries (excluding guarantees for its subsidiaries)	External guarantee given by the Company and its subsidiaries (excluding guarantees for its subsidiaries)
The guaranteed party	Date of	Limit on	Actual effective	Actual	Type of	Period of	Complete	Whether the
	disclosure	guaranteed	date (date of	guaranteed	guarantee	guarantee	d or not	guarantee is given
	of relevant	amount	agreement)	amount				for any connected
	announce							party
	ment in
	relation to
	the limit
	on the
	guaranteed
	amount
Nil	—	—	—	—	—	—	—	—
Total limit on the amount of external				Actual amount of external
guarantees approved during the Reporting		0		guarantees during the		0
Period(A1)				ReportingPeriod(A2)

Page 40 of 45

Total limit on the amount of external							Total balance of actual amount of external guarantees at the end of the Reporting Period
guarantees which has been approved at the
			0							0
end of the Reporting Period (A3)
							(A4)
Guarantees given by the Company								for its subsidiaries
The guaranteed party	Date of			Guarante		Actual	Actual	Type of guarantee			Period of guarantee			Comp	Whet
	disclosure of			ed		effective	guarantee							leted	her
	relevant			amount		date (date	d amount							or not	the
	announcement in					of									guara
	relation to the					agreement)									ntee is
	limit on the														given
	guaranteed														for
	amount														any
															conne
															cted
															party
	22 November			60,000
Guangdong Refrigerator						2014-3-5	9.44	Joint liability guarantee;			2014.3.5-2015.1.31			Yes	No
	2013
	22 November			60,000
Guangdong Refrigerator						2015-3-9	9.61	Joint liability guarantee			2015.3.9-2016.1.31			No	No
	2013
	22 November			60,000
Guangdong Refrigerator						2013-12-10	71.97	Joint liability guarantee			2013.12.10-2015.10.13			Yes	No
	2013
	22 November			60,000
Guangdong Refrigerator						2014-7-7	110.18	Joint liability guarantee;			2014.7.7-2016.1.28			No	No
	2013
GuangdongAir-conditioner	3 December 2014			30,000		2015-5-13	140.06	Joint liability guarantee			2015.5.13-2016.1.15			Yes	No
GuangdongAir-conditioner	3 December 2014			30,000		2015-10-26	567.70	Joint liability guarantee			2015.10.26-2016.1.12			No	No
	22 November			30,000
Kelon Air-conditioner						2014-5-5	160.00	Joint liability guarantee;			2014.5.5-2015.12.31			Yes	No
	2013
	22 November			30,000
Kelon Air-conditioner						2015-4-8	74.83	Joint liability guarantee			2015.4.8-2015.8.30			Yes	No
	2013
	22 November			30,000
Kelon Air-conditioner						2014-10-10	401.52	Joint liability guarantee;			2014.10.10-2015.6.4			Yes	No
	2013
	22 November			30,000
Kelon Air-conditioner						2015-11-25	160.00	Joint liability guarantee			2015.11.25-2016.12.31			No	No
	2013
Home Appliances Co	22 November
				5,000		2014-6-23	125.30	Joint liability guarantee			2014.6.23-2015.5.30			Yes	No
	2013
Home Appliances Co	22 November
				5,000		2014-6-20	60.00	Joint liability guarantee;			2014.6.20-2016.6.11			No	No
	2013
Home Appliances Co	22 November
				5,000		2015-8-20	127.87	Joint liability guarantee			2015.8.20-2016.5.30			No	No
	2013
	22 November
Home Appliances Co				5,000		2015-1-16	1,611.27	Joint liability guarantee			2015.1.16-2016.1.14			Yes	No
	2013
	22 November
Yangzhou Refrigerator				10,000		2013-5-14	76.39	Joint liability guarantee;			2013.5.14-2015.1.14			Yes	No
	2013
	22 November
Ronsheng Plastic				6,000		2015-1-12	2,993.20	Joint liability guarantee			2015.1.12-2015-12-28			Yes	No
	2013
	22 November
Ronsheng Plastic				6,000		2015-10-16	882.10	Joint liability guarantee			2015.10.16-2016.2.29			No	No
	2013
Total limit on the amount of guarantees for
subsidiaries approved during the Reporting							Actual amount of guarantees for
Period (B1)				0			subsidiaries during the Reporting					7,581.44
							Period (B2)
Total limit on the amount of guarantees for
subsidiaries which has been approved at the end							Total balance of actual amount of
of the Reporting Period (B3)				213,000			guarantees for subsidiaries at the end					1,917.46
							of the Reporting Period (B4)
		Guarantees given by the subsidiaries for its subsidiaries
The guaranteed party		Date of	Limit on		Actual effective		Actual		Type of	Period of		Complete	Whether the
		disclosure	guaranteed		date (date of		guaranteed		guarantee	guarantee		d or not	guarantee is given
		of relevant	amount		agreement)		amount						for any connected
		announce											party
		ment in
		relation to
		the limit
		on the
		guaranteed
		amount

