The Board of Directors (the "Board") of Hisense Kelon Electrical Holdings Company Limited (the "Company") hereby announces the unaudited interim report of the Company and its subsidiaries (collectively referred to as the "Group") for the six months ended 30 June 2015 (the "Reporting Period") together with comparative figures for the corresponding period in 2014. This interim report has been reviewed by the Company's Audit Committee.

FINANCIAL INFORMATION PREPARED IN ACCORDANCE WITH CHINA ACCOUNTING STANDARDS

(Unless otherwise stated, all amounts are denominated in Renminbi)

1. CONSOLIDATED BALANCE SHEETS

Prepared by: Hisense Kelon Electrical Holdings Company Limited Unit: RMB

Item	Closing balance	Opening Balance

Current assets:
Cash at bank and on hand	879,033,377.53	870,663,755.12
Balances with clearing companies
Lending capital
Financial assets at fair value through profit or loss	45,885,145.11	162,460.00
Derivative financial assets
Notes receivable	2,022,652,896.39	991,796,937.82
Accounts receivable	3,127,840,926.65	1,984,291,386.93
Prepayments	446,248,452.29	498,209,306.68
Insurance premium receivable
Receivables from reinsurers
Reserves for reinsurance contract receivable
Interests receivable
Dividends receivable
Other receivables	446,884,703.32	493,051,526.66
Financial assets purchased under agreements to resell
Inventories	3,352,817,562.84	2,915,921,775.81
Assets classified as held for sale
Non-current assets due within one year
Other current assets	308,416,803.24	287,019,824.65
Total current assets	10,629,779,867.37	8,041,116,973.67
Non-current assets:
Disbursement of loans and advances
Available-for-sale financial assets	3,900,000.00	4,000,000.00
Held-to-maturity investments
Long-term receivables
Long-term equity investments	1,119,864,899.12	1,216,043,770.20
Investment properties	30,208,771.74	31,459,416.41
Fixed assets	3,390,359,539.97	2,932,039,091.41
Construction in progress	185,543,441.52	251,551,873.15
Construction materials
Disposal of fixed assets Productive biological assets	7,857,686.83	134,612.95
Oil and gas assets
Intangible assets	661,702,034.19	670,944,657.29
Development costs
Goodwill
Long-term prepaid expenses	11,505,346.17	12,690,220.43
Deferred tax assets	137,880,384.70	106,813,348.23
Other non-current assets
Total non-current assets	5,548,822,104.24	5,225,676,990.07
Total assets	16,178,601,971.61	13,266,793,963.74

1. CONSOLIDATED BALANCE SHEETS — Continued

Prepared by: Hisense Kelon Electrical Holdings Company Limited Unit: RMB

Item	Closing balance	Opening Balance
Current liabilities:
Short-term borrowings	388,293,554.13	253,985,142.45
Borrowings from central bank
Receipt of deposits and deposits from other banks
Loans from other banks
Financial liabilities at fair value through profit or loss		7,391,136.66
Derivative financial liabilities
Notes payable	2,134,358,147.40	1,528,195,526.41
Accounts payable	5,282,041,539.94	3,465,854,583.60
Advances from customers	445,806,561.46	765,881,375.85
Proceeds from disposal of financial assets under agreements to repurchase
Handling fees and commission payable
Employee remunerations payable	240,279,273.50	249,664,285.98
Taxes payable	164,526,233.11	174,792,592.21
Interests payable
Dividends payable	37,707.02	2,067.02
Other payables	1,618,998,324.13	1,735,584,905.78
Reinsured accounts payable
Reserves for reinsurance contract
Customer brokerage deposits
Securities underwriting brokerage deposits
Liabilities classified as held for sale
Non-current liabilities due within one year
Other current liabilities	1,026,163,690.19	680,022,633.56
Total current liabilities	11,300,505,030.88	8,861,374,249.52

1. CONSOLIDATED BALANCE SHEETS — Continued

Prepared by: Hisense Kelon Electrical Holdings Company Limited		Unit: RMB
Item	Closing balance	Opening Balance

Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preference shares
Perpetual debts
Long-term payables
Long-term employee remunerations payable
Specific payables
Provisions	372,659,888.08	404,411,887.77
Deferred income	58,084,575.53	60,261,598.06
Deferred tax liabilities	35,026.65	165,600.70
Other non-current liabilities
Total non-current liabilities	430,779,490.26	464,839,086.53
Total liabilities	11,731,284,521.14	9,326,213,336.05
Owners' equity (Shareholders' equity):
Paid-in capital (Share capital)	1,362,725,370.00	1,358,495,560.00
Other equity instruments
Including: Preference shares
Perpetual debts
Capital reserve	2,153,765,644.61	2,125,930,825.88
Less: Treasury shares
Other comprehensive income	9,760,648.24	39,990,884.45
Special reserves
Surplus reserves	145,189,526.48	145,189,526.48
General risk provisions
Undistributed profit	294,473,965.47	(211,243,768.43)
Total equity attributable to shareholders of the parent	3,965,915,154.80	3,458,363,028.38
Minority interests	481,402,295.67	482,217,599.31
Total owners' equity (shareholders' equity)	4,447,317,450.47	3,940,580,627.69
Total liabilities and owners' equity (shareholders' equity)	16,178,601,971.61	13,266,793,963.74

2. BALANCE SHEETS OF PARENT COMPANY

Prepared by: Hisense Kelon Electrical Holdings Company Limited Unit: RMB

Item	Closing Balance	Opening Balance
Current assets:
Cash at bank and on hand	62,725,786.61	28,279,997.40
Financial assets at fair value through profit or loss
Derivative financial assets
Notes receivable	9,839,896.39	21,212,318.94
Accounts receivable	1,858,937,529.73	1,728,905,969.96
Prepayment	443,261,953.21	437,314,766.27
Interests receivable
Dividends receivable
Other receivables	976,176,866.48	834,537,438.77
Inventories	508,377.20	488,848.54
Assets classified as held for sale
Non-current assets due within one year
Other current assets
Total current assets	3,351,450,409.62	3,050,739,339.88
Non-current assets:
Available-for-sale financial assets	3,900,000.00	4,000,000.00
Held-to-maturity investments
Long-term receivables
Long-term equity investments	3,626,456,738.50	3,722,635,609.58
Investment properties	11,757,687.00	12,449,817.00
Fixed assets	125,053,911.74	136,178,710.74
Construction in progress
Construction materials
Disposal of fixed assets
Productive biological assets
Oil and gas assets
Intangible assets	205,123,661.00	210,195,530.00
Development costs
Goodwill
Long-term prepaid expenses	1,844,333.38	2,347,333.36
Deferred tax assets
Other non-current assets
Total non-current assets	3,974,136,331.62	4,087,807,000.68
Total assets	7,325,586,741.24	7,138,546,340.56

2. BALANCE SHEETS OF PARENT COMPANY — Continued

Prepared by: Hisense Kelon Electrical Holdings Company Limited		Unit: RMB
----------------------------------------------------------------	--	-----------

Item	Closing Balance	Opening Balance

Current liabilities:
Short-term borrowings Financial liabilities at fair value through profit or loss
Derivative financial liabilities
Notes payable
Accounts payable	1,478,422,962.93	1,540,384,205.06
Advances from customers	26,623,496.02	30,571,318.62
Employee remunerations payable	3,900,420.58	4,695,796.34
Taxes payable	603,426.19	40,194,681.98
Interests payable
Dividends payable
Other payables	831,172,150.84	793,873,733.58
Liabilities classified as held for sale
Non-current liabilities due within one year
Other current liabilities	348,040,340.36	484,701,272.85
Total current liabilities	2,688,762,796.92	2,894,421,008.43
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preference shares
Perpetual debts
Long-term payables
Long-term employee remunerations payable
Specific payables
Provisions	369,660,794.22	404,411,887.77
Deferred income	32,587,070.83	32,279,217.04
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities	402,247,865.05	436,691,104.81
Total liabilities	3,091,010,661.97	3,331,112,113.24
Owners' equity (Shareholders' equity):
Paid-in capital (Share capital)	1,362,725,370.00	1,358,495,560.00
Other equity instruments Including: Preference shares

Perpetual debts
Capital reserve Less: Treasury shares	2,276,012,265.78	2,248,177,447.05
Other comprehensive income	24,823.98	29,436,301.71
Special reserves
Surplus reserves	114,580,901.49	114,580,901.49
Undistributed profit	481,232,718.02	56,744,017.07
Total (shareholders' equity)	4,234,576,079.27	3,807,434,227.32
Total liabilities and Owners' equity (shareholders' equity)	7,325,586,741.24	7,138,546,340.56

3. CONSOLIDATED INCOME STATEMENT

Prepared by: Hisense Kelon Electrical Holdings Company Limited Unit: RMB

Item	Amount for current period	Amount for previous period
I. Total operating revenue	13,611,148,619.89	15,397,537,762.48
Including: Operating revenue	13,611,148,619.89	15,397,537,762.48
Interest income
Insurance premium earned
Income from handling fees and commission
II. Total operating costs	13,468,670,270.85	14,796,376,342.57
Including: Operating costs	10,800,650,891.99	12,062,743,794.94
Interest expenses
Handling fees and commission expenses
Refunded premiums
Net amount of compensation payout
Net amount of insurance contract reserves provided
Policyholder dividend expenses
Reinsurance premium expenses
Business taxes and surcharges	30,886,280.24	47,442,408.04
Selling and distribution expenses	2,210,836,967.94	2,290,188,924.94
General and administrative expenses	430,232,672.22	403,931,289.17
Financial expenses	(24,809,869.01)	(14,986,556.54)
Impairment losses on assets	20,873,327.47	7,056,482.02
Add: Gain from changes in fair value (Loss denoted by "–")	53,113,821.77	(90,475,246.57)
Investment income (Loss denoted by "–")	290,512,875.51	186,760,167.37
Including: Share of profit of associates and jointly controlled entities	127,811,784.18	141,589,179.58
Foreign exchange gains (Loss denoted by "–")
III. Operating profits (Loss denoted by "–")	486,105,046.32	697,446,340.71
Add: Non-operating income	101,692,390.83	47,756,186.98
Including: Gain on disposal of non-current assets	1,040,721.35	1,639,741.48
Less: Non-operating expenses	9,347,599.79	3,675,820.69
Including: Loss on disposal of non-current assets	7,334,966.96	2,496,560.42
IV. Total profit (Total loss denoted by "–")	578,449,837.36	741,526,707.00
Less: Income tax expenses	64,380,329.92	103,110,741.21
V. Net profits (Net loss denoted by "–")	514,069,507.44	638,415,965.79
Net profits attributable to shareholders of the parent	505,717,733.90	609,769,686.14
Profit and loss of minority interests	8,351,773.54	28,646,279.65
VI. Other comprehensive income after tax, net	(30,230,236.21)	(259,491.65)
Other comprehensive income after tax attributable to owners of the parent, net	(30,230,236.21)	(259,491.65)
A. Items not to be reclassified into profit or loss in subsequent periods	(29,411,477.73)
1. Changes arising from remeasurement of net liabilities or assets of defined
benefit plan
2. Share of other comprehensive income of the investee not to be reclassified
into profit or loss under the equity method	(29,411,477.73)
B. Items to be reclassified into profit or loss in subsequent periods	(818,758.48)	(259,491.65)
1. Share of other comprehensive income of the investee to be reclassified into
profit or loss under the equity method in subsequent periods		(4,453.63)
2. Gains or losses from changes in fair value of available-for-sale financial
assets 3. Gains or losses on reclassification of held-to-maturity investments as available-for-sale financial assets
4. The effective portion of gains or losses from cash flow hedges
5. Differences on translation of foreign currency financial statements	(818,758.48)	(255,038.02)
6. Others
Other comprehensive income after tax attributable to minority interests, net
VII. Total comprehensive income	483,839,271.23	638,156,474.14
Total comprehensive income attributable to shareholders of the parent	475,487,497.69	609,510,194.49
Total comprehensive income attributable to minority interests	8,351,773.54	28,646,279.65
VIII. Earnings per share:
(1) Basic earnings per share	0.37	0.45
(2) Diluted earnings per share	0.37	0.45

4. INCOME STATEMENT OF PARENT COMPANY

Prepared by: Hisense Kelon Electrical Holdings Company Limited Unit: RMB

	Amount for	Amount for
Item	current period	previous period

I. Total operating revenue	25,868,823.41	5,249,146,573.79
Less: Operating costs	26,507,302.40	4,270,466,231.49
Business taxes and surcharges	3,902,274.41	21,046,881.03
Selling and distribution expenses	(155,720,281.19)	551,288,269.74
General and administrative expenses	18,538,946.49	22,854,230.23
Financial expenses	(401,369.93)	(3,159,994.63)
Impairment losses on assets	4,088,727.17	(14,245,175.15)
Add: Gain from changes in fair value (Loss denoted by "–")
Investment income (Loss denoted by "–")	295,367,872.47	169,172,985.38
Including: Share of profit of associates and jointly controlled entities	127,811,784.18	141,589,179.58
II. Operating profits (Loss denoted by "–")	424,321,096.53	570,069,116.46
Add: Non-operating income	1,195,093.43	9,597,414.74
Including: Gain on disposal of non-current assets
Less: Non-operating expenses	1,027,489.01	980,540.71
Including: Loss on disposal of non-current assets	52,497.90	234,697.72
III. Total profit (Total loss denoted by "–")	424,488,700.95	578,685,990.49
Less: Income tax expenses
IV. Net profits (Net loss denoted by "–")	424,488,700.95	578,685,990.49
V. Other comprehensive income after tax, net	(29,411,477.73)	(4,453.63)
A. Items not to be reclassified into profit or loss in subsequent periods	(29,411,477.73)
1. Changes arising from remeasurement of net liabilities or assets of defined benefit plan
2. Share of other comprehensive income of the investee not to be reclassified
into profit or loss under the equity method	(29,411,477.73)
B. Items to be reclassified into profit or loss in subsequent periods		(4,453.63)
1. Share of other comprehensive income of the investee to be reclassified into
profit or loss under the equity method in subsequent periods		(4,453.63)
2. Gains or losses from changes in fair value of available-for-sale financial assets
3. Gains or losses on reclassification of held-to-maturity investments as available-for-sale financial assets
4. The effective portion of gains or losses from cash flow hedges
5. Differences on translation of foreign currency financial statements
6. Others
VI. Total comprehensive income	395,077,223.22	578,681,536.86
VII. Earnings per share:
(1) Basic earnings per share
(2) Diluted earnings per share

5. CONSOLIDATED CASH FLOW STATEMENT

Prepared by: Hisense Kelon Electrical Holdings Company Limited		Unit: RMB
	Amount for	Amount for
Item	current period	previous period
I. Cash flows from operating activities:
Cash received from sales of goods and rendering of services	6,227,820,959.38	6,153,912,976.43
Net increase in customer deposits and interbank deposits
Net increase in borrowings from central bank
Net increase in placements from other financial institutions
Cash received from original insurance contracts
Net cash received from reinsurance business
Net increase in deposits and investments from policyholders
Net increase from disposal of financial assets at fair value through profit or loss
Cash received from interests, fees and commissions
Net increase in placements from banks and other financial institutions
Net increase in repurchase business capital
Tax rebates received	443,199,992.26	309,467,203.75
Other cash received concerning operating activities	264,680,100.87	311,684,318.20
Subtotal of cash inflows from operating activities	6,935,701,052.51	6,775,064,498.38
Cash paid for purchases of commodities and receipt of services	3,292,850,945.61	3,585,242,259.81
Net increase in loans and advances to customers
Net increase in deposits with central bank and other banks
Cash paid for compensation under original insurance contract
Cash paid for interests, fees and commissions
Cash paid for policyholders' dividend
Cash paid to and for employees	1,361,502,120.62	1,267,429,479.30
Cash paid for taxes and surcharges	407,033,653.93	401,999,569.44
Cash paid for other operating activities	2,073,479,177.64	1,420,106,965.74
Subtotal of cash outflows from operating activities	7,134,865,897.80	6,674,778,274.29
Net cash flows from operating activities	(199,164,845.29)	100,286,224.09
II. Cash flows from investing activities:
Cash received from recovery of investments	330,278,145.68	88,200,000.00
Cash received from investment income	7,410,000.00	10,127,855.18
Net cash received from disposals of fixed assets, intangible assets and other
long-term assets	605,807.79	2,565,902.12
Net cash received from disposals of subsidiaries and other operation units
Cash received relating to other investing activities
Subtotal of cash inflows from investing activities	338,293,953.47	100,893,757.30
Cash paid for acquisition of fixed assets, intangible assets and other long-term
assets	289,212,638.80	283,497,036.44
Cash paid for investments
Net increase in pledge loans
Cash paid for acquiring subsidiaries and other operation units
Cash paid relating to other investing activities
Subtotal of cash outflows from investing activities	289,212,638.80	283,497,036.44
Net cash flows from investing activities	49,081,314.67	(182,603,279.14)

5. CONSOLIDATED CASH FLOW STATEMENT — Continued

Prepared by: Hisense Kelon Electrical Holdings Company Limited Unit: RMB

	Amount for	Amount for
Item	current period	previous period
III. Cash flows from financing activities:
Cash received from capital contribution	32,358,046.50	48,566,371.50
Including: Cash contribution to subsidiaries from minority shareholders'
investment
Cash received from borrowings	934,143,486.71	806,571,237.55
Cash received from issuance of bonds
Cash received relating to other financing activities		800,000.00
Subtotal of cash inflows from financing activities	966,501,533.21	855,937,609.05
Cash paid for repayment of borrowings	799,523,193.18	494,790,463.77
Cash paid for distribution of dividends, profit or payment of interest expenses	8,519,142.00	11,954,926.30
Including: Dividend and profit paid to minority shareholders by subsidiaries
Cash paid relating to other financing activities	259,000.00
Subtotal of cash outflows from financing activities	808,301,335.18	506,745,390.07
Net cash flows from financing activities	158,200,198.03	349,192,218.98
IV. Effects of foreign exchange rate changes on cash and cash equivalents	(6,045.00)	115,183.65
V. Net increase in cash and cash equivalents	8,110,622.41	266,990,347.58
Add: Balance of cash and cash equivalents at the beginning of the period	870,038,755.12	472,987,177.54
VI. Balance of cash and cash equivalents at the end of the period	878,149,377.53	739,977,525.12

6. CASH FLOW OF PARENT COMPANY

Prepared by: Hisense Kelon Electrical Holdings Company Limited Unit: RMB

	Amount for	Amount for
Item	current period	previous period

I. Cash flows from operating activities:
Cash received from sales of goods and rendering of services	166,327,676.10	2,168,905,484.06
Tax rebates received
Cash received concerning other operating activities	291,362,572.26	2,921,858,928.95
Subtotal of cash inflows from operation activities	457,690,248.36	5,090,764,413.01
Cash paid for purchases of commodities and receipt of labor services		3,137,820,366.65
Cash paid to and for employees	9,204,433.51	304,563,168.43
Cash paid for taxes and surcharges	79,995,026.92	167,454,421.81
Cash paid for other operating activities	728,973,850.04	1,663,805,340.32
Subtotal of cash outflow from operating activities	818,173,310.47	5,273,643,297.21
Net cash flows from operating activities	(360,483,062.11)	(182,878,884.20)
II. Cash flow from investing activities:
Cash received from recovery of investments	330,278,145.68	88,200,000.00
Cash received from investment income	31,957,120.14	32,005,136.18
Net cash received from disposals of fixed assets, intangible assets and
other long-term assets	335,539.00	124,872.27
Net cash received from disposals of subsidiaries and other operation units		57,530,000.00
Cash received relating to other investing activities
Subtotal of cash inflows from investing activities	362,570,804.82	177,860,008.45
Cash paid for acquisition of fixed assets, intangible assets and other
long-term assets		3,539,909.00
Cash paid for investments
Net cash paid for acquisition of subsidiaries and other operation units
Cash paid relating to other investing activities
Subtotal of cash outflows from investing activities		3,539,909.00
Net cash flows from investing activities III. Cash flows from financing activities:	362,570,804.82	174,320,099.45
Cash received from capital contribution	32,358,046.50	33,972,196.50
Cash received from borrowings
Cash received from issuance of bonds
Cash received relating to other financing activities
Subtotal of cash inflows from financing activities	32,358,046.50	33,972,196.50
Cash paid for repayment of borrowings
Cash paid for distribution of dividends, profit or payment of interest expenses
Cash paid relating to other financing activities
Subtotal of cash outflows from financing activities
Net cash flows from financing activities	32,358,046.50	33,972,196.50
IV. Effects of foreign exchange rate changes on cash and cash equivalents
V. Net increase in cash and cash equivalents	34,445,789.21	25,413,411.75
Add: Balance of cash and cash equivalents at the beginning of the period	28,279,997.40	194,913,820.28
VI . Balance of cash and cash equivalents at the end of the period	62,725,786.61	220,327,232.03

7. CONSOLIDATED STATEMENT OF CHANGES IN OWNERS' EQUITY

Prepared by: Hisense Kelon Electrical Holdings Company Limited													Unit: RMB
	Amount for current period Attributable to shareholders of the parent
Item	Share capital	Preference shares	Other equity instruments Perpetual debts	Others	Capital reserve	Less: Treasury shares	Other comprehensive income	Special reserves	General risk Surplus reserves provisions	Undistributed profits	Others	Minority interests	Total shareholders' equity
I. Closing balance of previous year Add: Changes in accounting policies Correction for error in previous	1,358,495,560.00				2,125,930,825.88		39,990,884.45		145,189,526.48	(211,243,768.43)		482,217,599.31	3,940,580,627.69
period Business combination involving entities under common control Other
II. Opening balance for the year III. Movements in the current period	1,358,495,560.00				2,125,930,825.88		39,990,884.45		145,189,526.48	(211,243,768.43)		482,217,599.31	3,940,580,627.69
(Decreases denoted in "–") (1) Total	4,229,810.00				27,834,818.73		(30,230,236.21)			505,717,733.90		(815,303.64)	506,736,822.78
comprehensive income (2) Shareholders' contributions and capital							(30,230,236.21)			505,717,733.90		8,351,773.54	483,839,271.23
reductions 1. Ordinary shares	4,229,810.00				27,834,818.73								32,064,628.73
contributed by owners 2. Capital contributions by holders of	4,229,810.00				30,633,992.02								34,863,802.02
other equity instruments 3. Amount of share based payment included in shareholders'
equity 4. Other (3) Profit Distribution 1. Appropriations to surplus reserve 2. Appropriations to general risk provisions					(2,799,173.29)							(9,167,077.18)	(2,799,173.29) (9,167,077.18)
3. Distribution to shareholders 4. Other (4) Transfer of shareholders' equity												(9,167,077.18)	(9,167,077.18)
1. Transfer to capital (or share capital) from capital reserve 2. Transfer to capital (or share capital) from surplus reserve
3. Surplus reserves for making up losses 4. Other (5) Special reserves 1. Provided during the period 2. Used during the period
(6) Other IV. Closing balance for the period	1,362,725,370.00				2,153,765,644.61		9,760,648.24		145,189,526.48	294,473,965.47		481,402,295.67	4,447,317,450.47

Legal representative: Tang Ye Guo Chief financial officer: Li Hua Accounting supervisor: Yan Zhi Yong

7. CONSOLIDATED STATEMENT OF CHANGES IN OWNERS' EQUITY — Continued

	Amount for previous year Attributable to shareholders of the parent
		Other equity instruments				Less:	Other			General				Total
Item	Share capital	Preference shares	Perpetual debts	Others	Capital reserve	Treasury shares	comprehensive income	Special reserves	Surplus reserves	risk provisions	Undistributed profits	Others	Minority interests	shareholders' equity
I. Closing balance for previous year Add: Changes in accounting policies Correction for error in previous period	1,354,054,750.00				2,092,858,847.28		40,350,357.85		145,189,526.48		(883,722,400.78)		434,606,641.74	3,183,337,722.57
Business combination involving entities under common control Other
II . Opening balance for the year III. Movements in the current period	1,354,054,750.00				2,092,858,847.28		40,350,357.85		145,189,526.48		(883,722,400.78)		434,606,641.74	3,183,337,722.57
(Decreases denoted in "–") (1) Total	4,440,810.00				33,071,978.60		(359,473.40)				672,478,632.35		47,610,957.57	757,242,905.12
comprehensive income (2) Shareholders' contributions							(145,901.32)				672,478,632.35		39,031,866.12	711,364,597.15
and capital reductions 1. Ordinary shares	4,440,810.00				33,071,978.60								11,522,966.00	49,035,754.60
contributed by owners 2. Capital contributions	4,440,810.00				35,022,063.86								11,522,966.00	50,985,839.86
by holders of other equity instruments 3. Amount of share based payment included in
shareholders' equity 4. Other					(1,950,085.26)									(1,950,085.26)
(3) Profit Distribution 1. Appropriations to surplus reserve 2. Appropriations to general risk provisions													(2,943,874.55)	(2,943,874.55)
3. Distribution to shareholders 4. Other (4) Transfer of shareholders'													(2,943,874.55)	(2,943,874.55)
equity 1. Transfer to capital (or share capital) from capital reserve 2. Transfer to capital
(or share capital) from surplus reserve 3. Surplus reserves for making up
losses 4. Other (5) Special reserves 1. Provided during the period 2. Used during the
period (6) Other							(213,572.08)							(213,572.08)
IV. Closing balance for the period	1,358,495,560.00				2,125,930,825.88		39,990,884.45		145,189,526.48		(211,243,768.43)		482,217,599.31	3,940,580,627.69

Prepared by: Hisense Kelon Electrical Holdings Company Limited Unit: RMB

Legal representative: Tang Ye Guo Chief financial officer: Li Hua Accounting supervisor: Yan Zhi Yong

8. STATEMENT OF CHANGES IN OWNERS' EQUITY OF THE PARENT COMPANY

Prepared by: Hisense Kelon Electrical Holdings Company Limited							Amount for current period					Unit: RMB
					Attributable to shareholders of the parent
Item	Share capital	Preference shares	Other equity instruments Perpetual debts	Others	Capital reserve	Less: Treasury shares	Other comprehensive income	Special reserves	Surplus reserves	General risk provisions	Undistributed profits	Total shareholders' equity
I. Closing balance of previous year Add: Changes in accounting policies Correction for error in previous period	1,358,495,560.00				2,248,177,447.05		29,436,301.71		114,580,901.49		56,744,017.07	3,807,434,227.32
Other II. Opening balance for the year III. Movements in the current period	1,358,495,560.00				2,248,177,447.05		29,436,301.71		114,580,901.49		56,744,017.07	3,807,434,227.32
(Decreases denoted in "–") (1) Total comprehensive income (2) Shareholders' contributions and	4,229,810.00				27,834,818.73		(29,411,477.73) (29,411,477.73)				424,488,700.95 424,488,700.95	427,141,851.95 395,077,223.22
capital reductions	4,229,810.00				27,834,818.73							32,064,628.73
1. Ordinary shares contributed by owners 2. Capital contributions by holders of other equity instruments 3. Amount of share-based payment included in shareholders'	4,229,810.00				30,633,992.02							34,863,802.02
equity 4. Other (3) Profit Distribution 1. Appropriations to surplus reserve 2. Appropriations to general risk provisions 3. Distribution to shareholders 4. Other (4) Transfer of shareholders' equity 1. Transfer to capital (or share capital) from capital reserve 2. Transfer to capital (or share capital) from surplus reserve 3. Surplus reserves for making up losses 4. Other (5) Special reserves 1. Provided during the period 2. Used during the period (6) Other					(2,799,173.29)							(2,799,173.29)
IV. Closing balance for the period	1,362,725,370.00				2,276,012,265.78		24,823.98		114,580,901.49		481,232,718.02	4,234,576,079.27

8. STATEMENT OF CHANGES IN OWNERS' EQUITY OF THE PARENT COMPANY — Continued

							Amount for previous year
					Attributable to shareholders of the parent
Item	Share capital	Preference shares	Other equity instruments Perpetual debts	Others	Capital reserve	Less: Treasury shares	Other comprehensive income	Special reserves	Surplus reserves	General risk provisions	Undistributed profits	Total shareholders' equity
I. Closing balance for previous year Add: Changes in accounting	1,354,054,750.00				2,223,601,333.16				114,580,901.49		(884,000,229.61)	2,808,236,755.04
policies Correction for error in previous period					(6,246,753.49)		29,582,203.03				(23,335,449.54)
Other II . Opening balance for the year III. Movements in the current period	1,354,054,750.00				2,217,354,579.67		29,582,203.03		114,580,901.49		(907,335,679.15)	2,808,236,755.04
(Decreases denoted in "–") (1) Total comprehensive income	4,440,810.00				30,822,867.38		(145,901.32) (145,901.32)				964,079,696.22 964,079,696.22	999,197,472.28 963,933,794.90
(2) Shareholders' contributions and capital reductions 1. Ordinary shares contributed by	4,440,810.00				30,822,867.38							35,263,677.38
owners 2. Capital contributions by holders of other equity instruments 3. Amount of share-based payment	4,440,810.00				32,772,952.64							37,213,762.64
included in shareholders' equity 4. Other (3) Profit Distribution 1. Appropriations to surplus reserve 2. Appropriations to general risk provisions 3. Distribution to shareholders 4. Other (4) Transfer of shareholders' equity 1. Transfer to capital (or share capital) from capital reserve 2. Transfer to capital (or share capital) from surplus reserve 3. Surplus reserves for making up losses					(1,950,085.26)							(1,950,085.26)
4. Other (5) Special reserves 1. Provided during the period 2. Used during the period (6) Other IV. Closing balance for the period	1,358,495,560.00				2,248,177,447.05		29,436,301.71		114,580,901.49		56,744,017.07	3,807,434,227.32

HISENSE KELON ELECTRICAL HOLDINGS COMPANY LIMITED

NOTES TO THE FINANCIALS TATEMENTS

Half year of 2015

(Unless otherwise stated, all amounts are denominated in Renminbi)

1. COMPANY PROFILE

Hisense Kelon Electrical Holdings Company Limited (hereinafter referred to as the "Company"), formerly known as Guangdong Shunde Pearl River factory(廣東順德珠江冰箱廠)was established in 1984. After the restructuring into a joint stock limited company in December 1992, the Company was renamed as Guangdong Kelon Electrical Holdings Company Limited. The Company's 459,589,808 overseas listed public shares (the "H Shares") were listed on The Stock Exchange of Hong Kong Limited on 23 July 1996. In 1998, the Company obtained the approval to issue 110,000,000 domestic shares (the "A Shares"), which were listed on the Shenzhen Stock Exchange on 13 July 1999.

In October 2001 and March 2002, the former single largest shareholder of the Company, Guangdong Kelon (Ronshen) Group Company Limited (hereinafter referred to as "Ronshen Group", which previously held 34.06% interest in the Company) entered into a share transfer agreement and a supplemental agreement with Shunde Greencool Enterprise Development Company Limited (which was renamed as "Guangdong Greencool Enterprises Development Company Limited in 2004, hereinafter referred to as "Guangdong Greencool"), in connection with the transfer of 20.64% of the total share capital of the Company to Guangdong Greencool by Ronshen Group. In April 2002, Ronshen Group transferred its shareholding of 6.92%, 0.71% and 5.79% of the total share capital of the Company to Shunde Economic Consultancy Company, Shunde Dong Heng Development Company Limited and Shunde Xin Hong Enterprise Company Limited, respectively. After the abovementioned share transfers, Ronshen Group, the former single largest shareholder of the Company, no longer held shares of the Company.

On 14 October 2004, 5.79% of the total share capital of the Company held by Shunde Xin Hong Enterprise Company was transferred to Guangdong Greencool. Upon completion of the share transfer, the percentage of total share capital of the Company held by Guangdong Greencool increased to 26.43%.

On 13 December 2006, 26.43% of the total share capital of the Company held by Guangdong Greencool Enterprises Development Company Limited was transferred to Qingdao Hisense Air-Conditioning Company Limited ("Qingdao Hisense Air-Conditioning"). Upon completion of the share transfer, Guangdong Greencool, the former single largest shareholder of the Company, no long held shares of the Company.

The Company's share reform scheme was approved on the A shareholders' meeting on 29 January 2007 and approved by the Ministry of Commerce of the PRC on 22 March 2007. The shareholding of Qingdao Hisense Air-Conditioning, the largest shareholder of the Company, was changed to 23.63% after the scheme. Since 2008, Qingdao Hisense Air-Conditioning has successively increased the shareholding of the Company through secondary market. At the end of 2009, Qingdao Hisense Air-Conditioning held 25.22% of the total share capital of the Company.

On 20 June 2007, the name of the Company was changed from "Guangdong Kelon Electrical Holdings Company Limited" to "Hisense Kelon Electrical Holdings Company Limited".

In accordance with the resolutions of the fourth interim general meeting of the Company held on 31 August 2009, and as approved by China Securities Regulatory Commission with the "Letter of Reply Concerning the Approval for the Major Asset Restructuring of Hisense Kelon Electrical Holdings Company Limited and the Acquisition of Assets through Issuance of Shares to Qingdao Hisense Air-Conditioning Company Limited (Zheng Jian Xu Ke [2010] No. 329)", and the "Letter of Reply Concerning the Approval for the Announcement by Qingdao Hisense Air-Conditioning Company Limited of the Acquisition Report of Hisense Kelon Electrical Holdings Company Limited and the Waiver of its General Offer Obligation (Zheng Jian Xu Ke [2010] No. 330)" dated 23 March 2010, the Company was permitted to issue 362,048,187 ordinary shares (A shares) in Renminbi to Qingdao Hisense Air-conditioning (as a specific object), to fund the acquisition of 100% equity interests in Hisense (Shandong) Air-Conditioner Co., Ltd., 51% equity interests in Hisense (Zhejiang) Air-Conditioner Co., Ltd., 49% equity interests in Qingdao Hisense Hitachi Air-Conditioning Systems Co., Ltd. ("Hisense Hitachi"), 55% equity interests in Hisense (Beijing) Electrical Co., Ltd., 78.70% equity interests in Qingdao Hisense Mould Co., Ltd. and the white goods marketing businesses and assets including refrigerators and airconditioners of Qingdao Hisense Marketing Co., Ltd. ("Hisense Marketing").

Half year of 2015

1. COMPANY PROFILE — Continued

In 2010, the connected transaction in relation to the acquisition of assets by way of share (A share) issue by the Company to a specific object was completed, and the Company issued 362,048,187 additional A shares to Qingdao Hisense Air-Conditioning under seasoned offering. The new shares were listed on 10 June 2010. On 30 June 2010, the registered capital of the Company changed from RMB992,006,563.00 to RMB1,354,054,750.00.

On 18 June 2013, 612,221,909 restricted A shares of the Company held by Qingdao Hisense Air Conditioning were no longer subject to selling moratorium and were listed for trading.

On 23 May 2014, upon the satisfaction of the conditions to the first exercise period of the First Share Option Incentive Scheme of the Company and after approval by and registration with the Shenzhen branch of China Government Securities Depository Trust & Clearing Co. Ltd., an additional of 4,440,810 new shares issued upon the exercise of options were approved for listing.

On 19 June 2015, upon the satisfaction of the conditions to the second exercise period of the First Share Option Incentive Scheme of the Company and after approval by and registration with the Shenzhen branch of China Government Securities Depository Trust & Clearing Co. Ltd., an additional of 4,229,810 new shares issued upon the exercise of options were approved for listing.

As at 30 June 2015, the total number of shares of the Company was 1,362,725,370 and the registered share capital of the Company was RMB1,362,725,370.00; of which, the shareholding of the Company held by Qingdao Hisense Air-Conditioning was 44.93%.

Scope of operations of the Company:	Manufacturing and sales of refrigerators, air-conditioners and home appliances.
Place of registration of the Company:	No. 8 Ronggang Road, Ronggui, Shunde, Foshan, Guangdong Province.

Address of headquarters: No. 8 Ronggang Road, Ronggui, Shunde, Foshan, Guangdong Province.

The 2015 interim financial statements and the notes to the financial statements of the Company were approved at the first meeting in 2015 of the nineth session of the Board.

During the Reporting Period, there were a total of 35 subsidiaries consolidated into the Company. See Note 6 "Business Combination and Consolidated Financial Statements" for more details.

2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

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.

As the Company is listed in both Mainland and Hong Kong stock exchange, save as the abovementioned relevant regulations, the financial statements shall also disclose such information as required by 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.

Half year of 2015

3. STATEMENT OF COMPLIANCE WITH THE ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES

The financial statements prepared by the Company comply with the requirements of the Accounting Standards for Business Enterprises and truly and completely reflect the financial state as at 30 June 2015 and the operating results, cash flows and other related information of the Company for the year then ended. In addition, the financial statements also comply with the disclosure requirements as contained in the Information Disclosure Regulations for Companies Publicly Issuing Securities No. 15 — General Provisions for Financial Statements (Revised 2014) issued by China Securities Regulatory Commission relating to financial statements and notes thereto in all material respects.

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES

The Company and its subsidiaries are engaged in the production of household appliances. Based on actual production and management features, the Company and its subsidiaries formulated a number of specific accounting policies and accounting estimates for revenue recognition and other related transactions and matters in accordance with the relevant requirements of Accounting Standards for Business Enterprises. See this note 4(24) "Income" for details. For the explanation on significant accounting judgments and estimates made by the management, please refer to note 4(30) "Significant Accounting Judgments and Estimates".

1. Accounting period

The accounting period is based on the calendar year and starts on 1 January and ends on 31 December.

2. Business cycle

A normal business cycle represents a period from purchase of assets used for production to realization of cash or cash equivalents by the Company. The Company adopts a 12-month period as its business cycle and the basis for liquidity classification between assets and liabilities.

3. Reporting currency

Renminbi (RMB) is the currency in the primary economic environment in which the Company and its domestic subsidiaries operate. The Company and its domestic subsidiaries adopt RMB as their reporting currencies. The overseas subsidiaries of the Company adopt the Hong Kong dollar, Euro or Japanese Yen as their respective reporting currencies depending on the currency in the primary economic environment where they operate. RMB is the functional currency adopted by the Company in preparing these financial statements.

