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

Aug 27, 2015

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

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HISENSE KELON ELECTRICAL HOLDINGS COMPANY LIMITED

海信科龍電器股份有限公司

(A joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 00921)

2015 INTERIM RESULTS ANNOUNCEMENT

The Board of Directors (the “Board”) of Hisense Kelon Electrical Holdings Company Limited (the “Company”) hereby announces the unaudited interim results 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 results announcement has been reviewed by the Company’s Audit Committee.

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

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

Consolidated Balance Sheet

Item	Note	30 June 2015	31 December 2014
Assets
Current assets
Cash at bank and on hand		879,033,377.53	870,663,755.12
Financial assets at fair value through profit or loss for the currentperiod		45,885,145.11	162,460.00
Notes receivable		2,022,652,896.39	991,796,937.82
Accounts receivable	5	3,127,840,926.65	1,984,291,386.93
Prepayments		446,248,452.29	498,209,306.68
Others receivables		**446,884,703.32 **	493,051,526.66
Inventories		**3,352,817,562.84 **	2,915,921,775.81
Other current assets		308,416,803.24	287,019,824.65

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Total current assets		**10,629,779,867.37 **	8,041,116,973.67
Non-current assets
Financial assets available-for-sale		3,900,000.00	4,000,000.00
Long-term equity investments		1,119,864,899.12	1,216,043,770.20
Investmentproperties		30,208,771.74	31,459,416.41
Fixed assets		**3,390,359,539.97 **	2,932,039,091.41
Construction inprogress		**185,543,441.52 **	251,551,873.15
Disposal of fixed assets		7,857,686.83	134,612.95
Intangible assets		661,702,034.19	670,944,657.29
Long-term prepaid expenses		11,505,346.17	12,690,220.43
Deferred tax assets		137,880,384.70	106,813,348.23
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
Liabilities and shareholders’ equity
Current liabilities
Short-term borrowings		388,293,554.13	253,985,142.45
Financial liabilities at fair value through profit or loss for the current period			7,391,136.66
Notespayable		2,134,358,147.40	1,528,195,526.41
Accounts payable	6	**5,282,041,539.94 **	3,465,854,583.60
Advances from customers		445,806,561.46	765,881,375.85
Employee remunerations payable		240,279,273.50	249,664,285.98
Taxespayable		164,526,233.11	174,792,592.21
Interestspayable
Dividendspayable		**37,707.02 **	2,067.02
Otherpayables		1,618,998,324.13	1,735,584,905.78
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
Non-current liabilities
Provisions		372,659,888.08	404,411,887.77
Deferred income		58,084,575.53	60,261,598.06
Deferred tax liability		35,026.65	165,600.70
Total non-current liabilities		430,779,490.26	464,839,086.53
Total liabilities		11,731,284,521.14	9,326,213,336.05
Shareholders’ equity
Share capital		1,362,725,370.00	1,358,495,560.00

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Capital reserves		**2,153,765,644.61 **	2,125,930,825.88
Other comprehensive incomes		9,760,648.24	39,990,884.45
Surplus reserves		145,189,526.48	145,189,526.48
Retainedprofits		294,473,965.47	-211,243,768.43
Total equity attributable to shareholders of the Company		3,965,915,154.80	3,458,363,028.38
Minorityinterests		**481,402,295.67 **	482,217,599.31
Total shareholders’ equity		4,447,317,450.47	3,940,580,627.69
Total liabilities and shareholders’ equity		**16,178,601,971.61 **	13,266,793,963.74

Consolidated Income Statement

Consolidated Income Statement
Item	Note	January to June 2015	January to June 2014
Operating revenue	7	13,611,148,619.89	15,397,537,762.48
Operatingcosts	7	10,800,650,891.99	12,062,743,794.94
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	8	**-24,809,869.01 **	-14,986,556.54
Impairment losses on assets		20,873,327.47	7,056,482.02
Gain from changes in fair value		53,113,821.77	-90,475,246.57
Investmentgain	9	**290,512,875.51 **	186,760,167.37
Including: Share of profit of associates and joint ventures		127,811,784.18	141,589,179.58
Operating profits		**486,105,046.32 **	697,446,340.71
Non-operatingincome		101,692,390.83	47,756,186.98
Including:Gainson non-current assets		1,040,721.35	1,639,741.48
Non-operatingexpenses		9,347,599.79	3,675,820.69
Including: Losses on disposal of non-current assets		7,334,966.96	2,496,560.42
Totalprofits		578,449,837.36	741,526,707.00
Less: Income tax expenses	10	**64,380,329.92 **	103,110,741.21
Netprofits		514,069,507.44	638,415,965.79
Net profits of consolidated parties prior to consolidation