Page 41 of 45

Nil	—	—	—	—	—	—	—	—
Total limit on the amount of guarantees for
subsidiaries approved during the Reporting				Actual amount of guarantees
Period (C1)		0		for subsidiaries during the		0
				Reporting Period (C2)
Total limit on the amount of guarantees for				Total balance of actual amount
subsidiaries which has been approved at the				of guarantees for subsidiaries
		0				0
end of the Reporting Period (C3)				at the end of the Reporting
				Period (C4)
Total guaranteed amount of the Company (being the sum of the previous three major items)
Total limit on the amount of guarantees
approved during the Reporting Period				Actual amount of guarantees
(A1+B1+C1)		0		during the Reporting Period		7,581.44
				(A2+B2+C2)
Total limit on the amount of guarantees				Total balance of actual amount
which has been approved at the end of the				of guarantees at the end of the
		213,000				1,917.46
Reporting Period (A3+B3+C3)				Reporting Period (A4+B4+C4)
Proportion of actual amount of guarantees (being A4+B4+C4) to the net				0.47%
assets of the Company
Including:
Guaranteed amount provided for shareholders, beneficial controlling
parties and their connectedparties(D)
Guaranteed amount provided directly or indirectly for the guaranteed party
				727.7
withgearingratio over 70%(E)
Totalguaranteed amount over 50% of the net asset(F)
Sum of the above threeguarantees(D+E+F)				727.7
For guarantees which have not expired, description on liability for
guarantees incurred during the Reporting Period or possibility to assume				Nil
joint liabilities(if any)
Description of provision of external guarantee in violation of prescribed
				Nil
procedures

Ⅵ .DERIVATIVES INVESTMENT

Ⅵ.DERIVATIVES INVESTMENT	Ⅵ.DERIVATIVES INVESTMENT	Ⅵ.DERIVATIVES INVESTMENT	Ⅵ.DERIVATIVES INVESTMENT	Ⅵ.DERIVATIVES INVESTMENT	Ⅵ.DERIVATIVES INVESTMENT	Ⅵ.DERIVATIVES INVESTMENT	Ⅵ.DERIVATIVES INVESTMENT	Ⅵ.DERIVATIVES INVESTMENT	Ⅵ.DERIVATIVES INVESTMENT	Ⅵ.DERIVATIVES INVESTMENT	Ⅵ.DERIVATIVES INVESTMENT	Ⅵ.DERIVATIVES INVESTMENT	Ⅵ.DERIVATIVES INVESTMENT
Unit: RMB (in ten thousand)
Name	Conn	Wheth	Type of	Initial	Effective	Expiry	Investment			Amo	Invest	Proportio	Actual
of	ectio	er or	derivatives	investment	Date	Date	at the			unt of	ment at	n of	amount
opera	n	not a	investment	of			beginning of	Amoun		provi	the end	investme	of profit
tors		connec		derivatives			the	t of	Amount	sion	of the	nt to the	and loss
of		ted		investment			Reporting	purcha	of	for	Reporti	net asset	during
deriv		transac					Period	se	disposal	impai	ng	of the	the
atives		tion						during	during	rment	Period	Compan	Reportin
invest								the	the	(if		y at the	g Period
ment								Reporti	Reportin	any)		end of
								ng	g Period			the
								Period				Reportin
												g Period
												(%)
			Forward
			foreign	221,160.9	1 Januar	31 Decem		108,78	246,601.		83,342.
Bank	No	No					221,160.98					20.61	5,513.18
			exchange	8	y 2015	ber 2015		3.26	39		85
			contracts
Source of derivatives investment				Export trade payment
funding
Litigation involved (if				Not applicable
applicable)
Date of the announcement				26 March 2015
disclosing the approval of
derivatives investment by the
Board (ifany)