4. Accounting treatment for business combinations involving entities under common and not under common control

A business combination refers to the transaction or matter in which one reporting subject formed due to the combination of two or above separate entities. A business combination can be classified as the combination under common control and not under common control.

(1) Business combination involving entities under common control

A business combination under common control is a business combination in which all of the combining entities are ultimately controlled by the same party or parties both before and after the combination, and that control is not transitory. For a business combination under common control, the party that obtains the control of the other parties on the combination date is the acquirer, and other parties involving in the business combination are the acquirees. The combination date is the date on which the acquirer effectively obtains the control of the acquirees.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

4. Accounting treatment for business combinations involving entities under common and not under common control — Continued

(1) Business combination involving entities under common control — Continued

Assets and liabilities that are obtained by the acquirer in a business combination shall be measured at their carrying amount at the combination date as recorded by the acquirees. The difference between the carrying amount of the net assets obtained and the carrying amount of the consideration paid by the acquirer for the combination (or the aggregate par value of the issued shares) shall be adjusted to share premium under capital reserve (or capital premium). If the share premium under capital reserve (or capital premium) is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.

Expenses that are directly attributable to the business combination by the acquirer are charged to the profit and loss for the period in which they are incurred.

(2) Business combination involving entities not under common control

A business combination not under common control is a business combination in which all of the combining entities are not ultimately controlled by the same party or parties both before and after the combination. For a business combination not under common control, the party that obtains the control of the other parties on the acquisition date is the acquirer; other parties involving in the business combination are the acquirees. The acquisition date is the date on which the acquirer effectively obtains control of the acquirees.

For a business combination not under common control, the cost of business combination is the fair value of assets paid, liabilities incurred or undertaken, and equity securities issued by the acquirer for obtaining the control of the acquirees at the acquisition date. Expenses that are attributable to the business combination such as audit fees, legal services fees, consultancy fees and other administration expenses incurred by the Company as acquirer are expensed in the profit or loss for the period in which they are incurred. Transaction fees of equity securities or debt securities issued by the acquirer as consideration for a business combination are included in the initially recognised amount of equity securities or debt securities. Contingent consideration involved is recorded as the combination cost at its fair value on the acquisition date. Should any new or further evidence in relation to the circumstances existing on the acquisition date arise within 12 months after the acquisition date, making it necessary to adjust the contingent consideration, the goodwill arising from the business combination shall be adjusted accordingly. The cost of combination incurred and identifiable net assets obtained by the acquirer in a business combination are measured at fair value on the acquisition date. Where the cost of the combination exceeds the acquirer's interest in the fair value of the acquiree's identifiable net assets on the acquisition date, the difference is recognised as goodwill; where the cost of combination is lower than the acquirer's interest in the fair value of the acquiree's identifiable net assets on the acquisition date, the difference is recognised in profit or loss for the current year after a review of measurement for the fair value of identifiable assets, liabilities and contingent liabilities of the acquiree and the combination cost.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

4. Accounting treatment for business combinations involving entities under common and not under common control — Continued

(2) Business combination involving entities not under common control — Continued

In relation to the deductible temporary difference acquired from the acquiree, which was not recognised as deferred tax assets due to non-fulfillment of the recognition criteria at the date of the acquisition, if new or further information that is obtained within 12 months after the acquisition date indicates that related conditions at the acquisition date already existed, and that the realization of the economic benefits brought by the deductible temporary difference of the acquiree on the acquisition date can be expected, the relevant deferred tax assets shall be recognised and goodwill shall be deducted accordingly. When the amount of goodwill is less than the deferred tax assets that shall be recognised, the difference shall be recognised in the profit or loss for the period. Except for the above circumstances, deferred tax assets in relation to business combination are recognised in the profit or loss for the period.

For a business combination involving entities not under common control that is achieved in stages, the Company shall determine whether the business combination shall be treated as "a bundle of transactions" in accordance with the determination standards as contained in the "Circular on the Publishment of Interpretation 5 on Accounting Standards for Business Enterprises" issued by the Ministry of Finance (Cai Kuai [2012] No. 19) and Section 51 of "Accounting Standards for Business Enterprises 33 – Consolidated Financial Statements" (Refer to note 4(5)ii). Where the business combination is treated as "a bundle of transactions", the business combination shall be accounted for in accordance with the previous paragraphs and note 4(12) "Long term equity investment"; where the business combination does not fall within "a bundle of transactions", the business combination in the Company's and the consolidated financial statements shall be accounted for as follows:

In the Company's financial statements, the initial cost of the investment shall be the sum of the carrying amount of equity investment held in the acquiree prior to the acquisition date and the amount of additional investment made to the acquiree at the acquisition date. Other comprehensive income relating to the equity interest held in the acquiree prior to the acquisition date shall be, upon disposal of the investment, accounted for in accordance with the same basis as that the acquiree adopts in directly disposing of relevant assets or liabilities, that is, except for the acquirer's interest in the changes arising from remeasurement of net assets or liabilities relating to the defined benefit plan of the acquiree that is accounted for in accordance with the equity method of accounting, the balance shall be transferred to investment income for the current period.

In the consolidated financial statements, the equity interest held in the acquiree prior to the acquisition date is re-measured according to its fair value at the acquisition date; the difference between the fair value and the carrying amount is recognised as investment income for the current period. Other comprehensive income relating to the equity interest held in the acquiree prior to the acquisition date shall be accounted for in accordance with the same basis as that the acquiree adopts in directly disposing of relevant assets or liabilities, that is, except for the acquirer's interest in the changes arising from remeasurement of net assets or liabilities relating to the defined benefit plan of the acquiree that is accounted for in accordance with the equity method of accounting, the balance shall be transferred to investment income for the period within which the acquisition date falls.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

5. Preparation of consolidated financial statements

(1) Criteria for the recognition of scope of consolidation

The scope of consolidation shall be determined based on the concept of control. Control refers to the power over the investee, share of or entitlement to the risk exposure or rights of reward of variable returns, and the ability to affect the amount of such returns by using its power over the investee. The consolidated financial statements comprise the financial statements of the Company and all of its subsidiaries, which are defined as those entities controlled by the Company.

Once any change in the facts and circumstances arises which leads to a change in the elements involved in the definition of control, the Company will conduct an assessment.

(2) Preparation of consolidated financial statements

Subsidiaries are consolidated from the date on which the Company obtains their net assets and actual control over their operating decisions, and are deconsolidated from the date when such control ceases. For subsidiaries being disposed, the operating results and cash flows prior to the date of disposal are duly included in the consolidated income statement and consolidated cash flow statement; for subsidiaries disposed during the period, the opening balances of the consolidated balance sheet would not be restated. For subsidiaries acquired from a business combination not under common control, their operating results and cash flows subsequent to the acquisition date are included in the consolidated income statement and consolidated cash flow statement, and the opening balances and comparative figures in the consolidated financial statements would not be restated. For subsidiaries acquired from a business combination under common control, their operating results and cash flows from the date of commencement of the period in which the combination occurred to the date of combination are included in the consolidated income statement and consolidated cash flow statement, and the comparative figures in the consolidated financial statements would be restated.

In preparing the consolidated financial statements, where the accounting policies or the accounting periods are inconsistent between the Company and subsidiaries, the financial statements of subsidiaries are adjusted in accordance with the accounting policies and accounting period of the Company. For subsidiaries acquired from a business combination not under common control, their financial statements are adjusted based on the fair value of the identifiable net assets at the acquisition date.

All significant inter-group balances, transactions and unrealised profits are eliminated in preparing the consolidated financial statements.

The portion of a subsidiary's equity and the portion of a subsidiary's net profits and losses for the period not attributable to the Company are recognised as minority interests and profits and losses attributable to minority interests respectively, which are presented under shareholders' equity and net profit separately, in the consolidated financial statement. A subsidiary's net profit and loss for the period attributable to minority interests is recognised as share of profit or loss of minority interests under net profit in the consolidated income statement. When the amount of a subsidiary's loss attributable to the minority shareholders exceeds the minority shareholders' share of the opening balance of shareholders' equity of the subsidiary, the excess is deducted from the minority interests.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

5. Preparation of consolidated financial statements — Continued

(2) Preparation of consolidated financial statements — Continued

When the control over a subsidiary is lost due to disposal of a portion of equity investment or otherwise, the remaining equity interest is re-measured at the fair value on the date when the control ceased. The difference between the sum of the consideration received from disposal of equity interest and the fair value of the remaining equity interest, and the net assets of the former subsidiary attributable to the Company since the acquisition date as calculated based on its original shareholding percentage in that subsidiary, is recognised as the investment income for the period when the loss of control occurred. Other comprehensive incomes in relation to the equity investment of the subsidiary shall be, upon the loss of control, accounted for in accordance with the same basis as that the acquiree adopts in directly disposing of relevant assets or liabilities, that is, except for the changes arising from remeasurement of net assets or liabilities relating to the defined benefit plan of that subsidiary, the balance shall be transferred to investment income for the current year. Subsequent measurement of the remaining equity interests shall be in accordance with relevant accounting standards such as "Accounting Standards for Business Enterprises 2 — Long-term Equity Investments" or "Accounting Standards for Business Enterprises 22 — Recognition and Measurement of Financial Instruments", which are detailed in note 4(12) "Long term equity investment" or note 4(9) "Financial instrument".

The Company shall determine whether a series of transactions in relation to disposal of equity investment in or even loss of control over a subsidiary in stages should be treated as a bundle of transactions. When the economic effects and terms and conditions of the transactions in relation to the disposal of equity investment met one or more of the following situations, the series of transactions shall normally be accounted for as a bundle of transactions: (i) these transactions are entered into simultaneously or after considering the mutual consequences of each individual transaction; (ii) these transactions need to be considered as a whole in order to achieve a deal in commercial sense; (iii) the occurrence of an individual transaction depends on the occurrence of one or more individual transaction(s) in the series; (iv) The result of an individual transaction is not economical, but it would be economical after taking into account the other transactions in the series. When the transactions are not treated as a bundle of transactions, each of the individual transactions shall be accounted for as the "portion disposal of long term equity investment in a subsidiary which would not lead to loss of control" (detailed in note 4(12)ii(iv)) or the "loss of control due to portion disposal of equity investment in a subsidiary or otherwise" (detailed in the previous paragraph), as the case may be. When the transactions in relation to disposal of equity investment in or even loss of control over a subsidiary are treated as a bundle of transactions, each of the transactions shall be accounted for as one transaction in relation to disposal of the subsidiary leading to loss of control; however, the difference between the consideration received from the disposal and the share of net assets of the subsidiary disposed in each individual transaction before loss of control shall be recognised as other comprehensive income in the consolidated financial statements, and reclassified as profit or loss for the period when control is lost.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

6. Classification of joint arrangements and accounting treatment for joint operations

A joint arrangement refers to an arrangement over which two or more parties have joint control. In accordance with the Company's rights and obligations under a joint arrangement, the Company classifies joint arrangements into joint operations and joint ventures. A joint operation refers to a joint arrangement under which the Company is entitled to the assets and assumes the obligations. A joint venture refers to a joint arrangement under which the Company is only entitled to net assets.

The investment in joint ventures is accounted for using the equity method in accordance with the accounting policies as set out in note 4(12)ii(ii) "Long-term equity investment by using equity method".

As a party to a joint operation, the Company recognise the assets held and obligations assumed solely by the Company, and the assets held and obligations assumed jointly by the Company in proportion to the share of the Company; recognise the revenue from sales of the share of outputs of the joint operation of the Company; recognise the share of revenue from sales of outputs by the joint operation of the Company; recognise the expenses solely incurred by Company; and recognise the expenses incurred by the joint operation in proportion to the share of the Company.

When the Company, as a party to a joint operation, invests in or disposes of an asset (not being a business, the same below) to or purchase an asset from the joint operation, the Company shall only recognise the portion of profit or loss arising from this transaction attributable to other parties to the joint operation before such disposal to any third party. Where an impairment loss of these assets that meets the requirements in "Accounting Standard for Business Enterprises 8 — Asset Impairment" arises, the Company shall recognise the loss in full in relation to the assets invested in or disposed of to the joint operation by the Company; and shall recognise the loss in proportion to the share of the Company in relation to the assets purchased from the joint operation by the Company.

7. Criteria for the recognition of cash and cash equivalents

For the purpose of the cash flows statement, cash and cash equivalents comprise cash on hand, deposits held at call with bank and short-term (maturing within 3 months from the date of acquisition) and highly liquid investments that are readily convertible to known amounts of cash and subject to an insignificant risk of changes in value.

8. Foreign currency transactions and translation of financial statements in foreign currency

(1) Translation of foreign currency transactions

Foreign currency transactions are, on initial recognition, translated into the functional currency at the spot exchange rates prevailing at the dates of the transactions, i.e. the middle price of RMB exchange rate published by the People's Bank of China on that date in general and the same below, except when the Company carries on a business of currency exchange or involves in currency exchange transactions, at the actual exchange rates which would be used.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

8. Foreign currency transactions and translation of financial statements in foreign currency — Continued

(2) Translation of monetary items and non-monetary items in foreign currencies

At the balance sheet date, monetary items denominated in foreign currency are translated into the functional currency using the spot exchange rate prevailing at the balance sheet date. The resulting exchange differences are recognised in profit or loss for the current period, except for (i) those attributable to foreign currency borrowings that have been taken out specifically for the acquisition, construction or production of qualifying assets, which are capitalised as part of the cost of those assets; (ii) exchange difference arising from changes in carrying amount of available for sale foreign-currency monetary items other than changes in amortized cost, which is recognised in other comprehensive income.

For the purpose of preparing consolidated financial statements involving foreign operations, the exchange differences arising from changes in exchange rates in relation to translation of foreign currency monetary items which effectively constitute a net investment in the foreign operation, are recognized in other comprehensive income, or upon disposal of the foreign operation, in the profit or loss for the period.

Non-monetary items denominated in foreign currency that are measured at historical cost are translated into the functional currency using the spot rates prevailing at the dates of the transactions. Non-monetary items denominated in foreign currency that are measured at fair value are translated into the functional currency using the spot rate prevailing on the date when fair value is determined and the resulting exchange differences will be recognised as fair value change (including a change of exchange rate) in profit or loss for the period or as other comprehensive income.

(3) Translation of financial statements in foreign currency

For the purpose of preparing consolidated financial statements involving foreign operations, the exchange differences arising from changes in exchange rates in relation to translation of foreign currency monetary items which effectively constitute a net investment in the foreign operation, are recognised as "exchange difference on translation of financial statements in foreign currency" in other comprehensive income, or upon disposal of the foreign operation, in the profit or loss for the period.

The following displays the methods for translating financial statements in foreign currency of foreign operations into the statements in RMB: The asset and liability items in the balance sheets are translated at the spot exchange rates on the balance sheet date. Under the shareholders' equity, the items other than "undistributed profits" are translated at the spot exchange rates at the transaction dates. The income and expense items in the income statements are translated at the spot exchange rates at the transaction dates. Opening balance of undistributed profits is equal to the closing balance of undistributed profits after translation in the previous year; closing balance of undistributed profit is measured and presented based on the items in profit distribution after translation. The exchange difference arising from translation of the sum of assets, liabilities and equity items is recognised as the difference on translation of financial statements in foreign currency in other comprehensive income. Such exchange difference in relation to the foreign operation as shown under shareholders' equity in the balance sheet is recognised in the profit or loss for the period in full or on a pro rata basis upon disposal of the foreign operation leading to a loss of control.

The cash flows in foreign currency and of overseas operations are translated at the spot exchange rates on the dates of the cash flows or the rates approximate thereto. The effect of exchange rate changes on cash is presented separately as an adjustment item in the cash flow statement.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

8. Foreign currency transactions and translation of financial statements in foreign currency — Continued

(3) Translation of financial statements in foreign currency — Continued

The opening balance and the prior year's figures are presented as the balances after translation of the financial statements in the previous year.

On disposal of the entire owners' equity held in a foreign operation by the Company, or upon a loss of control over a foreign operation due to partial disposal of equity investment or other reasons, the exchange differences arising on translation of the financial statements in foreign currency in relation to that foreign operation, which are attributable to owners' equity of parent company as shown under shareholders' equity in the balance sheet, are recognised in the profit or loss in the period in which the disposal took place.

In case of partial disposal of equity investment or other reason resulting in reduction in shareholding in a foreign operation without losing control over it, the exchange differences arising from the translation of financial statements in foreign currency in relation to the assets disposed will be attributable to minority interests and will not recognised in profit or loss for the period. For partial disposals of equity interests in foreign operations which are associates or joint ventures, the exchange differences arising from the translation of financial statements in foreign currency of the foreign operation is reclassified to profit or loss for the period in which the disposal took place on a pro rata basis.

9. Financial instruments

The Group recognizes a financial asset or a financial liability when it becomes a party to the contractual provisions of a financial instrument. Financial assets and financial liabilities are measured at fair value upon initial recognition. For financial assets and financial liabilities measured at fair value through profit or loss, the transaction costs are directly recognised in profit or loss for the period. For financial assets and financial liabilities classified as other categories, the transaction costs are included in the amount initially recognised.

(1) Determination of fair value for financial assets and financial liabilities

The fair value refers to the price that will be received when selling an asset or the price to be paid to transfer a liability in an orderly transaction between market participants on the date of measurement. For financial instruments that have an active market, fair value is determined based on the quoted price in such market. The quoted price in an active market refers to the price that is easily and regularly obtained from exchanges, brokers, industrial organisations and price fixing service organisations, representing the actual price of a market transaction that takes place in a fair deal. Where financial instruments do not have an active market, the fair value is determined using valuation techniques. Valuation techniques include, among others, reference to the prices reached in recent market transactions entered into by both willing parties with an informed view, and reference to present fair values of other substantially identical financial instruments, cash flow discounting method and option pricing models.

(2) Classification, recognition and measurement of financial assets

Any regular purchase and sale of financial assets shall be recognised and derecognised at the transaction date. Financial assets are classified into financial assets at fair value through profit or loss, held-to maturity investments, loans and receivables and available-for-sale financial assets upon initial recognition.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

9. Financial instruments — Continued

(2) Classification, recognition and measurement of financial assets — Continued

① Financial assets at fair value through profit or loss

They include financial assets held-for-trading and those designated as financial assets at fair value through profit or loss. Financial assets measured at fair value by the Company through profit or loss are financial assets held-for-trading.

A financial asset is classified as held for trading if one of the following conditions is satisfied: (a) It has been acquired mainly for the purpose of sale or repurchase in the near term; or (b) It is part of a portfolio of identifiable financial instruments that the Group manages together and there is objective evidence that the Company has adopted a shortterm profit-taking pattern recently; or (c) It is a derivative, except for a derivative that is designated as and is an effective hedging instrument, or that is a financial guarantee contract, or a derivative that is linked to and must be settled by delivery of an unquoted equity instrument (without a quoted price in an active market) whose fair value cannot be reliably measured.

Financial assets held-for-trading are measured subsequently at fair value. Gains or losses arising from changes in fair value and any dividend and interest income on such assets are recognized in the profit or loss for the current period.

② Held-to-maturity investments

They are non-derivative financial assets that have fixed or determinable payments and fixed maturity and for which the Company has the positive intention and ability to hold to maturity.

Held-to-maturity investments are measured subsequently at amoritised cost by using the effective interest rate method. Gains or losses arising on derecognition, impairment or amortization are recognized in the profit or loss for the current period.

The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability (or a group of financial assets or financial liabilities) and the interest income or interest expense over respective periods, using the effective interest rate. The effective interest rate is the rate that exactly discounts estimated future cash flows through the expected life of the financial asset or financial liability or, where appropriate, a shorter period to the current carrying amount of the financial asset or financial liability.

When calculating the effective interest rate, the Company estimates future cash flows taking into account all contractual terms of the financial asset or financial liability (without considering future credit losses), and also considers all fees paid or received between the parties to the contract giving rise to the financial asset or financial liability that are an integral part of the effective interest rate, transaction costs, and premiums or discounts, etc.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

9. Financial instruments — Continued

(2) Classification, recognition and measurement of financial assets — Continued

③ Loans and receivables

They are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Financial assets, including notes receivable, trade receivable, interest receivable, dividends receivable and other receivables, are classified as loans and receivables by the Company.

Loans and receivables are measured subsequently at the amortised cost by using the effective interest rate method. Gains or losses arising on derecognition, impairment or amortisation are charged to profit or loss in the current period.

④ Available-for-sale financial assets

They include non-derivative financial assets that are designated as available for sale upon initial recognition and the financial assets other than those at fair value through profit or loss, loans and receivables and held-to-maturity investments.

The closing cost of available-for-sale debt instrument investments is recognised at amortised cost, i.e. the initially recognised amount less the principal repaid, and then plus or less the accumulated amortisation amount arising from the amortisation of the difference between the initially recognised amount and the amount at the maturity date using the effective interest rate method, and then further less the impairment loss already incurred. The closing cost of availablefor-sale equity instrument investments is the cost on initial acquisition.

Available-for-sale financial assets are subsequently measured at fair value. Gain or loss arising from changes in fair value are recognised as other comprehensive income, except for impairment loss and exchange differences arising from translation of foreign currency monetary financial assets in relation to amortised cost which are accounted for through profit or loss for the current period. The financial assets will be transferred out on derecognition and accounted for through profit or loss for the current period. However, equity investment that is not quoted in an active market and the fair value of which cannot be measured reliably, and derivative financial assets that are linked to and must be settled by delivery of such equity instrument are subsequently measured at cost.

Interests received during the period in which available-for-sale financial assets are held and the cash dividends declared by the investee are recognised as investment income.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

9. Financial instruments — Continued

(3) Impairment of financial assets (other than receivables)

Except for financial assets at fair value through profit or loss for the current period, the Company assesses the carrying amount of other financial assets at each balance sheet date, and if there is objective evidence that the financial assets are impaired, provisions are made for the impairment.

① Impairment of held-to-maturity investments

The carrying amount of the financial assets measured at cost or amortised cost is written down to the present value of the estimated future cash flow and the written-down amount is recognised as the impairment loss in the profit or loss for the current period. The originally recognised impairment loss is reversed if there is objective evidence that the value of the financial assets has been recovered and the recovery can be linked objectively to an event occurring after the impairment loss was recognised. The carrying amount of the financial assets upon the reversal of the impairment loss will not exceed the amortised cost of the financial assets on the reversal date as if no impairment loss provision has been made.

② Impairment of available-for-sale financial assets

If there is objective evidence of a significant prolonged decrease in the fair value of an available-for-sale financial asset, and the downtrend is expected to be non-temporary, it can be ascertained that the available-for-sale financial asset is impaired and an impairment loss shall be recognised. Upon impairment provision is made in respect of the impaired available-for-sale financial asset, the cumulative loss from the decline in fair value originally recognized directly in shareholder's equity is removed and recognized as impairment loss. The cumulative loss removed equals to the initial acquisition cost of the available-for-sale financial asset, net of principal payment and amortization, current fair value and impairment losses previously recognized in the profit or loss.

If after an impairment loss was recognized on an available-for-sale debt instrument, the fair value of the debt instrument has increased in a subsequent period and the increase can be objectively related to an event occurring after the impairment loss was recognized, the previously recognized impairment loss is reversed and recognized in profit or loss for the current period. The impairment loss recognized on an equity instrument available-forsale is reversed in equity, not in profit or loss, if any increase in fair value occurs after the impairment.

(4) Basis for recognition and measurement of transfer of financial assets

The financial asset will be de-recognised if any of the following conditions is satisfied: (1) The contractual right to receive the cash flow of the financial asset is terminated; (2) The financial asset has been transferred and substantially all of the risks and rewards of ownership of the financial asset have been transferred to the transferee; (3) The financial asset has been transferred and the entity has waived the control over the financial asset although it has neither transferred nor reserved substantially all of the risks and rewards of ownership of the financial asset.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

9. Financial instruments — Continued

(4) Basis for recognition and measurement of transfer of financial assets — Continued

Where the entity has neither transferred nor reserved substantially all of the risks and rewards of ownership of the financial asset and not waived the control over the financial asset, to the extent of its continuous involvement in the financial asset transferred, the entity recognises the relevant financial asset and meanwhile, recognises the relevant liability accordingly. The extent of the continuous involvement is the level of risk to which the entity exposes due to changes in the value of such financial asset.

Where the conditions of de-recognition are satisfied upon overall transfer of the financial asset, the difference between the carrying amount of the transferred financial asset and the sum of the consideration received from the transfer and the accumulated changes in fair value previously recognised in other comprehensive income is recognised in the profit or loss for the current period.

Where the conditions of de-recognition are satisfied upon partial transfer of the financial asset, the carrying amount of the transferred financial asset is allocated between the derecognized and nonderecognised portion at the corresponding fair value, and the difference between the sum of the consideration received from the transfer and the accumulated changes in fair value previously recognised in other comprehensive income to be allocated to the de-recognised portion and the above mentioned allocated carrying amount is recognised in the profit or loss for the current period.

Where the Company disposes of the financial asset with the right of recourse or transfers the financial asset by endorsement, it shall be ascertained that whether substantially all the risks and rewards of ownership of the financial asset have been transferred. Where substantially all the risks and rewards of ownership of the financial asset have been transferred to the transferee, the financial asset are derecognised; where substantially all the risks and rewards of ownership of the financial asset have been retained, the financial asset are not de-recognised; and where substantially all the risks and rewards of ownership of the financial asset have been neither transferred nor retained, it shall be determined whether the entity retains the control over the asset and the asset shall be accounted for in accordance with the above mentioned policies.

(5) Classification and measurement of financial liabilities

Upon initial recognition, financial liabilities are classified into financial liabilities at fair value through profit or loss and other financial liabilities. Upon initial recognition, financial liabilities are measured at fair value. For the financial liabilities at fair value through profit or loss, the relevant transaction costs are directly recognised in profit or loss for the current period; and for other financial liabilities, the relevant transaction costs are included in the initially recognized amount.

① Financial liabilities at fair value through profit or loss

The conditions for the financial liabilities to be classified as held for trading and to be designated to be measured at fair value through profit or loss upon initial recognition are the same as those for the financial assets to be classified as held for trading and to be designated to be measured at fair value through profit or loss upon initial recognition.

The financial liabilities at fair value through profit or loss are subsequently measured at the fair value. The gains or losses arising from the change in fair value and the dividend and interest expenses related to the financial liabilities are charged to the profit or loss for the current period.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

9. Financial instruments — Continued

(5) Classification and measurement of financial liabilities — Continued

② Other financial liabilities

The derivative financial liabilities linked to and to be settled through delivery of the equity instruments that are not quoted in an active market and the fair value of which cannot be reliably measured such equity instruments are subsequently measured at cost. Other financial liabilities are subsequently measured at amortised cost using the effective interest rate method and the gains or losses arising from de-recognition or amortization are recognised in profit or loss for the current period.

③ Financial guarantee contracts

The financial guarantee contracts other than the financial liabilities designated as at fair value through profit or loss are initially recognised at fair value and subsequently measured at the amount determined in accordance with the Accounting Standards for Business Enterprises 13 — Contingencies or the balance of the initially recognized amount less the accumulated amortisation determined in accordance with the Accounting Standards for Business Enterprises 14 — Income, whichever is the higher.

(6) De-recognition of financial liabilities

The financial liabilities may not be de-recognised in whole or in part unless and until the present obligations of the financial liabilities are discharged in whole or in part. Where the Company (the debtor) concludes an agreement with a creditor to replace the existing financial liabilities with the new financial liabilities and the contractual terms for new financial liabilities are materially not the same as existing financial liabilities, the existing financial liabilities are de-recognised and the new financial liabilities are recognised.

Where the financial liabilities are de-recognised in whole or in part, the difference between the carrying amount of the de-recognised portion and the consideration paid (including nonmonetary assets transferred or new financial liabilities assumed) is recognised in profit or loss for the current period.

(7) Derivatives and embedded derivatives

Derivatives are initially measured at fair value at the date when the derivative contracts are entered into and are subsequently re-measured at fair value. The gain or loss arising from the change in fair value of a derivative is recognised in profit or loss for the current period, unless the derivative is designated and highly effective as a hedging instrument, in which case the timing of the recognition in profit or loss depends on the nature of the hedge relationship in accordance with hedging accounting policies.

An embedded derivative is separated from the hybrid instrument, where the hybrid instrument is not designated as a financial asset or financial liability at fair value through profit or loss, and treated as a stand-alone derivative if the economic characteristics and risks of the embedded derivative are not closely related to those of the host contract, and a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative. If the Group is unable to measure the embedded derivative separately either at acquisition or at a subsequent balance sheet date, it will designate the entire hybrid instrument as a financial asset or financial liability at fair value through profit or loss.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

9. Financial instruments — Continued

(8) Offsetting financial assets and financial liabilities

Where the Company has a legal right to offset the recognised financial assets and financial liabilities and may enforce this right at present and plans to net or realise the financial assets and settle the financial liabilities, the remaining balance upon the offset between the financial assets and the financial liabilities is presented in the balance sheet. Otherwise, the financial assets and the financial liabilities are separately presented in the balance sheet and do not offset against each other.

(9) Equity instruments

An equity instrument refers to a contract which proves the ownership of the remaining equities in net assets of the Company after deduction of all liabilities. The issuance (including refinancing), repurchase, sale or cancellation of equity instruments is accounted for as the change in equity. The Company does not recognise the change in fair value of equity instruments. Transaction costs related to equity transactions are charged to equity.

Various distributions (excluding dividends) made by the Company to holders of equity instruments reduce owners' equity. The Company does not recognise the change in fair value of equity instruments.

10. Accounts receivable

(1) Accounts receivable that are individually significant and subject to separate provision:

① The basis or criteria for determination of individually significant receivables

Accounts for 10% or above of the total receivables, except for the Greencool receivables.

② Method of provision for bad debt in individually significant receivables

Individually significant receivables are subject to separate impairment test. Where there is an objective evidence of impairment, the balance of the present value of the future cash flows less than the carrying amount shall be treated as impairment loss and accounted for as provision for bad debts. Where there is no impairment according to the separate impairment test, the accounts receivable shall be combined into a group of receivables with similar credit risk characteristics and subject to a further impairment test collectively.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

10. Accounts receivable — Continued

(2) Receivables subject to collective provision:

Basis for determination of groups is as follows

Group 1 A group of accounts receivable based on ageing characteristics

Group 2 A group of Greencool receivables.

Method of provision for bad debts by groups

Group 1 Using ageing analysis method.
Group 2 Conducting an individual impairment test, where the balance of the present value of the future cash flows expected to be derived from the receivables less than the carrying amount shall be treated as impairment loss and accounted for as provision for bad debts.

For Group 1, receivables for which provision for bad debts is made using age analysis method are as follows:

	Ratio of provision for
Ageing	bad debts (%)
Within 3 months (including 3 months)	0
Over 3 months but within 6 months (including 6 months)	10
Over 6 months but within 1 year (including 1 year)	50
Over 1 year	100

(3) Individually insignificant receivables subject to separate provision:

Reason for individual provision	Receivables which are individually insignificant over one year or above.
Method for provision for bad debts	Where there is an objective evidence of impairment, receivables shall be separated from the group they belong to and subject to an individual test. The balance of the present value of the future cash flows expected to be derived from the receivables less than the carrying amount shall be treated as impairment loss and accounted for as provision for bad debts

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

11. Inventories

(1) Classification of inventories

Inventories are classified into: raw materials, goods in processing contract, low-value consumables, packaging materials, self-manufactured semi-finished goods, work in progress, goods in transit, finished goods and etc.

(2) Measurement of inventories

Inventories are initially measured at actual cost. Cost of an inventory consists of purchase cost, processing cost and other cost.

Raw materials are measured at the standard cost upon delivery, and amortized at the end of each month according to cost differences in order to adjust the standard cost to actual cost.

Work in progress and finished goods are measured at the actual cost upon delivery, whereas the actual cost is determined using the weighted average method.

(3) Basis for determination of net realizable value and method of provision for declines in value of inventories

The net realizable value of commodity inventories for immediate sales, such as finished goods, commodity stocks, and materials ready for sale, is determined based on the estimated selling price less the estimated selling and distribution costs and related taxes in the ordinary course of business;

The net realizable value of raw materials is determined based on the estimated selling price of finished goods manufactured, less the costs estimated to be incurred up to completion and estimated costs necessary to make the sale, and related taxes in the ordinary course of business;

For inventories held for fulfilling sales contract or labor contract, the net realizable value is determined based on the contract price; if the amounts of inventories held exceed the amounts of sales order specified in the contract, the net realizable value of the excess portion is determined based on the general market price.

The Company takes general inventory checkup at each balance sheet date, and records or adjusts impairment loss on inventories at the lower of cost or net realizable value. The provision for impairment loss on inventories is made on an individual basis in principle; for inventories in a large quantity and with relatively low unit prices, provision for impairment loss on inventories shall be made based on the category; for inventories relevant to the production and sales of products in the same region with same or similar use or purpose and difficult to measure separately, provision for impairment loss on inventories shall be made on an aggregated basis. In case the factors causing the previous write-down of inventories disappear, the write-down amount shall be reversed to the provision of impairment previously made and the reverse amount shall be charged to the profit or loss for the period.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

11. Inventories — Continued

(4) The group adopts the perpetual inventories system.

(5) Amortization of low-value consumables and packaging materials

Low-value consumables are expensed upon issuance.

Packaging materials are expensed upon issuance.

12. Long-term equity investments

Long-term equity investments under this section refer to long-term equity investments in which the Company has control, joint control or significant influence over the investee. Long-term equity investment without control or joint control or significant influence of the Group is accounted for as available-for-sale financial assets or financial assets at fair value through profit or loss for the period. For details on its accounting policy, please refer to note 4(9) "Financial instruments".

Joint control is the Company's contractually agreed sharing of control over an arrangement, the activities under which must be decided by unanimous agreement from parties who share the control. Significant influence is the power of the Company to participate in the decision-making for financial and operating policies of an investee, but not to control or joint control the formulation of such policies together with other parties.

(1) Determination of investment cost

For a long-term equity investment acquired through a business combination involving entities under common control, the initial investment cost shall be recognised at the carrying amount of the Company's share of the combined party's equity in the consolidated financial statements of the ultimate controlling party on the date of combination. The difference between the initial cost of the long-term equity investment and the cash paid, non-monetary assets transferred and the carrying amount of the debts assumed shall offset against the capital reserve. Where the capital reserve is insufficient to offset, the retained earnings shall be adjusted. In case that the consideration of the business combination is satisfied by issuing equity securities, the initial investment cost of the long-term equity investment shall be recognised at the carrying amount of the Company's share of the combined party's equity in the consolidated financial statements of the ultimate controlling party on the date of combination. With the total face value of the shares issued as share capital, the difference between the initial cost of the long-term equity investment and total face value of the shares issued shall be used to offset against the capital reserve. Where the capital reserve is insufficient to offset, the retained earnings shall be adjusted. For a business combination involving entities under common control by acquiring equity interests in the combined party under common control in a series of transactions, the transactions shall be treated separately: in case of "a bundle of transactions", each of the transactions shall be accounted for as an acquisition of control; otherwise, the initial investment cost of the longterm equity investment shall be recognised at the carrying amount of the Company's share of the combined party's equity in the consolidated financial statements of the ultimate controlling party on the date of combination. The difference between the initial cost of the long-term equity investment and the sum of the carrying amount of the long-term equity investment before combination and the book value of the additional consideration paid for further acquisition of shares on the date of combination shall offset against the capital reserve. Where the capital reserve is insufficient to offset, the retained earnings shall be adjusted. Other comprehensive income recognised for the equity investment held prior to the date of combination by using equity method or for available-for-sale financial assets will not be accounted for in the financial statements.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

12. Long-term equity investments — Continued

(1) Determination of investment cost — Continued

For a long-term equity investment acquired through a business combination involving entities not under common control, the initial investment cost of the long-term equity investment shall be recognised at the cost of combination on the date of acquisition. Cost of combination includes the aggregate fair value of assets paid, liabilities incurred or assumed and equity securities issued by the acquirer. For a business combination involving entities not under common control by acquiring the equity in the acquiree in a series of transactions, the transactions shall be treated separately: in case of "a bundle of transactions", each of the transactions shall be accounted for as an acquisition of control; otherwise, the initial investment cost of the long-term equity investment shall be accounted for using the cost method at the sum of the carrying amount of equity investment previously held in the acquiree and the additional investment cost. Where the equity investment previously held is accounted for by using the equity method, the corresponding other comprehensive income will not be accounted for. Where the equity investment previously held is classified as an available-for-sale financial asset, the difference between its fair value and carrying amount, as well as the accumulated changes in fair value previously included in the other comprehensive income shall be recognised in the profit or loss for the current period.

Agent fees incurred by the combining party or the acquirer for a business combination such as audit, legal service, and valuation and consultation fees, and other related administration expenses are charged to profit or loss in the current period when such expenses incurred.

The long-term equity investment acquired other than by means of a business combination shall be initially measured at cost. Such cost, depending upon the means of acquisition of the longterm equity investment, is determined based on, among others, the purchase price actually paid by the Company in cash, the fair value of equity securities issued by the Company, the agreed value by the investment contracts or agreements, fair value or original carrying amount of the asset exchanged in a nonmonetary asset exchange transaction, and fair value of the long-term equity investment. The costs, taxes and other necessary expenses that are directly attributable to the acquisition of the long-term equity investment are also included in the investment cost. Where an additional equity investment gives rise to an ability to exercise a significant influence or joint control over the investee but without obtaining the control, the cost of the long-term equity investment shall be the sum of fair value of the equity investment previously held determined in accordance with "Accounting Standard for Business Enterprises 22 – Recognition and Measurement of Financial Instruments" and additional investment cost.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

12. Long-term equity investments — Continued

(2) Subsequent measurement and recognition of profit or loss

A long-term equity investment with joint control (excluding that constituting a joint venture) over or significant influence on the investee is accounted for by using the equity method, and a long-term equity investment with control over the investee is accounted for in the Company's financial statements by using the cost method.