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Net profit 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
Earnings per share
Basic earningsper share	13	**0.37 **	0.45
Diluted earningsper share	13	**0.37 **	0.45
Other comprehensive income		-30,230,236.21	-259,491.65
(1) Items to be reclassified into profit and loss in subsequent accounting periods upon satisfaction of required conditions		-818,758.48	-259,491.65
(2) items not to be reclassified into profit and loss in subsequent accounting periods		-29,411,477.73	0.00
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

Note:

1. General information

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

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

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

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issued 362,048,187 A shares to Hisense Air-Conditioning for the Acquisition.

On 23 May 2014, the conditions for exercising the options of the first exercise period of the first share option incentive scheme of the Company were satisfied. The Shenzhen branch of China Securities Depository and Clearing Corporation Limited has approved the registration and the listing of the 4,440,810 new shares.

On 19 Jun 2015, the conditions for exercising the options of the second exercise period of the first share option incentive scheme of the Company were satisfied. The Shenzhen branch of China Securities Depository and Clearing Corporation Limited has approved the registration and the listing of the 4,229,810 new shares. As at 30 June 2015, the total number of issued shares of the Company was 1,362,725,370 and the registered capital of the Company was RMB1,362,725,370.00, of which Hisense Air-Conditioning held 612,316,909 shares, representing 44.93% of the Company’s total issued share capital and continued to be the immediate controlling shareholder.

In the opinion of the directors of the Company, as at 30 June 2015, Hisense Company Limited (“Hisense Group”), a state-owned enterprise incorporated in the PRC, is regarded as the ultimate controlling shareholder.

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

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

2. Basis of preparation

These financial statements were prepared in accordance with the Accounting Standards for Business Enterprises issued by the Ministry of Finance, and the disclosure requirements under the Preparation Convention of Information Disclosure by Companies Offering Securities to the Public No. 15 — General Provisions on Financial Reporting (revised 2010) issued by the China Securities Regulatory Commission.

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

3. Significant changes in accounting policies

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

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4. Segment information

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

(1) Segment information for the period ended 30 June 2015 is as follows:

Amount for current period	Refrigerators and Washingmachines	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. Share of profit of associates and joint ventures	-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)	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 equityinvestments	74,572,137.17	383,326,275.66	-38,574,427.58		419,323,985.25

Segment information for the corresponding period last year is as follows:

Amount for last period	Refrigerators and Washingmachines	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

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3. Share of profit oft in associates and joint ventures	-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)	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.Additons to other non-current assets other than long-term equityinvestments	149,221,863.60	75,641,716.07	92,368,330.07		317,231,909.74

(2) Geographical Information

Item	January to June 2015	January to June 2014
Revenue from external customers - Mainland	8,403,560,311.36	10,114,000,100.38
Revenues from external customers - Overseas	4,084,218,904.13	3,918,409,368.73
Total	12,487,779,215.49	14,032,409,469.11
Item	30 June 2015	31 December 2014
Non-current assets - Mainland	5,535,400,276.54	5,212,995,836.79
Non-current assets - Overseas	13,421,827.70	12,681,153.28
Total	5,548,822,104.24	5,225,676,990.07

*The Company is mainly operated in Mainland China, where the majority of non-current assets are located as well，therefore no further detailed geographical information is required to be reported.

5. Trade receivables

Normal credit term of 60 days is granted to customers. The Group allows a credit term of not exceeding one year for large and well-established customers. Sales are usually settled by cash on delivery for small and new customers. Trade receivables are non-interest bearing.