Page 42 of 45

26 June 2015

Date of the announcement disclosing the approval of derivatives investment during shareholders’ meetings (if any)

The derivatives business of the Company mainly represents the forward foreign exchange contracts used to avoid the risk of foreign exchange fluctuations related to the overseas sales receivables. The Risk analysis of positions in Company determines a reasonable range of foreign exchange rates to achieve the hedging purpose. derivatives during the Reporting Period and explanations of risk The Company has formulated the “Management Measures for the Foreign Exchange Capital control measures (including but Business” and “the Internal Control System for Forward Foreign Exchange Capital Transactions”. not limited to market risk, The measures specifically regulate the basic principles, operation rules, risk control measures and liquidity risk, credit risk, internal controls that shall be followed when engaging in the business of foreign exchange operation risk, legal risk etc.) derivatives. In respect of actual business management, the Company manages the derivatives business before, during and after the operation based on the management measures for the derivatives business.

Changes in market price or The assessment of the fair value of the derivatives carried out by the Company mainly represents product fair value of invested the outstanding foreign exchange forward contracts entered into by the Company and banks, which derivatives during the Reporting are recognized as transactional financial assets or liabilities based on the difference between the Period, where specific methods quotation of the outstanding foreign exchange forward contracts and the forward exchange rate as at and relevant assumptions and the end of the period. During the Reporting Period, the Company recognized a gain on change in parameters used shall be fair value of the derivatives of RMB -2.5391 million. Investment gain amounted to RMB disclosed in the analysis of derivatives’ fair value 57.6709 million, resulting in a total profits or losses of RMB 55.1318 million. Explanations of any significant changes in the Company’s accounting policies and specific During the Reporting Period, there were no material changes in the accounting policy and specific accounting and auditing accounting and auditing principles for the Company’s derivatives business as compared to last principles on derivatives reporting period. between the Reporting Period and the last reporting period

Opinion of independent directors: Commencement of foreign exchange derivatives business by the Specific opinions of independent Company was beneficial to the Company in the prevention of exchange rate fluctuation risks. The Directors on the derivatives Company has devised the Internal Control System for Forward Foreign Exchange Capital investment and risk control of Transactions to strengthen internal control and enhance the management of foreign exchange risks the Company by the Company, and the targeted risk control measures adopted were practicable.

Ⅶ . CONSIGNED FINANCING

√ Applicable □ Not applicable

√Applicable□Not	√Applicable□Not	√Applicable□Not	applicable	applicable	applicable	applicable	applicable	applicable	applicable	applicable	applicable
			Unit:RMB(intenthousand)
										Actual	Actual
							The actual	Amoun
	Whether		Amount							amount	recovery
							amount of	t of
	it is a		of			Mode of				of profit	of profit
				Commen			principal	provisi
Name of	connecte		consign		Expirati	determining			Expected	and loss	and loss
		Product type		cement			received	on for
trustee	d		ed		on date	remuneratio			revenue	during	during
				date			during the	impair
	transacti		financin			n				the	the
							Reporting	ment
	on		g							Reportin	Reportin
							Period	(if any)
										g Period	g Period
						Revenue
						guaranteed
		Bank’s asset		31	1	type,					Not
Bank	No	management	20,000	Decembe	Februar	investment	0	0	70.13	0	applicabl
		product		r 2015	y 2016	revenue rate					e
						(annual rate
						of 4%)
Total			20,000	--	--	--	0	0	70.13	0	--
Source of funding for consigned
			Internal funding of the Company
financing
Total amount of overdue principal
and revenue which was not yet			0
recovered