① Long-term equity investments accounted for by using the cost method

Under the cost method, a long-term equity investment is measured at its initial investment cost. The cost of the long-term equity investment shall be adjusted in case of any additional investment or return. Except for the actual consideration paid on acquisition of the investment or cash dividends or profits declared but not yet distributed which are included in the consideration, the gain on investment for the period is recognised at the Company's share of cash dividends or profits declared by the investee.

② Long-term equity investments accounted for by using the equity method

Under the equity method, where the initial investment cost of a long-term equity investment exceeds the Company's share of fair value of the investee's identifiable net assets at the acquisition date, no adjustment shall be made to the initial investment cost. Where the initial investment cost is less than the Company's share of fair value of the investee's identifiable net assets at the acquisition date, the difference shall be charged to profit or loss for the current period, and the cost of the long term equity investment shall be adjusted accordingly.

Under the equity method, the gain on investment and other comprehensive income shall be recognised at the Company's share of the net profit or loss and other comprehensive income realised by the investee, respectively, and carrying amount of the long-term equity investment shall be adjusted accordingly. Carrying amount of the long-term equity investment shall be reduced by the Company's share of the profit or cash dividend declared by the investee. In respect of the changes in owners' equity of the investee other than in net profit or loss, other comprehensive income and profit distribution, the carrying amount of the long-term equity investment shall be adjusted and included in the capital reserves. The Company recognises its share of the investee's net profit or loss based on fair value of the investee's identifiable assets at the time of acquisition, after making appropriate adjustments thereto. In the case of any inconsistency between the accounting policies and accounting periods adopted by the investee and by the Company, the financial statements of the investee shall be adjusted in accordance with the accounting policies and accounting periods of the Company, and the gain on investment and other comprehensive income shall be recognised accordingly. In respect of the transactions between the Company and its associates and joint ventures in which the assets invested or disposed of are not part of the business, the share of unrealised gain or loss arising from inter-group transactions shall be offset by the portion attributable to the Company, and the gain or loss on investment shall be recognized accordingly. However, any unrealised loss arising from inter-group transactions between the Company and an investee is not offset to the extent that the loss is impairment loss of the assets transferred. Where the Company invests to its joint ventures or associates an asset forming part of a business, giving rise to the acquisition of a longterm equity investment by the investor without obtaining control, the initial investment cost of the additional long-term equity investment shall be recognised at fair value of the business invested. The difference between initial investment cost and carrying amount of the business invested will be fully included in profit or loss for the current period. Where the Company disposes of an asset forming part of a business to its associates or joint ventures, the difference between the consideration received and the carrying amount of the business shall be fully included in profit or loss for the current period. Where the Company acquires from its associates or joint ventures an asset forming part of a business, the profit or loss related to the transaction shall be accounted for and recognised in accordance with "Accounting Standards for Business Enterprises 20 "Business Combination".

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

12. Long-term equity investments — Continued

(2) Subsequent measurement and recognition of profit or loss — Continued

② Long-term equity investments accounted for by using the equity method — Continued

The Company's share of net loss of the investee shall be recognised to the extent that the carrying amount of the long-term equity investment and any long-term equity that substantially forms part of the investor's net investment in the investee are written down to zero. If the Company has to assume additional obligations to the loss of the investee, the estimated liabilities shall be recognised for the estimated obligation assumed and charged to the profit or loss as investment loss for the period. Where the investee makes profits in subsequent periods, the Company shall re-recognise its share of the profits after setting off against the share of unrecognised losses.

③ Acquisition of minority interests

When preparing the consolidated financial statements, the Company adjusts the capital reserve and, if the capital reserve is insufficient, adjusts the retained earnings based on the difference between the additional long-term equity investment arising on acquisition of minority interests and the Company's share in the net assets of the subsidiary accrued from the acquisition date (or combination date) in proportion to the additional shareholdings.

④ Disposal of long-term equity investment

In the consolidated financial statements, if the parent disposes part of the long-term equity investment in the subsidiary without losing its control, the difference between the disposal price and the Company's share in the net assets of the subsidiary attributable to the disposal of the long-term equity investment is recognised in the shareholders' equity; if the parent disposes part of the long-term equity investment in the subsidiary resulting in the loss of its control over the subsidiary, the accounting treatment shall be in accordance with the policies as set out in note 4(5)ii "Preparation of consolidated financial statements".

In other cases, upon the disposal of a long-term equity investment, the difference between the carrying amount of the investment and the price received is recognised in the profit or loss for the current period.

For a long-term equity investment that is accounted for using the equity method where the remaining equity after disposal continues to be accounted for using the equity method, the portion of other comprehensive income previously included in shareholder's equity shall be treated in accordance with the same basis as the investee directly disposes of relevant asset or liability on pro rata basis at the time of disposal. The owners' equity recognised for the change in owners' equity of the investee other than net profit or loss, other comprehensive income and profit distribution shall be transferred to profit or loss for the current period on pro rata basis.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

12. Long-term equity investments — Continued

(2) Subsequent measurement and recognition of profit or loss — Continued

④ Disposal of long-term equity investment — Continued

For a long-term equity investment accounted for using the cost method where the remaining equity after disposal continues to be accounted for using cost method, other comprehensive income recognised using the equity method or in accordance with the standard for recognition and measurement of financial instruments prior to the acquisition of control over the investee shall be treated in accordance with the same basis as the investee directly disposes of relevant asset or liability, and transferred to profit or loss for the current period on pro rata basis. The change in owners' equity recognised in net assets of the investee by using the equity method other than net profit or loss, other comprehensive income and profit distribution shall be transferred to profit or loss for the current period on pro rata basis.

In preparing separate financial statements, if control is lost over the investee upon partial disposal of equity investment, the remaining equity with joint control or an ability to impose a significant influence over the investee after disposal shall be accounted for using the equity method, and shall be adjusted as if it has been accounted for using the equity method since it was acquired. The remaining equity without joint control or an ability to impose a significant influence over the investee after disposal shall be accounted for based on the standard for recognition and measurement of financial instruments, and the difference between its fair value and carrying amount as at the date of loss of control shall be included in profit or loss for the current period. In respect of other comprehensive income recognised using the equity method or in accordance with the standard for recognition and measurement of financial instruments prior to the acquisition of control over the investee, it shall be accounted for in accordance with the same basis as the investee directly disposes of relevant asset or liability when the control is lost. The change in owners' equity recognised in net assets of the investee by using the equity method other than net profit or loss, other comprehensive income and profit distribution shall be transferred to profit or loss for the current period at the time when the control over investee is lost. Where the remaining equity after disposal is accounted for using the equity method, other comprehensive income and other owners' equity shall be carried forward on pro rata basis. Where the remaining equity after disposal is accounted for in accordance with the standard for recognition and measurement of financial instruments, other comprehensive income and other owners' equity shall be fully carried forward.

If the joint control or significant influence over the investee is lost upon partial disposal of equity investment, the remaining equity after disposal shall be accounted for in accordance with the standard for recognition and measurement of financial instruments. The difference between its fair value and carrying amount as at the date of loss of joint control or significant influence shall be included in profit or loss for the current period. For other comprehensive income recognised previously for the equity investment using equity method, it shall be accounted for in accordance with the same basis as the investee directly disposes of relevant asset or liability at the time when the equity method was ceased to be used. The owners' equity recognised arising from the change in owners' equity of the investee other than net profit or loss, other comprehensive income and profit distribution shall be transferred to profit or loss for the current period at the time when the equity method was ceased to be used.

Where the Company disposes of its equity investment in a subsidiary in a series of transactions until the control is lost, and such transactions form "a bundle of transactions", each transaction shall be accounted for as a disposal of equity investment of the subsidiary resulting in a loss of control. The difference between the consideration for each transaction and the carrying amount of the long-term equity investment attributable to the equity interests disposed prior to loss of control shall be initially recognised as other comprehensive income, and upon loss of control, transferred to profit or loss for the period when the loss of control takes place.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

12. Long-term equity investments — Continued

(3) Impairment test and provision for impairment

For long-term equity investments in subsidiaries, joint ventures and associates, the Company provides for impairment in accordance with the policies in note 4(20).

13. Investment properties

Investment properties are the properties held to earn rental or for capital appreciation or both, and represent buildings which have been leased out by the Company.

Investment properties are initially recognized at the cost at the time of acquisition, and are depreciated or amortized on a basis consistent with the depreciation and amortization policies which the Group adopts for fixed assets and intangible assets.

Please see note 4(20) for recognition of provision for impairment of investment properties using cost model for subsequent measurement.

14. Fixed assets

(1) Recognition of fixed assets

Fixed assets are tangible assets that are held for producing goods, rendering of services, leasing out to other parties or administrative purposes, with useful life more than one accounting year. Fixed assets are recognized when they meet the following conditions:

① When it is probable that the economic benefits associated with the fixed asset will flow into the Company; and
② The cost of the fixed asset can be reliably measured.

(2) Depreciation of fixed assets

Fixed assets are depreciated by categories using the straight-line method over their useful life. Depreciations are provided when the fixed assets are available for intended use, and are terminated when the fixed assets are derecognised or classified as non-current assets held-forsale (except for fixed assets that are fully depreciated and are still in use, and lands that are accounted separately). When no impairment provision is made, the annual depreciation rates for different fixed assets which are determined by asset category, estimated useful life and estimated residual value are as follows:

		Rate of residual	Annual
Category	Useful life (year)	value (%)	depreciation rates
Buildings	20-50	0-10	1.8-5
Machinery and equipment	5-20	5-10	4.5-19
Electronic equipment, appliances
and furniture	5-10	5-10	9-19
Motor vehicles	5-10	5-10	9-19
Moulds	3	0	33.33

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

14. Fixed assets — Continued

(3) Impairment test and provision for impairment loss of fixed assets

Please see note 4(20) for recognition of provision for impairment of fixed assets of the Company.

15. Construction in progress

(1) Measurement of construction in progress

Constructions in progress are measured at actual cost and are accounted for by individual projects.

(2) Timing of transfer from construction in progress to fixed assets

Constructions in progress are transferred to fixed assets at all the actual expenses incurred when they are ready for intended use. When construction in progress is ready for its intended use but has not completed the final accounts, it shall be transferred to fixed assets at estimated cost, which is based on project budget, project price or actual construction cost, on the date when it is ready for intended use, and depreciation is made accordingly pursuant to the Company's depreciation policy in relation to fixed assets. The estimated cost will be adjusted for the actual cost after the completion of the final accounts without adjustments to the depreciation already provided.

(3) Provision for impairment loss on construction in progress

Please see note 4(20) for the recognition of provision for impairment on construction in progress.

16. Borrowing costs

(1) Principles for recognition of capitalization of borrowing costs

Assets eligible for capitalization refer to the fixed assets, investment properties, inventories and other assets that require a substantially long period of time of acquisition and construction or production activities for intended use or for sale. Borrowing costs include interest on borrowings, amortization of discounts or premiums, ancillary costs, and exchange differences arising from foreign currency borrowings.

Where the borrowing costs incurred by the Company can be directly attributable to the acquisition and construction or production activities of assets eligible for capitalization, it shall be capitalized and recorded as part of the costs of relevant assets. Other borrowing costs shall be recognized as expenses in profit or loss for the period on the basis of the actual amount incurred at the time when they are incurred.

The borrowing costs shall not be capitalized until they meet the following requirements at the same time:

① The expenditure for the asset has already been incurred, which shall include the expenses by means of cash, transfer of non-cash assets or interest bearing debts paid for the acquisition and construction or production activities of the asset eligible for capitalization;
② The borrowing costs have been incurred;
③ The acquisition and construction or production activities necessary to prepare the asset for its intended use or for sale have already commenced.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

16. Borrowing costs — Continued

(2) Period of capitalization of the borrowing costs

The borrowing costs that are directly attributable to the acquisition and construction or production of qualifying asset are capitalized as the cost before the asset is ready for its intended use or sale. Borrowing costs incurred afterwards are recognised in profit or loss for the current period.

Where the acquisition and construction or production activities of a qualifying asset is interrupted abnormally and the interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended. Should the interruption be a necessary step for the asset qualified for capitalization under acquisition and construction or production to become ready for its intended use or sale, the borrowing cost shall continue to be capitalised. Borrowing costs arising during the interruption period shall be recognised in the profit or loss for the period until the acquisition and construction or production of the asset is resumed, and by then capitalization of the borrowing costs shall also be resumed. Where part of the acquisition and construction or production activities of asset qualified for capitalization is completed and available for separate use, the capitalization of borrowing cost for that part of the asset shall be ceased.

(3) Calculation of capitalized borrowing costs

For the specific borrowings obtained for the acquisition and construction or production of a qualifying asset, the interest expense (deducting any interest income earned from depositing the unused specific borrowings with the bank or any investment income arising on the temporary investment of those borrowings) and the ancillary expense incurred in relation to the specific borrowings shall be capitalized until the qualifying asset is ready for the intended use or sale.

For the general borrowings obtained for the acquisition and construction or production of a qualifying asset, the interest expense to be capitalized is determined by multiplying the capitalization rate of general borrowings used by the weighted average of the excess amount of cumulative expenditures on the asset over the amount of specific borrowings. The capitalization rate shall be calculated and determined in light of the weighted average interest rate of the general borrowings.

Where there is any discount or premium, the amount of discounts or premiums shall be amortized in each accounting period by using effective interest rate method, and an adjustment shall be made to the amount of interests in each period.

During the capitalization period, exchange differences related to principal and interest on specific borrowings denominated in foreign currencies are capitalized as part of the cost of the qualifying assets.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

17. Intangible asset

(1) Initial measurement of intangible assets

An intangible asset is an identifiable non-monetary asset without physical substance owned or controlled by the Company.

An intangible asset shall be initially measured at cost. The expenditures incurred on an intangible asset shall be recognised as cost of the intangible asset only if it is probable that economic benefits associated with the asset will flow to the Company and the cost of the asset can be measured reliably. Other expenditures on an item asset shall be charged to profit or loss when incurred.

Land use right acquired shall normally be recognised as an intangible asset. For self-constructed buildings (e.g. plants), the expenditures on the land use right and cost of the buildings shall be separately accounted for as an intangible asset and fixed asset. For buildings and structures purchased, the purchase consideration shall be allocated among the land use right and the buildings on a reasonable basis. In case there is difficulty in making a reasonable allocation, the consideration shall be recognised in full as an fixed asset.

(2) Subsequent measurement of intangible assets

① Useful life of intangible assets

The useful life of intangible assets is determined upon acquisition. For an intangible asset with definite useful life, the Company estimates the years of its useful life or the amount of similar measurement units such as production capacity constituting a useful life. An intangible asset with unforeseeable life to bring economic benefits to the Company is deemed to be an intangible asset with indefinite useful life.

② Amortisation of intangible assets

An intangible asset with a definite useful life are amortized over the estimated useful life from the month of acquisition using the straight-line method. An intangible asset with indefinite useful life are not amortized but an impairment test is carried out at the end of the year.

The useful life and method of amortization for intangible assets are reviewed and adjusted, if necessary, at least annually at the end of each year.

③ When an intangible asset is expected to no longer generate any future economic benefits to the Company at the end of the year, the carrying amount of the intangible asset is entirely transferred into the profit or loss for the period.

④ Impairment of intangible assets

Please see note 4(20) for the recognition of provision for impairment of intangible assets.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

18. Expenditure on research and development

(1) The Group classifies the expenditure on an internal research and development project into expenditure at the research phase and expenditure at the development phase.
(2) Specific criteria for the classification of the Company's internal research and development projects into research phase and development phase:

Research phase: the phase at which creative investigation and research activities are carried out as planned for the purpose of obtaining and understanding new scientific or technical knowledge.

Development phase: the phase at which the research achievement or other knowledge is applied to a particular project or design in order to produce new or substantially improved materials, devices, products and etc. before commercial production or utilization.

(3) Expenditure at the research phase of an internal research and development project is recognized in profit or loss for the period when it is incurred.
(4) Expenditure at the development phase of an internal research and development project is recognised as an intangible asset only if all of the following conditions are satisfied at the same time:
① It is technically feasible to complete the intangible asset so that it will be available for use or sale;
② Management intends to complete and to use or sell the intangible asset;
③ It can be demonstrated how the intangible asset will generate economic benefits, including demonstrating that there is an existing market for products produced by the intangible asset or for the intangible asset itself, and that it can be used if the intangible asset is to be used internally;
④ There are adequate technical, financial and other resources to complete the development and the ability to use or sell the intangible assets;
⑤ The expenditure attributable to the intangible asset at its development phase can be reliably measured.
(5) All the expenditures on research and development which cannot be distinguished between the research phase and development phase are recognised in the profit or loss when incurred.

19. Long-term prepaid expenses

(1) Long-term prepaid expenses are expenditures that have been incurred but should be recognized as expenses over more than one year in the current and subsequent periods. Long-term prepaid expenses are amortized on a straight-line basis over the expected beneficial period.
(2) Pre-operating expenses during the establishment period should be recognized directly in profit or loss in the month as incurred.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

20. Impairment of assets

Impairment of long-term equity investments in subsidiaries, associates and jointly ventures, investment properties subsequently measured using the cost method, fixed assets, construction in progress, intangible assets and goodwill (other than inventories, investment properties measured using the fair value method, deferred tax assets and financial assets) are determined as follows:

(1) An asset is tested for impairment if there is any indication that the asset may be impaired at the balance sheet date. If any indication exists that the asset may be impaired, the recoverable amount is estimated. Goodwill arising from a business combination, an intangible asset with an indefinite useful life and intangible assets that have not been ready for intended use are tested for impairment at least once a year, irrespective of whether or not there is any indication that those assets may be impaired.
(2) The recoverable amount of an asset is the higher of its fair value less costs to sell and the present value of the expected future cash flows estimated to be derived from the asset. The recoverable amount is estimated on an individual asset basis. If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of a group of assets to which the asset belongs is determined.
(3) Identification of an asset group is based on whether major cash inflows generated by the asset group are largely independent of the cash inflows from other assets or asset groups. When the recoverable amount of an asset or an asset group is less than its carrying amount, the carrying amount is written down to the recoverable amount. The written-down amount is provided for impairment loss and recognized in profit or loss for the period.
(4) Once the impairment loss of the above assets is recognized, it will not be reversed in subsequent periods.

21. Employee benefits

Staff remuneration of the Company mainly includes short-term staff remuneration, post-employment benefits, termination benefits and other long-term staff benefits, in which:

Short-term remuneration mainly includes salaries, bonuses, allowance and subsides, staff welfare, medical insurance premium, maternity insurance premium, work-related injury insurance premium, housing provident funds, union operation costs and employee education costs and non-monetary welfare etc. Short-term remuneration incurred during the accounting period in which the staff provided services for the Company is recognised as a liability, and included in profit or loss for the current period or as related asset cost. Nonmonetary welfare is measured at fair value.

Post-employment benefits mainly include defined contribution plan. Defined contribution plan mainly includes pension insurance premium and unemployment insurance premium. Relevant contribution amount is included as part of related asset cost or in profit or loss for the current period during the period in which the expenses incurred.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

21. Employee benefits — Continued

Where the Company terminates the employment relationship with employees before the expiration of the employment contracts or proposes compensation to encourage employees to accept voluntary redundancy, it shall recognise employee compensation liabilities arising from termination benefit and included in profit or loss for the current period, on the date when the Company may not revoke unilaterally the termination benefit provided due to the termination of employment relationship plans or employee redundance proposals or when the Company recognises the cost and expenses related to restructuring involving in the payment of termination benefit, whichever is earlier. However, if the termination benefit is not expected to be fully paid within 12 months from the end of the reporting period, it shall be accounted for as other long-term staff remuneration.

The early retirement plan shall be accounted for in accordance with the same accounting principles for termination benefit abovementioned. The salaries or wages and the social contributions to be paid to the retiring employees for the period from the date on which the employees cease rendering services to the scheduled retirement date, shall be recognised as termination benefit in profit or loss for the current period if the recognition criteria for provisions are satisfied.

Where other long-term employee benefit provided by the Company for its employees falls in defined contribution plans, it shall be accounted for as a defined contribution plan, or otherwise as a defined benefit plan.

22. Provisions

Obligations pertinent to the contingencies which satisfy all the following conditions are recognised as accrued liabilities: (a) The obligation is a current obligation borne by the Company; (b) it is likely that an outflow of economic benefits will be resulted from the performance of the obligation; and (c) the amount of the obligation can be reliably measured.

At the balance sheet date, accrued liabilities shall be measured at the best estimate of the necessary expenses required for the performance of existing obligations, after taking into account relevant risks, uncertainties, time value of money and other factors pertinent to the contingencies.

If all or part of the expenses required for settlement of accrued liabilities are expected to be compensated by a third party, the compensation amount shall, on a recoverable basis, be recognised as an asset separately, and compensation amount recognised shall not be more than the carrying amount of the accrued liabilities.

23. Share-based payments and equity instruments

(1) Share-based payments

Equity-settled share incentives are granted to senior management by the Company. Equity instruments used for share incentives are measured at their fair value as at the date of grant.

(2) Accounting treatment of share-based payments

Equity-settled share payments to employees are charged to costs and capital reserve (other capital reserve) at their fair value on the date of grant, and subsequent changes in fair value are not accounted. Cash-settled share payments to employees are re-measured at their fair value on each balance sheet date and are recognised as costs and staff remuneration payables.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

23. Share-based payments and equity instruments — Continued

(3) Determination of fair value of equity instruments

If there is an active market for an equity instrument granted such as share option, the fair value of the equity instrument is determined based on the quoted price in the active market. If not, the fair value is determined using the option pricing model.

(4) Recognition basis for the best estimate of exercisable equity instruments

On each balance sheet date within the vesting period, the estimated number of exercisable equity instruments is amended based on the best estimate made by the Company according to the latest available subsequent information as to changes in the number of employees with exercisable rights. As at the exercise date, the final estimated number of exercisable equity instruments should equal the actual number of exercisable equity instruments.

(5) Accounting treatment for implementation, amendment and termination of share-based payments

The accumulated cost to be recognised for the period is determined based on the fair value of abovementioned equity instruments and estimated number of exercisable equity instruments, after deducting the recognised amount for the previous period, and is expensed for the period.

24. Revenue

(1) Sale of goods

Revenue from the sale of goods is recognised when all the following conditions are satisfied: the significant risks and rewards of ownership of the goods have been transferred to purchaser; the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; it is probable that the associated economic benefits will flow to the Company; the relevant revenue and costs can be measured reliably.

(2) Rendering of services

On the balance sheet date, outcome of a transaction on rendering of services that could be reliably estimated shall be recognised using percentage-of-completion method. The Company determines the total revenue from rendering of services based on the purchase price received or receivable by the party to whom the services are rendered under the contract or agreement, except when the purchase price is unfair.

On the balance sheet date, where the outcome of a transaction on rendering of services cannot be reliably estimated, accounting treatment is carried out as follows:

① If the cost incurred is expected to be recoverable, the revenue from rendering of services shall be recognised at the cost that has been incurred, and an equivalent amount is carried forward to profit or loss as service cost.
② If the cost incurred is not expected to be recoverable, the cost that has been incurred shall be recognised in the profit or loss for the period, and no revenue from such services is recognised.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

24. Revenue — Continued

(3) Transfer of asset use rights

When it is probable that the economic benefits related to the transaction will flow to the Company and the revenue from transfer of asset use rights can be reliably measured, it is recognised as follows:

① The interest income is recognised on basis of the length of time during which and effective interest rate at which the Company's cash funds are utilized by the others.
② The royalty income is recognised on basis of the agreed payment schedule and method under relevant agreement or contract.

25. Government grants

Government grants are divided into asset-related government grants and income-related government grants.

(1) Recognition and measurement of government grants

Government grants are recognized when all attaching conditions are satisfied and the grants are received.

If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or receivable. If a government grant is in the form of a transfer of a nonmonetary asset, it is measured at fair value; if fair value is not reliably determinable, it is measured at a nominal amount.

(2) Accounting treatment of government grants

An asset-related government grant shall be recognized as deferred income, and evenly amortized to profit or loss over the useful life of the related asset.

A government grant measured at a nominal amount is recognized directly in profit or loss for the period.

For an income-related government grant, where the grant is a compensation for related expenses or losses to be incurred by an entity in subsequent periods, it shall be recognized as deferred income and included in profit or loss for the period when related expenses are charged; where the grant is a compensation for related expenses or losses already incurred by the entity, the grant shall be recognized directly in profit or loss for the period.

26. Deferred tax assets/deferred tax liabilities

(1) Current income tax

At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods shall be measured at the income tax expected to be paid (or returned) as required by tax laws. Taxable income, based on which the current income tax expense is calculated, is derived after adjusting the accounting profit before tax for the year in accordance with relevant requirements of tax laws.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

26. Deferred tax assets/deferred tax liabilities — Continued

(2) Deferred income tax assets and deferred income tax liabilities

Temporary differences arising from the difference between the carrying amount of an asset or liability and its tax base, and the difference between the tax base and the carrying amount of an item that is not recognised as an asset or liability but has a tax base that can be determined according to tax laws, shall be recognised for deferred income tax assets and deferred income tax liabilities using the balance sheet liability method.

Deferred income tax liabilities are not recognised for taxable temporary differences related to: the initial recognition of goodwill; and the initial recognition of an asset or liability in a transaction which is neither a business combination nor affects accounting profit or taxable income (or deductible loss) at the time of the transaction. In addition, for taxable temporary differences associated with investments in subsidiaries, associates, and joint ventures, if the Company is able to control the timing of the reversal of the temporary difference, and it is probable that the temporary difference will not reverse in the foreseeable future,relevant deferred income tax liabilities are not recognised either. Except for abovementioned circumstances, the Company recognises deferred income tax liabilities arising from other taxable temporary differences.

Deferred income tax assets are not recognised for deductible temporary differences related to the initial recognition of an asset or liability in a transaction which is neither a business combination nor affects accounting profit or taxable income (or deductible loss) at the time of the transaction. In addition, for deductible temporary differences associated with investments in subsidiaries, associates and joint ventures, if it is not probable that the temporary difference will reverse in the foreseeable future, and it is not probable that taxable income will be available in the future against which the deductible temporary difference can be utilised, relevant deferred income tax assets are not recognised. Except for abovementioned circumstances, the Company recognises deferred income tax assets arising from other deductible temporary differences to the extent that it is probable that taxable income will be available against which the deductible temporary differences can be utilised.

The Company recognises a deferred income tax asset for deductible losses and tax credits that can be carried forward to subsequent periods, to the extent that it is probable that future taxable income will be available against which the deductible losses and tax credits can be utilised.

At the balance sheet date, deferred income tax assets and deferred income tax liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, according to the tax laws.

At the balance sheet date, the Company reviews the carrying amount of a deferred income tax asset. If it is probable that sufficient taxable income will not be available in future periods against which the benefit of deferred income tax asset can be utilised, the carrying amount of the deferred income tax asset shall be written down. Any amount so written down shall be reversed when it becomes probable that sufficient taxable income will be available.

(3) Income tax expense

Income tax expense comprises current income tax expense and deferred income tax expense.

Current and deferred income tax expense or income is included in profit or loss for the current period, except for those recognised as other comprehensive income or current income tax and deferred income tax related to transactions or events that are directly recognised in shareholders' equity, which are recognised in other comprehensive income or shareholders' equity, and except for deferred income tax arising from a business combination, which is used to adjust the carrying amount of goodwill.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

26. Deferred tax assets/deferred tax liabilities — Continued

(4) Offsetting income tax

With the legal rights of netting off and with an intention to net off or realize the assets and settle the liabilities, the Company records the net current income tax assets and current income tax liabilities after offsetting between the assets and liabilities.

When the Company has the legal rights of netting off current income tax assets and liabilities, and deferred income tax assets and deferred income tax liabilities are related to income tax imposed on the same taxable entity by the same tax competent authority or related to different taxable entities, the Company records the net current income tax assets and current income tax liabilities after offsetting between the assets and liabilities, provided that the taxable entity involved is intended to net off current income tax assets and liabilities or, realise assets and settle liabilities during each significant future period whenever deferred income tax assets and liabilities would be reversed.

27. Segment information

The Company identifies operating segments based on the internal organization structure, management requirements and internal reporting system, and discloses segment information of reportable segments on the basis of operating segments.

An operating segment is a component of the Company that satisfies all the following conditions:

(1) The component is able to generate revenues and incur expenses in the course of ordinary activities;
(2) The operating results of the component are regularly reviewed by the Company's management in order to make decisions about resources to be allocated to the segment and to assess its performance; and
(3) Information on financial position, operating results and cash flows of the component is available to the Company. The accounting policies of operating segments are the same with the major accounting policies of the Company.

The segment revenue, operating results, assets and liabilities include the amount that is directly attributable to the segment and can be allocated to the segment on a reasonable basis. Revenue, assets and liabilities of an operating segment are determined at the amount before the elimination of inter-group transactions and intergroup current account balances. Transfer price between operating segments is calculated based on terms similar to those of the transactions with other parties.

28. Operating leases

The Company, as lessor, recognises the rentals under operating leases in profit or loss in respective periods over the leasing term on a straight line basis. Initial direct costs incurred are accounted for in the profit or loss for the period.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

29. Changes in significant accounting policies and accounting estimates

(1) Changes in accounting policies

There were no changes in the accounting policies of the Company in the current period.

(2) Changes in accounting estimates

There were no changes in the accounting estimates of the Company in the current period.

30. Critical accounting judgements and estimates

The Company needs to make judgments, estimates and assumptions as to the carrying amount of statement items which cannot be accurately measured in applying its accounting policies due to inherent uncertainties of operation activities. Such judgments, estimates and assumptions are made based on the historical experience of the Company's management and taking into account other relevant factors, and may affect the reported amount of revenue, expenses, assets and liabilities and disclosure of contingent liabilities at the balance sheet date. However, the actual results derived from the uncertainties of such estimates may differ from the current estimation of the Company's management, which may cause critical adjustment to the carrying amount of assets or liabilities which may be affected in the future.

The Company regularly reviews the aforesaid judgments, estimates and assumptions on a going concern basis. A revision to accounting estimate is recognised in the period in which the estimate is revised if it only affects that period. A revision is recognised in the period of the revision and future periods if it affects both current and future periods.

At the balance sheet date, the critical areas where the Company needs to make judgments, estimates and assumptions as to the amount of items in the financial statements are set out below:

(1) Classification of leases

The Company classifies the leases as operating lease and financing lease in accordance with "Accounting Standards for Business Enterprises 21 — Leases". When making the classification, the management needs to analyse and judge whether all the risks and rewards relating to the ownership of leased out assets have been substantially transferred to the leasee, or whether the Company has been substantially obliged to all the risks and rewards relating to the ownership of leased assets.

(2) Allowance for inventories

In accordance with the accounting policies of inventories and by measuring at the lower of cost and net realisable value, the Company makes allowance for inventories which have costs higher than net realisable value or become obsolete and slow-moving. Write-down of inventories to their net realisable values is based on the valuation of marketability and net realisable values of inventories. Determination of impairment of inventories requires the management to make judgments and estimates on the basis of definite evidence and taking into account the purpose of holding inventories and impacts of events after balance sheet date. The difference between the actual outcome and original estimates shall affect the carrying amount of inventories and provision for and reversal of the provision for the impairment of inventories during the period in which the estimates are revised.

Half year of 2015

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

30. Critical accounting judgements and estimates — Continued

(3) Depreciation and amortisation

The Company shall provide depreciation and amortisation for investment properties, fixed assets and intangible assets over their useful lives and after taking into account of their residual value by using straight-line method. The Company shall regularly review the useful lives to determine the amount depreciated and amortised to be accounted for in each reporting period. The useful life is determined by the Company according to its previous experience on similar assets and estimated technical updates. If there is any material change in the estimate previously made, the depreciation and amortisation will be adjusted over the future period.

(4) Deferred income tax assets

The deferred income tax assets will be recognised for all unused tax losses to the extent that it is probable there will be sufficient taxable profits against which the loss is utilised. This requires the Company's management to apply numerous judgments to estimate the timing and amount of the future taxable profits so as to determine the amount of deferred income tax assets to be recognised with reference to the tax planning strategy.

(5) Income tax

There are some uncertainties in tax treatment and calculation for some transactions of the Company during its ordinary course of business. The approval from the tax authority is required for pre-tax expending of some items. Any difference between the final determined outcome of such tax matters and the initially estimated amount will exert an effect on the current income tax and deferred income tax during the period in which the final amount is determined.

5. TAXATION

1. The types and rates of taxes applicable to the Group

Type of taxes	Tax basis	Tax rate
Value-added tax	Taxable value added amount	17%
Business tax	Taxable business turnover	5%
City maintenance and construction tax	Turnover tax payable	1%-7%
Education surcharges	Turnover tax payable	3%
Corporate income tax	Taxable income	25%

Half year of 2015

5. TAXATION — Continued

2. Tax preferences and approvals

Guangdong Kelon Mould Co., Ltd., a subsidiary of the Company, received the Certificate of High-tech Enterprise (Number: GR201444001017) dated 10 October 2014 which was jointly issued by the Guangdong Science and Technology Department, Guangdong Provincial Finance Department, Guangdong Provincial State Tax Bureau and Guangdong Provincial Local Taxation Bureau, with an effective period of three years (2014, 2015 and 2016). Pursuant to the tax preference regulation on High-tech Enterprises, this subsidiary is entitled to the preferential enterprise income tax rate of 15% in 2014, 2015 and 2016.

Hisense (Shandong) Air-Conditioning Co. Ltd., a subsidiary of the Company, received the Certificate of Hightech Enterprise (Number: GR201437100159) dated 14 October 2014 which was jointly issued by the Qingdao Science and Technology Department, Qingdao Finance Department, Qingdao State Taxation Bureau and Qingdao Local Taxation Bureau, with an effective period of three years (2014, 2015 and 2016). According to the relevant tax preference regulation on High-tech Enterprises, the applicable enterprise income tax rate for this subsidiary is 15% in 2014, 2015 and 2016.

Qingdao Hisense Mould Co., Ltd., a subsidiary of the Company, received the Certificate of Hightech Enterprise (Number: GR201437100092) dated 14 October 2014 which was jointly issued by the Qingdao Science and Technology Department, Qingdao Finance Department, Qingdao State Taxation Bureau and Qingdao Local Taxation Bureau, with an effective period of three years (2014, 2015 and 2016). According to the relevant tax preference regulation on High-tech Enterprises, the applicable enterprise income tax rate for this subsidiary is 15% in 2014, 2015 and 2016.

Hisense (Shandong) Refrigerator Ltd., a subsidiary of the Company, received the Certificate of Hightech Enterprise (Number: GR201437100091) dated 14 October 2014 which was jointly issued by the Qingdao Science and Technology Department, Qingdao Finance Department, Qingdao State Taxation Bureau and Qingdao Local Taxation Bureau, with an effective period of three years (2014, 2015 and 2016). According to the relevant tax preference regulation on High-tech Enterprises, the applicable enterprise income tax rate for this subsidiary is 15% in 2014, 2015 and 2016.

Hisense Ronshen (Yangzhou) Refrigerator Co., Ltd., a subsidiary of the Company, received the Certificate of High-tech Enterprise (Number: GR201332000826) dated 3 December 2013 which was jointly issued by the Jiangsu Science and Technology Department, Jiangsu Finance Department, Jiangsu Provincial State Taxation Bureau and Jiangsu Local Taxation Bureau, with an effective period of three years (2013, 2014 and 2015). According to the relevant tax preference regulation on Hightech Enterprises, the applicable enterprise income tax rate for this subsidiary is 15% in 2013, 2014 and 2015.

Hisense (Chengdu) Refrigerator Co., Ltd., a subsidiary of the Company, received Chuan Jing Xin Chan Ye Han No. [2014]176 from Sichuan Province Commission of Economy and Information Technology on 7 March 2014. The principal activities of this subsidiary are recognized as industrial projects encouraged by the State. Pursuant to the tax preference regulation on Western Development policies, this subsidiary is entitled to the preferential enterprise income tax rate of 15% from 2014 to 2020.

The subsidiaries of the Company which were incorporated in Hong Kong are subject to an income tax on the estimated assessable profits derived from or arising in Hong Kong at a rate of 16.5% (2014: 16.5%).

Half year of 2015

5. TAXATION — Continued

3. Other illustrations

(1) Other taxes in the PRC, including, among others, real estate tax, land use tax, local education surcharges, vehicle and vessel tax, stamp duty and withholding individual income tax, are calculated and payable in accordance with the relevant regulations of the State tax laws.
(2) Kelon (Japan) Ltd, a subsidiary of the Company, is a legal person in Japan and is mainly subject to income tax (including corporation tax, corporate inhabitant tax and corporate business tax), consumption tax and fixed asset tax. The bases and rates of such taxes are as follows:

Type of taxes	Tax Basis	Tax rate
Corporation tax	The audited profits for the period	In accordance with the applicable local tax rate
Corporate inhabitant tax (local tax)	A fixed tax rate on the legal person itself and proportional tax rate on its income	In accordance with the applicable local tax rate
Corporate business tax (local tax)	The total amount of income, value-added amount and capital for each operating year	In accordance with the applicable local tax rate
Consumption tax	The difference between the total sales amount and the total purchase amount of the tax payer	In accordance with the applicable local tax rate
Fixed asset tax	Value of lands, buildings and depreciable assets	In accordance with the applicable local tax rate

Half year of 2015

6. BUSINESS COMBINATION AND CONSOLIDATED FINANCIAL STATEMENTS

Unless otherwise expressly stated, all amounts in the following table of this section are denominated in RMB'0000.