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The aging of trade receivables is analyzed as follows:

Item	30 June 2015	31 December 2014
Within three months	3,065,255,740.70	1,939,033,166.75
Over three months but within six months	51,559,322.61	41,524,824.98
Over six months but within one year	32,363,591.21	15,771,755.40
Over one year	113,908,887.38	134,718,629.69
Total	3,263,087,541.90	2,131,048,376.82
Less: provision for bad debts	135,246,615.25	146,756,989.89
	3,127,840,926.65	1,984,291,386.93

6. Trade payables

The aging of trade payables is analysed as follows:

Item	30 June 2015	31 December 2014
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

7. Revenue and cost of sales

7. Revenue and	cost of sales
Item	January to June 2015	January to June 2014
Revenue from main 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	13,611,148,619.89	15,397,537,762.48
Item	January to June 2015	January to June 2014
Cost of main operations	9,781,224,754.56	10,797,489,654.95
Cost of other operations	1,019,426,137.43	1,265,254,139.99
Total	10,800,650,891.99	12,062,743,794.94

8. Financial expenses

Item	January to June 2015	January to June 2014
Interest expenses	5,543,081.06	3,453,788.27
less: interest income	2,896,619.54	1,995,289.97

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Gain/(loss) on Foreign Exchange	-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

9. Investment Income

(1) Summary of investment income

9. Investment Income (1)Summaryof investment income
Item	January to June 2015	January to June 2014
Income from long-term equity investment - the cost method	7,410,000.00	9,500,000.00
Income from long-term equity investment - the equitymethod	127,811,784.18	141,589,179.58
Income from disposal of long-term equity investment	135,598,968.15
Income from disposal of financial assets held for trading	19,692,123.18	35,670,987.79
Total	290,512,875.51	186,760,167.37

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

Investee	January to June 2015	January to June 2014
Hisense International Co., Ltd.	7,410,000.00	9,500,000.00
Total	7,410,000.00	9,500,000.00

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

Investee	January to June 2015	January to June 2014
Huayi Compressor		5,259,786.88
Attend Logistics Co,. Ltd.	-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

10. Income tax expenses

Item	January to June 2015	January to June 2014
Income tax expenses	95,447,366.39	98,978,126.87
Inc: Current income tax calculated according to tax law and related regulationsin Mainland China	88,651,587.23	92,514,458.28
Current income tax calculated according to tax law and related regulationsin HongKong	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

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Certain subsidiaries have been recognised as “high technology” companies and are entitled to a preferential tax rate of 15% (2014: 15%).Hong Kong Profits Tax is calculated at 16.5% (2014: 16.5%) of the estimated assessable profits.

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

11. Net Current Assets

Item	30 June 2015	31 December 2014
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 Company）	3,351,450,409.62	3,050,739,339.88
Less ：Current Liabilities （the Company）	2,688,762,796.92	2,894,421,008.43
Net Current Assets（the Company）	662,687,612.70	156,318,331.45

12.Total Assets Less Current Liabilities

Item	30 June 2015	31 December 2014
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 Company）	7,325,586,741.24	7,138,546,340.56
Less ：Current Liabilities （the Company）	2,688,762,796.92	2,894,421,008.43
Total Assets Less Current Liabilities （the Company）	4,636,823,944.32	4,244,125,332.13

13. Earnings per share

(a) Basic earnings per share

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

number of ordinary shares outstanding:
Item	January to June 2015	Januaryto June 2014
Consolidated net profit attributable to ordinary shareholders of the Company	505,717,733.90	609,769,686.14
Weighted average number of ordinary shares in issue of the Company	1,359,200,528.33	1,354,794,885.00
Basic earnings per share	0.37	0.45

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(b) Diluted earnings per share

The calculation of diluted earnings per share is based on the consolidated net profit attributable to ordinary shareholders of the Company adjusted for dilutive potential ordinary shares divided by the adjusted weighted average number of ordinary shares in issue of the Company. For the Reporting Period and the corresponding period ended 30 June 2014, there were no dilutive potential ordinary shares, and therefore the diluted earnings per share were same as the basic earnings per share.

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 air-conditioner 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 RMB13611 million and principal operating revenue of RMB12488 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 RMB8404 million, representing a year-on-year decrease of 16.91%, whereas the export sales business recorded a principal operating revenue of RMB4084 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.