Page 43 of 45

Legal disputes involved (if
	Not applicable
applicable)
Date of publishing the
announcement in respect of the
	Not applicable
Board meeting held to approve the
consigned financing (if applicable)
Date of publishing the
announcement in respect of the
Shareholders’ meeting held to	Not applicable
approve the consigned financing (if
applicable)
Whether there is any plan for
	Yes
consigned financing in the future

Ⅷ .DESCRIPTION OF CHANGES IN SCOPE OF CONSOLIDATION AS COMPARED TO FINANCIAL REPORT LAST YEAR

• √ Applicable □ Not applicable

Newly consolidated subsidiary:

Jiangmen Hisense Electrical Appliances Co., Ltd., a subsidiary newly established by the Company during the Reporting Period, was consolidated for the Reporting Period.

Subsidiaries no longer included in the scope of consolidation:

During the Reporting Period, the Company cancelled a wholly-owned subsidiary Foshan Shunde Kelon Household Electrical Appliance Company Limited, which was no longer consolidated since the month following the cancellation.

During the Reporting Period, the Company transferred its entire equity interests in a wholly-owned subsidiary Hisense Home Appliance (Europe) Research &Development Center GmbH, which was no longer consolidated since the month following completion of the transfer.

This announcement is published in both English and Chinese. If there is any conflict between the English and the Chinese versions, the Chinese version shall prevail.

DEFINITIONS

In the announcement, unless the context requires otherwise, the following terms or expressions shall have the following meanings:

“Company”, “the Company”	Hisense Kelon Electrical Holdings Company Limited
“Hisense Air-Conditioning”	Qingdao Hisense Air-Conditioning Company Limited
“Hisense Electric”	Hisense Electric Co., Ltd.
“Hisense Group”	Hisense Company Limited
“Hisense Hitachi”	Qingdao Hisense Hitachi Air-Conditioning Systems Co., Ltd.
“Hisense-Whirlpool”	Hisense-Whirlpool (Zhejiang) Electric Appliances Co., Ltd.
“Hisense Finance”	Hisense Finance Company Limited

Page 44 of 45

“Hisense International”	Hisense International Co., Ltd.
“Hisense Hong Kong”	Hisense (Hong Kong) Company Limited
“Guangdong Greencool”	Guangdong Greencool Enterprise Development Company Limited
“Greencool Companies”	Guangdong Greencool and other related parties
“Guangdong Refrigerator”	Hisense Ronshen (Guangdong) Refrigerator Co., Ltd.
“Guangdong Air-Conditioner”	Hisense (Guangdong) Air-Conditioner Co., Ltd.
“Kelon Air-conditioner”	Guangdong Kelon Air-Conditioner Co., Ltd.
“Home Appliances Co”	Guangdong Hisense Home Appliances Co., Ltd..
“Guangdong Freezer”	Hisense Ronshen (Guangdong) Freezer Co., Ltd.
“Yangzhou Refrigerator”	Hisense Ronshen (Yangzhou) Refrigerator Co., Ltd.
“Ronsheng Plastic”	Foshan Shunde Rongsheng Plastic Co., Ltd.
“Huayi Compressor”	Huayi Compressor Company Limited
“Foshan Intermediate Court”	Intermediate People’s Court of Foshan City
“RMB”	Renminbi
“Hong Kong Stock Exchange”	The Stock Exchange of Hong Kong Limited

Page 45 of 45