(1) Subsidiaries

1. Subsidiaries acquired through establishment or investment

Name of the subsidiary	Type of subsidiary	Place of registration Business	Nature of	Registered Entity capital type		Scope of business	Actual investment at the end of the period	Shareholding (%) Direct	Indirect held	% of voting rights	Consolidated or not	Minority interest	Gain or loss attributable to minority interest	Dividend attributed to minority interest
Hisense Ronshen (Guangdong) Refrigerator Co., Ltd. ("Guangdong Refrigerator")	Wholly owned subsidiary	Foshan	Industrial	US\$26,800,000 Limited	liability company	Manufacture and sale of refrigerators	20,464.04	70%		30% 100%	Yes
Guangdong Kelon Airconditioner Co., Ltd. ("Guangdong Airconditioner")*1	Subsidiary	Foshan	Industrial	US\$36,150,000 Limited	liability company	Manufacture and sale of airconditioners	28,100.00	60%		100%	Yes
Hisense Ronshen (Guangdong) Freezer Co., Ltd. ("Guangdong Freezer")	Wholly owned subsidiary	Foshan	Industrial	23,700.00 Limited	liability company	Manufacture and sale of freezers	3,530.39	44%		56% 100%	Yes
Shunde Kelon Household Electrical Appliance Co., Ltd. ("Kelon HEA")	Wholly owned subsidiary	Foshan	Industrial	1,000.00 Limited	liability company	Manufacture and sale of household appliances	250.00	25%		75% 100%	Yes
Guangdong Hisense Home Appliances Co., Ltd. ("Hisense Home Appliances")	Subsidiary	Foshan	Industrial	5,740.51 Limited	liability company	Manufacture and sale of home appliances, such as metal furniture, plastic furniture, kitchen ventilator, gas stove	5,153.11	81.17%		81.17%	Yes	1,490.01	58.68	216.21
Foshan Shunde Rongsheng Plastic Co., Ltd. ("Rongsheng Plastic")	Subsidiary	Foshan	Industrial	US\$15,827,400 Limited	liability company	Manufacture of plastic parts	8,184.29	44.92%	25.13% 70.05%		Yes	8,470.37	73.56
Guangdong Kelon Mould Co., Ltd. ("Kelon Mould")	Subsidiary	Foshan	Industrial	US\$15,056,100 Limited	liability company	Manufacture of moulds	8,886.70		70.11% 61.54%		Yes	5,440.64	228.82
Guangdong Huaao Electronics Co., Ltd. ("Huaao Electronics")	Subsidiary	Foshan	Industrial	1,000.00 Limited	liability company	Research and development, production and sale of electronic products	700.00			70% 100%	Yes
Guangdong Foshan Shunde Kelon Property Service Co., Ltd. ("Kelon Property")	Wholly owned subsidiary	Foshan	Service		500.00 Limited liability company	Corporate consultancy management,catering, household decoration design	492.78		100% 100%		Yes
Foshan Shunde Wangao Import & Export Co., Ltd. ("Wangao I&E")	Wholly owned subsidiary	Foshan	Commercial		300.00 Limited liability company	Import and export	300.00	20%		80% 100%	Yes
Foshan Shunde Kelon Jiake Electronics Co., Ltd. ("Kelon Jiake")	Wholly owned subsidiary	Foshan	Industrial	6,000.00 Limited	liability company	IT and communication technology,and microelectronics technology development	6,000.00	70%		30% 100%	Yes
Guangdong Kelon Weili Electrical Appliances Co., Ltd. ("Kelon Weili")	Subsidiary	Zhongshan Industrial		20,000.00 Limited	liability company	Production of intelligent washing machines, intelligent air conditioners and after sale maintenance services and technology consultation for its products, 70% products for domestic sale		55%	25% 80%		Yes	(436.26)	—
Hisense Ronshen (Yingkou) Refrigerator Co., Ltd. ("Yingkou Refrigerator")	Subsidiary	Yingkou	Industrial	20,000.00 Limited	liability company	Manufacture and sale of refrigerators	14,213.99	42%	36.79% 78.79%		Yes	133.02	(84.40)

Half year of 2015

6. BUSINESS COMBINATION AND CONSOLIDATED FINANCIAL STATEMENTS — Continued

Unless otherwise expressly stated, all amounts in the following table of this section are denominated in RMB'0000. — Continued

(1) Subsidiaries — Continued

1. Subsidiaries acquired through establishment or investment — Continued

Name of the subsidiary	Type of subsidiary	Place of registration Business	Nature of	Registered Entity capital type		Scope of business	Actual investment at the end of the period	Shareholding (%) Direct	Indirect held	% of voting rights	Consolidated or not
Jiangxi Kelon Industrial Development Co., Ltd. ("Jiangxi Kelon")	Wholly owned subsidiary	Nanchang Industrial		US\$29,800,000 Limited	liability company	Manufacture and sale of household and commercial air-conditioners, refrigerators, freezers and small household appliances	23,940.92	60%		40% 100%	Yes
Jiangxi Kelon Combine Electrical Appliances Co., Ltd. ("Combine")*2	Subsidiary	Nanchang Industrial		2,000.00 Limited	liability company	Research and development, production and sale of household and commercial airconditioners, refrigerators, freezers and small household appliances	1,100.00			55% 55%	No
Hangzhou Kelon Electrical Co., Ltd. ("Hangzhou Kelon")	Wholly owned subsidiary	Hangzhou Industrial		2,400.00 Limited	liability company	Research and development and production of high efficiency, energy saving and environmental friendly refrigerators, technology for environmental friendly refrigerators, technology consultation, warehousing, and sale of the Company's products	2,400.00	100%		100%	Yes
Hisense Ronshen (Yangzhou) Refrigerator Co., Ltd. ("Yangzhou Refrigerator")	Wholly owned subsidiary	Yangzhou Industrial		US\$44,447,900 Limited	liability company	Production and sale of energy saving, environmental friendly refrigerators and other energy saving cooling electrical appliances	32,253.66	74.33%	25.67% 100%		Yes
Shangqiu Kelon Electrical Co., Ltd. ("Shangqiu Kelon")	Wholly owned subsidiary	Shangqiu Industrial		15,000.00 Limited	liability company	Research and development, manufacture and sale of household and commercial air-conditioners, refrigerators, freezers and small household appliances and parts and accessories, and provision of relevant information and technical consultancy services	15,000.00			100% 100%	Yes
Zhuhai Kelon Electrical Industrial Development Co., Ltd. ("Zhuhai Kelon")	Wholly owned subsidiary	Zhuhai	Industrial	US\$29,980,000 Limited	liability company	Research and development and manufacture of refrigerators, airconditioners, freezers, small household appliances and related accessories	23,581.15	75%		25% 100%	Yes

Half year of 2015

6. BUSINESS COMBINATION AND CONSOLIDATED FINANCIAL STATEMENTS — Continued

Unless otherwise expressly stated, all amounts in the following table of this section are denominated in RMB'0000. — Continued

(1) Subsidiaries — Continued

1. Subsidiaries acquired through establishment or investment — Continued

Name of the subsidiary	Type of subsidiary	Place of registration Business	Nature of	Registered Entity capital type		Scope of business	Actual investment at the end of the period	Shareholding (%) Direct	Indirect held	% of voting rights	Consolidated or not	Minority interest	Gain or loss attributable to minority interest	Dividend attributed to minority interest
Shenzhen Kelon Purchase Co., Ltd. ("Shenzhen Kelon")	Wholly owned subsidiary		Shenzhen Commercial	10,000.00 Limited	liability company	Domestic business, material supply and marketing (excluding franchise, control and monopoly of goods); import and export; provision of warehousing, information consultation	10,000.00	95%		5% 100%	Yes
Pearl River Electric Refrigerator Co., Ltd. ("Pearl River Refrigerator")	Wholly owned subsidiary		Hong Kong Commercial	HK\$400,000 Limited	liability company	Sale of raw materials and accessories for refrigerators	31.55		100% 100%		Yes
Kelon Development Co., Ltd. ("Kelon Development")	Wholly owned subsidiary		Hong Kong Investment	HK\$5,000,000 Limited	liability company	Investment holding	1,120.00	100%		100%	Yes
Kelon (Japan) Limited ("Kelon Japan")	Wholly owned subsidiary	Japan		Commercial JPY1,100,000,000 Limited	liability company	Technical research and trading of electrical household appliances	2,594.32		100% 100%		Yes
Kelon International Incorporation ("KII")	Wholly owned subsidiary	British Virgin Islands	Commercial	US\$50,000 Limited	liability company	Investment holding and sale of household appliances	0.0006		100% 100%		Yes
Hisense (Chengdu) Refrigerator Co., Ltd. ("Chengdu Refrigerator")	Wholly owned subsidiary	Chengdu Industrial		5,000.00 Limited	liability company	Manufacture of household appliances and refrigeration equipment, sale of the Company's products, and provision of related after-sale services	5,000.00	100%		100%	Yes
Hisense (Shandong) Refrigerator Co., Ltd. ("Shandong Refrigerator")	Wholly owned subsidiary	Qingdao	Industrial	27,500.00 Limited	liability company	Manufacture of energy saving and environmental friendly refrigerators, freezers and other household energy saving cooling appliances; sale of self manufactured products of the Company; design and development of new products in the area of energy saving and environmental friendly refrigerators, freezers and energy saving cooling appliances	27,500.00	100%		100%	Yes
Guangdong Hisense Refrigerator Marketing Co., Ltd. ("Refrigerator Marketing Company")	Subsidiary	Foshan	Commercial		20,081.90 Joint stock limited	Sale and provision of aftersale and technical services of refrigerators, freezers, washing machines, living appliances and other household appliances	15,827.60		78.82% 78.82%		Yes	4,597.43	195.49	194.78
Qingdao Hisense Air conditioner Marketing Co., Ltd. ("Airconditioner Marketing Company")	Subsidiary	Qingdao	Commercial		10,091.00 Joint stock limited	General items of operation: sales and provision of after-sale and technical services of airconditioners, air purifiers, dehumidifiers, living appliances, environmental	7,626.00		75.57% 75.57%		Yes	3,306.08	(103.96)	93.57

appliances

Half year of 2015

6. BUSINESS COMBINATION AND CONSOLIDATED FINANCIAL STATEMENTS — Continued

Unless otherwise expressly stated, all amounts in the following table of this section are denominated in RMB'0000. — Continued

(1) Subsidiaries — Continued

1. Subsidiaries acquired through establishment or investment — Continued

Name of the subsidiary	Type of subsidiary	Place of registration Business	Nature of	Registered Entity capital type		Scope of business	Actual investment at the end of the period	% of voting rights	Consolidated or not	Minority interest	Gain or loss attributable to minority interest
Hisense Home Appliance (Europe) Research & Development Center GmbH ("Hisense Europe Research")	Wholly owned subsidiary		Germany R&D center	EUR50,000.00 Limited	liability company	Research, development and design of refrigerators, air conditioners, washing machines, small household appliances and other household appliances, provision of technical consultation, services and technical support for household appliances, and sale of design proposals of household appliances products	39.85	100% 100%	Yes
Hisense (Guangdong) Air Conditioner Company Limited ("Hisense Guangdong Air Conditioner")	Wholly owned subsidiary	Jiangmen Industrial		20,000.00 Limited	liability company	Development, manufacture and assembly of airconditioners, air purifiers, dehumidifiers, living appliances, environmental appliances and other household appliances products, sale of selfmanufactured products, provision of after-sale and technical consultancy services related to above products, Import and export of various goods and technologies self manufactured and distributed (exclusive of goods or technologies subject to business operation restrictions by State or prohibited from import or export)	20,000.00	100% 100%	Yes
Hisense (Guangdong) Mould Plastic Company Limited ("Hisense Guangdong Mould Plastic")	Wholly owned subsidiary	Jiangmen Industrial		1,000.00 Limited	liability company	Manufacture of moulds, hardwares, plastic furnitures (exclusive of worn-out plastics), and development, manufacture, assembly and sales of their parts, provision of after sale and technical consultancy services related to above products, Import and export of various goods and technologies self manufactured and distributed (items that permission is required by law, no operations shall be carried out until permitted by relevant	1,000.00	100% 76.35%	Yes	(22.39)	(22.39)

departments)

Half year of 2015

6. BUSINESS COMBINATION AND CONSOLIDATED FINANCIAL STATEMENTS — Continued

2. Subsidiaries acquired through business combination under common control

Name of the subsidiary	Type of subsidiary	Place of registration Business	Nature of	Registered Entity capital type		Scope of business	Actual investment at the end of the period	Shareholding (%) Direct	Indirect	% of voting	Minority interest	Gain or loss attributable to minority interest	Dividend attributed to minority interest
Hisense (Beijing) Electric Co., Ltd. ("Beijing Refrigerator")	Subsidiary	Beijing	Industrial	8,571.00 Limited	liability company	Manufacture of refrigerator products and other household appliances; sale of self-manufactured products; import and export of goods and technologies, and provision of import and export agency services	9,210.12	55%		55% Yes	8,761.71	(36.47)
Hisense (Shandong) Airconditioning Co., Ltd. ("Shandong Airconditioning")	Wholly owned subsidiary	Qingdao	Industrial	50,000.00 Limited	liability company	Research and development, manufacture and sale of air conditioning products and injection moulds, and provision of after-sale maintenance services	56,717.55	100%		100% Yes
Hisense (Zhejiang) Airconditioning Co., Ltd. ("Zhejiang Air-conditioning")	Subsidiary	Huzhou	Industrial	11,000.00 Limited	liability company	Production of air-conditioners, manufacture and sale of other household appliances, provision of related technical services, and import and export of goods and technologies	5,452.36	51%		51% Yes	4,266.29	311.43
Qingdao Hisense Mould Co., Ltd. ("Hisense Mould")	Subsidiary	Qingdao	Industrial	2,764.20 Limited	liability company	Design and manufacture of moulds, machine processing, design and manufacture of jigs, plastic injection, painting/brushing and processing etc.	12,162.80	78.70%		78.70% Yes	6,582.63	473.08	412.14
Hisense (Nanjing) Electric Co., Ltd. ("Nanjing Refrigerator")	Subsidiary	Nanjing	Industrial	12,869.15 Limited	liability company	Research and development, manufacture and sale of fluorine free refrigeration products and other household appliances. Import and export of various self-manufactured and distributed goods and technologies	10,173.67		60%	60% Yes	5,550.70	-258.67

* 1 The Company holds 60% equity interests in Guangdong Air-conditioner and 70% equity interests in Huaao Electronics, however as the Company has committed to provide financial support to these companies and bear their losses in entirety, the long-term equity investment was accounted for as 100% shareholding.
* 2 The Company holds 55% equity interests in Combine. As Combine has declared in liquidation and reorganization, therefore it has not been included in the consolidated financial statements.

3. Illustration of changes in scope of business combination

There was no newly consolidated subsidiary during the period.

Half year of 2015

6. BUSINESS COMBINATION AND CONSOLIDATED FINANCIAL STATEMENTS — Continued

4. Major financial information of the principal non-wholly-owned subsidiaries

						Unit: RMB'0000
			Closing balance
Name of the	Current	Non-current	Total	Current	Non-current	Total
subsidiary	assets	assets	assets	liabilities	liabilities	liabilities
Refrigerator
Marketing
Company	301,373.99	3,559.13	304,933.12	282,370.72	0.00	282,370.72
Air-conditioner
Marketing
Company	387,020.92	1,104.89	388,125.81	374,485.17	0.00	374,485.17
			Opening balance
Name of the	Current	Non-current	Total	Current	Non-current	Total
subsidiary	assets	assets	assets	liabilities	liabilities	liabilities
Refrigerator
Marketing
Company	278,235.80	3,613.95	281,849.75	260,151.50		260,151.50
Air-conditioner
Marketing
Company	249,589.64	1,113.83	250,703.47	236,360.66		236,360.66

5. Transactions that led to changes in the ownership interest in, but without losing of control of the subsidiary

Nil.

6. Exchange rate for major items in the financial statements of overseas operating entities

				Unit: RMB
Major items		Balances		Balances
in the financial		denominated in		denominated
statements	Currency	foreign currency	Exchange rate	in RMB
Cash at bank and	HKD	264,367,119.36	0.7888	208,538,071.09
on hand	EUR	53,168.88	6.8240	362,824.44
Net accounts receivable	HKD	712,712,912.32	0.7888	562,202,199.49
Revenue from principal operations	HKD	2,781,961,522.55	0.7888	2,194,536,437.26
Administrative expenses	HKD	1,258,084.15	0.7888	992,433.39

Notes to exchange rate:

Consolidated overseas operating entities that are accounted for in foreign currency include Pearl River Refrigerator, Kelon Development, KII, Hisense Europe Research and Kelon Japan. On the date of consolidation, the Company has translated the items of assets and liabilities at spot exchange rate on the balance sheet date, while items under equity (other than unallocated profits) were translated at historic exchange rate, and items under profit and loss were translated at average exchange rate. The difference between assets and liabilities and net assets was reflected in "Other comprehensive income" and presentated separately under shareholder's equity in the balance sheet.

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise specified, opening balances refer to balances as at 1 January 2015, whereas closing balances refer to balances as at 30 June 2015; and the current period refers to January to June 2015, whereas the previous period refers to January to June 2014 in the following notes (including major notes to the financial statements of the Company):

1. Cash at bank and on hand

		Closing balance		Opening balance
Item	Foreign currency	Exchange rate	RMB	Foreign currency	Exchange rate	RMB
Cash on hand:
RMB
HKD	10,000.00	0.78882	7,888.20	10,000.00	0.78887	7,888.70
JPY
Others
Subtotal in cash:			7,888.20			7,888.70
Bank deposits:
RMB	683,934,030.69	1	683,934,030.69	821,955,447.61	1	821,955,447.61
HKD	997,248.03	0.78882	786,649.19	579,349.85	0.78887	457,031.78
USD	26,835,562.89	6.11490	164,096,783.50	7,363,232.04	6.11900	45,055,608.01
JPY	158,386.05	0.05008	7,932.29	158,386.00	0.05137	8,136.45
EUR	4,296,024.92	6.82400	29,316,074.05	341,318.49	7.45560	2,544,734.41
Others			19.61	2,202.38		9,908.16
Subtotal of bank
deposits:			878,141,489.33			870,030,866.42
Other cash at bank and on hand:
RMB	884,000.00	1	884,000.00	625,000.00	1	625,000.00
Subtotal of other cash at bank and
on hand:			884,000.00			625,000.00
Total			879,033,377.53			870,663,755.12

Notes to cash at bank and on hand:

Other cash at bank and on hand represented mainly security deposit.

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

1. Cash at bank and on hand — Continued

Breakdown of restricted cash at bank and on hand are listed as follows:

Item	Closing balance	Opening balance
Security deposit	884,000.00	625,000.00
Total	884,000.00	625,000.00

2. Financial assets at fair value through profit or loss

(1) Category

Item	Closing balance	Opening balance
Financial assets held-for-trading	45,885,145.11	162,460.00
Including: Derivative financial assets	45,885,145.11	162,460.00
Total	45,885,145.11	162,460.00

(2) Notes to financial assets held-for-trading

(i) There was no material restriction for realizing the financial assets held-for-trading as at the end of the period.
(ii) Derivative financial assets mainly represented the outstanding forward exchange settlement and sale contracts entered into by the Company and banks, which were recognized as the financial assets or liabilities held-for-trading based on the difference between the quotated price of the outstanding forward contracts and the forward rates as at 30 June 2015.

3. Notes receivable

(1) Classification of notes receivable

Category	Closing balance	Opening balance
Bank acceptance notes Commercial acceptance notes	2,010,634,445.46 12,018,450.93	967,193,183.44 24,603,754.38
Total	2,022,652,896.39	991,796,937.82

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

3. Notes receivable — Continued

(2) Pledged notes receivable as at the end of the period:

Pledged amounts as at the end of the period
Closing balance	Opening balance
631,259,641.35	365,731,397.56
631,259,641.35	365,731,397.56

Whereas: the top five notes receivables are as follows:

Issuer	Date of issuance	Maturity date	Amount
Top 1	2015/4/30	2015/10/30	37,979,537.63
Top 2	2015/4/27	2015/10/27	37,733,912.03
Top 3	2015/3/27	2015/9/27	15,000,000.00
Top 4	2015/5/28	2015/11/28	14,000,000.00
Top 5	2015/6/9	2015/12/9	13,846,684.72

(3) As at the end of the period, there was no discounted notes receivable.

(4) As at the end of the period, there were no notes receivable that are reclassified to accounts receivable due to inability of the issuers to settle the notes.
(5) As at the end of the period, notes endorsed to other parties but not due yet amounted to RMB3,866,868,525.45 (31 December 2014: RMB6,064,065,561.52), with the top five notes receivables as follows:

Issuer	Date of issuance	Maturity date	Amount
Suning Procurement Center of Suning
Commerce Group Co., Ltd.	2015/3/26	2015-09-27	10,000,000.00
Suning (Wuhu) Commerce Co., Ltd.	2015-03-27	2015-09-27	10,000,000.00
Suning (Wuhu) Commerce Co., Ltd.	2015-03-27	2015-09-27	10,000,000.00
Suning Procurement Center of Suning
Commerce Group Co., Ltd.	2015-05-11	2015-11-11	10,000,000.00
Suning Procurement Center of Suning
Commerce Group Co., Ltd.	2015-05-29	2015-11-28	10,000,000.00

(6) Please see note 8 for details of notes receivables from related parties as at the end of the period.

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

4. Accounts receivable

(1) Accounts receivable by category:

	Closing balance
Category	Book value		Provision for bad debts
		Percentage		Percentage
	Amount	(%)	Amount	(%)
Individually significant and subject to separate provision for bad debts
Ageing analysis Greencool Companies	3,263,087,541.90	100.00	135,246,615.25	4.14
Subtotal	3,263,087,541.90	100.00	135,246,615.25	4.14
Individually insignificant but subject to separate provision for bad debts
Total	3,263,087,541.90	100.00	135,246,615.25	4.14

Continued from above table

	Opening balance
Category	Book value		Provision for bad debts
		Percentage		Percentage
	Amount	(%)	Amount	(%)
Individually significant and subject to separate provision for bad debts
Ageing analysis	2,131,048,376.82	100.00	146,756,989.89	6.89
Greencool Companies
Subtotal	2,131,048,376.82	100.00	146,756,989.89	6.89
Individually insignificant but subject to separate provision for bad debts
Total	2,131,048,376.82	100.00	146,756,989.89	6.89

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

4. Accounts receivable — Continued

(1) Accounts receivable by category: — Continued

Accounts receivable in the group provided for bad debts by using ageing analysis method:

	Closing balance			Opening balance
Age	Book value		Provision for bad debts		Book value
	Amount	Percentage (%)		Amount	Percentage (%)
Within three months Over three months but	3,065,255,740.70	93.94		1,939,033,166.75	90.99
within six months Over six months but	51,559,322.61	1.58	5,155,932.26	41,524,824.98	1.95	4,152,482.50
within one year	32,363,591.21	0.99	16,181,795.61	15,771,755.40	0.74	7,885,877.70
Over one year	113,908,887.38	3.49	113,908,887.38	134,718,629.69	6.32	134,718,629.69
Total	3,263,087,541.90	100.00	135,246,615.25	2,131,048,376.82	100.00	146,756,989.89

(2) Movements in bad debt provision for accounts receivable

			Decrease for the period
Year	Opening balance	Provision for the year	Reversal	Write-off	Closing balance
Reporting Period	146,756,989.89	10,202,548.41	55,716.21	21,657,206.84	135,246,615.25

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

4. Accounts receivable — Continued

(3) Accounts receivable that are written off

				Whether or not arising from related party
Name	Nature	Amount	Reason for write-off	transactions
			Not recoverable
Unrelated party	Payment for goods	21,657,206.84	due to long aging	No
Total		21,657,206.84	—	—

(4) As at 30 June 2015, there was no amounts due from shareholder who holds 5% or more voting shares of the Company in accounts receivable. As at 31 December 2014, there was no amounts due from shareholder who holds 5% or more voting shares of the Company in accounts receivable.

(5) Top five accounts receivable

No.	Relationship with the Company	Amount	Age	Percentage of the total accounts receivable (%)
Top 1	Unrelated party	589,094,928.37	Within three months	18.05
Top 2	Unrelated party	338,793,992.58	Within three months	10.38
Top 3	Unrelated party	216,672,144.10	Within three months	6.64
Top 4	Related party	98,087,781.08	Within three months	3.01
Top 5	Unrelated party	72,676,751.59	Within three months	2.23
Total	—	1,315,325,597.72	—	40.31

(6) Please see note 8 for details of accounts receivable from related parties as at the end of the period.

(7) As at the end of the period, the balance of accounts receivable amounted to RMB417,164,142.48 were used for factoring secured borrowings to secure borrowings of RMB388,293,554.13.

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

5. Prepayments

(1) Prepayments are presented by aging as follows:

Age	Closing balance		Opening balance
	Amount	Percentage (%)	Amount	Percentage (%)
Within one year	433,833,360.22	97.22	493,371,989.78	99.03
One to two years	12,415,092.07	2.78	4,837,316.90	0.97
Two to three years
Over three years
Total	446,248,452.29	100.00	498,209,306.68	100.00

(2) Top five prepayments

	Relationship with			Reason for
No.	the Company	Amount	Age	nonsettlement

Top 1	Unrelated party	75,591,350.84	Within one year	Normal settlement
Top 2	Unrelated party	69,502,245.84	Within one year	Normal settlement
Top 3	Unrelated party	36,782,980.53	Within one year	Normal settlement
Top 4	Unrelated party	18,478,276.02	Within one year	Normal settlement
Top 5	Unrelated party	11,575,250.70	Within one year	Normal settlement

Total		211,930,103.93	—

(3) As at 30 June 2015, there was no amounts due from shareholder who holds 5% or more voting shares of the Company in the prepayments. As at 31 December 2014, there was no amounts due from shareholder who holds 5% or more voting shares of the Company in the prepayments.

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

6. Other receivables

(1) Other receivables are disclosed by category as follows:

Closing balance
Book value		Provision for bad debts
			Percentage
Amount	(%)	Amount	(%)

127,393,675.52	20.19	3,800,000.00	2.98
134,249,323.25	21.28	31,921,649.25	23.78
369,278,769.88	58.53	148,315,416.08	40.16
503,528,093.13	79.81	180,237,065.33	35.79

	—
			29.17
	630,921,768.65	Percentage 100.00	184,037,065.33

Continued from above table:

Opening balance
		Provision for bad debts
			Percentage
Amount	(%)	Amount	(%)


127,393,675.52	18.88	3,800,000.00	2.98
178,154,494.66	26.40	29,659,997.32	16.65
369,278,769.88	54.72	148,315,416.08	40.16
547,433,264.54	81.12	177,975,413.40	32.51

674,826,940.06	100.00	181,775,413.40	26.94
	Book value	Percentage

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

6. Other receivables — Continued

(1) Other receivables are disclosed by category as follows: — Continued

As at the end of the year, other receivables individually significant and subject to separate provision for bad debts are as follows:

		Closing balance
Other receivables	Other	Provision for	Provision ratio	Reasons for
(provided by company)	receivables	bad debts	(%)	provision
Grant	127,393,675.52	3,800,000.00	2.98	The percentage to total receivables exceeding 10%
Total	127,393,675.52	3,800,000.00	—	—

Other receivables in the group provided for bad debts by aging are as follows:

	Closing balance			Opening balance
			Provision for			Provision for
Age	Book value		bad debts	Book value		bad debts
		Percentage			Percentage
	Amount	(%)		Amount	(%)
Within three months	96,003,086.59	15.22		144,145,632.73	21.36
Over three months but
within six months	4,706,796.48	0.75	470,679.65	2,912,828.41	0.43	291,282.84
Over six months but
within one year	4,176,941.17	0.66	2,088,470.59	3,454,638.05	0.51	1,727,319.01
Over one year	29,362,499.01	4.65	29,362,499.01	27,641,395.47	4.10	27,641,395.47
Total	134,249,323.25	21.28	31,921,649.25	178,154,494.66	26.40	29,659,997.32

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

6. Other receivables — Continued

(1) Other receivables are disclosed by category as follows: — Continued

Other receivables in the group provided for bad debts by Greencool Companies are as follows:

	Closing balance		Opening balance
		Provision for		Provision for
Name	Amount	bad debts	Amount	bad debts
Hainan Greencool Environmental
Protection Engineering Co., Ltd.
("Hainan Greencool")	12,289,357.71	12,289,357.71	12,289,357.71	12,289,357.71
Jiangxi Kesheng Trading Co., Ltd.
("Jiangxi Kesheng")	27,462,676.72	20,103,988.97	27,462,676.72	20,103,988.97
Jinan San Ai Fu Chemical Co., Ltd.
("Jinan San Ai Fu")	121,496,535.45	24,368,160.49	121,496,535.45	24,368,160.49
Greencool Technology Development
(Shenzhen) Co., Ltd. ("Shenzhen
Greencool Technology")	32,000,000.00	15,519,462.85	32,000,000.00	15,519,462.85
Greencool Environmental Engineering
Shenzhen Co., Ltd. ("Shenzhen
Greencool Environmental")	33,000,000.00	16,004,446.06	33,000,000.00	16,004,446.06
Jiangxi Keda Plastic Technology Co.
Ltd. ("Jiangxi Keda")	13,000,200.00		13,000,200.00
Zhuhai Longjia Refrigerating Plant Co.,
Ltd. ("Zhuhai Longjia")	28,600,000.00		28,600,000.00
Zhuhai Defa Air-conditioner Fittings
Co., Ltd. ("Zhuhai Defa")	21,400,000.00		21,400,000.00
Wuhan Changrong Electrical
Appliance Co., Ltd. ("Wuhan
Changrong")	20,000,000.00		20,000,000.00
Beijing Deheng Solicitors ("Deheng
Solicitors")	2,000,000.00	2,000,000.00	2,000,000.00	2,000,000.00
Shangqiu Bingxiong Freezing Facilities
Co., Ltd. ("Shangqiu Bingxiong")	58,030,000.00	58,030,000.00	58,030,000.00	58,030,000.00
Total	369,278,769.88	148,315,416.08	369,278,769.88	148,315,416.08

(2) Movements in provision for impairment of other receivables:

			Decrease for the period
Year	Opening balance	Provision for the period	Reversal	Write-off	Closing balance
The Reporting Period	181,775,413.40	2,261,651.93			184,037,065.33

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

6. Other receivables — Continued

(3) Other receivables that are written off

Nil

(4) As at 30 June 2015, there was no amounts due from shareholder that holds 5% or morevoting shares of the Company in the balance of other receivables. As at 31 December 2014, there was no amounts due from shareholder that holds 5% or more voting shares of the Company in the balance of other receivables.

(5) Other receivables by nature

Nature	Closing balance	Opening balance
Inter-group current account payments	476,794,887.00	477,322,300.55
Personal borrowings	1,162,837.48	3,508,590.02
Security deposit	9,014,026.90	1,661,640.00
Others	143,950,017.27	192,334,409.49
Total	630,921,768.65	674,826,940.06

(6) Top five other receivables

	Relationship with the			Percentage of the total other
No.	Company	Amount	Age	receivables (%)
Top 1	Unrelated party	127,393,675.52	Over one year	20.19
Top 2	"Specific third party"	121,496,535.45	Over three years	19.26
Top 3	"Specific third party"	58,030,000.00	Over three years	9.20
Top 4	"Specific third party"	33,000,000.00	Over three years	5.23
Top 5	"Specific third party"	32,000,000.00	Over three years	5.07
Total		371,920,210.97	—	58.95

The term "specific third party" is the abbreviation of the Greencool Companies controlled by the original actual controlling party through the above companies, with whom the Company incurred a series of unusual cash inflows and outflows.

(7) Please see note 8 for details of other receivables from related parties as at the end of the period.

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

7. Inventories

(1) Classification of inventories

	Closing balance
Item	Book value	Provision for declines in value	Carrying amount
Raw materials	378,827,464.52	30,587,333.42	348,240,131.10
Works in progress	158,651,082.30	8,685,770.52	149,965,311.78
Finished goods	2,925,286,606.52	70,674,486.56	2,854,612,119.96
Total	3,462,765,153.34	109,947,590.50	3,352,817,562.84

Continued from above table

Opening balance
	Provision for
Book value	declines in value	Carrying amount
355,829,763.12	30,884,089.84	324,945,673.28
158,031,735.66	8,685,770.52	149,345,965.14
2,516,821,812.70	75,191,675.31	2,441,630,137.39
3,030,683,311.48	114,761,535.67	2,915,921,775.81

(2) Provision for declines in value of inventories

			Decrease for the period
	Opening	Provision for			Closing
Inventories category	balance	the period	Reversal	Write-off	balance
Raw materials	30,884,089.84	401,100.00		697,856.42	30,587,333.42
Works in progress	8,685,770.52				8,685,770.52
Finished goods	75,191,675.31		4,401,214.21	115,974.54	70,674,486.56
Total	114,761,535.67	401,100.00	4,401,214.21	813,830.96	109,947,590.50

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

7. Inventories — Continued

(3) Basis of the provision for declines in value of inventories and reasons for the reversal or write-off during the year

Item	Basis of the provision for declines in value of inventories	Reasons for the write-off of provision for declines in value of inventories during the year
Raw materials Works in progress Finished goods	The lower of the cost and net realizable value	Removal due to sales

8. Other current assets

Closing balance	Opening balance
298,602,533.53	255,404,902.62
9,814,269.71	31,614,922.03
308,416,803.24	287,019,824.65

9. Available-for-sale financial assets

(1) Available-for-sale financial assets

		Closing balance		Opening balance
Item	Book value	Impairment provision	Carrying amount	Book value	Impairment provision	Carrying amoun
Available-for-sale equity instrument	3,900,000.00		3,900,000.00	4,000,000.00		4,000,000.00
Including: Measured at cost	3,900,000.00		3,900,000.00	4,000,000.00		4,000,000.00
Total	3,900,000.00		3,900,000.00	4,000,000.00		4,000,000.00

Notes to available-for-sale financial assets: All the available-for-sale financial assets held by the Company are investments in non-listed companies in PRC.

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

9. Available-for-sale financial assets — Continued

(2) Available-for-sale financial assets measured at cost as at the end of the Reporting Period

	Impairment provision			Impairment provision
	At				At				Shareholding	Cash dividend
	the beginning	Increase for	Decrease for	At the end	the beginning	Increase for	Decrease for	At the end of	in the investee	in current
Investee	of the period	the period	the period	of the period	of the period	the period	the period	the period	(%)	period
Xinjiang Hisense Kelon Electrical Sales
Co., Ltd. ("Xinjiang Kelon")	100,000.00		100,000.00	0.00
Fujian Kelon Air-condition Sales Co.,
Ltd. ("Fujian Kelon")	100,000.00			100,000.00					2.00
Hisense International Marketing Co., Ltd.
("Hisense International Marketing")	3,800,000.00			3,800,000.00					12.67	7,410,000.00
Total	4,000,000.00		100,000.00	3,900,000.00					—	7,410,000.00

10. Investments in joint ventures and associates

(1) Investments in joint ventures

							Unit: RMB'0000
		Registered	Legal	Business	Registered	% of	% of	Accounting
Name of investee	Entity type	place	representative	nature	capital	shareholding	voting rights	treatment
Hisense-Whirlpool (Zhejiang) Electric Appliances Co., Ltd. ("Hisense-Whirlpool")	Limited liability company	Zhejiang	LEE IAN	Industrial	45,000.00	50.00	50.00	Equity method
Hisense Hitachi	Limited liability company	Shandong	Qing Shan Gong	Industrial	US\$46,000,000	49.00	49.00	Equity method

(2) Investments in associates

								Unit: RMB'0000
			Legal		Registered	% of	% of	Accounting
Name of investee	Entity type	Registered place	representative	Business nature	capital	shareholding	voting rights	treatment

Huayi Compressor Company Limited	Joint stock company	JIangxi	Liu Ti Bin	Industrial	55,962.40
("Huayi Compressor")3
Attend Logistics Co., Ltd. ("Attend")	Limited liability company	Guangzhou	Ye Wei Long	Logistics	1,000.00	20.00	20.00	Equity method

Notes to investments in joint ventures and associates:

1. There was no significant difference between the significant accounting policies and accounting estimates of the joint ventures and associates and those of the Company.
2. Illustration of evidence of joint control over joint ventures: the production and operation of the enterprise are under joint management of the parties as required by the Articles of Associations of the joint venture.
3. The Company has disposed of all shares held by it in Huayi Compressor, and written off its investment in Huayi Compressor during the Reporting Period.