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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-by-side 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-on-year 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 inits strategy of “product is king” and “focus on refined products”. The Company introduced Hisense Air-conditioner’s Apple Cloud Series T, model Yuanzhuang ( “ 炫转” )air-conditioner. With its brilliant performance in five areas including “intelligence, energy efficiency, healthy living,

• 12 -

aesthetics and quietness”, Hisense Yuanzhuang (“炫转”)air-conditioner won the “Chinese Home Electrical Appliance Design Award” in the Chinese Home Electrical Appliances Expo.

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 commerce.

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
		Corresponding	compared to
Items	Reporting Period
		period last year	corresponding
			period last
			year (%)
Operatingrevenue(RMB)	13,611,148,619.89	15,397,537,762.48	-11.60
Net profits attributable to shareholders of listed	505,717,733.90	609,769,686.14
			-17.06
company (RMB)

• 13 -

Net profits after deducting non-recurring profit and loss
	287,527,945.85	573,969,809.70	-49.91
attributable to shareholders of listed company (RMB)
Net cash flow from operatingactivities(RMB)	-199,164,845.29	100,286,224.09	-298.60
Basic earningsper share(RMB/share)	0.37	0.45	-17.78
Diluted earningsper 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
	End of the Reporting
Items		End of last year	compared to
	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	3,965,915,154.80	3,458,363,028.38
			14.68
(RMB)

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

Unit: RMB	Unit: RMB	Unit: RMB
Item	Amount	Description
Profits or losses from disposal of non-current assets (including the part written off
	129,254,722.54
for provision for impairment on assets)
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	95,745,088.44
with fixed percentage based on unified standards promulgated by government)
Other non-operatingincome and expenses other than the aforementioned items	2,893,948.21
Less:Effect of income tax	7,335,504.15
Effect of minorityinterests(after tax)	2,368,466.99
Total	218,189,788.05	--

( Ⅲ )ANALYSIS OF PRINCIPAL BUSINESS

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

Unit:RMB

Item				Reasons for change
	Closing balance	Opening balance	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 ReportingPeriod.
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.

• 14 -

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 ReportingPeriod.
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.
Item		Amount for		Reasons for change
	Amount for	corresponding	change
	current period	period last year	(%)
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.

• 15 -

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 operatingactivities	2,073,479,177.64	1,420,106,965.74	46.01	Mainly due to the increase in fees payable.
Net cash flows from operatingactivities	-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 inthe current period.
Net cash flows from investingactivities	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.

( Ⅳ ) DESCRIPTION OF PRINCIPAL BUSINESS SEGMENTS

Unit: RMB	Unit: RMB	Unit: RMB	Unit: RMB	Unit: RMB	Unit: RMB	Unit: RMB
				Increase or	Increase or
						Increase or
				decrease in	decrease in
						decrease in
				revenue from	costs of
			Gross			gross profit
	Revenue from			operating	operating
		Costs of operating	profit			margin as
Item	operating businesses			businesses as	businesses as
		businesses	margin			compared to
				compared to	compared to
			(%)			corresponding
				corresponding	corresponding
						period last
				period last year	period last
						year (%)
				(%)	year (%)
By industry
Home appliances
manufacturing	12,487,779,215.49	9,781,224,754.56	21.67	-11.01	-9.41	-1.38
industry
By product
Refrigerators and
	6,136,651,831.84	4,759,023,251.48	22.45	-2.40	-3.63	0.98
washing machines
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

• 16 -

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.

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

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

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: RMB 100 million).

As at 30 June 2015, the Group had bank deposits and cash (including pledged bank balances) amounting to approximately RMB 879 million (as at 30 June 2014: RMB 740 million) and bank loans amounting to approximately RMB 388 million (as at 30 June 2014: RMB 502 million).