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

10. Investments in joint ventures and associates — Continued

(3) Major financial information of the principal joint ventures

	Closing balance/Amount incurred during current period		Unit: RMB'0000 Opening balance/Amount incurred during previous period
Item	Hisense Hitachi	Hisense-Whirlpool	Hisense Hitachi	Hisense Hitachi
Current assets	299,932.49	15,219.23	259,821.08	37,961.79
Including: Cash and cash equivalents	201,016.26	6,270.99	181,380.62	6,722.74
Non-current assets	41,378.44	30,460.54	40,554.98	36,222.75
Total assets	341,310.93	45,679.77	300,376.06	74,184.54
Current liabilities	140,288.58	18,360.85	97,777.20	39,884.46
Non-current liabilities	119.13	0.00	6,634.52
Total liabilities	140,407.71	18,360.85	104,411.72	39,884.46
Minority interests	6,440.06	0.00	6,138.85
Equity attributable to shareholders of
parent	194,463.16	27,318.92	189,825.49	34,300.08
Share of net asset measured in proportion
to shareholdings	95,286.95	13,659.46	93,014.49	17,150.04
Adjustment for:	2,811.41	0.00	2,965.78
— Goodwill
— Unrealized profits from intragroup
transactions
— others	2,811.41		2,965.78
Carrying amount of investment in equity
of joint ventures	98,098.36	13,659.46	95,980.27	17,150.04
Fair value of investment in equity of joint ventures with available quoted price
Operating revenue	218,330.30	18,958.09	187,206.94	50,059.21
Financial expenses	(2,897.99)	(200.39)	(1,792.92)	(60.35)
Income tax expense	7,011.85	0.00	5,653.92	0.00
Net profit	34,695.12	(6,981.16)	32,038.90	(3,752.26)
Net profit from discontinued operations	0.00	0.00	0.00	0.00
Other comprehensive income	0.00	0.00	0.00	0.00
Total comprehensive income	34,695.12	(6,981.16)	32,038.90	(3,752.26)
Dividend from joint ventures during
current year	14,210.00	0.00	8,820.00

(4) Aggregate financial information of the insignificant associates

	Closing balance/Amount incurred during current period		Unit: RMB'0000 Opening balance/Amount incurred during previous period
Item	Huayi Compressor	Attend	Huayi Compressor	Attend
Associate: Total carrying amount of investments Amounts in aggregate in proportion to		272.66	8,189.07	285
the shareholdings: — Net profit		(12.34)	525.98	1.98
— Other comprehensive income — Total comprehensive income		(12.34)	525.98	1.98

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

11. Long-term equity investment

	Investee	Accounting treatment	Investment cost	Opening balance	Increase for the period	Decrease for the period	Closing balance	% Equity interest held	% voting rights held	Impairment provision	Cash dividend
	1. Investment in joint ventures Hisense-Whirlpool Hisense Hitachi	Equity method Equity method	225,000,000.00 332,821,597.45	171,500,403.47 959,802,671.02	162,841,037.27	34,905,811.85 142,100,000.00	136,594,591.62 980,543,708.29	50 49	50 49		142,100,000.00
	2. Investment in associates Huayi Compressor Attend	Equity method Equity method	2,000,000.00	81,890,655.26 2,850,040.45		81,890,655.26 123,441.24	2,726,599.21	20	20
	3. Other long-term equity investment Combine*1	Cost method	11,000,000.00	11,000,000.00			11,000,000.00	55	55	11,000,000.00
Total			570,821,597.45	1,227,043,770.20	162,841,037.27	259,019,908.35	1,130,864,899.12			11,000,000.00	142,100,000.00

*1 As Combine, a subsidiary of the Company, has declared in liquidation and reorganization, it has not been included in the consolidated financial statements and impairment has been fully provided for the investment cost; as at the end of the Reporting Peirod, all the joint ventures and associates of the Company are unlisted companies.

Whereas:

Item	Closing balance	Opening balance
Listed investment:
Equity method		81,890,655.26
Associate		81,890,655.26
Total		81,890,655.26
Non-listed investment:
Equity method	1,119,864,899.12	1,134,153,114.94
Joint venture	1,117,138,299.91	1,131,303,074.49
Associate	2,726,599.21	2,850,040.45
Cost method
Total	1,119,864,899.12	1,134,153,114.94

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

12. Investment properties

(1) Investment properties measured at cost

	Opening	Increase for	Decrease for	Closing
Item	balance	the period	the period	balance
A. Total cost	68,689,779.02			68,689,779.02
1. Buildings and structures	68,689,779.02			68,689,779.02
B. Total accumulated depreciation
and amortization	37,230,362.61	1,250,644.67		38,481,007.28
1. Buildings and structures	37,230,362.61	1,250,644.67		38,481,007.28
C. Total net book value	31,459,416.41			30,208,771.74
1. Buildings and structures	31,459,416.41			30,208,771.74
D. Total accumulated provision for
impairment
1. Buildings and structures
E. Total carrying amount	31,459,416.41			30,208,771.74
1. Buildings and structures	31,459,416.41			30,208,771.74

(2) Notes to investment properties

① Depreciation expense during the Reporting Period amounted to RMB1,250,644.67 and RMB1,250,146.67 for the previous period.
② As at 30 June 2015, no investment properties were pledged by the Company.
③ As at 30 June 2015, the Company has not obtained ownership certificates for the investment property, namely Mee King Building, with cost of RMB13,794,500, accumulated depreciation of RMB8,329,300 and net carrying amount of RMB5,465,200.
④ As at 30 June 2015, the Company has not identified any investment Properties with the recoverable amount lower than its carrying amount and therefore no provision has been made for impairment.
⑤ Among the investment properties, all buildings and structures are located in the Mainland China with useful lives ranging from 20 to 50 years.

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

13. Fixed assets

(1) Particulars of fixed assets

			Buildings and	Machinery and	Furniture, fixtures and
Item			structures	equipment	office equipment	Motor vehicles	Moulds	Total

	A. Cost
		1. Opening balance	2,025,094,496.39	2,795,037,147.95	377,207,871.47	28,573,537.15	1,075,858,174.26	6,301,771,227.22
		2. Additions in the period	330,558,460.47	296,946,892.84	14,219,801.80	5,261,190.59	167,000,662.00	813,987,007.70
		(1) Purchase	18,626,298.66	56,275,240.18	7,198,382.51	5,161,321.08	79,004,246.22	166,265,488.65
		(2) Transferred from
		construction in progress	311,932,161.81	240,671,652.66	7,021,419.29	99,869.51	87,996,415.78	647,721,519.05
		3. Reductions in the period	488,013.37	132,307,898.80	2,378,744.55	1,499,488.11	30,213,844.83	166,887,989.66
		(1) Disposal or retirement	488,013.37	132,307,898.80	2,378,744.55	1,499,488.11	30,213,844.83	166,887,989.66
		4. Closing balance	2,355,164,943.49	2,959,676,141.99	389,048,928.72	32,335,239.63	1,212,644,991.43	6,948,870,245.26
		B. Accumulated depreciation
		1. Opening balance	873,554,957.30	1,466,982,418.66	247,494,269.88	15,163,173.04	637,134,429.12	3,240,329,248.00
		2. Additions in the period	42,930,413.66	128,085,634.64	14,412,922.34	1,746,703.71	129,873,973.81	317,049,648.16
		(1) Provision	42,930,413.66	128,085,634.64	14,412,922.34	1,746,703.71	129,873,973.81	317,049,648.16
		3. Reductions in the period	405,634.91	111,855,987.57	2,327,967.77	1,109,227.19	18,672,229.52	134,371,046.96
		(1) Disposal or retirement	405,634.91	111,855,987.57	2,327,967.77	1,109,227.19	18,672,229.52	134,371,046.96
		4. Closing balance	916,079,736.05	1,483,212,065.73	259,579,224.45	15,800,649.56	748,336,173.41	3,423,007,849.20
		C. Impairment provision
		1. Opening balance	34,115,252.48	85,060,237.08	1,592,612.69	444,847.19	8,189,938.37	129,402,887.81
		2. Additions in the period		12,396,162.51	68,795.04			12,464,957.55
		(1) Provision		12,396,162.51	68,795.04			12,464,957.55
		3. Reductions in the period		3,974,646.48	18,914.39	18,010.68	2,353,417.72	6,364,989.27
		(1) Disposal or retirement		3,974,646.48	18,914.39	18,010.68	2,353,417.72	6,364,989.27
		4. Closing balance	34,115,252.48	93,481,753.11	1,642,493.34	426,836.51	5,836,520.65	135,502,856.09
		D. Carrying amount
		1. Opening carrying amount	1,117,424,286.61	1,242,994,492.21	128,120,988.90	12,965,516.92	430,533,806.77	2,932,039,091.41
		2. Closing carrying amount	1,404,969,954.96	1,382,982,323.15	127,827,210.93	16,107,753.56	458,472,297.37	3,390,359,539.97

During the Reporting Period, the fixed assets transferred from construction in progress amounted to RMB647,721,519.05 (the previous period: RMB236,953,132.02).

(2) Depreciation expense for the Reporting Period amounted to RMB317,049,648.16 and amounted to RMB211,952,179.10 for the previous period.
(3) As at the end of the period, no fixed asset was idle transitorily.
(4) As at the end of the period, no fixed asset was held under finance lease.
(5) As at the end of the period, no fixed asset was rent out under operating lease.
(6) As at the end of the period, no fixed asset was held for sale.
(7) As at the end of the period, no fixed asset has not obtained the ownership certificate.
(8) As at the end of the period, no building or structure was pledged.

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

14. Constructions in progress

(1) Breakdown of constructions in progress

		Closing balance		Opening balance
Item	Book value	Impairment provision	Net carrying amount	Book value	Impairment provision	Net carrying amount
Yangzhou Refrigerator Shandong	9,895,437.00		9,895,437.00	15,467,782.11		15,467,782.11
Air-conditioning	21,734,263.92		21,734,263.92	4,848,447.07		4,848,447.07
Shandong Refrigerator	69,852,128.91		69,852,128.91	91,572,755.37		91,572,755.37
Zhejiang
Air-conditioning	17,213,534.01		17,213,534.01	34,548,485.95		34,548,485.95
Hisense Guangdong
Air-Conditioner	38,239,312.28		38,239,312.28	82,802,325.49		82,802,325.49
Others	36,379,683.07	7,770,917.67	28,608,765.40	30,082,994.83	7,770,917.67	22,312,077.16
Total	193,314,359.19	7,770,917.67	185,543,441.52	259,322,790.82	7,770,917.67	251,551,873.15

(2) Movements in major projects of construction in progress

Name of project	Budget	Opening balance	Increase for the year	Transferred to fixed assets	Other reductions	% Contribution in budget	Progress	Source of funding	Closing balance
Plants of Hisense Guangdong Air-Conditioner Punch presses and other production equipment of Hisense Guangdong	310,680,748.00	17,707,714.85	276,507,082.74	294,214,797.59		94.70	Completed	Self-funding
Air-Conditioner	53,560,796.20	48,423,713.08	5,137,083.12	49,353,767.98		100.00	Not completed	Self-funding	4,207,028.22
Punch presses and other production equipment of Zhejiang Air-conditioning Punch presses and other production equipment of Shandong	71,682,504.91	29,232,246.63	40,580,636.75	50,802,095.22	5,896,409.69	97.39	Not completed	Self-funding	13,114,378.47
Air-conditioning Production lines of Shangqiu Kelon	14,451,797.27	0.00 7,770,917.67	14,451,797.27	0.00	0.00	100.00	Not completed Pending retirement	Self-funding Self-funding	14,451,797.27 7,770,917.67
Others		156,188,198.59	292,988,642.20	253,350,858.26	42,055,744.97				153,770,237.56
Total		259,322,790.82	629,665,242.08	647,721,519.05	47,952,154.66				193,314,359.19

Notes to movements in constructions in progress:

① During the period, movements in constructions in progress mainly represented increase and decrease in the production lines and plants of the Company's subsidiaries.
② During the period, there was no capitalization of the borrowing costs for constructions in progress.

(3) Provision for impairment of constructions in progress

Items	Opening balance	Increase for the period	Decrease for the period	Closing balance	Reasons
Production line of Shangqiu Kelon	7,770,917.67			7,770,917.67
Total	7,770,917.67			7,770,917.67

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

15. Intangible assets

(1) Particulars of intangible assets

Item			Land use rights	Trademarks	Know-how	Others	Total
A.	Cost
	1.	Opening balance	808,342,663.63	524,409,198.95	69,420,777.22	57,208,229.65	1,459,380,869.45
	2.	Additions in the period			23,164.43	9,574,332.78	9,597,497.21
		(1) Purchase			23,164.43	9,574,332.78	9,597,497.21
		(2) Internal research and
		development
	3.	Reductions in the period	833,368.81		—	4,886,875.65	5,720,244.46
		(1) Disposal	833,368.81		—	4,886,875.65	5,720,244.46
	4.	Closing balance	807,509,294.82	524,409,198.95	69,443,941.65	61,895,686.78	1,463,258,122.20
B.		Accumulated amortization
	1.	Opening balance	223,230,839.37	134,130,255.55	56,048,916.24	38,432,794.20	451,842,805.36
	2.	Additions in the period	8,801,918.73		2,901,971.94	2,993,978.58	14,697,869.25
		(1) Provision	8,801,918.73		2,901,971.94	2,993,978.58	14,697,869.25
	3.	Reductions in the period	717,935.49		—	860,057.91	1,577,993.40
		(1) Disposal	717,935.49		—	860,057.91	1,577,993.40
	4.	Closing balance	231,314,822.61	134,130,255.55	58,950,888.18	40,566,714.87	464,962,681.21
C.		Impairment provision
	1.	Opening balance	50,012,843.19	286,061,116.40	—	519,447.21	336,593,406.80
	2.	Additions in the period
		(1) Provision
	3.	Reductions in the period
		(1) Disposal
	4.	Closing balance	50,012,843.19	286,061,116.40	—	519,447.21	336,593,406.80
D.		Carrying amount
	1.	Closing carrying amount	526,181,629.02	104,217,827.00	10,493,053.47	20,809,524.70	661,702,034.19
	2.	Opening carrying amount	535,098,981.07	104,217,827.00	13,371,860.98	18,255,988.24	670,944,657.29

(2) Notes to intangible assets:

① Amortization of intangible assets amounted to RMB14,697,869.25 for the Reporting Period, compared to that of RMB10,983,180.94 in the previous period.
② As at the end of the period, no land use rights were pledged.
③ Trademarks were not amortized due to indefinite useful lives, and no provision was made for impairment of trademarks after tested for impairment at the end of the period.

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

16. Long-term prepaid expenses

Item	Opening balance	Additions in the period	Amortization in the period	Other deductions	Closing balance	Reasons for Other deductions
Overhaul expenses for fixed assets	12,690,220.43	1,827,599.90	3,012,474.16		11,505,346.17
Total	12,690,220.43	1,827,599.90	3,012,474.16		11,505,346.17

17. Deferred tax assets/deferred tax liabilities

Deferred tax assets and liabilities are presented on a net basis.

(1) Net of deferred tax assets or liabilities and corresponding deductible or taxable temporary differences arising from offsetting

Item	Net of deferred tax assets or liabilities at the end of the reporting period	Deductible or taxable Temporary differences arising from offsetting deferred tax assets and liabilities at the end of the reporting period	Net of deferred tax assets or liabilities at the beginning of the reporting period	Deductible or taxable Temporary differences arising from offsetting deferred tax assets and liabilities at the beginning of the reporting period
Deferred tax assets:
Provision for assets impairment	34,594,608.67	142,628,489.23	29,423,799.12	141,992,086.22
Financial assets held-for-trading	1,111,446.95	5,019,053.00	140,541.50	778,150.00
Others	102,174,329.08	611,050,489.62	77,249,007.61	466,938,900.24
Subtotal	137,880,384.70	758,698,031.85	106,813,348.23	609,709,136.46
Deferred tax liabilities:
Accelerated depreciation	35,026.65	233,511.00	165,600.70	1,104,004.67
Subtotal	35,026.65	233,511.00	165,600.70	1,104,004.67

(2) Details of offsetting deferred tax assets and liabilities

Item	Amount for the period	Amount for previous period
Financial assets held-for-trading	1,111,446.95	140,541.50

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

18. Short-term borrowings

(1) Short-term borrowings by category

Item	Closing balance	Opening balance
Secured borrowings	388,293,554.13	253,985,142.45
Total	388,293,554.13	253,985,142.45

Notes to the categories of short-term borrowings:

The secured borrowings represented the secured borrowings incurred by the accounts receivable factoring activities of the subsidiaries of the Company, which were all denominated in US dollar and translated into RMB at the end of the period.

(2) As at the end of the period, the Company had no outstanding short-term borrowings due.

19. Financial liabilities at fair value through profit or loss

Item	Closing balance	Opening balance
Financial liabilities held-for-trading		7,391,136.66
Including: Derivative financial liabilities		7,391,136.66
Total		7,391,136.66

Notes to financial liabilities held-for-trading:

It represented mainly the outstanding forward exchange settlement and sale contracts entered into by the Company and banks, which were recognized as the financial assets or liabilities held-for-trading based on the difference between the quotated price of the outstanding forward contracts and the forward rates as at 30 June 2015.

20. Notes payable

Category	Closing balance	Opening balance
Bank acceptance notes	1,019,464,248.97	970,754,476.87
Commercial acceptance notes	1,114,893,898.43	557,441,049.54
Total	2,134,358,147.40	1,528,195,526.41

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

20. Notes payable — Continued

Particulars of notes payable:

① As at 30 June 2015, there were no amount due to shareholders holding 5% or more of the voting shares of the Company in the balance of notes payable. As at 31 December 2014, there were no amount due to shareholders holding 5% or more of the voting shares of the Company in the balance of notes payable.
② There were no outstanding notes payable due as at the end of the period.
③ Please see note 8 for details of notes payable to related parties as at the end of the period.

21. Accounts payable

(1) Ageing analysis of accounts payable

Age	Closing balance	Opening balance
Within one year	5,114,480,221.58	3,335,201,948.30
Over one year	167,561,318.36	130,652,635.30
Total	5,282,041,539.94	3,465,854,583.60

(2) As at 30 June 2015, there was no amount due to shareholders holding 5% or more of the voting shares of the Company in the balance of accounts payable. As at 31 December 2014, there was no amount due to shareholders holding 5% or more of the voting shares of the Company in the balance of accounts payable.
(3) Please see note 8 for details of accounts payable to related parties as at the end of the period.

22. Advances from customers

(1) Aging analysis of advances from customers

Age	Closing balance	Opening balance
Within one year	387,359,619.34	703,294,210.41
Over one year	58,446,942.12	62,587,165.44
Total	445,806,561.46	765,881,375.85

(2) As at 30 June 2015, there was no amount due to shareholders holding 5% or more of the voting shares of the Company in the balance of advances from customers. As at 31 December 2014, there was no amount due to shareholders holding 5% or more of the voting shares of the Company in the balance of advances from customers.
(3) Please see note 8 for details of amount due to related parties in the balance of advances from customers as at the end of the period.

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

23. Compensations payable to employee

(1) Compensations payable to employee are listed as follows:

Item	Opening balance	Increase for the period	Decrease for the period	Closing balance
1. Short-term compensations 2. Post-employment benefit-defined	241,975,071.22	1,140,716,253.23	1,148,926,944.74	233,764,379.71
contribution plans	3,702,760.52	89,734,468.98	88,957,727.12	4,479,502.38
3. Termination benefits	3,986,454.24	2,403,661.72	4,354,724.55	2,035,391.41
Total	249,664,285.98	1,232,854,383.93	1,242,239,396.41	240,279,273.50

(2) Short-term compensations are as follows:

	Opening	Increase for	Decrease for	Closing
Item	balance	the period	the period	balance

1. Wages and salaries, bonuses,
allowances and subsidies	234,505,836.08	977,361,818.30	988,782,843.80	223,084,810.58
2. Staff welfare	4,174,873.47	71,204,308.99	70,748,924.62	4,630,257.84
3. Social insurance	1,082,639.03	42,628,117.92	42,470,138.91	1,240,618.04
Including: Medical insurance	666,105.96	35,522,767.04	35,390,304.21	798,568.79
Work-related injury
insurance	306,555.86	3,551,519.70	3,514,771.89	343,303.67
Maternity insurance	109,977.21	3,553,831.18	3,565,062.81	98,745.58
4. Housing provident funds	662,447.17	40,232,138.61	39,818,050.75	1,076,535.03
5. Labor union funds and employee
education funds	1,549,275.47	9,289,869.41	7,106,986.66	3,732,158.22
Total	241,975,071.22	1,140,716,253.23	1,148,926,944.74	233,764,379.71

(3) Defined contribution plans are as follows:

Item	Opening	Increase for	Decrease for	Closing
	balance	the period	the period	balance
1. Basic pension insurance	3,397,571.20	84,285,243.96	83,587,402.26	4,095,412.90
2. Unemployment insurance	305,189.32	5,449,225.02	5,370,324.86	384,089.48
Total	3,702,760.52	89,734,468.98	88,957,727.12	4,479,502.38

Note: The Company participates as required in the basic pension insurance and unemployment insurance schemes operated by government agencies, pursuant to which the Company makes monthly contributions to such plans at 12% and 0.50% of employees' basic salaries respectively. The Company has no further payment obligations beyond above monthly contribution. The corresponding expenses are included in the profit or loss or cost of relevant asset for the period as incurred.

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

23. Compensations payable to employee — Continued

(3) Defined contribution plans are as follows: — Continued

Notes to compensations payable to employee:

(1) There were no defaulted payables included in compensations payable to employee.
(2) Arrangements in respect of expected payout time and amount for employee compensations payable: calculated in the current month and paid in the following month.

24. Taxes payable

Item	Closing balance	Opening balance
Value-added tax	26,154,118.70	44,988,423.65
Business tax	62,772.80	63,909.26
Enterprise income tax	86,795,460.92	80,983,264.18
Individual income tax	4,976,420.46	3,680,314.25
City maintenance and construction tax	3,771,299.13	6,928,866.85
Real estate tax	6,377,032.93	9,823,022.93
Land use tax	2,263,062.89	4,997,247.57
Education surcharges	2,519,168.64	4,652,099.25
Embankment maintenance fee	1,118,430.17	3,281,842.31
Others	30,488,466.47	15,393,601.96
Total	164,526,233.11	174,792,592.21

25. Dividends payable

Name	Closing balance	Opening balance
Yingleng (Group) Co., Ltd.	2,067.02	2,067.02
Other shareholders	35,640.00
Total	37,707.02	2,067.02

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

26. Other payables

(1) Ageing analysis of other payables:

Age	Closing balance	Opening balance
Within one year	1,194,624,546.85	1,328,493,785.03
Over one year	424,373,777.28	407,091,120.75
Total	1,618,998,324.13	1,735,584,905.78

(2) As at 30 June 2015, there was no amount due to shareholders holding 5% or more of the voting shares of the Company in the balance of other payables. As at 31 December 2014, there was no amount due to shareholders holding 5% or more of the voting shares of the Company in the balance of other payables.

(3) Please see note 8 for details of amount due to related parties in the balance of other payables as at the end of the period.

(4) Particulars of other payables of significant amounts due over one year

Name	Amount	Reasons for remaining outstanding	Remark
Tianjin Taijin Yunye Company Limited ("Tianjin Taijin")	65,000,000.00	Current account	Specific third party companies account
Zhuhai Longjia	28,316,425.03	Current account	Specific third party companies account
Jiangxi Greencool	13,000,000.00	Current account	Greencool Companies

27. Other current liabilities

Item	Closing balance	Opening balance	Reasons for the balance

Installation fees	370,027,383.87	251,034,465.20	Installation fee provided for but not yet paid in respect of goods sold
Sales discounts	447,883,805.76	261,526,162.20	Incurred but not yet settled
Transportation fees	16,553,870.63	13,590,621.68	Incurred but not yet settled
Marketing fees	55,730,908.74	61,792,224.98	Incurred but not yet settled
Power fees	9,241,799.43	11,014,661.53	Incurred but not yet settled
Agency fees	16,815,356.29	21,579,061.96	Incurred but not yet settled
Others	109,910,565.47	59,485,436.01	Incurred but not yet settled
Total	1,026,163,690.19	680,022,633.56

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

28. Provisions

Item	Opening balance	Decrease for the period	Closing balance
Pending litigation	4,617,529.65	208,562.74	4,408,966.91
Provision for warranties*	399,794,358.12	31,543,436.95	368,250,921.17
Total	404,411,887.77	31,751,999.69	372,659,888.08

* Provision for warranties represented the estimated security deposit for product quality. During the warranty period, the Company will offer a free warranty service to the customers concerned. Based on the industry's experience and historic data, the warranty costs were calculated and provided based on the remaining years of warranty offered and the average repair fee per unit.

29. Deferred income

Item	Closing balance	Opening balance
State debenture projects for technical advancement and industry
upgrade	21,450,000.00	21,450,000.00
Production technology reform project for energy-saving household
SBS large-size refrigerator	1,250,000.00	1,475,000.00
Technology reform project for design and production of high
precision smart moulds	2,006,666.67	2,146,666.67
Others	33,377,908.86	35,189,931.39
Total	58,084,575.53	60,261,598.06

30. Share capital

Share classes	Opening balance	Increase for the period	Closing balance
Restricted floating shares subject to lock-up	710,325.00	707,410.00	1,417,735.00
Including: Other domestic shares Including: Shares held by domestic natural			0.00
persons	710,325.00	707,410.00	1,417,735.00
Unrestricted floating shares not subject to
lock-up	1,357,785,235.00	3,522,400.00	1,361,307,635.00
Including: RMB ordinary shares	898,195,427.00	3,522,400.00	901,717,827.00
Overseas listed foreign shares	459,589,808.00		459,589,808.00
Total number of shares	1,358,495,560.00	4,229,810.00	1,362,725,370.00

Changes for the period was attributable to fulfillment of the exercise conditions and exercise of the share options for the second exercise period of the Company's first share option scheme. The total number of shares as a result of the exercise of share option was 4,229,810, as verified by Rui Hua Yan Zi [2015] No. 95020003 Yan Zi report issued by Ruihua Certified Public Accountants Co. Limited.

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

31. Capital reserve

(1) Changes in capital reserve

Item	Opening	Increase for	Decrease for	Closing
	balance	the period	the period	balance
Share premium	2,003,136,239.79	30,633,992.02	3,023,366.09	2,033,770,231.81
Other capital reserve	122,794,586.09	224,192.80		119,995,412.80
Total	2,125,930,825.88	30,858,184.82	3,023,366.09	2,153,765,644.61

(2) Notes to capital reserve:

① The increase in share premium for the period was mainly attributable to the premium from exercising share options.
② The increase in other capital reserve for the period was attributable to the amount accounted for the share options provided; the decrease for the period was due to exercising of share options.

32. Other comprehensive income

			Amount incurred in the period
	Item	Opening balance	Amount before income tax for the period	Less: Amount included in other comprehensive income in previous period and transfered to profit or loss in current period	Less: income tax expense	Attributable to parent after tax	Attributable to minority interest after tax	Closing balance
1.	Other comprehensive income that would not be reclassified subsequently to profit or loss	(4,298,798.14)	4,298,798.14			4,298,798.14
	Including: Share of other comprehensive income of investee that would not be reclassified into profit or loss under equity method	(4,298,798.14)	4,298,798.14			4,298,798.14
2.	Other comprehensive income that would be	44,289,682.59	(34,529,034.35)			(34,529,034.35)		9,760,648.24
	reclassified subsequently to profit or loss Including: Share of other comprehensive income of investee that would be reclassified into profit or loss under equity method	33,735,099.85	(33,710,275.87)			(33,710,275.87)		24,823.98
	Difference arising from translation of financial	10,554,582.74	(818,758.48)			(818,758.48)		9,735,824.26
	statements presented in foreign currency Total other comprehensive income	39,990,884.45	(30,230,236.21)			(30,230,236.21)		9,760,648.24

33. Surplus reserve

Item	Opening balance	Increase for the period	Decrease for the period	Closing balance
Statutory surplus reserve	145,189,526.48			145,189,526.48
Total	145,189,526.48			145,189,526.48

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

34. Undistributed profits

	Ratio for appropriation or	Amount for	Amount for
Item	distribution	the period	previous period
Undistributed profits at the end of previous period		(211,243,768.43)	(883,722,400.78)
Add: Adjustment to undistributed profits at the beginning of the year
Undistributed profits at the beginning of the period Add: Net profits attributable to the		(211,243,768.43)	(883,722,400.78)
shareholders of the parent in current period Less: Appropriation of statutory surplus reserve		505,717,733.90	672,478,632.35
Dividends payable on ordinary shares
Undistributed profits at the end of the period		294,473,965.47	(211,243,768.43)

35. Operating revenue and operating costs

(1) Operating revenue and operating costs

Item	Amount for the period	Amount for previous period
Revenue from principal operations	12,487,779,215.49	14,032,409,469.11
Revenue from other operations	1,123,369,404.40	1,365,128,293.37
Total operating revenue	13,611,148,619.89	15,397,537,762.48
Costs of principal operations	9,781,224,754.56	10,797,489,654.95
Costs of other operations	1,019,426,137.43	1,265,254,139.99
Total operating costs	10,800,650,891.99	12,062,743,794.94

(2) Principal operations (by products)

	Amount for the period		Amount for previous period
Products	Operating revenue	Operating costs	Operating revenue	Operating costs
1. Refrigerators and
washing machines	6,136,651,831.84	4,759,023,251.48	6,287,790,801.15	4,938,155,758.02
2. Air-conditioners	5,793,122,043.63	4,597,727,838.07	7,214,897,296.28	5,485,955,258.68
3. Others	558,005,340.02	424,473,665.01	529,721,371.68	373,378,638.25
Total	12,487,779,215.49	9,781,224,754.56	14,032,409,469.11	10,797,489,654.95

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

35. Operating revenue and operating costs — Continued

(3) Principal operations (by region)

	Amount for the period		Amount for previous period
Region	Operating revenue	Operating costs	Operating revenue	Operating costs
Domestic	8,403,560,311.36	6,141,490,802.42	10,114,000,100.38	7,276,607,756.09
Overseas	4,084,218,904.13	3,639,733,952.14	3,918,409,368.73	3,520,881,898.86
Total	12,487,779,215.49	9,781,224,754.56	14,032,409,469.11	10,797,489,654.95

(4) Operating revenue from the top five customers of the Company

No.	Amount for the period	Percentage of the total revenue from principal operations of the Company (%)
Top 1	1,226,568,074.52	9.82
Top 2	798,338,841.96	6.39
Top 3	720,665,681.55	5.77
Top 4	369,403,077.61	2.96
Top 5	234,093,099.24	1.87
Total	3,349,068,774.88	26.82

36. Business tax and surcharges

Item	Standard charge rate	Amount for the period	Amount for previous period
Business tax	5%	878,259.41	3,112,464.66
City maintenance and construction tax	1%-7%	17,433,115.11	27,273,464.78
Education surcharges	3%	12,574,905.72	17,056,478.60
Total		30,886,280.24	47,442,408.04

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

37. Financial expenses

	Amount for	Amount for
Item	the period	previous period
Interest expenses*	5,543,081.06	3,453,788.27
Less: Interest income	2,896,619.54	1,995,289.97
Exchange gain or loss	(16,495,792.59)	(12,598,553.46)
Others	(10,960,537.94)	(3,846,501.38)
Total	(24,809,869.01)	(14,986,556.54)

* Interest expenses for the Reporting Period and for previous period were the interests on bank borrowings of the last instalment of repayment within five years.

38. Impairment losses on assets

Amount for previous period
119,228.77
6,937,253.25

7,056,482.02

39. Gain arising from changes in fair value

Sources of gain arising from changes in fair value	Amount for the period	Amount for previous period
Financial assets held-for-trading	45,722,685.11	(67,115,019.35)
Including: Gain from changes in fair value of derivative financial
instruments	45,722,685.11	(67,115,019.35)
Financial liabilities held-for-trading	7,391,136.66	(23,360,227.22)
Total	53,113,821.77	(90,475,246.57)

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

40. Investment gain

(1) Breakdown of investment gain

Item	Amount for the period	Amount for previous period
Gain from available-for-sale financial assets during holding
period	7,410,000.00	9,500,000.00
Gain from long-term equity investment under the equity
method	127,811,784.18	141,589,179.58
Gain from disposal of long-term equity investment	135,598,968.15
Gain from disposal of financial assets at fair value through
profit or loss	19,692,123.18	35,670,987.79
Total	290,512,875.51	186,760,167.37

(2) Gain from available-for-sale financial assets during holding period

Investee	Amount for the period	Amount for previous period
Hisense International Marketing	7,410,000.00	9,500,000.00
Total	7,410,000.00	9,500,000.00

(3) Gain from long-term equity investment under the equity method:

	Amount for	Amount for
Investee	the period	previous period
Huayi Compressor		5,259,786.88
Attend	(123,441.24)	19,780.37
Hisense-Whirlpool	(34,905,811.85)	(18,349,602.26)
Hisense Hitachi	162,841,037.27	154,659,214.59
Total	127,811,784.18	141,589,179.58

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

41. Non-operating income and non-operating expenses

Non-operating income

	Amount for	Amount for
Item	the period	previous period
Total gain from disposal of non-current assets	1,040,721.35	1,639,741.48
Including: Gain from disposal of fixed assets	1,040,721.35	1,639,741.48
Government grants	95,745,088.44	29,489,120.05
Other	4,906,581.04	16,627,325.45
Total	101,692,390.83	47,756,186.98

Details of government grants during the reporting period are as follows:

Item		Amount for the period	Amount for previous period
1.	Government grants related to assets
	Production technology reform project for energy-saving
	household SBS large-size refrigerator*1	225,000.00	225,000.00
	Technology renovation project for manufacturing
	sophisticated intelligent mould*2	140,000.00	140,000.00
	Government grants related to other assets	4,288,077.72	2,597,012.43
	Subtotal	4,653,077.72	2,962,012.43
2.	Government grants related to income
	Tax rebate for embedded software	1,699,734.49
	Other government subsidies	89,392,276.23	26,527,107.62
	Subtotal	91,092,010.72	26,527,107.62
	Total	95,745,088.44	29,489,120.05

* The government grants represented the project award of RMB3,000,000.00 granted to the subsidiary of the Company Guangdong Refrigerator by the Financial Bureau of Foshan, Shunde under "Circulating the Circular of Guangdong Provincial Support for Technology Renovation Tender Projects and Supplementary Projects in 2007" (Fo Jing Mao [2007] No. 391), and the project award of RMB1,500,000.00 granted to the subsidiary of the Company Guangdong Refrigerator by the Economic and Trade Bureau of Foshan, Shunde under "Reply by the Office of the People's Government of Shunde, Foshan on Consenting to Grant Regional Subsidy for Science and Technology Outlay to Enterprises Including Guangdong Xinbao Electrical Appliances Holdings Co., Ltd. in 2007" (Shun Fu Ban Han [2008] No. 114). The project was commenced from October 2007 and ended in October 2009. In April and May 2008, Guangdong Refrigerator has recognized deferred income after receiving the project government grants of RMB3,000,000.00 and RMB1,500,000.00 respectively from the Company, and the amounts received were accounted for in the books of Guangdong Refrigerator as non-operating income over a period of 10 years. In 2008, Guangdong Refrigerator has recognized income in the amount of RMB325,000.00. In 2009, income in the amount of RMB450,000.00 was recognized. In 2010, income in the amount of RMB450,000.00 was recognized. In 2011, income in the amount of RMB450,000.00 was recognized. In 2012, income in the amount of RMB450,000.00 was recognized. In 2013, income in the amount of RMB450,000.00 was recognized. In 2014, income in the amount of RMB450,000.00 was recognized.In the first half of 2015, income in the amount of RMB225,000.00 was recognized, and the remaining amount of RMB1,250,000.00 was recognized as deferred income.

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

41. Non-operating income and non-operating expenses — Continued

Non-operating income — Continued

2 The government grants were granted to Hisense Mould, a subsidiary of the Company, by the Commission Of Economy and Informatization of Qingdao Municipal under the "Approval of the Commission Of Economy and Informatization of Qingdao Municipal on the Application for Investment by the Central Government on Technology Reforms of Small-to-Medium Industrial Enterprises 2012 by the Technology Renovation Project for Manufacturing Sophisticated Intelligent Moulds of Qingdao Hisense Mould Co., Ltd." (Qing Jing Xin Pi Zi [2012] No. 5) for use in the technology renovation project for manufacturing sophisticated intelligent moulds in 2012. The government grants for the project were recognized as deferred income upon receipt by Hisense Mould in August 2012. Hisense Mould has recognized the amount from the month after receipt as non-operating income over a period of 10 years. In 2012, Hisense Mould has recognized income in the amount of RMB93,333.33 in relation to the item for the year. In 2013, income in the amount of RMB280,000.00 was recognized. In 2014, income in the amount of RMB280,000.00 was recognized. In the first half of 2015, income in the amount of RMB140,000.00 was recognized, and the remaining amount of RMB2,006,666.67 was recognized as deferred income.

Non-operating expenses

Item	Amount for the period	Amount for previous period
Total loss on disposal of non-current assets	7,334,966.96	2,496,560.42
Including: Loss on disposal of fixed assets	7,334,966.96	2,496,560.42
Other	2,012,632.83	1,179,260.27
Total	9,347,599.79	3,675,820.69

42. Income tax expenses

Income tax expenses

Item	Amount for the period	Amount for previous period
Current income tax	95,447,366.39	98,978,126.87
Including: PRC enterprise income tax	88,651,587.23	92,514,458.28
Hong Kong profit tax	6,795,779.16	6,463,668.59
Deferred tax expenses	(31,067,036.47)	4,132,614.34
Total	64,380,329.92	103,110,741.21

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

43. Calculation of basic and diluted earnings per share

Item		Amount for the period	Amount for previous period

Net profits attributable to ordinary shareholders
of the Company of the reporting period	P1	505,717,733.90	609,769,686.14
Non-recurring item attributable to ordinary
shareholders of the Company of the reporting
period	F	218,189,788.05	35,799,876.44
Net profits after non-recurring item attributable
to ordinary shareholders of the Company of
the reporting period	P2=P1-F	287,527,945.85	573,969,809.70
Effect of dilutive events on net profits attributable
to ordinary shareholders of the Company	P3
Effect of dilutive events on net profits after
non-recurring item attributable to ordinary
shareholders of the Company	P4
Weighted average number of ordinary shares	S	1,359,200,528.33	1,354,794,885.00
Add: Additional weighted average number of ordinary shares assuming conversion of all
dilutive potential ordinary shares to ordinary
shares	X1
Weighted average number of ordinary shares in
the calculation of diluted earnings per share	X2=S+X1	1,359,200,528.33	1,354,794,885.00
Basic earnings per share attributable to ordinary
shareholders of the Company	Y1=P1/S	0.37	0.45
Basic earnings per share attributable to ordinary
shareholders of the Company after non
recurring items	Y2=P2/S	0.21	0.42
Diluted earnings per share attributable to
ordinary shareholders of the Company	Y3=(P1+P3)/X2	0.37	0.45
Diluted earnings per share attributable to
ordinary shareholders of the Company after
non-recurring items	Y4=(P2+P4)/X2	0.21	0.42

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

44. Other comprehensive incomes

Item	Amount for the period	Amount for previous period
1. Recognition of share of other comprehensive incomes of the investee based on equity method Less: Income tax effect arising from recognition of share of other comprehensive incomes of the investee based on equity method Add: Net amount accounted for as other comprehensive incomes	(33,710,275.87)	(4,453.63)
in the previous period and transferred to profit and loss in the current period	4,298,798.14
Subtotal	(29,411,477.73)	(4,453.63)
2. Difference on translation of foreign currency financial statements Less: Net amount transferred to gain/(loss) upon disposal of foreign operations in the current period	(818,758.48)	(255,038.02)
Subtotal	(818,758.48)	(255,038.02)
3. Other Less: Income tax effect arising from other items under other comprehensive income Net amount of other items under other comprehensive income of previous period transferred in the current period
Subtotal	—	—
Total	(30,230,236.21)	(259,491.65)

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

45. Notes to cash flows statement

(1) Other cash receipt related to operating activities

Amount for the period	Amount for previous period
2,896,619.54	1,812,038.83
92,477,937.66	29,124,120.05
169,305,543.67	280,748,159.32
264,680,100.87	311,684,318.20

(2) Other cash payment related to operating activities

Item	Amount for the period	Amount for previous period
Cash payments for general and administrative expense	251,838,732.09	262,625,683.70
Cash payments for sales expenses	1,347,984,708.00	1,087,347,369.22
Bank charges	1,469,497.12	5,477,821.30
Other	472,186,240.43	64,656,091.52
Total	2,073,479,177.64	1,420,106,965.74

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

46. Supplementary information on cash flows statement

(1) Supplementary information on cash flows statement

		Amount for	Amount for
	Supplementary information	the period	previous period
1.	Reconciliation of net profit to cash flows from operating
	activities:
	Net profit	514,069,507.44	638,415,965.79
	Add: Provision for assets impairment	20,873,327.47	7,056,482.02
	Depreciation of fixed assets	318,300,292.83	213,202,325.77
	Amortization of intangible assets	14,697,869.25	10,983,180.94
	Amortization of long-term prepaid expenses	3,012,474.16	1,131,064.92
	Loss on disposals of fixed assets, intangible and other	6,294,245.61	856,818.94
	longterm assets
	Loss on scrapping of fixed assets
	Loss on change in fair value	53,113,821.77	90,475,246.57
	Financial expenses	(30,352,950.07)	(14,986,556.54)
	Investment loss	(290,512,875.51)	(186,760,167.37)
	Decrease in deferred tax assets	(31,067,036.47)	4,132,614.34
	Increase in deferred tax liabilities	(130,574.05)
	Decrease in inventory	(432,081,841.86)	(321,557,030.40)
	Decrease in operating receivables	(2,067,029,097.85)	(2,693,136,532.83)
	Increase in operating payables	1,721,647,991.99	2,350,472,811.94
	Others
	Net cash flows from operating activities	(199,164,845.29)	100,286,224.09
2.	Significant investing and financing activities not
	involving cash receipts and payment:
	Liabilities converted into equity
	Convertible company debentures due within one year
	Fixed assets under finance leases
3.	Net movement in cash and cash equivalents:
	Cash at the end of the period	878,149,377.53	739,977,525.12
	Less: Cash at the beginning of the period	870,038,755.12	472,987,177.54
	Add: Cash equivalents at the end of the period
	Less: Cash equivalents at the beginning of the period
	Net increase in cash and cash equivalents	8,110,622.41	266,990,347.58

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

46. Supplementary information on cash flows statement — Continued

(2) Details of cash and cash equivalents

Item		Closing balance	Opening balance
1.	Cash	878,149,377.53	870,038,755.12
	Including: Cash on hand	7,888.20	7,888.70
	Bank deposit that are readily available for payment	878,141,489.33	870,030,866.42
	Other cash that are readily available for payment
2.	Cash equivalents
	Including: Bond investments due within three months
3.	Cash and cash equivalents as at the end of the period	878,149,377.53	870,038,755.12

47. Net current assets

Item	Closing balance	Opening balance
Current assets (Consolidated)	10,629,779,867.37	8,041,116,973.67
Less: Current liabilities (Consolidated)	11,300,505,030.88	8,861,374,249.52
Net current assets (Consolidated)	(670,725,163.51)	(820,257,275.85)
Current assets (the parent)	3,351,450,409.62	3,050,739,339.88
Less: Current liabilities (the parent)	2,688,762,796.92	2,894,421,008.43
Net current assets (the parent)	662,687,612.70	156,318,331.45

48. Total assets less current liabilities

Item	Closing balance	Opening balance
Total assets (Consolidated)	16,178,601,971.61	13,266,793,963.74
Less: Current liabilities (Consolidated)	11,300,505,030.88	8,861,374,249.52
Total assets less current liabilities (Consolidated)	4,878,096,940.73	4,405,419,714.22
Total assets (the parent)	7,325,586,741.24	7,138,546,340.56
Less: current liabilities (the parent)	2,688,762,796.92	2,894,421,008.43
Total assets less current liabilities (the parent)	4,636,823,944.32	4,244,125,332.13

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

49. Segment information

The Group manages its business by divisions which are organized by a mixture of both business lines and geographical locations. For the purpose of resource allocation and performance assessment, the management manages the operating results of each business segment separately, and the segment results are assessed based on the profits of the reporting segments.

(1) Segment profit or loss and assets and liabilities

		Refrigerators and			Inter-segment
	Amount for the period	washing machines	Air-conditioners	Others	elimination	Total
1.	Revenue from external sales	6,136,651,831.84	5,793,122,043.63	558,005,340.02		12,487,779,215.49
2.	Revenue from Inter-segment			566,503,360.66	(566,503,360.66)
3.	Gain from investment in associates and jointly
	controlled entities	(34,905,811.85)	162,841,037.27	(123,441.24)		127,811,784.18
4.	Depreciation and amortization	197,664,510.72	92,360,362.20	45,985,763.32		336,010,636.24
5.	Gain from changes in fair value	23,117,472.33	24,524,066.45	5,472,282.99		53,113,821.77
6.	Impairment losses on assets	12,150,229.02	8,365,319.47	357,778.98		20,873,327.47
7.	Total profit (Total loss)	106,105,797.34	274,655,711.17	252,174,499.30	(54,486,170.45)	578,449,837.36
8.	Income tax expenses	52,917,164.89	770,306.50	10,692,858.53		64,380,329.92
9.	Net profit (net loss) (including
	minority interests)	53,188,632.45	273,885,404.67	241,481,640.77	(54,486,170.45)	514,069,507.44
10.	Total assets	12,402,487,086.05	12,421,901,717.31	3,870,706,529.19	(12,516,493,360.94)	16,178,601,971.61
11.	Total liabilities	8,290,649,600.96	9,921,667,497.54	2,511,371,115.46	(8,992,403,692.82)	11,731,284,521.14
12.	Additions to other non-current assets other than long-term
	equity investments	74,572,137.17	383,326,275.66	(38,574,427.58)		419,323,985.25

Half year of 2015

7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — Continued

49. Segment information — Continued

(1) Segment profit or loss and assets and liabilities — Continued

Continued from above table

		Refrigerators and			Inter-segment
	Amount for last period	washing machines	Air-conditioners	Others	elimination	Total
1.	Revenue from external sales	6,287,790,801.14	7,214,897,296.28	529,721,371.69		14,032,409,469.11
2.	Revenue from Inter-segment			685,139,673.40	(685,139,673.40)
3.	Gain from investment in associates and jointly
	controlled entities	(13,089,815.38)	154,659,214.59	19,780.37		141,589,179.58
4.	Depreciation and amortization	131,224,705.35	61,518,837.23	31,441,964.13		224,185,506.71
5.	Gain from changes in fair value	(38,508,944.11)	(40,225,630.56)	(11,740,671.90)		(90,475,246.57)
6.	Impairment losses on assets	2,007,220.40	2,523,503.54	2,525,758.08		7,056,482.02
7.	Total profit (Total loss)	200,120,273.80	479,284,433.71	92,501,371.81	(30,379,372.32)	741,526,707.00
8.	Income tax expenses	26,205,733.62	71,433,826.93	5,471,180.66	0.00	103,110,741.21
9.	Net profit (net loss) (including
	minority interests)	173,914,540.18	407,850,606.78	87,030,191.15	(30,379,372.32)	638,415,965.79
	10. Total assets	13,269,026,315.69	12,062,111,032.83	3,942,866,361.86	(13,679,988,407.81)	15,594,015,302.57
	11. Total liabilities	9,368,237,443.37	9,819,799,306.76	2,697,634,850.08	(10,159,310,691.81)	11,726,360,908.40
	12. Additions to other non-current assets other than long-term
	equity investments	149,221,863.60	75,641,716.07	92,368,330.07		317,231,909.74

(2) Geographic Information

Amount for	Amount for
the period	last period
8,403,560,311.36	10,114,000,100.38
4,084,218,904.13	3,918,409,368.73
12,487,779,215.49	14,032,409,469.11
Closing balance	Opening balance
5,535,400,276.54	5,212,995,836.79
13,421,827.70	12,681,153.28
5,548,822,104.24	5,225,676,990.07

The Company mainly operates in Mainland China, where the majority of non-current assets are located, Therefore it is not necessary to present further details of the regional information.

Half year of 2015

8. RELATED PARTIES AND RELATED TRANSACTIONS

1. Particulars of the parent

					(Unit: RMB'0000)
		Category of	Place of	Legal
Name of the Parent	Relationship	enterprise	registration	Representative	Business Nature
Qingdao Hisense Air-conditioning	Controlling Shareholder	Foreign-sino Joint Venture	Qingdao	Tang Ye Guo	Manufacture of air-conditioners, moulds and provision of after-sale services
Hisense Group	Ultimate Holding shareholder	State wholly-owned Qingdao		Zhou Houjian	Entrusted operation of state-owned assets; manufacture and sales of household appliances, communication, products and services

Continued from above table

	Registered	Shareholding of the parent	Voting rights of the parent		Organization
Name of the Parent	capital	(%)	(%)	Ultimate holding company	code
Qingdao Hisense Air-conditioning	67,479	44.93	44.93	State-owned Assets Supervision and Administration Commission of Qingdao Municipal	61430651-4
Hisense Group	80,617			State-owned Assets Supervision and Administration Commission of Qingdao Municipal	16357877-1

2. For information on the subsidiaries, associates and joint ventures of the Company, please see note 6, note 7(10) and note 7(11).

3. Greencool Companies

Name of related parties of Greencool Companies	Relationship with the Company
Guangdong Greencool	Former controlling shareholder of the Company
Shenzhen Greencool Environmental	Related party of Guangdong Greencool
Shenzhen Greencool Technology	Related party of Guangdong Greencool
Hainan Greencool	Related party of Guangdong Greencool
Jiangxi Greencool Electrical Appliance Co., Ltd.	Related party of Guangdong Greencool
("Jiangxi Greencool")

Half year of 2015

8. RELATED PARTIES AND RELATED TRANSACTIONS — Continued

4. Other related parties of the Company

Name of other related parties	Relationship of other related parties with the Company	Institution Code
Hisense Finance Co., Ltd. ("Hisense Finance")	Subsidiary of ultimate holding company	71788291x
Hisense Electric Co., Ltd. ("Hisense Electrical Appliances")	Subsidiary of ultimate holding company	26462882-x
Beijing Xuehua Group Company Limited
("Xuehua Group")	Minority shareholder of Beijing Refrigerator
Beijing Embraco Snowflake Compressor Co., Ltd.
("Embraco")	Associate of Xuehua Group
Hisense International (HK) Co., Ltd.
("Hisense Hong Kong")	Subsidiary of ultimate holding company

5. The Greencool Companies had a series of transactions or unusual cash flows through the following "Specific Third Party Companies"

Name of related party	Relationship with the Company

Jiangxi Kesheng	Specific Third Party Company
Jinan San Ai Fu	Specific Third Party Company
Jianxi Keda	Specific Third Party Company
Zhuhai Longjia	Specific Third Party Company
Zhuhai Defa	Specific Third Party Company
Wuhan Changrong	Specific Third Party Company
Tianjin Taijin	Specific Third Party Company
Deheng Solicitors	Specific Third Party Company
Shangqiu Bingxiong	Specific Third Party Company

Half year of 2015

8. RELATED PARTIES AND RELATED TRANSACTIONS — Continued

6. Related party transactions

(1) Purchase of goods/receipt of services during the Reporting Period

			Amount for the Period		Amount for previous Period
Related Party	Particulars of related parties transactions	Pricing and decision-making procedures of related parties transactions	Amount	Percentage to similar transaction (%)	Amount	Percentage to similar transaction (%)
Hisense Electrical Appliances and its subsidiaries	Purchase of finished goods	Agreed Price	52,051.29		60,267.37
Hisense Whirlpool	Purchase of finished goods	Agreed Price	79,618,286.63	0.74	194,907,823.66	1.62
Hisense Hitachi	Purchase of finished goods	Agreed Price	157,204.27		622,009.40	0.01
Subtotal of purchase of finished good			79,827,542.19	0.74	195,590,100.43	1.63
Hisense Electrical Appliances and its subsidiaries	Purchase of raw materials	Agreed price	1,631,870.46	0.02	18,149,369.53	0.15
Hisense Group and its subsidiaries	Purchase of raw materials	Agreed price	4,044,598.06	0.04	12,075,076.65	0.10
Hisense Whirlpool	Purchase of raw materials	Agreed price	1,550,835.75	0.01	3,690,044.91	0.03
Hisense Hitachi	Purchase of raw materials	Agreed price	2,438,609.96	0.02	2,986,714.26	0.02
Embraco	Purchase of raw materials	Agreed price	20,792,179.97	0.19	14,217,109.40	0.12
Subtotal of purchase of raw materials			30,458,094.20	0.28	51,118,314.75	0.42
Hisense Electrical Appliances and its subsidiaries	Receipt of services	Agreed price	5,307,936.47	0.05	3,779,996.25	0.03
Hisense Group and its subsidiaries	Receipt of services	Agreed price	203,057,305.44	1.88	216,363,969.20	1.79
Subtotal of receipt of services			208,365,241.91	1.93	220,143,965.45	1.82
Hisense Hong Kong	Financing Agency	Agreed price	133,617,519.56	1.24	159,244,111.45	1.32
Subtotal of financing			133,617,519.56	1.24	159,244,111.45	1.32

Half year of 2015

8. RELATED PARTIES AND RELATED TRANSACTIONS — Continued

6. Related party transactions Continued
(1) Purchase of goods/receipt of services during the Reporting Period Continued
- ① The Company and entered into a Business Cooperation Framework Agreement with Hisense Group and Hisense Electrical Appliances on 2 December 2014. During the effective term of the agreement, the transaction with the Company being the purchaser and recipient of service was subject to an aggregate cap (exclusive of tax) of RMB652,900,000.
- ② The Company and Hisense Whirlpool entered into a Business Framework Agreement (II) on 2 December 2014. During the effective term of the agreement, the transaction with the Company being the purchaser and recipient of service was subject to an aggregate cap (exclusive of tax) of RMB768,870,000.
- ③ The Company and Hisense Hitachi entered into a Business Framework Agreement (I) on 2 December 2014. During the effective term of the agreement, the transaction with the Company being the purchaser was subject to an aggregate cap (exclusive of tax) of RMB27,670,000.
- ⑤ The Company and Hisense Hong Kong entered into a Factoring Purchase Framework Agreement on 2 December 2014. During the effective period of the agreement, the transaction in which Hisense Kelon engaged Hisense Hong Kong to perform factoring purchase as its agent was subject to an aggregate cap of USD100,000,000.

The above agreements were considered and approved at the ninth interim meeting of the Company's eighth session of the board of directors in 2014 convened on 2 December 2014 and the first extraordinary general meeting in 2015 convened on 21 January 2015 respectively.

Half year of 2015

8. RELATED PARTIES AND RELATED TRANSACTIONS — Continued

6. Related party transactions — Continued

(2) Sale of goods/rendering of service during the reporting period

			Amount for the period		Amount for previous period
	Particulars of related transactions	Pricing policies and procedures for decision-making	Amount	Percentage to similar transaction (%)	Amount	Percentage to similar transaction (%)
Name of related party
Hisense Electrical Appliances and its subsidiaries	Sale of finished goods	Agreed price			146,139.04
Hisense Group and its subsidiaries	Sale of finished goods	Agreed price	1,240,590,940.80	9.11	902,737,391.61	5.86
Hisense Hitachi	Sale of finished goods	Agreed price	65,117,693.52	0.48	15,280,315.32	0.10
Subtotal of sales amount of finished product			1,305,708,634.32	9.59	918,163,845.97	5.96
Hisense Electrical Appliances and its subsidiaries	materials	Agreed price			2,682,707.14	0.02
Hisense Group and its subsidiaries	materials	Agreed price	7,523,820.92	0.06	4,604,364.56	0.03
Hisense Whirlpool	materials	Agreed price			5,169,810.78	0.03
Hisense Hitachi	materials	Agreed price	1,215,812.27	0.01	589,151.84
Subtotal of sales amount of raw materials			8,739,633.19	0.07	13,046,034.32	0.08
Hisense Electrical Appliances and its subsidiaries	Sale of mould	Market price	37,631,516.42	0.28	40,068,376.07	0.26
Hisense Group and its subsidiaries	Sale of mould	Market price	69,854,521.24	0.51	90,827,390.81	0.59
Hisense Whirlpool	Sale of mould	Market price			3,762,820.52	0.02
Hisense Hitachi	Sale of mould	Market price	8,074,130.50	0.06	1,232,478.63	0.01
Subtotal of sales amount of moulds			115,560,168.16	0.85	135,891,066.03	0.88
Hisense Group and its subsidiaries	Rendering of service	Agreed price	1,419,721.57	0.01	2,745,111.37	0.02
Hisense Whirlpool	Rendering of service	Agreed price	960,689.89	0.01	904,487.48	0.01
Xuehua Group	Rendering of service	Agreed price	806,630.56	0.01
Attend	Rendering of service	Agreed price			2,177.30
Subtotal of rendering of service			3,187,042.02	0.03	3,651,776.15	0.03

Half year of 2015

8. RELATED PARTIES AND RELATED TRANSACTIONS — Continued

6. Related party transactions Continued
(2) Sale of goods/rendering of service during the reporting period Continued
- ① The Company entered into a Business Cooperation Framework Agreement with Hisense Group and Hisense Electrical Appliances on 2 December 2014. During the effective period of the agreement, the transaction with the Company being the supplier and service provider was subject to an aggregate cap (exclusive of tax) of RMB3,417,520,000.
- ② The Company and Hisense Whirlpool entered into a Business Framework Agreement (II) on 2 December 2014. During the effective period of the agreement, the transaction with the Company being the supplier and service provider was subject to an aggregate cap (exclusive of tax) of RMB23,660,000.
- ③ The Company and Hisense Hitachi entered into a Business Framework Agreement (I) on 2 December 2014. During the effective period of the agreement, the transaction with the Company being the supplier and service provider was subject to an aggregate cap (exclusive of tax) of RMB175,160,000.

Half year of 2015

8. RELATED PARTIES AND RELATED TRANSACTIONS — Continued

6. Related party transactions — Continued

(3) Purchase of goods/receipt of services in 2014

			Amount for the period		Amount for previous period
Name of related party	Particulars of related transactions	Pricing policies and procedures for decision-making	Amount	Percentage to similar transaction (%)	Amount	Percentage to similar transaction (%)

Hisense Whirlpool	Purchase of finished goods	Agreed price	430,133,686.79	2.07	654,769,720.19	3.44
Hisense Electrical Appliances and its subsidiaries	Purchase of finished goods	Agreed price	70,512.82		409,060.87
Hisense Group and its subsidiaries	Purchase of finished goods	Agreed price	2,284,666.67	0.01	167,413.33
Subtotal of purchase of finished goods			432,488,866.28	2.08	655,346,194.39	3.44
Huayi Compressor and its subsidiaries	Purchase of raw materials	Agreed price	757,992,072.20	3.65	792,876,108.54	4.16
Embraco	Purchase of raw materials	Agreed price	23,497,568.39	0.11	55,408,634.21	0.29
Hisense Whirlpool	Purchase of raw materials	Agreed price	8,593,163.00	0.04	6,414,982.38	0.03
Hisense Hitachi	Purchase of raw materials	Agreed price	6,230,202.75	0.03	7,658,894.53	0.04
Hisense Group and its subsidiaries	Purchase of raw materials	Agreed price	16,672,758.10	0.08	12,297,129.49	0.06
Hisense Electrical Appliances and its subsidiaries	Purchase of raw materials	Agreed price	22,214,693.81	0.11	21,045,309.18	0.11
Subtotal of purchase of raw materials			835,200,458.25	4.02	895,701,058.33	4.69
Hisense Group and its subsidiaries	Purchase of mould	Agreed price			44,097.00
Subtotal of purchase amount of moulds					44,097.00
Hisense Group and its subsidiaries	Receipt of services	Agreed price	395,453,887.87	1.9	314,008,392.57	1.65
Xuehua Group	Receipt of services	Agreed price	1,485,040.46	0.01	18,464,451.09	0.1
Hisense Electrical Appliances and its subsidiaries	Receipt of services	Agreed price	9,996,984.51	0.05	9,037,818.74	0.05
Subtotal of receipt of services			406,935,912.84	1.96	341,510,662.40	1.8
Hisense Hong Kong	Purchase financing agency		213,244,123.52	1.03	145,231,385.68	0.76
Subtotal of financing purchase			213,244,123.52	1.03	145,231,385.68	0.76

Half year of 2015

8. RELATED PARTIES AND RELATED TRANSACTIONS — Continued

6. Related party transactions — Continued

(3) Purchase of goods/receipt of services in 2014 — Continued

① The Company entered into a Business Cooperation Framework Agreement with Hisense Group and Hisense Electrical Appliances on 21 November 2013. During the effective term of the agreement, the transaction with the Company being the purchaser and recipient of service was subject to an aggregate cap (exclusive of VAT) of RMB 570,040,000.
② The Company and Hisense Whirlpool entered into a Business Framework Agreement (II) on 21 November 2013. During the effective term of the agreement, the transaction with the Company being the purchaser and recipient of service was subject to an aggregate cap (exclusive of VAT) of RMB 1,257,730,000.
③ The Company and Hisense Hitachi entered into a Business Framework Agreement (I) on 21 November 2013. During the effective term of the agreement, the transaction with the Company being the purchaser was subject to an aggregate cap (exclusive of VAT) of RMB 20,080,000.
④ The Company and Hisense Hong Kong entered into a Factoring Purchase Framework Agreement on 21 November 2013. During the effective period of the agreement, the transaction in which Hisense Kelon engaged Hisense Hong Kong to perform factoring purchase as its agent was subject to an aggregate cap of USD 36,000,000.

The above agreements were considered and approved at the fifth interim meeting of the Company's eighth session of the board of directors in 2013 convened on 21 November 2013 and the first extraordinary general meeting in 2014 convened on 10 January 2014 respectively.

⑤ The above transactions with Hisense Group and its subsidiaries, Hisense Electrical Appliances and its subsidiaries, Hisense Hong Kong, Embraco, and Xuehua Group constitute continuous connected transactions under Chapter 14A of the Listing Rules. The Company confirmed that it has complied with the relevant disclosure requirement and shareholders' approval requirement under Chapter 14A of the Listing Rules with respect to such continuing connected transactions (with the exceptions of (A) the Purchase Financing Agency Framework Agreement between the Company and Hisense Hong Kong, which was made on normal commercial terms and in the interest of the Company, without any charge on the Group's assets for the financial assistance; (B) the connected transactions conducted between the Company and Xuehua Group and Embraco respectively were made on normal commercial terms and all applicable percentage ratios were under 1%, while Xuehua Group and Embraco are connected persons of the Company at the subsidiary level. As such, the respective connected transactions between the Company and Hisense Hong Kong, Embraco and Xuehua Group were exempted from the requirements of reporting, announcement and shareholders' approval according to rules 14A.65(4) and 14A.76(1) (b) under the Listing Rules).

Other than the above transactions, the transactions with related parties conducted in 2014 as disclosed in note 8 of the financial statements in the 2014 annual report do not constitute connected transactions under Chapter 14A of the Listing Rules.

Half year of 2015

8. RELATED PARTIES AND RELATED TRANSACTIONS — Continued

6. Related party transactions — Continued

(4) Sale of goods/rendering of service in 2014

			Amount for the Period		Amount for previous period
	Particulars of related	Pricing and decision–making procedures of related		Percentage to similar transaction		Percentage to similar transaction
Related Party	parties transactions	parties transactions	Amount	(%)	Amount	(%)

Hisense Electrical Appliances and its subsidiaries	Sale of finished goods	Agreed Price	4,745.21		102,569.92
Hisense Whirlpool	Sale of finished goods	Agreed Price			146318.87
Hisense Hitachi Hisense Group and its subsidiaries	Sale of finished goods Sale of finished goods	Agreed Price Market price	41,950,005.66 1,782,987,606.97	0.16 6.72	70,899,684.46 2,630,872,809.89	0.29 10.8

Subtotal of sales amount of finished product			1,824,942,357.84	6.88	2,702,021,383.14	11.09
Hisense Whirlpool	Sale of raw materials	Agreed Price	12,300,354.33	0.05	21,528,464.60	0.09
Hisense Group and its subsidiaries	Sale of raw materials	Agreed Price	12,317,816.40	0.05	8,650,148.96	0.04
Hisense Hitachi	Sale of raw materials	Agreed Price	1,178,388.59		1,390,888.76	0.01
Hisense Electrical Appliances and its subsidiaries	Sale of raw materials	Agreed Price	592,472.70		4,175,791.11	0.02
Huayi Compressor and its subsidiaries	Sale of raw materials	Agreed Price	2,085,169.42	0.01
Subtotal of sales amount of raw materials			28,474,201.44	0.11	35,745,293.43	0.16
Hisense Group and its subsidiaries	Sale of moulds and equipment	Market price	208,313,517.39	0.79	182,374,253.98	0.75
Hisense Hitachi	Sale of moulds	Market price	7,523,076.91	0.03	118,803.43
Hisense Whirlpool	Sale of moulds and equipment	Market price	4,196,474.36	0.02	7,139,646.13	0.03
Hisense Electrical Appliances and its subsidiaries	Sale of moulds	Market price	71,042,006.08	0.27	72,330,708.33	0.3
Subtotal of sales amount of Moulds			291,075,074.74	1.11	261,963,411.87	1.08
Attend		Agreed Price	3,600.00
Hisense Whirpool		Agreed Price	2,970,942.16	0.01	2,710,938.24	0.01
Hisense Group and its subsidiaries		Agreed Price	5,129,018.69	0.02	2,455,623.42	0.01
Subtotal of rendering of service		Agreed Price	8,103,560.85	0.03	5,166,561.66	0.02

Half year of 2015

8. RELATED PARTIES AND RELATED TRANSACTIONS — Continued

6. Related party transactions — Continued

(4) Sale of goods/rendering of service in 2014 — Continued

① The Company entered into a Business Cooperation Framework Agreement with Hisense Group and Hisense Electrical Appliances on 21 November 2013. During the effective term of the agreement, the transaction with the Company being the supplier and provider of services was subject to an aggregate cap (exclusive of VAT) of RMB3,433,960,000.
② The Company and Hisense Whirlpool entered into a Business Framework Agreement (II) on 21 November 2013. During the effective term of the agreement, the transaction with the Company being the supplier and provider of services was subject to an aggregate cap (exclusive of VAT) of RMB86,100,000.
③ The Company and Hisense Hitachi entered into a Business Framework Agreement (I) on 21 November 2013. During the effective term of the agreement, the transaction with the Company being the supplier and provider of services was subject to an aggregate cap (exclusive of VAT) of RMB273,500,000.

④ Among the aforementioned transactions, the Company's transactions with Hisense Group and its subsidiaries and Hisense Electrical Appliances and its subsidiaries constitute continuous 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 and shareholders' approval requirement for the relevant connected transactions.

(5) Particulars of related party guarantees

Guarantor	Guaranteed Party	Ammount (RMB'0000)	Effective Date of Guarantee	Expiry Date of Guarantee	Nature of Guarantee	Gurantee Completed
Hisense Group Hisense Group	Shandong Refrigerator Shandong Air-conditioning	421.85 160.00	2013/4/25 2014/4/30	2015/7/31 2015/12/31	Import letter of credit Bank Guarantee	No No
Total		581.85

Half year of 2015

8. RELATED PARTIES AND RELATED TRANSACTIONS — Continued

6. Related party transactions — Continued

(5) Particulars of related party guarantees — Continued

Particulars of related party guarantee:

① In April 2013, Hisense Group and the business department of Qingdao branch of Agricultural Bank entered into a Maximum Guarantee Contract (No. 84100520130002413), pursuant to which Hisense Group would provide guarantee securities for the liabilities under the maximum credit limit of RMB100,000,000 arising from various businesses with Shandong Refrigerator by the business department of Qingdao branch of Agricultural Bank during the period from 25 April 2013 to 23 April 2014.
② In August 2014, Hisense Group and the business department of Qingdao branch of Agricultural Bank entered into a Maximum Guarantee Contract (No. 84100520140001566), pursuant to which Hisense Group would provide guarantee securities for the liabilities under the maximum credit limit of RMB100,000,000 arising from various businesses with Shandong Refrigerator by the business department of Qingdao branch of Agricultural Bank during the period from 11 August 2014 to 18 November 2014.
③ In January 2015, Hisense Group and the business department of Qingdao branch of Agricultural Bank entered into a Maximum Guarantee Contract (No. 84100520150000609), pursuant to which Hisense Group would provide guarantee securities for the liabilities under the maximum credit limit of RMB100,000,000 arising from various businesses with Shandong Refrigerator by the business department of Qingdao branch of Agricultural Bank during the period from 1 January 2015 to 31 December 2015.
④ In October 2013, Hisense Group and Shandong Road sub-branch of Qingdao branch of Industrial and Commercial Bank entered into a Maximum Guarantee Contract (No. 38030201-2013 Ying Ye (Bao) Zi No. 0043), pursuant to which Hisense Group would provide guarantee securities for the liabilities under the maximum credit limit of RMB150,000,000 arising from various businesses with Shandong Air-conditioning by Shandong Road sub-branch of Qingdao branch of Industrial and Commercial Bank during the period from 10 October 2013 to 18 September 2014.

As at 30 June 2015, the Company and its subsidiaries had balances of bank deposit of RMB 643,905,200, bank loans of RMB0, and notes payable of RMB 1,019,464,200 with Hisense Finance. For the year, loan interests paid to Hisense Finance amounted to RMB0, interests paid in relation to discounted notes amounted to RMB0, exchange handling fees paid amounted to RMB 170,800, and handling fees for the setting up of electronic bankers' acceptance amounted to RMB605,400. Interest income received from Hisense Finance for the deposits amounted to RMB2,351,100. Provision of exchange settlement, sales and remittance services by Hisense Finance amounted to RMB812,483,800 for the year.

Half year of 2015

8. RELATED PARTIES AND RELATED TRANSACTIONS — Continued

7. Receivables from and payables to related parties

(1) Receivables from related parties

		Closing Balance		Opening Balance
			Provision for		Provision for
Item	Related party	Book Value	bad debts	Book Value	bad debts
Accounts Receivable	Hisense Electrical Appliances and its subsidiaries	11,903,872.68		5,369,800.07
Accounts Receivable	Hisense Group and its subsidiaries	485,665,223.92	863,752.76	425,687,562.52	863,752.76
Accounts Receivable	Hisense Whirlpool	2,413,169.47		2,433,508.67
Accounts Receivable	Hisense Hitachi	21,450,843.08		6,246,024.20
Subtotal		521,433,109.15	863,752.76	439,736,895.46	863,752.76
Notes Receivable	Hisense Electrical Appliances and its subsidiaries	10,386,168.06		1,777,900.00
Notes Receivable	Hisense Group and its subsidiaries	36,074,690.36		7,742,513.97
Subtotal		46,460,858.42		9,520,413.97
Other Receivables	Hisense Electrical Appliances and its subsidiaries	11,350.00		163,006.00
Other Receivables	Hisense Group and its subsidiaries	361,572.29		158,946.20
Other Receivables	Hisense Whirlpool	50,000.00		7,237,588.19
Other Receivables	Xuehua Group	7,200,000.00		7,200,000.00
Subtotal		7,622,922.29		14,759,540.39
Prepayments	Hisense Group and its subsidiaries	798,416.54		1,119,996.81
Subtotal		798,416.54		1,119,996.81

Half year of 2015

8. RELATED PARTIES AND RELATED TRANSACTIONS — Continued

7. Receivables from and payables to related parties — Continued

(2) Amount due to Related Parties from Listed Companies

Related Parties	Closing Balance	Opening Balance
		8,609,219.66
Accounts Payable Hisense Electrical Appliances and its subsidiaries		8,396.50
Hisense Group and its subsidiaries	112,262,797.27	30,670,272.38
Hisense Whirlpool	7,515,092.45	141,394,148.65
Hisense Hitachi	848,682.21	1,592.78
	140,434,487.38	180,683,629.97
Hisense Group and its subsidiaries	4,277,504.28	2,852,656.51
Hisense Electrical Appliances and its subsidiaries	105,297.76
Embraco	120,000.00	100,000.00
Combine	5,099,880.00	5,099,880.00
Hisense Whirlpool		200,000.00
Hisense Hitachi	55,178.70
	9,657,860.74	8,252,536.51

Hisense Group and its subsidiaries	1,852,353.48	1,769,699.72
Hisense Electrical Appliances and its subsidiaries		933,000.00
	1,880,153.48	2,702,699.72
	Embraco Hisense Hitachi	19,057,756.06 750,159.39 27,800.00

Half year of 2015

8. RELATED PARTIES AND RELATED TRANSACTIONS — Continued

8. Transactions with "specific third party companies"

		Closing Balance	Opening Balance
Item	Related Parties	Carrying Amount	Carrying Amount

Other Receivables	Jiangxi Kesheng	27,462,676.72	27,462,676.72
	Jinan San Ai Fu	121,496,535.45	121,496,535.45
	Jianxi Keda	13,000,200.00	13,000,200.00
	Zhuhai Longjia	28,600,000.00	28,600,000.00
	Zhuhai Defa	21,400,000.00	21,400,000.00
	Wuhan Changrong	20,000,000.00	20,000,000.00
	Deheng Solicitors	2,000,000.00	2,000,000.00
	Shangqiu Bingxiong	58,030,000.00	58,030,000.00
Subtotal of other receivables		291,989,412.17	291,989,412.17
Other Payables	Zhuhai Longjia	28,316,425.03	28,316,425.03
	Tianjin Taijin	65,000,000.00	65,000,000.00
Subtotal of other payables		93,316,425.03	93,316,425.03

9. Transactions with Greencool Companies

Item	Related parties	Closing Balance Book Value	Opening Balance Book Value
Other Receivables	Shenzhen Greencool Environmental	33,000,000.00	33,000,000.00
	Shenzhen Greencool Technology	32,000,000.00	32,000,000.00
	Hainan Greencool	12,289,357.71	12,289,357.71
Subtotal of other receivables		77,289,357.71	77,289,357.71
Other Payables	Jiangxi Greencool	13,000,000.00	13,000,000.00
Subtotal of other payables		13,000,000.00	13,000,000.00

Half year of 2015

9. SHARE-BASED PAYMENT

1. General information about share-based payments

Amount for the period	Item
(293,417.77)	Total equity instruments granted during the period
30,633,992.02	Total equity instruments exercised during the period
	Total equity instruments expired during the period
Exercise price of share options was	Range of exercise price of share options outstanding and remaining
RMB7.65, with remaining contractual	contractual term as the end of the period
term of 242 days
	Range of exercise price of other equity instruments and remaining
	contractual term as at the end of the period
	Equity settled share-based payments
Amount for the period	Item

Determination on fair value of equity instruments at the date of grant	Fair value of share options granted under the Scheme calculated by using the BlackScholes option pricing model
Determination on the best estimate of the number of exercisable equity instruments	Determined by taking into account of the number of participants, expected gain of share options and performance assessment of participants, etc.
Reasons for significant discrepancies between estimates of current period and previous period	Nil
Accumulated amount of equity settled share-based payments in capital reserve	8,716,058.46
Total expense recognized for equity settled share-based payments	8,716,058.46

3 Share-based services

Item	Amount for the period
Total amount of employee services received in exchange for
share-based payments	8,716,058.46
Total amount of other services received in exchange for
share-based payments

Half year of 2015

9. SHARE-BASED PAYMENT — Continued

4. Share granted

Category	Exercise Price	Outstanding as at 1 January 2015	Lapsed during the year	Exercised douring the Year	Oustanding as at 30 June 2015
Directors	\$7.65	2,299,960		415,800	1,884,160
Senior Management	\$7.65	2,225,940		281,000	1,944,940
Other Management	\$7.65	5,459,190	1,268,410	3,533,010	657,770
Total		9,985,090	1,268,410	4,229,810	4,486,870

The board of directors of the Company has completed the registration in respect of the grant of share options under the First Share Option Incentive Scheme of Hisense Kelon Electrical Holdings Company Limited (the "Scheme") under the authorization granted at the general meeting of the Company on 28 September 2011, and the basic information are as follow:

① Date of Grant: 31 August 2011
② Exercise price: RMB7.65 per share
③ Option abbreviation: Hisense JLC1
④ Option code: 037018
⑤ The share options are valid for five years from the date of grant, subject to a lock up period of 2 years. The incentive participants may exercise their options in equal installments within 3 years from the third anniversary of the date of grant, with 33%, 33% and 34% of the total options granted being exercisable each year.
⑥ The incentive participants may include: the directors of the Company (exclusive of the independent directors and the external directors who are not working with Hisense Group Limited liability company), senior management (including president, vice president, financial controller, board secretary, company secretary and other officers regarded as senior management under the Articles of Association) of the Company, mid-level management staff of the Company and its subsidiaries, and core technical personnel as the Board may determine.
⑦ The fund for exercising share options by the participants shall be raised by themselves and the Company shall not provide borrowings or any other kind of financial assistance to the participants under the Scheme (including guarantee for their borrowings).
⑧ The share option scheme has been reviewed and approved by the SASAC of Qingdao, filed with the SASAC of the State Council and filed with the CSRC with no objection.