• 17 -

Total capital expenditures of the Group for the six months ended 30 June 2015 amounted to approximately RMB 289 million (for the six months ended 30 June 2014: RMB 283 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 RMB 417 million (31 December 2014: RMB 557 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

• 18 -

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:

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

				Percentage	No. of
			Percentag
				to the	shares
			e to the
				relevant	held
			total
	Nature of	No. of		class of	subject
Name of Shareholder			issued
	Shareholder	shares held		issued	to
			shares of
				shares of	trading
			the
				the	morator
			Company
				Company	um
Qingdao Hisense Air-conditioning CompanyLimited	State-owned legal person	612,316,909	44.93%	67.80%	0
HKSCC Nominees LimitedNote1	Foreign legal person	459,120,768	33.69%	99.90%	0
Wang WenxueNote2	Domestic natural person	7,532,470	0.55%	0.83%	0
Wen BinNote2	Domestic natural person	7,323,407	0.54%	0.81%	0
Zhang Shaowu	Domestic natural person	7,230,000	0.53%	0.80%	0
Zhao ZhiluNote2	Domestic natural person	6,696,088	0.49%	0.74%	0
Huang LiNote2	Domestic natural person	6,620,566	0.49%	0.73%	0
Ni LonghaiNote2	Domestic natural person	4,370,444	0.32%	0.48%	0
Tao XiaomingNote2	Domestic natural person	4,249,218	0.31%	0.47%	0
Zou JianxiongNote2	Domestic natural person	2,400,955	0.18%	0.27%	0

Notes:

1.The shares held by HKSCC Nominees Limited are held on behalf of a number of its

• 19 -

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.

2.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

Name of Shareholders	Number of tradable shares held	Class of shares
Qingdao Hisense Air-conditioning Company Limited	612,316,909	RMB ordinary shares
HKSCC Nominees Limited	459,120,768	Overseas listed foreignshares
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

• 20 -

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	Percenta ge of the respectiv e type of shares	Percentag e of the total number of shares in issue
Qingdao Hisense Air-conditioning Company Limited Note1	Beneficialowner	Ashares	612,316,909(L)	67.80%	44.93%
Qingdao Hisense Electric Holdings Company Limited Note 1	Interest of controlled corporation	Ashares	612,316,909(L)	67.80%	44.93%
Hisense Company Limited Note 1	Interest of controlled corporation	Ashares	612,316,909(L)	67.80%	44.93%
Hisense (Hong Kong) Company Limited_Note 1_	Beneficialowner	Hshares	64,869,000 (L)	14.11%	4.76%
Qingdao Hisense Electric Holdings Company Limited Note 1	Interest of controlled corporation	Hshares	64,869,000 (L)	14.11%	4.76%
Hisense Company Limited Note 1	Interest of controlled corporation	Hshares	64,869,000 (L)	14.11%	4.76%
Prime Capital Management Company Limited Note 2	Investmentmanager	Hshares	57,886,691(L)	12.60%	4.25%
Citigroup Inc.Note3	Person having security interests in shares and custodian corporation/ approved lending agent	Hshares	30,181,081(L) 172,000(S) 7,150,918(P)	6.56% 0.03% 1.55%	2.21% 0.01% 0.52%

• 21 -

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 ；

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

3. By virtue of the SFO, Citigroup Inc. was interested in these H shares, in which Citigroup Global Markets Limited was interested in the long position of 22,858,163 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

• 22 -

Name of Director	Nature of interest	Number of shares held	Percentage to the total issued shares of the Company	Percentage to the relevant class of issued shares of the Company
TangYe Guo	Beneficialowner	831,600 A Shares (Note 1)	0.06%	0.09%
Jia Shao Qian	Beneficialowner	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).

2. 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 for the period ended 30 June 2015.

THE FIRST SHARE OPTION INCENTIVE SCHEME

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

N o .	Name	Position	Outstanding share options as at 1 January 2015 (’0000 shares)	Number of share options exercised during the Reporting Period (’0000 shares)	Number of share options lapsed during the Reporting Period (’0000 shares)	Number of share options cancelled during the Reporting Period (’0000 shares)	Outstandin g share options as at 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 （Note2）	N/A	-	-	N/A
4	Mid level management staff and key personnel		730.254	353.301	126.841	126.841	250.112
	Total		871.668	422.981	126.841	126.841	321.846

• 23 -

Notes:

1. All share options available for issue under the first share option incentive scheme have been granted.

2. 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.

(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.

• 24 -

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.