Half year of 2015

9. SHARE-BASED PAYMENT — Continued

4. Share granted — Continued

On 18 October 2013, the resolution on adjustment to participants, and the number of shares granted under the first share option incentive scheme of the Company was passed at the fourth interim meeting of the Company's eighth session of the board of directors in 2013 to cancel 4,668,000 share options. Upon the adjustment, there were 14,842,000 share options granted under the scheme.

In 2013, the conditions to exercise for the first exercise period of the first phase share option incentive scheme of the Company were fulfilled. Upon approval at the fourth interim meeting of the Company's eighth session of the board of directors in 2013, 163 eligible participants all exercised their share options during the first exercise period, and there were 4,897,860 exercisable share options in total at the exercise price of RMB7.65. In May 2014, 148 eligible participants of the Company exercised their share options with 4,440,810 share options exercised. During the first phase to exercise share options, 9 participants were no longer eligible for this share option incentive. Board of directors of the Company decided to disqualify the above 9 participants and cancel 416,100 share options accordingly.

On 22 May 2015, the resolution on adjustment to participants, and the number of shares granted under the first share option incentive scheme of the Company was approved in the sixth interim meeting in 2015 by the Company's eighth session of the Board of directors. A total of 1,268,410 share options were cancelled, and after the adjustment, there were a total of 8,716,680 share options granted but not yet exercised.

In May 2015, the conditions for exercising the vesting rights for the second phase of share options incentive scheme of the Company were fulfilled. Upon the application by the Board of directors of the Company's, the confirmation by Shenzhen Stock Exchange and the approval by China Securities Depository and Clearing Corporation Limited (CSDC) – Shenzhen Branch to register, 138 incentive scheme participants have exercised their vesting rights in the second phase of vesting period to subscribe a total of 4,229,810 shares at an exercise price of RMB7.65/share.

As at 30 June 2015, a total of 4,486,870 share options have been granted by the Company which weret not yet exercised.

10. CONTINGENCIES

1. Contingent Liabilities arising from Pending litigations and arbitration and their financial impacts

As at 30 June 2015, the pending litigations involving the Company are summarized as follows:

(1) Cases with the Company as the Plaintiff

Plaintiff	Defendant	Causes	Total Amount Involved
The Company	Beijing Diamond Advertising Co., Ltd	Dispute over advertising contract	5,000,000.00
The Company and its subsidiaries	Other		42,233,062.80

Total 47,233,062.80

Half year of 2015

10. CONTINGENCIES — Continued

1. Contingent Liabilities arising from Pending litigations and arbitration and their financial impacts — Continued

(2) Cases with the Company as the defendant

Plaintiff	Defendant	Causes	Total Amount Involved
Supplier of raw materials	The Company	Dispute over sale and purchase contract and processing contract	5,382,208.26
Other	The Company	Labor dispute and others	11,606,880.41
Total			16,989,088.67

(3) Cases for which the judgment was in favor of the Company and become effective but was not yet executed

Plaintiff	Defendant	Causes	Total Amount Involved
The Company	Shanqiu Kelon	Purchase amount outstanding	25,660,900.00
Total			25,660,900.00

It represented the request of the Company to the defendants to repay the purchase amount of goods, related interests and all the litigation fees. The civil judgment is now in effect.

11. OTHER SIGNIFICANT EVENTS

1. Assets and liabilities measured at fair value

Item	Opening Balance	Amount of Financial Assets	Gain/(loss) from change in fair Value	Closing Balance
Financial Assets
Derivative financial assets	162,460.00	45,885,145.11	45,722,685.11	45,885,145.11
Subtotal of financial Assets	162,460.00	45,885,145.11	45,722,685.11	45,885,145.11
Derivative financial liabilities	(7,391,136.66)		7,391,136.66	—
Subtotal of financial liabilities	(7,391,136.66)		7,391,136.66	—

Half year of 2015

11. OTHER SIGNIFICANT EVENTS — Continued

2. Financial risk Management objectives and policies

The Company's major financial instruments include: cash at bank and on hand, derivative financial instruments, notes receivable, accounts receivable, other receivables, notes payable, accounts payable, other payables and bank borrowings. Details of the financial instruments were disclosed in the relevant notes.

Risks associated with the above financial instruments include: credit risk, liquidity risk, interest rate risk and foreign currency risk.

(1) Credit Risk

Credit risk is the risk exposed to the Company on financial losses arising from the failure of clients or financial instrument counterparties to fulfill contract obligations. It arises mainly from the bank balances, trade and other receivables and financial derivative.

The Company maintains substantially all of its bank balances in several major large state banks in the PRC. In strong support of the country on those banks, the Board is of the opinion that there is no significant credit risk exposed to losses associated with such assets.

The Company mitigates its exposure to risk relating to trade and other receivables by dealing with diversified customers with solid financial foundation. Certain new customers are required to place cash deposits with the Group to reduce the maximum exposure to credit risk. The Group seeks to maintain strict control over its outstanding receivables and has a credit control policy to minimize credit risk. In addition, all receivable balances are monitored on an ongoing basis and overdue balances are followed up by senior management.

The credit risk on derivative instruments is not significant as the counterparties are high creditworthy banks rated by international credit-rating agencies.

The maximum exposure to credit risk at reporting date is the carrying amount of each class of financial assets shown on the consolidated financial statements.

(2) Liquidity Risk

In the management of liquidity risk, the Company monitors and maintains cash and cash equivalents at a level which is adequate, in the management's point of views, to finance the Company's operations and mitigate the effects of short-term fluctuations in cash flows. The Company's treasury department is responsible for maintaining a balance between continuity of funding and flexibility through the use of bank credit and loan in order to meet the Company's liquidity requirements.

In order to mitigate the liquidity risk, the directors have carried out a detailed review of the liquidity of the Company, including maturity profile of its trade and other payables, borrowings and availability of loan financing provided by Hisense Finance and future renewal of bank borrowings, it is concluded that adequate funding is available to fulfill the Group's short-term obligations and capital expenditure requirements.

Half year of 2015

11. OTHER SIGNIFICANT EVENTS — Continued

2. Financial risk Management objectives and policies — Continued

(3) Interest Rate Risk

The Company is exposed to interest rate risk due to changes in interest rates of interest-bearing financial assets and liabilities. Interest-bearing financial assets are mainly deposits with banks, which are mostly short-term in nature whereas interest-bearing financial liabilities are primarily short-term bank borrowings. As at 30 June 2015, the Company's short-term bank borrowings were at fixed rate. As all the Company's borrowings were short term loans, any change in the interest rate from time to time is not considered to have significant impact on the Company's performance.

(4) Foreign Currency Risk

Foreign currency risk is the risk of loss due to adverse change in exchange rates relating to investments and transactions denominated in foreign currencies. The Group's monetary assets and transactions are mainly denominated in RMB, HKD, USD, JPY and EUR. The exchange rates between RMB, HKD, USD, JPY and EUR are not pegged, and there is fluctuation of exchange rates between RMB, USD, JPY and EUR.

The carrying amounts of the Company's monetary assets and monetary liabilities denominated in foreign currencies at the end of reporting period are as follows:

	Closing Balance		Opening Balance
Currency	Assets	Liabilities	Assets	Liabilities
USD	1,356,736,063.18	404,904,953.04	820,825,155.22	293,087,628.93
EUR	101,046,229.53	3,947,589.28	36,886,178.77	4,099,568.80

The following table indicates the approximate effect of reasonably possible foreign exchange rate changes on the net profit, to which the Group has significant exposure at the end of reporting period:

Sensitivity analysis of change in exchange rate:

Item	Amount for the Period Increase/Decrease in Profit after tax	Amount for the Previous Period Increase/Decrease in profit after tax
USD to RMB
Appreciates by 5%	35,693,666.63	23,981,103.87
Depreciates by 5%	(35,693,666.63)	(23,981,103.87)
EUR to RMB
Appreciates by 5%	3,641,199.01	9,526,416.52
Depreciates by 5%	(3,641,199.01)	(9,526,416.52)

Half year of 2015

11. OTHER SIGNIFICANT EVENTS — Continued

2. Financial risk Management objectives and policies — Continued

(4) Foreign Currency Risk— Continued

Sensitivity analysis of change in forward rate:

Item	Amount for the Period Increase/Decrease in Profit after tax	Amount for the Previous Period Increase/Decrease in profit after tax
USD to RMB
Appreciates by 5%	(9,450,000.00)	(12,956,250.00)
Depreciates by 5%	9,450,000.00	12,956,250.00
EUR to RMB
Appreciates by 5%	(1,207,500.00)	(954,375.00)
Depreciates by 5%	1,207,500.00	954,375.00

3. Capital Management

The primary objectives of the Company's capital management are to safeguard the Company's ability to continue as a going concern and to maintain healthy capital ratios in order to support its business and maximise shareholders' value.

The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes for managing capital during the periods ended 30 June 2015 and 31 December 2014.

The Company monitors capital using a gearing ratio, which is net debt divided by the adjusted capital plus net debt. Net debt includes bank and other borrowings, accounts payable, notes payable, other payables and debentures payables, less cash and cash equivalents. The gearing ratios as at the end of the reporting periods were as follows:

Item	Closing Balance	Opening Balance
Total Debt	11,731,284,521.14	9,326,213,336.05
Including: Short-term borrowings	388,293,554.13	253,985,142.45
Accounts payable	5,282,041,539.94	3,465,854,583.60
Notes Payables	2,134,358,147.40	1,528,195,526.41
Other Payables	1,618,998,324.13	1,735,584,905.78
Less: Cash and Cash equivalents	878,149,377.53	870,038,755.12
Net Debt	10,853,135,143.61	8,456,174,580.93
Equity attributable to shareholders of the Parent	3,965,915,154.80	3,458,363,028.38
Capital and net debt	14,819,050,298.41	11,914,537,609.31
Gearing Ratio	73.24%	70.97%

Half year of 2015

11. OTHER SIGNIFICANT EVENTS — Continued

4. Retirement Benefit Scheme

The Company contributes mainly to a defined contribution pension scheme, which is administered by the provincial government, in respect of employees of the Company and subsidiaries. According to such scheme, the Company and subsidiaries shall pay an amount, calculated at several percentages of the total salaries and wages of the employees, to a retirement fund.

The total costs charged to the profit or loss approximately of RMB172,594,700 (Corresponding period last year: RMB150,370,000) represents contributions to the scheme by the Company and subsidiaries at rates specified in the scheme.

5. Leases

(1) Different categories of leased assets of the Company are as follows:

		Unit: RMB'0000
Categories of leased assets under operating leases	Closing Carrying Amount	Opening Carrying Amount
Buildings	3,020.88	3,145.94
Total	3,020.88	3,145.94

2. The Company as lessor under operating lease

The Company's investment properties are also leased to a number of tenants for different terms. The rental income for the reporting period amounted to RMB7,117,900 (Corresponding period last year: RMB3,586,100).

The minimum rent receivables under non-cancellable operating leases at the end of reporting period are follows:

		Unit: RMB'0000
	Amount for	Amount for
Item	the Period	previous Period
Within one year	592.73	322.17
Over one year but within five years, inclusive	293.28	183.5
Total	886.01	505.67

Half year of 2015

11. OTHER SIGNIFICANT EVENTS — Continued

5. Leases — Continued

(3) The Company as lessee under operating lease

The Company leases certain leasehold land and buildings and plant and machinery under operating leases with lease terms from one to five years. The operating lease payments for the period ended 30 June 2015 was as follows:

		Unit: RMB'0000
	Amount for	Amount for
Operating lease payments	the Period	previous period
Leasehold land and buildings	1,716.53	1,213.01
Plant and machinery	105.51	0
Total	1,822.04	1,213.01

(4) The total future minimum lease payments under non-cancellable operating leases at the end of reporting period falling due are as follows:

	Unit: RMB'0000
	Amount for	Amount for
Item	the Period	previous period
Within one year	1,159.47	1,018.43
Over one year but within five years	2,921.25	1,692.07
Total	4,080.72	2,710.50

6. Capital Commitment

Item	Closing Balance	Unit: RMB'0000 Opening Balance

Commitments for the investment in subsidiaries and jointly controlled entity:
— Authorized but not yet contracted for
— Contracted but not provided for	23,299.80	44,277.00
Commitments for the acquisition of property, plant and equipment
of subsidiaries:
— Contracted but not provided for

Total

7. Dividend

No dividends was paid or proposed for the period (2014: Nil), or reserve funds converted into capital.

Half year of 2015

12. NOTES TO MAJOR ITEMS OF THE FINANCIAL STATEMENTS OF THE PARENT

1. Accounts Receivable

(1) Disclosure of accounts receivable by categories:

	Closing Balance
	Carrying Amount			Provision for bad debts
Category	Amount	% of total balance	Amount	% of total balance
Individually significant and subject to separate provision
Ageing analysis	1,980,337,980.17	100.00	121,400,450.44	6.13
Greencool Companies
Subtotal	1,980,337,980.17	100.00	121,400,450.44	6.13
Individually insignificant but subject to separate provision
Total	1,980,337,980.17	100.00	121,400,450.44	6.13

Half year of 2015

12. NOTES TO MAJOR ITEMS OF THE FINANCIAL STATEMENTS OF THE PARENT — Continued

1. Accounts Receivable — Continued

(1) Disclosure of accounts receivable by categories: — Continued

Continued from above table

	Closing Balance
	Carrying Amount		Provision for bad debts
Category	Amount	% of total balance	Amount	% of total balance
Individually significant and subject to separate provision
Aging Analysis Greencool Companies	1,867,953,870.49	100	139,047,900.53	7.44
Subtotal	1,867,953,870.49	100	139,047,900.53	7.44
Individually insignificant but subject to separate provision
Total	1,867,953,870.49	100	139,047,900.53	7.44

Accounts receivable in the category provided bad debts by using ageing method:

Closing Balance		Opening Balance
	Carrying Amount				Carrying Amount
Age	Amount	% of total Balance	Provision for bad debts	Amount	% of total balance	Provision for bad debts
Within three months Over three months but	1,845,052,893.74	93.17		1,719,843,329.52	92.07
within six months Over six months but	6,854,761.17	0.35	685,476.12	3,057,481.35	0.16	305,748.14
within one year	15,430,701.88	0.78	7,715,350.94	12,621,814.46	0.68	6,310,907.23
Over one year	112,999,623.38	5.71	112,999,623.38	132,431,245.16	7.09	132,431,245.16
Total	1,980,337,980.17	100.00	121,400,450.44	1,867,953,870.49	100	139,047,900.53

Half year of 2015

12. NOTES TO MAJOR ITEMS OF THE FINANCIAL STATEMENTS OF THE PARENT — Continued

1. Accounts Receivable — Continued

(2) Movements in provision for accounts receivable

			Decrease for the Year
	Opening Balance	Provision for the Year	Reversal	Write-off	Closing Balance
Reporting Period	139,047,900.53	4,009,756.75		21,657,206.84	121,400,450.44

(3) Accounts receivable that were written off

Company Name	Nature of accounts receivable	Amount written-off	Reason for write-off	Arising from related party transactions or not
Unrelated parties	Loans	21,657,206.84	Not recoverable due to long outstanding	No
Total		21,657,206.84

(4) As at 30 June 2015, there was no amount due from shareholders holding 5% or more (including 5%) of the voting shares of the Company in the balance of accounts receivable. As at 31 December 2014, there was no amount due from shareholders holding 5% or more (including 5%) of the voting shares of the Company in the balance of accounts receivable.

(5) Top five accounts Receivable

	Relationship with			Percentage of the total accounts receivables
No.	the Company	Amount	Ageing	amount(%)
Top 1	Subsidiary	1,264,706,211.51	Within three months	63.86
Top 2	Subsidiary	602,020,266.23	Within three months	30.40
Top 3	unrelated Party	24,995,034.40	Within three months	1.26
Top 4	unrelated Party	8,580,649.34	Within three months	0.43
Top 5	unrelated Party	6,582,990.66	Within three months	0.33
Total		1,906,885,152.14		96.28

Half year of 2015

12. NOTES TO MAJOR ITEMS OF THE FINANCIAL STATEMENTS OF THE PARENT — Continued

2. Other Receivables

(1) Other Receivables are disclosed by category as follows:

	Closing Balance
Item	Book value		Provision for bad debts
	Amount	Percentage (%)	Amount	Percentage (%)
Individually significant and subject
to separate provision	127,393,675.52	12.76	3,800,000.00	2.98
Ageing Analysis	870,611,076.08	87.24	18,027,885.12	2.07
Greencool Companies	0.00	—	0.00
Subtotal of the Category	870,611,076.08	87.24	18,027,885.12	2.07
Individually insignificant but subject
to separate provision		—
Total	998,004,751.60	100.00	21,827,885.12	2.19

Continued from above table

	Opening Balance
	Book value		Provision for bad debts
Category	Amount	Percentage (%)	Amount	Percentage (%)
Individually significant and subject
to separate provision	127,393,675.52	14.88	3,800,000.00	2.98
Ageing Analysis	728,892,677.94	85.12	17,948,914.69	2.46
Greencool Companies
Subtotal of the Category	728,892,677.94	85.12	17,948,914.69	2.46
Individually insignificant but subject to separate provision
Total	856,286,353.46	100.00	21,748,914.69	2.54

Half year of 2015

12. NOTES TO MAJOR ITEMS OF THE FINANCIAL STATEMENTS OF THE PARENT — Continued

2. Other Receivables — Continued

(1) Other Receivables are disclosed by category as follows: — Continued

Other receivables in the category provided bad debts by using ageing analysis:

	Closing Balance			Opening Balance
	Book value				Book value
		Percentage	Provision for		Percentage	Provision for
Age	Amount	(%)	bad debts	Amount	(%)	bad debts
Within three months	851,583,190.96	85.33		710,231,259.64	82.94
Over three months but within
six months		—	0.00
Over six months but within
one year	2,000,000.00	0.20	1,000,000.00	1,425,007.20	0.17	712,503.59
Over one year	17,027,885.12	1.71	17,027,885.12	17,236,411.10	2.01	17,236,411.10
Total	870,611,076.08	87.24	18,027,885.12	728,892,677.94	85.12	17,948,914.69

(2) Movements in provision for other receivables

			Decrease for the year
Year	Opening Balance	Provision for the Year	Reversal	Write-off	Ending Balance
Reporting Period	21,748,914.69	78,970.43			21,827,885.12

(3) Other receivables that are written off

Nil

(4) As at 30 June 2015, there was no other receivables from shareholder that holds 5% or more (including 5%) shares of the voting rights of the Company. As at 31 December 2014, there was no other receivable from shareholder that holds 5% or more (including 5%) shares of the voting rights of the Company.

Half year of 2015

12. NOTES TO MAJOR ITEMS OF THE FINANCIAL STATEMENTS OF THE PARENT — Continued

2. Other Receivables — Continued

(5) Top five other receivables

Name of the	Relationship with			Percentage of the total other receivables amount
Companies	the Company	Amount	Ageing	(%)
Top 1	Subsidiary	225,185,348.80	Within three months	22.56
Top 2	Subsidiary	165,409,651.68	Within three months	16.57
Top 3	Unrelated Party	127,393,675.52	Over one year	12.76
Top 4	Subsidiary	118,703,827.50	Within three months	11.89
Top 5	Subsidiary	87,784,356.44	Within three months	8.80
Total		724,476,859.94	—	72.59

3. Long-term equity investments

Investee	Accounting treatment	Investment cost	Opening balance	Changes	Closing balance	% Equity interest held	% Voting rights held	Provision for impairment	Cash dividend in the year
Huayi Compressor	Equity method		81,890,655.26	(81,890,655.26)
Attend	Equity method	2,000,000.00	2,850,040.45	(123,441.24)	2,726,599.21	20	20
Hisense Whirlpool	Equity method	225,000,000.00	171,500,403.47	(34,905,811.85)	136,594,591.62	50	50
Hisense Hitachi	Equity method	332,821,597.45	959,802,671.02	20,741,037.27	980,543,708.29	49	49		142,100,000.00
Equity method Subtotal		559,821,597.45	1,216,043,770.20	(96,178,871.08)	1,119,864,899.12				142,100,000.00
Guangdong Refrigerator	Cost method	155,552,425.85	155,552,425.85		155,552,425.85	70	70
Kelon Air-conditioner	Cost method	281,000,000.00	281,000,000.00		281,000,000.00	60	60	59,381,641.00
Guangdong Freezer	Cost method	15,668,880.00	15,668,880.00		15,668,880.00	44	44
Kelon HEA	Cost method	2,500,000.00	2,500,000.00		2,500,000.00	25	25
HEA Co.	Cost method	32,634,553.70	51,531,053.70		51,531,053.70	81.17	81.17		9,318,926.74
Rongsheng Plastic	Cost method	53,270,064.00	53,270,064.00		53,270,064.00	44.92	44.92
Wangao I&E	Cost method	600,000.00	600,000.00		600,000.00	20	20
Kelon Jiake	Cost method	42,000,000.00	42,000,000.00		42,000,000.00	70	70
Kelon Weili	Cost method				0.00	55	55
YingKou Refrigerator	Cost method	84,000,000.00	84,000,000.00		84,000,000.00	42	42
Jiangxi Kelon	Cost method	147,763,896.00	147,763,896.00		147,763,896.00	60	60
Hangzhou Kelon	Cost method	24,000,000.00	24,000,000.00		24,000,000.00	100	100
Yangzhou Refrigerator	Cost method	252,356,998.00	252,356,998.00		252,356,998.00	74.33	74.33
Zhuhai Kelon	Cost method	189,101,850.00	189,101,850.00		189,101,850.00	75	75
Shenzhen Kelon	Cost method	95,000,000.00	95,000,000.00		95,000,000.00	95	95
Kelon Development	Cost method	11,200,000.00	11,200,000.00		11,200,000.00	100	100
Chengdu Refrigerator	Cost method	50,000,000.00	50,000,000.00		50,000,000.00	100	100
Beijing Refrigerator Shandong Air	Cost method	92,101,178.17	92,101,178.17		92,101,178.17	55	55
Conditioner	Cost method	567,175,477.74	567,175,477.74		567,175,477.74	100	100
Zhejiang Air- Conditioner	Cost method	54,523,643.83	54,523,643.83		54,523,643.83	51	51
Hisense Mould	Cost method	121,628,013.09	121,628,013.09		121,628,013.09	78.7	78.7		15,228,193.40
Shandong Refrigerator	Cost method	275,000,000.00	275,000,000.00		275,000,000.00	100	100
Subtotal by cost method		2,547,076,980.38	2,565,973,480.38		2,565,973,480.38			59,381,641.00	24,547,120.14
Total		3,106,898,577.83	3,782,017,250.58	(96,178,871.08)	3,685,838,379.50			59,381,641.00	166,647,120.14

Half year of 2015

12. NOTES TO MAJOR ITEMS OF THE FINANCIAL STATEMENTS OF THE PARENT — Continued

4. Operating revenue and operating costs

(1) Operating revenue and operating costs

Item	Amount for the period	Amount for previous period
Revenue from principal operations	(1,599,012.47)	5,147,521,765.04
Revenue from other operations	27,467,835.88	101,624,808.75
Total operating revenue	25,868,823.41	5,249,146,573.79
Costs of principal operations	842,675.62	4,214,875,749.49
Costs of other operations	25,664,626.78	55,590,482.00
Total operating costs	26,507,302.40	4,270,466,231.49

(2) Principal operations (by products)

	Amount for the period		Amount for previous period
Products	Operating revenue	Operating costs	Operating revenue	Operating costs
Refrigerators and washing machines	(1,599,012.47)	842,675.62	2,733,483,939.24	2,191,110,350.70
Air-conditioners			2,414,037,825.80	2,023,765,398.79
Total	(1,599,012.47)	842,675.62	5,147,521,765.04	4,214,875,749.49

(3) Principal operations (by regions)

	Amount for the period		Amount for previous period
Region	Operating revenue	Operating costs	Operating revenue	Operating costs
Domestic Overseas	(1,599,012.47)	842,675.62	5,147,521,765.04	4,214,875,749.49
Total	(1,599,012.47)	842,675.62	5,147,521,765.04	4,214,875,749.49

Half year of 2015

12. NOTES TO MAJOR ITEMS OF THE FINANCIAL STATEMENTS OF THE PARENT — Continued

5. Investment income

(1) Breakdowns of investment income

Item	Amount for the period	Amount for previous period
Income from long-term equity investment — the cost method	24,547,120.14	10,877,281.00
Investment income from financial assets held-for-trading	7,410,000.00	9,500,000.00
Income from long-term equity investment — the equity
method	127,811,784.18	141,589,179.58
Income from disposal of long-term equity investment	135,598,968.15	7,206,524.80
Total	295,367,872.47	169,172,985.38

(2) Income from long-term equity investments — the cost method

Investee	Amount for the period	Amount for previous period
Hisense Home Appliances	9,318,926.74
Hisense Mould	15,228,193.40	10,877,281.00
Total	24,547,120.14	10,877,281.00

(3) Investment income from financial assets held-for-trading

Investee	Amount for the period	Amount for previous period
Hisense International Marketing	7,410,000.00	9,500,000.00
Total	7,410,000.00	9,500,000.00

(4) Income from long-term equity investment — the equity method

Investee	Amount for the period	Amount for previous period
Huayi Compressor	0.00	5,259,786.88
Hisense Whirlpool	(34,905,811.85)	(18,349,602.26)
Attend	(123,441.24)	19,780.37
Hisense Hitachi	162,841,037.27	154,659,214.59
Total	127,811,784.18	141,589,179.58

Half year of 2015

12. NOTES TO MAJOR ITEMS OF THE FINANCIAL STATEMENTS OF THE PARENT — Continued

6. Supplementary information on cash flows statement

		Amount for	Amount for
	Supplementary information	the period	previous period

1.	Reconciliation of net profit to cash flows from operating
	activities
	Net profit	424,488,700.95	578,685,990.49
	Add: Provision for assets impairment	4,088,727.17	(14,245,175.15)
	Depreciation of fixed assets, depletion of oil and gas assets
	and depreciation of productive biological assets	11,603,855.64	13,280,672.76
	Amortization of intangible assets	4,979,320.68	4,749,708.00
	Amortization of long-term prepaid expenses		0.00
	Loss on disposals of fixed assets, intangible and other
	long-term assets (Gain denoted by "-")	(393,634.00)	7,377,071.91
	Loss on scrapping of fixed assets (Gain denoted by "-")		0.00
	Loss on change in fair value (Gain denoted by "-")		0.00
	Financial expenses (Gain denoted by "-")		(14,986,556.54)
	Investment loss (Gain denoted by "-")	(295,367,872.47)	(169,172,985.38)
	Decrease in deferred tax assets (Increase denoted by "-")		0.00
	Increase in deferred tax liabilities (Decrease denoted by "-")		0.00
	Decrease in inventory (Increase denoted by "-")	(19,528.66)	1,372,124,225.32
	Decrease in operating receivables (Increase denoted by "-")	(266,245,751.87)	160,586,192.86
	Increase in operating payables (Decrease denoted by "-")	(243,616,879.55)	(2,121,278,028.47)
	Others
	Net cash flows from operating activities	(360,483,062.11)	(182,878,884.20)
2.	Significant investing and financing activities not involving cash
	receipts and payment:
	Liabilities converted into equity
	Convertible company debentures due within one year
	Fixed assets under finance leases
3.	Net movement in cash and cash equivalents
	Cash at the end of the period	62,725,786.61	220,327,232.03
	Less: Cash at the beginning of the period	28,279,997.40	194,913,820.28
	Add: Cash equivalents at the end of the period
	Less: Cash equivalents at the beginning of the period
	Net increase in cash and cash equivalents	34,445,789.21	25,413,411.75

Half year of 2015

13. SUPPLEMENTARY INFORMATION

1. Breakdown of non-recurring profit or loss

Item	Amount for the period	Amount for previous period
Profit or loss from disposal of non-current assets	129,254,722.54	(856,818.94)
Return, reduction and exemption of taxes surpassing approval or
without official approval document
Government grants included in the gain or loss (excluding those
government grants that are closely related to the enterprise's
business and are received with fixed amounts or with fixed
percentage based on unified standards promulgated by
government)	95,745,088.44	29,489,120.05
Capital occupation fees received from non-financial enterprises
that are included in current profits or losses
Gain arising under the circumstance where the investment cost for
acquisition of subsidiaries, associates and joint ventures is lower
than the fair value of the net assets attributable to the enterprise
Gain or loss arising from non-monetary assets exchange
Gain or loss arising from entrusted investment or entrusted asset
management
Asset impairment provided due to forced majeure (e.g. natural
disasters)
Gain or loss arising from debt restructuring Corporate restructuring expenses (e.g. staff placement costs and
integration expenses)
Gain or loss arising from the difference between the fair value and
transaction price in obviously unfair transactions
Net current profit or loss of subsidiaries arising from business
combination under common control from beginning of year to
the combination date
Gain or loss arising from contingencies irrelevant to the Company's
normal business
Gain or loss from changes in fair values of financial assets and
liabilities held-for-trading except for effective hedging activities
related to the Company's normal operations and investment gain
from disposal of financial assets and liabilities held-for-trading and
available-forsale financial assets
Reversal of impairment provision for accounts receivable individually tested for impairment		578,014.68
Gain or loss arising from entrusted loan
Gain or loss arising from changes in fair value of investment
properties measured subsequently by using fair value model
Effect on current profit or loss of one-off adjustment to current profit
or loss as required by taxation, accounting and other laws and
regulations
Custody fee income from entrusted operations
Other non-operating income and expense other than the
aforementioned items	2,893,948.21	15,448,065.18

Half year of 2015

13. SUPPLEMENTARY INFORMATION — Continued

1. Breakdown of non-recurring profit or loss — Continued

Item	Amount for the period	Amount for previous period
Other profit or loss items within the meaning of nonrecurring profit or loss
Total non-recurring profit or loss	227,893,759.19	44,658,380.97
Less: Effect of income tax on non-recurring profit or loss	7,335,504.15	7,662,455.83
Net non-recurring profit or loss	220,558,255.04	36,995,925.14
Less: Net effect of non-recurring profit or loss attributable to minority
interests (after tax)	2,368,466.99	1,196,048.70
Non-recurring profit or loss attributable to ordinary shareholders of the Company	218,189,788.05	35,799,876.44

2. Return on net asset and earnings per share

Current period

	Weighted average	Earnings per share
Profit for the reporting period	of return on net assets (%)	Basic earnings per share	Diluted earnings per share
Net profit attributable to ordinary shareholders of the Company Net profit attributable to ordinary shareholders of the Company after non-recurring profit or	13.66	0.37	0.37
loss	7.77	0.21	0.21

Corresponding period last year

	Weighted average	Earnings per share
Profit for the reporting period	of return on net assets (%)	Basic earnings per share	Diluted earnings per share
Net profit attributable to ordinary shareholders of the Company Net profit attributable to ordinary shareholders	19.85	0.45	0.45
of the Company after deducting nonrecurring gain or loss	18.68	0.42	0.42

Half year of 2015

13. SUPPLEMENTARY INFORMATION — Continued

3. Reasons for changes of major items in the financial statements of the Company

Item	Closing balance	Opening balance	Change (%)	Reasons for change
Financial assets measured at fair value where changes in fair value are accounted for as gain or loss of the period	45,885,145.11	162,460.00	28,143.96	Mainly due to changes in exchange rates for undue forward transactions at the end of the Reporting Period
Notes receivable	2,022,652,896.39	991,796,937.82	103.94	Mainly due to the increase in notes repayment and decrease in endorsement of notes receivable at the end of the Reporting Period
Accounts receivable	3,127,840,926.65	1,984,291,386.93	57.63	Mainly due to the end of the Reporting Period being the peak season, increased sales resulted in increased accounts receivable. The trend of year-on-year change in accounts receivable corresponds to the trend of year-on-year change in sales volume
Short-term borrowings	388,293,554.13	253,985,142.45	52.88	Mainly due to increase in factoring accounts receivable during the current period
Notes payable	2,134,358,147.40	1,528,195,526.41	39.67	Mainly due to increase in billing and notes payable at the end of the Reporting Period
Accounts payable	5,282,041,539.94	3,465,854,583.60	52.40	Mainly due to the end of the Reporting Period being the peak season, increased sales resulted in increased accounts payable. The trend of year-on-year change in accounts payable corresponds to the trend of year-on year change of sales volume
Advances from customers	445,806,561.46	765,881,375.85	(41.79)	Mainly due to the end of the Reporting Period being the peak season, increased sales resulted in decreased advances from customers
Other current liabilities	1,026,163,690.19	680,022,633.56	50.90	Mainly due to increased sales which resulted in an increase in corresponding amounts payable
Other consolidated income	9,760,648.24	39,990,884.45	(75.59)	Mainly due to the disposal of equity rights of Huayi Compressor during the Reporting Period and the transfer of other comprehensive income recognized in

the previous year

Half year of 2015

13. SUPPLEMENTARY INFORMATION — Continued

3. Reasons for changes of major items in the financial statements of the Company — Continued

	Amount for	Amount for corresponding
Item	current period	period last year	Change (%)	Reasons for change
Business taxes and surcharges	30,886,280.24	47,442,408.04	(34.90)	Mainly due to the changes in tax payable which resulted in the changes in corresponding taxes and surcharges
Financial expenses	(24,809,869.01)	(14,986,556.54)	N/A	Mainly due to the increase in foreign exchange gain
Impairment losses on assets	20,873,327.47	7,056,482.02	195.80	Mainly due to the increase in provision for bad debt and impairment loss of fixed assets in the current period
Gain from changes in fair value	53,113,821.77	(90,475,246.57)	N/A	Mainly due to changes in undue forward transactions and changes in settlement for due transactions
Investment gain	290,512,875.51	186,760,167.37	55.55	Mainly due to the disposal of equity rights of Huayi Compressor during the current period which resulted in increase in recognized investment income
Non-operating income	101,692,390.83	47,756,186.98	112.94	Mainly due to the increase in government grants received during the current period
Income tax expenses	64,380,329.92	103,110,741.21	(37.56)	Mainly due to the changes in deferred tax of the companies
Tax rebates received	443,199,992.26	309,467,203.75	43.21	Mainly due to the increase in the scale of export business which resulted in the increase in the corresponding export tax refund
Cash paid for other operating activities	2,073,479,177.64	1,420,106,965.74	46.01	Mainly due to the increase in fees payable
Cash received from recovery of investments	330,278,145.68	88,200,000.00	274.47	Mainly due to the disposal of equity rights of Huayi Compressor which resulted in the increase in the amount recovered from investment
Cash received from capital contribution	32,358,046.50	48,566,371.50	(33.37)	Mainly due to the change in amounts received from exercising of share options in the current period
Cash paid for repayment of borrowings	799,523,193.18	494,790,463.77	61.59	Mainly due to the increase in factoring accounts receivable business in the current period

INTERIM DIVIDEND

The Board does not recommend the payment of an interim dividend for the six months ended 30 June 2015. No interim dividend was paid for the corresponding period last year.

MANAGEMENT DISCUSSION AND ANALYSIS

I. ANALYSIS OF THE COMPANY'S OPERATION

1. Overall operation of the Company during the Reporting Period

During the Reporting Period, the white goods industry continued with the weak development trend in 2014. There was insufficient demand within the domestic market and there was sluggish growth or even contraction. Affected by these circumstances, the whole industry continued to suffer from declines in both sales volumes and values. According to the statistics of China Market Monitor Company Limited (CMM), as at June 2015, the cumulative retail volume of the refrigerator industry recorded a year-on-year decrease of 7.58%, and its cumulative retail value decreased by 2.12% year-on-year; whereas the cumulative retail volume of the airconditioner industry recorded a year-on-year decrease of 4.68%, and its cumulative retail value decreased by 9.03% year-on-year. As for the export business, the overall demand in the overseas market was weak. According to the Customs Statistics, the export volume in the first half of 2015 for the refrigeration industry recorded a year-on-year increase of 6.3%, and the export volume for the air-conditioning industry recorded a year-on-year decrease of 5.6%.

During the Reporting Period, the Company has been revolving around the operating directions of "building product advantage, enhancing sales capability, improving service quality, uplifting system performance and ensuring production scale and efficiency" formulated in the beginning of the year in implementing various tasks. However, due to factors such as insufficient demand in the market, slow improvement in the qualities of the Company's channel and inadequate product mix optimization, the effects of economies of scale of the Company declined. The Company recorded an operating revenue of RMB13,611 million and principal operating revenue of RMB12,488 million, representing a year-on-year decrease of 11.01%. Among these, the revenue from the refrigerator and washing machine business accounted for 49.14% of the principal operating revenue, representing a year-on-year decrease of 2.4%; revenue from the air-conditioner business accounted for 46.39% of the principal operating revenue, representing a year-on-year decrease of 19.71%; the domestic sales business recorded a principal operating revenue of RMB8,404 million, representing a year-on-year decrease of 16.91%, whereas the export sales business recorded a principal operating revenue of RMB4,084 million, representing a year-on-year increase of 4.23%. During the Reporting Period, the Company achieved a net profit attributable to shareholders of the Listed Company of RMB506 million, representing a year-on-year decrease of 17.06% and the earnings per share was RMB0.37.