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

An interim report containing all information as required by Appendix 16 of the Listing Rules will be published on the website of The Stock Exchange of Hong Kong Limited (http://www.hkex.com.hk) and the Company’s website (http://www.kelon.com) in due course.

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

Foshan City, Guangdong, the PRC, 27 August 2015

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

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

		Whether a			Execution of
	Amount			Results and
		liability is			the judgment
General status of the litigation	involved		Progress of the litigation	effects of the
		expected			of the
(arbitration)	(RMB ten		(arbitration)	litigation
		to be			litigation
	thousand)			(arbitration)
		incurred			(arbitration)
A series of related party			On 26 January 2015, the	Progress of the	As at the date
transactions and unusual cash			relevant subsidiaries of the	litigation will not	hereof, the
flows occurred between the			Company received the	affect the profits	Company has
Greencool Companies and the	72,541.44	No	execution judgments of	and losses for the	not yet
Company during the period from			(2009) Fo Zhong Fa Zhi Zi	current period.	received
October 2001 to July2005. In			No. 236 and(2010)Fo		execution
			- 25 -

addition, during the period, the			Zhong Fa Zhi Zi No. 32		judgment for
Greencool Companies, through			from the Foshan		1 case
certain specific third party			Intermediate Court.		involving
companies such as Tianjin Lixin			Pursuant to the execution		Greencool
Commercial Trading			judgments, the execution		Companies.
Development Company Limited,			procedure of the 2 above
were involved in a series of			mentioned cases have been
unusual cash flow with the			concluded in accordance
Company. The Company has			with the law.
instituted proceedings against the
Greencool Companies for such
transactions and unusual cash
flows as well as the suspected
fund embezzlements.

Ⅱ .SHAREHOLDINGS IN OTHER LISTED COMPANIES HELD BY THE COMPANY

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

In order to better leverage on the shares of Huayi Compressor held by the Company, the Company reduced the shareholding of Huayi Compressor by disposing a total of 20,928,506 shares during the Reporting Period. The corresponding cost of long-term equity investment of RMB81,890,700 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

Connected parties	Type of connected transaction	Particulars of connected transaction	Pricing principle of connected transaction	Connected transaction amount (RMB ten thousand)	Percentage of total amount of similar transactions (%)
Hisense Electric	Purchase	Finishedgoods	Agreedprice	5.2	-
Hisense -Whirlpool	Purchase	Finished goods	Agreedprice	7,961.83	0.74
Hisense Hitachi	Purchase	Finishedgoods	Agreedprice	15.72	-
Hisense Electric	Purchase	Materials	Agreedprice	163.19	0.02
Hisense Group	Purchase	Materials	Agreedprice	404.46	0.04
Hisense -Whirlpool	Purchase	Materials	Agreedprice	155.08	0.01
Hisense Hitachi	Purchase	Materials	Agreedprice	243.86	0.02
Hisense Electric	Receipt of services	Receipt of services	Agreedprice	530.79	0.05

• 26 -

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	Finishedgoods	Agreedprice	124,059.09	9.11
Hisense Hitachi	Sale	Finishedgoods	Agreedprice	6,511.77	0.48
Hisense Group	Sale	Materials	Agreedprice	752.38	0.06
Hisense Hitachi	Sale	Materials	Agreedprice	121.58	0.01
Hisense Electric	Sale	Moulds	Marketprice	3,763.15	0.28
Hisense Group	Sale	Moulds	Marketprice	6,985.45	0.51
Hisense Hitachi	Sale	Moulds	Marketprice	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

Unit: RMB ten thousand

External guarantee given by the Company (excluding guarantees for its subsidiaries)	External guarantee given by the Company (excluding guarantees for its subsidiaries)	External guarantee given by the Company (excluding guarantees for its subsidiaries)	External guarantee given by the Company (excluding guarantees for its subsidiaries)	External guarantee given by the Company (excluding guarantees for its subsidiaries)	External guarantee given by the Company (excluding guarantees for its subsidiaries)	External guarantee given by the Company (excluding guarantees for its subsidiaries)	External guarantee given by the Company (excluding guarantees for its subsidiaries)	External guarantee given by the Company (excluding guarantees for its subsidiaries)
The guaranteed party	Date of	Limit on	Actual effective	Actual	Type of	Period of	Complete	Whether
	disclosure	guaranteed	date (date of	guaranteed	guarantee	guarantee	d or not	the
	of relevant	amount	agreement)	amount				guarantee
	announce							is given
	ment in							for any
	relation to							connected
	the limit							party
	on the
	guaranteed
	amount
Nil	—	—	—	—	—	—	—	—
Total limit on the amount of				Actual amount of external
external guarantees approved during				guarantees during the
		0				0
the Reporting Period (A1)				Reporting Period (A2)
Total limit on the amount of				Total balance of actual amount
external guarantees which has been		0		of external guarantees at the		0
approved at the end of the				end of the Reporting Period
ReportingPeriod(A3)				(A4)

• 27 -

Guarantees given by the Company for its subsidiaries
The guaranteed	Date of		Guaranteed		Actual	Actual		Type of		Period of guarantee			Comp		Whet
party	disclosure of		amount		effective	guarantee		guarantee					leted		her
	relevant				date (date	d amount							or not		the
	announcemen				of										guara
	t in relation				agreement)										ntee is
	to the limit on														given
	the														for
	guaranteed														any
	amount														conne
															cted
															party
Guangdong	22 November		60,000					Joint liability
					2014-3-5	9.44				2014.03.05-2015.01.31			Yes		No
Refrigerator	2013							guarantee;
Guangdong	22 November		60,000					Joint liability
					2015-3-9	9.61				2015.03.09-2016.01.31			No		No
Refrigerator	2013							guarantee
Guangdong	22 November		60,000					Joint liability
					2014-7-7	55.58				2014.07.07-2015.01.09			Yes		No
Refrigerator	2013							guarantee
Guangdong	22 November		60,000					Joint liability
					2014-7-7	109.42				2014.07.07-2015.07.02			No		No
Refrigerator	2013							guarantee;
Guangdong	03 December		30,000					Joint liability
					2015-5-13	133.72				2015.05.13-2016.01.15			No		No
Air-conditioner	2014							guarantee
Kelon	22 November		30,000					Joint liability
					2014-5-5	160.00				2014.05.05-2015.12.31			No		No
Air-conditioner	2013							guarantee
Kelon	22 November		30,000					Joint liability
					2015-4-8	74.83				2015.04.08-2015.08.30			No		No
Air-conditioner	2013							guarantee;
Kelon	22 November		30,000					Joint liability
					2014-10-10	416.74				2014.10.10-2015.05.21			Yes		No
Air-conditioner	2013							guarantee
Home Appliances	22 November							Joint liability
			5,000		2014-6-23	125.30				2014.06.23-2015.05.30			Yes		No
Co	2013							guarantee
Home Appliances	22 November							Joint liability
			5,000		2014-6-20	60.00				2014.06.20-2016.06.11			No		No
Co	2013							guarantee;
Home Appliances	22 November							Joint liability
			5,000		2015-1-16	525.36				2015.01.16-2015.06.15			Yes		No
Co	2013							guarantee
Home Appliances	22 November							Joint liability
			5,000		2015-5-28	390.99				2015.05.28-2015.09.14			No		No
Co	2013							guarantee
Yangzhou	22 November							Joint liability
			10,000		2013-5-14	75.86				2013.05.14-2015.01.14			Yes		No
Refrigerator	2013							guarantee;
	22 November							Joint liability
Ronsheng Plastic			6,000		2015-1-12	1086.40				2015.01.12-2015.06.23			Yes		No
	2013							guarantee
	22 November							Joint liability
Ronsheng Plastic			6,000		2015-4-28	620.80				2015.04.28-2015.09.25			No		No
	2013							guarantee
Total limit on the amount of
guarantees for subsidiaries						Actual amount of
approved during the Reporting			30,000			guarantees for subsidiaries						3,854.05
Period (B1)						during the Reporting Period
						(B2)
Total limit on the amount of
guarantees for subsidiaries which						Total balance of actual
has been approved at the end of			213,000			amount of guarantees for						1,559.37
the Reporting Period (B3)						subsidiaries at the end of the
						Reporting Period (B4)
		Guarantees given by the subsidiaries for its subsidiaries
The guaranteed party		Date of		Limit on	Actual effective		Actual		Type of		Period of	Complete		Whether
		disclosure		guaranteed	date (date of		guaranteed		guarantee		guarantee	d or not		the
		of relevant		amount	agreement)		amount							guarantee
		announce												is given
		ment in												for any
		relation to												connected
		the limit												party
		on the
		guaranteed
		amount