I. ANALYSIS OF THE COMPANY'S OPERATION — Continued

2. Refrigerators and washing machines

While facing an external environment of increasing complexity of the industry during the Reporting Period, the Company actively implemented the foundation works of "reducing costs and improving efficiency" in the refrigerator and washing machine business. The gross profit margin of the domestic refrigerators and washing machines increased by 3.04 percentage points year-on-year. In terms of production efficiency, the average standard of output per worker increased by 34% year-on-year with the decrease in production scale, and the labour cost per unit improved by 21% year-on-year. In terms of technology, the Company has been committed to fulfilling its social responsibility by implementing "green energy" through procurement of innovative technology. The Company and Honeywell agreed to an in-depth strategic cooperation in which they would jointly promote the wide spread use of Solstice liquid blowing agent (LBA) in the refrigeration products, so as to further enhance the energy efficiency rating of its refrigeration products, and strengthen the Company's leading position in energy saving for refrigeration products. In terms of products, the Company insisted on uplifting the level of intelligence in products and enhancing user experience, by actively implementing work in respect of high-end products and launching upgraded products such as the "Ronshen Shishangpai(食尚派) Series" and the "Hisense Beiduofen(倍多分)Series". In the 2015 China Refrigerator Industry Summit Forum, with its technical innovations in fresh-keeping and moisturizing, "Ronshen" refrigerator won the grand award of the "Leading Brand in Fresh-keeping Technology in refrigerator industry"; with its innovative structural design and advanced innovative technology, the "Ronshen" 618 litres cross-design four-door intelligent refrigerator won the unique award of "Cross-design four-door leading product" in the industry; the "Hisense" 612 litres side-byside refrigerator was awarded the "High-end Variable Frequency Product in Refrigerator Industry" because of its differential advantages such as good cooling effect, strong fresh-keeping capabilities as well as low power consumption.

In the area of export business, the Company has actively expanded its scale of export to make up for the contracted domestic demand. According to the Customs Statistics, the Company's export volume of refrigeration products in the first half of 2015 increased by 16.4% year-on-year, representing a growth rate higher than the industry level of 6.3%.

3. Air-conditioner business

During the Reporting Period, the air-conditioner industry in general demonstrated low business at the time of peak season due to the factors including the general downturn of the air-conditioner industry, high volume of inventories and relatively cooler summer. According to the CMM statistics, the air-conditioning industry's cumulative retail volume in May and June 2015, being the traditional peak season, recorded year-onyear decrease of 5.13% and 4.68% respectively. Coupled with the impact of a price war, the air-conditioner manufacturing enterprises were facing a difficult business environment. During the first half of the year, the scale of the Company's air-conditioner business contracted, coupled with the impact of the price war, the gross profit margin fell by 3.33 percentage points year-on-year and there was a decline in profitability. Despite the difficult situation, the Company has been persistent in its strategy of "product is king" and "focus on refined products". The Company introduced Hisense Air-conditioner's Apple Cloud Series T, model Yuanzhuang(" 炫轉 ")air-conditioner. With its brilliant performance in five areas including "intelligence, energy efficiency, healthy living, aesthetics and quietness", Hisense Yuanzhuang(" 炫轉 ")air-conditioner won the "Chinese Home Electrical Appliance Design Award" in the Chinese Home Electrical Appliances Expo.

I. ANALYSIS OF THE COMPANY'S OPERATION — Continued

4. Outlook

Looking ahead to the second half of the year, the Company will strive to accomplish the following tasks for the maintenance of steady business operation.

In terms of product promotion: the promotion of high-end products will be strengthened, and the proportion of high-end products will be increased to improve the structure of the sales of the products and improve the gross profit margins of products.

In terms of channel management: the construction of core channels will be expedited, and the channels will be flattened to achieve the downward delegation of authority and improvement in market responsiveness; trainings will be strengthened, and mechanisms will be introduced to improve the enthusiasm of the marketing team and the execution power of the branch offices; the input-output ratio of the stores will be enhanced and the points of distribution network will be optimised.

In terms of system efficiency: non-performing models will be eliminated, production of under-performing models will be reduced and efficiencies of products will be improved; production efficiency will be uplifted by continuation in exploring rooms for profit improvement from manufacturing processes; further implementation in workflow enhancement such as process optimisation, automation and digitization will be continued to uplift management efficiency.

In terms of costs control: costs control capability will be strengthened to further improve the costs-to-production ratio.

In term of cash flow acceleration: the turnovers of inventories and receivables will be expedited by relentless clearance of overdue account receivables and abnormal accumulation of inventories; capital efficiency will be improved by increasing the application of electronic bank acceptance.

II. 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 compared to corresponding
Items	Reporting Period	Corresponding period last year	period last year (%)

Operating revenue (RMB)	13,611,148,619.89	15,397,537,762.48	(11.60)
Net profits attributable to shareholders of listed
company (RMB)	505,717,733.90	609,769,686.14	(17.06)
Net profits after deducting non-recurring profit and loss attributable to shareholders of listed
company (RMB)	287,527,945.85	573,969,809.70	(49.91)
Net cash flow from operating activities (RMB)	(199,164,845.29)	100,286,224.09	(298.60)
Basic earnings per share (RMB/share)	0.37	0.45	(17.78)
Diluted earnings per share (RMB/share)	0.37	0.45	(17.78)
Weighted average rate of return on net
assets (%)	13.66	19.85	(6.19)
			Increase or
			decrease as
			compared to
	End of the		end of last year
Items	Reporting Period	End of last year	(%)
Total assets (RMB)	16,178,601,971.61	13,266,793,963.74	21.95
Net assets attributable to shareholders of listed

company (RMB) 3,965,915,154.80 3,458,363,028.38 14.68

II. ANALYSIS TO PRINCIPAL FINANCIALS DURING THE REPORTING PERIOD — Continued

(II) Non-recurring profit and loss items and amounts

		Unit: RMB
Item	Amount	Description
Profits or losses from disposal of non-current assets (including the part written off for provision for impairment on assets)	129,254,722.54
Government grants recognized in the profits or losses (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)	95,745,088.44
Other non-operating income and expenses other than the
aforementioned items	2,893,948.21
Less: Effect of income tax	7,335,504.15
Effect of minority interests (after tax)	2,368,466.99
Total	218,189,788.05	—

II. ANALYSIS TO PRINCIPAL FINANCIALS DURING THE REPORTING PERIOD — Continued

(III) Analysis of principal business

Changes of major financial information as compared to corresponding period in previous year

				Unit: RMB
Item	Closing balance	Opening balance	change (%)	Reasons for change
Financial assets measured at fair value where changes in fair value are accounted for as gain or loss of the period	45,885,145.11	162,460.00	28,143.96	Mainly due to changes in exchange rates for undue forward transactions at the end of the Reporting Period
Notes receivable	2,022,652,896.39	991,796,937.82	103.94	Mainly due to the increase in notes repayment and decrease in endorsement of notes receivable at the end of the Reporting Period
Accounts receivable	3,127,840,926.65	1,984,291,386.93	57.63	Mainly due to the end of the Reporting Period being the peak season, increased sales resulted in increased accounts receivable. The trend of year-on-year change in accounts receivable corresponds to the trend of year-on-year change in sales volume
Short term borrowing	388,293,554.13	253,985,142.45	52.88	Mainly due to increase in factoring accounts receivable during the current period
Notes payable	2,134,358,147.40	1,528,195,526.41	39.67	Mainly due to increase in billing and notes payable at the end of the Reporting Period
Accounts payable	5,282,041,539.94	3,465,854,583.60	52.40	Mainly due to the end of the Reporting Period being the peak season, increased sales resulted in increased accounts payable. The trend of year-on-year change in accounts payable corresponds to the trend of year on-year change of sales volume
Advances from customers	445,806,561.46	765,881,375.85	(41.79)	Mainly due to the end of the Reporting Period being the peak season, increased sales resulted in decreased advances from customers
Other current liabilities	1,026,163,690.19	680,022,633.56	50.90	Mainly due to increased sales which resulted in an increase in corresponding amounts payable
Other comprehensive income	9,760,648.24	39,990,884.45	(75.59)	Mainly due to the disposal of equity rights of Huayi Compressor during the Reporting Period and the transfer of other comprehensive income recognized in the previous year

II. ANALYSIS TO PRINCIPAL FINANCIALS DURING THE REPORTING PERIOD — Continued

(III) Analysis of principal business — Continued

Item	Amount for current period	Amount for corresponding period last year	change (%)	Reasons for change
Operating revenue	13,611,148,619.89	15,397,537,762.48	(11.60)	No major change
Operating costs	10,800,650,891.99	12,062,743,794.94	(10.46)	No major change
Business taxes and surcharges	30,886,280.24	47,442,408.04	(34.90)	Mainly due to the changes in tax payable which resulted in the changes in corresponding taxes and surcharges
Selling and distribution expenses	2,210,836,967.94	2,290,188,924.94	(3.46)	No major change
General and administrative expenses	430,232,672.22	403,931,289.17	6.51	No major change
Financial expenses	(24,809,869.01)	(14,986,556.54)	N/A	Mainly due to the increase in foreign exchange gain
Impairment losses on assets	20,873,327.47	7,056,482.02	195.80	Mainly due to the increase in provision for bad debt and impairment loss of fixed assets in the current period
Gain from changes in fair value	53,113,821.77	(90,475,246.57)	N/A	Mainly due to changes in undue forward transactions and changes in settlement for due transactions
Investment income	290,512,875.51	186,760,167.37	55.55	Mainly due to the disposal of equity rights of Huayi Compressor during the current period which resulted in increase in recognized investment income
Non-operating income	101,692,390.83	47,756,186.98	112.94	Mainly due to the increase in government grants received during the current period
Income tax expenses	64,380,329.92	103,110,741.21	(37.56)	Mainly due to the changes in deferred tax of the companies
Tax rebates received	443,199,992.26	309,467,203.75	43.21	Mainly due to the increase in the scale of export business which resulted in the increase in the corresponding export tax refund
Cash paid for other operating activities	2,073,479,177.64	1,420,106,965.74	46.01	Mainly due to the increase in fees payable
Net cash flows from operating activities	(199,164,845.29)	100,286,224.09	N/A	Mainly due to the increase in fees payable
Cash received from recovery of investments	330,278,145.68	88,200,000.00	274.47	Mainly due to the disposal of equity rights of Huayi Compressor which resulted in the increase in the amount recovered from investment
Cash received from capital contribution	32,358,046.50	48,566,371.50	(33.37)	Mainly due to the change in amounts received from exercising of share options in the current period
Net cash flows from investing activities	49,081,314.67	(182,603,279.14)	N/A	Mainly due to the increase in cash received from investments
Cash paid for repayment of borrowings	799,523,193.18	494,790,463.77	61.59	Mainly due to the increase in factoring accounts receivable business in the current period
Net cash flows from financing activities	158,200,198.03	349,192,218.98	(54.70)	Mainly due to the changes in factoring accounts receivable business in the current period
Net increase in cash and cash equivalents	8,110,622.41	266,990,347.58	(96.96)	Mainly due to the decrease in net cash flow from operating and investment activities

II. ANALYSIS TO PRINCIPAL FINANCIALS DURING THE REPORTING PERIOD — Continued

(IV) Description of principal business segments

						Unit: RMB
				Increase or
				decrease in	Increase or
				revenue from	decrease in	Increase or
				operating	costs of operating	decrease in
				businesses	businesses as	gross profit margin
				as compared to	compared to	as compared to
	Revenue from	Costs of	Gross	corresponding	corresponding	corresponding
	operating	operating	profit margin	period last year	period last year	period last year
Item	businesses	businesses	(%)	(%)	(%)	(%)
By industry
Home appliances
manufacturing industry	12,487,779,215.49	9,781,224,754.56	21.67	(11.01)	(9.41)	(1.38)
By product
Refrigerators and washing
machines	6,136,651,831.84	4,759,023,251.48	22.45	(2.40)	(3.63)	0.98
Air-conditioners	5,793,122,043.63	4,597,727,838.07	20.63	(19.71)	(16.19)	(3.33)
Others	558,005,340.02	424,473,665.01	23.93	5.34	13.68	(5.58)
By region
Mainland	8,403,560,311.36	6,141,490,802.42	26.92	(16.91)	(15.60)	(1.14)
Overseas	4,084,218,904.13	3,639,733,952.14	10.88	4.23	3.38	0.74

III. CORE COMPETITIVENESS ANALYSIS

1. Technological advantages

The Company adheres to its operating philosophy 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.

III. CORE COMPETITIVENESS ANALYSIS — Continued

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.

IV. MAJOR SUBSIDIARIES AND COMPANIES IN WHICH THE COMPANY HAS EQUITY INTEREST

Name of company	Company type	Industry	Major product or service	Registered capital	Total assets (RMB ten thousand)	Net assets (RMB ten thousand)	Operating revenue (RMB ten thousand)	Operating profit (RMB ten thousand)	Net profits (RMB ten thousand)
Hisense Hitachi	A company in which the Company has equity interest	Home appliances industry	Production and sale of commercial air conditioners	US\$46 million	341,310.93	200,903.22	218,330.30	40,965.44	34,695.12

LIQUIDITY AND SOURCES OF CAPITAL

Net cash generated from operating activities of the Group was approximately RMB-199 million for the six months ended 30 June 2015 (for the six months ended 30 June 2014: RMB100 million).

As at 30 June 2015, the Group had bank deposits and cash (including pledged bank balances) amounting to approximately RMB879 million (as at 30 June 2014: RMB740 million) and bank loans amounting to approximately RMB388 million (as at 30 June 2014: RMB502 million).

Total capital expenditures of the Group for the six months ended 30 June 2015 amounted to approximately RMB289 million (for the six months ended 30 June 2014: RMB283 million).

GEARING RATIO

As at 30 June 2015, the Group's gearing ratio (calculated according to the formula: total liabilities divided by total assets) was 73% (as at 30 June 2014: 75%).

TRUST DEPOSITS

As at 30 June 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.

HUMAN RESOURCES AND REMUNERATION POLICY

As at 30 June 2015, the Group had approximately 33,470 employees, mainly comprising 4,704 technical staff, 15,886 sales representatives, 563 financial staff, 940 administrative staff and 11,377 production staff. The Group had 6 employees with a doctorate degree, 323 with a master's degree and 3,807 with a bachelor's degree. There were 429 employees who occupied mid-level positions or above in the Group according to the national standards. For the six months ended 30 June 2015, the Group's staff payroll amounted to RMB1,362 million (corresponding period in 2014 amounted to RMB1,267 million).

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 30 June 2015, the Group's property, plant and equipment (including leasehold land held for own use) and investment properties and trade receivables of approximately RMB417 million (31 December 2014: RMB557 million) were pledged as security for the Group's borrowings.

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.

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 Appendix 10 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "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 in the Reporting Period.

SHARE CAPITAL STRUCTURE

As at 30 June 2015, the share capital structure of the Company was as follows:

		Percentage to the total issued share capital
Class of shares	Number of shares
H shares	459,589,808	33.73%
A shares	903,135,562	66.27%
Total	1,362,725,370	100.00%

TOP TEN SHAREHOLDERS

As at 30 June 2015, there were 32,184 shareholders of the Company (the "Shareholders") in total, of which the top ten Shareholders were as follows:

Name of Shareholder	Nature of Shareholder	No. of shares held	Percentage to the total issued shares of the Company	Percentage to the relevant class of issued shares of the Company
Qingdao Hisense Air-conditioning Company Limited	State-owned legal person	612,316,909	44.93%	67.80%
HKSCC Nominees Limited Note 1	Foreign legal person	459,120,768	33.69%	99.90%
Wang Wenxue Note 2	Domestic natural person	7,532,470	0.55%	0.83%
Wen Bin Note 2	Domestic natural person	7,323,407	0.54%	0.81%
Zhang Shaowu	Domestic natural person	7,230,000	0.53%	0.80%
Zhao Zhilu Note 2	Domestic natural person	6,696,088	0.49%	0.74%
Huang Li Note 2	Domestic natural person	6,620,566	0.49%	0.73%
Ni Longhai Note 2	Domestic natural person	4,370,444	0.32%	0.48%
Tao Xiaoming Note 2	Domestic natural person	4,249,218	0.31%	0.47%
Zou Jianxiong Note 2	Domestic natural person	2,400,955	0.18%	0.27%

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, purchased 1,095,000 H shares during the Reporting Period, representing 0.08% of the total number of shares of the Company. Hisense (Hong Kong) Company Limited is the holder of 65,964,000 H shares in total at the end of the Reporting Period, representing 4.84% of the total number of shares of the Company.
1. The 7,532,370 shares of the Company held by Mr. Wang Wenxue, a shareholder of the Company, were held through a guaranteed security account for customer credit trading of China Securities Company Limited. The 7,323,407 shares of the Company held by Wen Bin, a shareholder of the Company, were held through a guaranteed security account for customer credit trading of Fortune Securities and Shares Company Limited. The 6,688,388 shares of the Company held by Zhao Zhilu, a shareholder of the Company, were held through a guaranteed security account for customer credit trading of Fortune Securities Company Limited. The 6,620,566 shares of the Company held by Huang Li, a shareholder of the Company, were held through a guaranteed security account for customer trading of Huarong Securities Company Limited. The 4,370,444 shares of the Company held by Ni Longhai, a shareholder of the Company, were held through a guaranteed security account for customer trading of Huarong Securities Company Limited. The 4,249,218 shares of the Company held by Tao Xiaoming, a shareholder of the Company, were held through a guaranteed security account for customer trading of Shanxi Securities Company Limited. The 2,400,855 shares of the Company held by Zou Jianxiong, a shareholder of the Company, were held through a guaranteed security account for customer credit trading of Guosen Securities Company Limited.

SHAREHOLDINGS OF THE TOP TEN SHAREHOLDERS OF TRADABLE SHARES

	Number of tradable
Name of Shareholders	shares held	Class of shares
Qingdao Hisense Air-conditioning Company Limited	612,316,909	RMB ordinary shares
HKSCC Nominees Limited	459,120,768	Overseas listed foreign shares
Wang Wenxue	7,532,470	RMB ordinary shares
Wen Bin	7,323,407	RMB ordinary shares
Zhang Shaowu	7,230,000	RMB ordinary shares
Zhao Zhilu	6,696,088	RMB ordinary shares
Huang Li	6,620,566	RMB ordinary shares
Ni Longhai	4,370,444	RMB ordinary shares
Tao Xiaoming	4,249,218	RMB ordinary shares
Zou Jianxiong	2,400,955	RMB ordinary shares

INTERESTS AND SHORT POSITIONS OF SUBSTANTIAL SHAREHOLDERS IN THE SHARES

So far as is known to any Directors, supervisors and the chief executive of the Company, as at 30 June 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:

LONG POSITION OR SHORT POSITION IN THE SHARES OF THE COMPANY

Name of shareholder	Capacity	Type of shares	Number of shares held	Percentage of the respective type of shares	Percentage of the total number of shares in issue
Qingdao Hisense Air-conditioning Company Limited Note 1	Beneficial owner	A shares	612,316,909(L)	67.80%	44.93%
Qingdao Hisense Electric Holdings Company Limited Note 1	Interest of controlled corporation	A shares	612,316,909(L)	67.80%	44.93%
Hisense Company Limited Note 1	Interest of controlled corporation	A shares	612,316,909(L)	67.80%	44.93%
Hisense (Hong Kong) Company Limited Note 1	Beneficial owner	H shares	64,869,000 (L)	14.11%	4.76%
Qingdao Hisense Electric Holdings Company Limited Note 1	Interest of controlled corporation	H shares	64,869,000 (L)	14.11%	4.76%
Hisense Company Limited Note 1	Interest of controlled corporation	H shares	64,869,000 (L)	14.11%	4.76%
Prime Capital Management Company Limited Note 2	Investment manager	H shares	57,886,691(L)	12.60%	4.25%
Citigroup Inc. Note 3	Person having security	H shares	30,181,081(L)	6.56%	2.21%
	interests in shares		172,000(S)	0.03%	0.01%
	and custodian corporation/ approved lending agent		7,150,918(P)	1.55%	0.52%

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% and indirectly owned as to 6.67% 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 and is accustomed or obliged to act in accordance with the directions or instructions of 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;
1. 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;
1. 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 22,858,163 H shares; Citigroup Global Markets Hong Kong Limited was interested in the long position of 172,000 H shares and the short position of 172,000 H shares and Citibank N.A. was interested in the long position of 7,150,918 H shares. Among such interests in the H shares, Citigroup Inc. was interested in the long position of 22,857,165 H shares as person having security interests, the long position of 7,150,918 H shares as custodian corporation or approved lending agent and the long position of 172,998 H shares and the short position of 172,000 H shares as interest of controlled corporation.

Save as disclosed above, as at 30 June 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.

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

As at 30 June 2015, save as disclosed below and in the section "The First Share Option Incentive Scheme", none of the members of the Board, supervisors and the chief executive of the Company and their respective associates held any interests or short positions in any shares, 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 Stock Exchange of Hong Kong Limited pursuant to the Model Code.

LONG POSITION IN THE SHARES OF THE COMPANY

		Number of	Percentage to the total issued shares of	Percentage to the relevant class of issued shares of
Name of Director	Nature of interest	shares held	the Company	the Company
Tang Ye Guo	Beneficial owner	831,600 A Shares (Note 1)	0.06%	0.09%
Jia Shao Qian	Beneficial owner	539,060 A Shares (Note 2)	0.04%	0.06%

Notes:

1. In addition to the 831,600 A Shares, Mr. Tang Ye Guo 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 30 June 2015).
1. In addition to the 539,060 A Shares, Mr. Jia Shao Qian 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 30 June 2015).

PURCHASE, SALE OR REDEMPTION OF SECURITIES

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

AUDIT COMMITTEE

The Audit Committee of the Company has reviewed the interim results announcement and the interim report for the period ended 30 June 2015.

THE FIRST SHARE OPTION INCENTIVE SCHEME

(1) MOVEMENTS OF THE SHARE OPTIONS DURING THE REPORTING PERIOD

No.	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)	Outstanding share options as at 30 June 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	Xiao Jian Lin	Former Director, former President	55.476 (Note 2)	N/A	55.476	55.476	N/A
4	Mid level management staff and key personnel		801.619	353.301	71.365	71.365	376.953
	Total		998.509	422.981	126.841	126.841	448.687

Notes:

All share options available for issue under the first share option incentive scheme have been granted.
Mr. Xiao Jian Lin has resigned from his positions as director and president on 17 March 2015.

(2) 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.

(3) 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.

THE FIRST SHARE OPTION INCENTIVE SCHEME — Continued

(4) 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.

According to the calculation by the Black-Scholes option pricing model, the Company recognized an expense of RMB-293,400 in total in relation to First Share Option Incentive Scheme during the Reporting Period.

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 Listing Rules.

SUPPLEMENTARY INFORMATION AS REQUIRED BY THE STOCK EXCHANGE OF HONG KONG LIMITED IN RELATION TO THE COMPANY'S A SHARES INTERIM RESULTS ANNOUNCEMENT

I. MATERIAL LITIGATIONS AND ARBITRATIONS OF THE COMPANY

✓ Applicable Not applicable

General status of the litigation (arbitration)	Amount involved (RMB ten thousand)	Whether a liability is expected to be incurred	Progress of the litigation (arbitration)	Results and effects of the litigation (arbitration)	Execution of the judgment of the litigation (arbitration)
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 suspected fund embezzlements.	72,541.44	No	On 26 January 2015, the relevant subsidiaries of the Company received the execution judgments of (2009) Fo Zhong Fa Zhi Zi No. 236 and (2010) Fo Zhong Fa Zhi Zi No. 32 from the Foshan Intermediate Court. Pursuant to the execution judgments, the execution procedure of the 2 above mentioned cases have been concluded in accordance with the law.	Progress of the litigation will not affect the profits and losses for the current period.	As at the date hereof, the Company has not yet received execution judgment for 1 case involving Greencool Companies.

II. SHAREHOLDINGS IN OTHER LISTED COMPANIES HELD BY THE COMPANY

		Initial		Carrying amount at	Profit and loss for the	Changes in ownership interests for
		investment cost (RMB ten	Shareholding percentage in the company	the end of the period (RMB ten	Reporting Period (RMB ten	the Reporting Period (RMB ten
Stock code	Stock abbreviation	thousand)	(%)	thousand)	thousand)	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 RMB81,890,700 was released and an investment gain of RMB135,549,000 was recognised. After the present disposal, the Company no longer holds shares in Huayi Compressor.

III. PARTICULARS OF CONNECTED TRANSACTIONS IN RELATION TO ORDINARY BUSINESS OCCURRED DURING THE REPORTING PERIOD

	Type of connected	Particulars of connected	Pricing principle of connected	Connected transaction amount	Percentage of total amount of similar transactions
Connected parties	transaction	transaction	transaction	(RMB ten thousand)	(%)
Hisense Electric	Purchase	Finished goods	Agreed price	5.2	—
Hisense — Whirlpool	Purchase	Finished goods	Agreed price	7,961.83	0.74
Hisense Hitachi	Purchase	Finished goods	Agreed price	15.72	—
Hisense Electric	Purchase	Materials	Agreed price	163.19	0.02
Hisense Group	Purchase	Materials	Agreed price	404.46	0.04
Hisense — Whirlpool	Purchase	Materials	Agreed price	155.08	0.01
Hisense Hitachi	Purchase	Materials	Agreed price	243.86	0.02
Hisense Electric	Receipt of services	Receipt of services	Agreed price	530.79	0.05
Hisense Group	Receipt of services	Receipt of services	Agreed price	20,305.73	1.88
Hisense Hong Kong	Receipt of purchase financing agency services	Receipt of purchase financing agency services	Agreed price	13,361.75	1.24
Hisense Group	Sale	Finished goods	Agreed price	124,059.09	9.11
Hisense Hitachi	Sale	Finished goods	Agreed price	6,511.77	0.48
Hisense Group	Sale	Materials	Agreed price	752.38	0.06
Hisense Hitachi	Sale	Materials	Agreed price	121.58	0.01
Hisense Electric	Sale	Moulds	Market price	3,763.15	0.28
Hisense Group	Sale	Moulds	Market price	6,985.45	0.51
Hisense Hitachi	Sale	Moulds	Market price	807.41	0.06
Hisense Group	Provision of services	Provision of services	Agreed price	141.97	0.01
Hisense — Whirlpool	Provision of services	Provision of services	Agreed price	96.07	0.01

As at the end of the Reporting Period, the Company and its subsidiaries had the balance of deposit of RMB643,905,200 and interest income received of RMB2,351,100, the actual balance of loan of RMB0, balance of electronic bank acceptance bill of RMB1,019,464,200, interest payment for discounted notes of RMB0 and the handling fee for opening accounts for electronic bank acceptance bill of RMB605,400 with Hisense Finance. The actual amount of discounted interest for the provision of draft discount services was RMB0, the actual amount involved for the provision of settlement and sale of foreign exchange services was US\$132,869,500 and the actual service fee paid for the provision of agency services such as settlement services for receipt and payment of funds was RMB170,800.

IV. PARTICULARS OF GUARANTEES

✓ Applicable Not applicable

Unit: RMB ten thousand

					External guarantee given by the Company (excluding guarantees for its subsidiaries)
	Date of disclosure							Whether the
	of relevant		Actual					guarantee
	announcement in		effective					is given
	relation to the limit	Limit on	date	Actual				for any
	on the guaranteed	guaranteed	(date of	guaranteed	Type of	Period of	Completed	connected
The guaranteed party	amount	amount	agreement)	amount	guarantee	guarantee	or not	party

Nil	—	—	—		— —	—	—	—
Total limit on the amount of external guarantees approved during the Reporting Period (A1)						0 Actual amount of external guarantees during the Reporting Period (A2)		0
Total limit on the amount of external guarantees which has been approved at the end of the Reporting Period (A3)					Reporting Period (A4)	0 Total balance of actual amount of external guarantees at the end of the		0

					Guarantees given by the Company for its subsidiaries
The guaranteed party	Date of disclosure of relevant announcement in relation to the limit on the guaranteed amount	Guaranteed amount	Actual effective date (date of agreement)	Actual guaranteed amount	Type of guarantee	Period of guarantee	Completed or not	Whether the guarantee is given for any connected party
Guangdong Refrigerator	22 November 2013	60,000	2014-3-5		9.44 Joint liability guarantee;	2014.03.05-2015.01.31	Yes	No
Guangdong Refrigerator	22 November 2013	60,000	2015-3-9		9.61 Joint liability guarantee	2015.03.09-2016.01.31	No	No
Guangdong Refrigerator	22 November 2013	60,000	2014-7-7		55.58 Joint liability guarantee	2014.07.07-2015.01.09	Yes	No
Guangdong Refrigerator	22 November 2013	60,000	2014-7-7		109.42 Joint liability guarantee;	2014.07.07-2015.07.02	No	No
Guangdong Air-conditioner	03 December 2014	30,000	2015-5-13		133.72 Joint liability guarantee	2015.05.13-2016.01.15	No	No
Kelon Air-conditioner	22 November 2013	30,000	2014-5-5		160.00 Joint liability guarantee	2014.05.05-2015.12.31	No	No
Kelon Air-conditioner	22 November 2013	30,000	2015-4-8		74.83 Joint liability guarantee;	2015.04.08-2015.08.30	No	No
Kelon Air-conditioner	22 November 2013	30,000	2014-10-10		416.74 Joint liability guarantee	2014.10.10-2015.05.21	Yes	No
Home Appliances Co	22 November 2013	5,000	2014-6-23		125.30 Joint liability guarantee	2014.06.23-2015.05.30	Yes	No
Home Appliances Co	22 November 2013	5,000	2014-6-20		60.00 Joint liability guarantee;	2014.06.20-2016.06.11	No	No
Home Appliances Co	22 November 2013	5,000	2015-1-16		525.36 Joint liability guarantee	2015.01.16-2015.06.15	Yes	No
Home Appliances Co	22 November 2013	5,000	2015-5-28		390.99 Joint liability guarantee	2015.05.28-2015.09.14	No	No
Yangzhou Refrigerator	22 November 2013	10,000	2013-5-14		75.86 Joint liability guarantee;	2013.05.14-2015.01.14	Yes	No
Ronsheng Plastic	22 November 2013	6,000	2015-1-12		1086.40 Joint liability guarantee	2015.01.12-2015.06.23	Yes	No
Ronsheng Plastic	22 November 2013	6,000	2015-4-28		620.80 Joint liability guarantee	2015.04.28-2015.09.25	No	No
Total limit on the amount of guarantees for subsidiaries approved during the Reporting Period (B1)					30,000 Actual amount of guarantees for subsidiaries during the Reporting Period (B2)			3,854.05

Total limit on the amount of guarantees for subsidiaries which has been approved at the end of the Reporting Period (B3)

213,000 Total balance of actual amount of guarantees for subsidiaries at the end of the Reporting Period (B4) 1,559.37

IV. PARTICULARS OF GUARANTEES — Continued

					Guarantees given by the subsidiaries for its subsidiaries
The guaranteed party	Date of disclosure of relevant announcement in relation to the limit on the guaranteed amount	Limit on guaranteed amount	Actual effective date (date of agreement)	Actual guaranteed amount	Type of guarantee	Period of guarantee	Completed or not	Whether the guarantee is given for any connected party
Nil	—	—	—		— —	—	—	—
Total limit on the amount of guarantees for subsidiaries approved during the Reporting Period (C1)						0 Actual amount of guarantees for subsidiaries during the Reporting Period (C2)		0
Total limit on the amount of guarantees for subsidiaries which has been approved at the end of the Reporting Period (C3)					Reporting Period (C4)	0 Total balance of actual amount of guarantees for subsidiaries at the end of the		0
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 (A1+B1+C1)						30,000 Actual amount of guarantees during the Reporting Period (A2+B2+C2)		3,854.05
Total limit on the amount of guarantees which has been approved at the end of the Reporting Period (A3+B3+C3)				213,000 Total balance of actual amount of guarantees at the end of the Reporting Period (A4+B4+C4)				1,559.37
Proportion of actual amount of guarantees (being A4+B4+C4) to the net assets of the Company Including:								0.39%
Guaranteed amount provided for shareholders, beneficial controlling parties and their connected parties (D)								0
Guaranteed amount provided directly or indirectly for the guaranteed party with gearing ratio over 70% (E)						368.55
Total guaranteed amount over 50% of the net asset (F)							0
Sum of the above three guarantees (D+E+F)								368.55
Statement on possibility to assume joint liabilities for guarantees which have not expired						Nil
Description of provision of external guarantee in violation of prescribed procedures								Nil

V. DERIVATIVES INVESTMENT

Unit: RMB (in ten thousand) Name of operators of derivatives investment Connection Whether or not a connected transaction Type of derivatives investment Initial investment amount of derivatives investment Effective Date Expiry Date Investment at the beginning of the period Amount of provision for impairment (if any) Investment at the end of the period Proportion of investment to the net asset of the Company at the end of the reporting period (%) Actual amount of profit and loss during the reporting period Bank No No Forward foreign exchange contracts 221,160.98 1 January 2015 30 June 2015 221,160.98 176,068.76 44.40 7,280.59 Source of derivatives investment funding Export trade payment

Date of the announcement disclosing the approval of 26 March 2015

derivatives investment by the Board (if any)

Litigation involved (if applicable) Not applicable

Date of the announcement disclosing the approval of derivatives investment during shareholders' meeting (if any) 26 June 2015

Risk analysis of positions in derivatives during the reporting period and explanations of risk control measures (including but not limited to market risk, liquidity risk, credit risk, operation risk, legal risk etc.)

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 Company determines a reasonable range of foreign exchange rates to achieve the hedging purpose. The Company has formulated the "Management Measures for the Foreign Exchange Capital Business" and "the Internal Control System for Forward Foreign Exchange Capital Transactions". The measures specifically regulate the basic principles, operation rules, risk control measures and internal controls that shall be followed when engaging in the business of foreign exchange 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.

V. DERIVATIVES INVESTMENT — Continued

Changes in market price or product fair value of invested derivatives during the reporting period, where specific methods and relevant assumptions and parameters used shall be disclosed in the analysis of derivatives' fair value

The assessment of the fair value of the derivatives carried out by the Company mainly represents the outstanding foreign exchange forward contracts entered into by the Company and banks, which are recognized as transactional financial assets or liabilities based on the difference between the quotation of the outstanding foreign exchange forward contracts and the forward exchange rate as at the end of the period. During the reporting period, the Company recognized a gain on change in fair value of the derivatives of RMB53,113,800. Investment gain amounted to RMB19,692,100, resulting in a total profits or losses of RMB72,805,900.

Explanations of any significant changes in the Company's accounting policies and specific accounting and auditing principles on derivatives between the reporting period and the last reporting period

Specific opinions of independent Directors on the derivatives investment and risk control of the Company

During the reporting period, there were no material changes in the accounting policy and specific accounting and auditing principles for the Company's derivatives business as compared to last reporting period.

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

This report 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 report, 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
"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 Its former name is Guangdong Kelon Fittings Co., Ltd., which has been changed since 10 April 2014
"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, Guangdong Province
"RMB"	Renminbi
"Hong Kong Stock Exchange"	The Stock Exchange of Hong Kong Limited

AI assistant

Medlive Technology Co., Ltd. — Interim / Quarterly Report 2015

50436_rns_2015-09-16_7ac09183-9d47-4254-82fd-ade82bee98cd.pdf

FINANCIAL INFORMATION PREPARED IN ACCORDANCE WITH CHINA ACCOUNTING STANDARDS

1. CONSOLIDATED BALANCE SHEETS

1. CONSOLIDATED BALANCE SHEETS — Continued

1. CONSOLIDATED BALANCE SHEETS — Continued

2. BALANCE SHEETS OF PARENT COMPANY

2. BALANCE SHEETS OF PARENT COMPANY — Continued

3. CONSOLIDATED INCOME STATEMENT

4. INCOME STATEMENT OF PARENT COMPANY

5. CONSOLIDATED CASH FLOW STATEMENT

5. CONSOLIDATED CASH FLOW STATEMENT — Continued

6. CASH FLOW OF PARENT COMPANY

7. CONSOLIDATED STATEMENT OF CHANGES IN OWNERS' EQUITY

7. CONSOLIDATED STATEMENT OF CHANGES IN OWNERS' EQUITY — Continued

8. STATEMENT OF CHANGES IN OWNERS' EQUITY OF THE PARENT COMPANY

8. STATEMENT OF CHANGES IN OWNERS' EQUITY OF THE PARENT COMPANY — Continued

HISENSE KELON ELECTRICAL HOLDINGS COMPANY LIMITED

NOTES TO THE FINANCIALS TATEMENTS

1. COMPANY PROFILE

1. COMPANY PROFILE — Continued

2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

3. STATEMENT OF COMPLIANCE WITH THE ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES

1. Accounting period

2. Business cycle

3. Reporting currency

4. Accounting treatment for business combinations involving entities under common and not under common control

(1) Business combination involving entities under common control

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

(1) Business combination involving entities under common control — Continued

(2) Business combination involving entities not under common control

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

(2) Business combination involving entities not under common control — Continued

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

5. Preparation of consolidated financial statements

(1) Criteria for the recognition of scope of consolidation

(2) Preparation of consolidated financial statements

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

5. Preparation of consolidated financial statements — Continued

(2) Preparation of consolidated financial statements — Continued

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

6. Classification of joint arrangements and accounting treatment for joint operations

7. Criteria for the recognition of cash and cash equivalents

8. Foreign currency transactions and translation of financial statements in foreign currency

(1) Translation of foreign currency transactions

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

8. Foreign currency transactions and translation of financial statements in foreign currency — Continued

(2) Translation of monetary items and non-monetary items in foreign currencies

(3) Translation of financial statements in foreign currency

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

8. Foreign currency transactions and translation of financial statements in foreign currency — Continued

(3) Translation of financial statements in foreign currency — Continued

9. Financial instruments

(1) Determination of fair value for financial assets and financial liabilities

(2) Classification, recognition and measurement of financial assets

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

9. Financial instruments — Continued

(2) Classification, recognition and measurement of financial assets — Continued

① Financial assets at fair value through profit or loss

② Held-to-maturity investments

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

9. Financial instruments — Continued

(2) Classification, recognition and measurement of financial assets — Continued

③ Loans and receivables

④ Available-for-sale financial assets

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

9. Financial instruments — Continued

(3) Impairment of financial assets (other than receivables)

① Impairment of held-to-maturity investments

② Impairment of available-for-sale financial assets

(4) Basis for recognition and measurement of transfer of financial assets

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

9. Financial instruments — Continued

(4) Basis for recognition and measurement of transfer of financial assets — Continued

(5) Classification and measurement of financial liabilities

① Financial liabilities at fair value through profit or loss

4. MAJOR ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES — Continued

9. Financial instruments — Continued

Medlive Technology Co., Ltd. Interim / Quarterly Report 2015