• 28 -

Nil	—	—	—	—	—	—	—	—
Total limit on the amount of
guarantees for subsidiaries				Actual amount of guarantees
approved during the Reporting		0		for subsidiaries during the		0
Period (C1)				Reporting Period (C2)
Total limit on the amount of
guarantees for subsidiaries which				Total balance of actual amount
has been approved at the end of the		0		of guarantees for subsidiaries		0
Reporting Period (C3)				at the end of the Reporting
				Period (C4)
Total guaranteed amount of the Company (being the sum of the previous three major items)
Total limit on the amount of
guarantees approved during the				Actual amount of guarantees
Reporting Period (A1+B1+C1)		30,000		during the Reporting Period		3,854.05
				(A2+B2+C2)
Total limit on the amount of
				Total balance of actual amount
guarantees which has been approved
				of guarantees at the end of the
at the end of the Reporting Period		213,000				1,559.37
				Reporting Period (A4+B4+C4)
(A3+B3+C3)
Proportion of actual amount of guarantees (being A4+B4+C4) to				0.39%
the net assets of the Company
Including:
Guaranteed amount provided for shareholders, beneficial				0
controlling parties and their connectedparties(D)
Guaranteed amount provided directly or indirectly for the				368.55
guaranteedpartywithgearingratio over 70%(E)
Totalguaranteed amount over 50% of the net asset (F)				0
Sum of the above threeguarantees (D+E+F)				368.55
Statement on possibility to assume joint liabilities for guarantees				Nil
which have not expired
Description of provision of external guarantee in violation of				Nil
prescribedprocedures

Ⅴ .DERIVATIVES INVESTMENT

Unit: RMB (in ten thousand)

Name of operators	Connection	Whether or	Type of	Initial investment	Effective	Expiry Date	Investment at	Amoun	Investment at	Proportio	Actual
of derivatives		not a	derivatives	amount of	Date		the beginning	t of	the end of the	n of	amount of
investment		connected	investment	derivatives			of the period	provisi	period	investme	profit and
		transaction		investment				on for		nt to the	loss during
								impair		net asset	the
								ment (if		of the	reporting
								any)		Company	period
										at the end
										of the
										reporting
										period
										(%)
			Forward
			foreign		1 January	30
Bank	No	No		221,160.98			221,160.98		176,068.76	44.40	7,280.59
			exchange		2015	June 2015
			contracts
Source of derivatives investment funding				Export trade payment
Litigation involved (if applicable)				Not applicable
Date of the announcement disclosing the				26 March 2015
approval of derivatives investment by the
Board (if any)

• 29 -

Date of the announcement disclosing the	26 June 2015
approval of derivatives investment during
shareholders’ meeting (ifany)
	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.
Risk analysis of positions in derivatives
during the reporting period and explanations	The Company has formulated the “Management Measures for the Foreign
of risk control measures (including but not	Exchange Capital Business” and “the Internal Control System for Forward Foreign
limited to market risk, liquidity risk, credit	Exchange Capital Transactions”. The measures specifically regulate the basic
risk, operation risk, legal risk etc.)	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.
	The assessment of the fair value of the derivatives carried out by the Company
Changes in market price or product fair	mainly represents the outstanding foreign exchange forward contracts entered into
value of invested derivatives during the	by the Company and banks, which are recognized as transactional financial assets
reporting period, where specific methods	or liabilities based on the difference between the quotation of the outstanding
and relevant assumptions and parameters	foreign exchange forward contracts and the forward exchange rate as at the end of
used shall be disclosed in the analysis of	the period. During the reporting period, the Company recognized a gain on change
derivatives’ fair value	in fair value of the derivatives of RMB 53,113,800. 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	During the reporting period, there were no material changes in the accounting
specific accounting and auditing principles	policy and specific accounting and auditing principles for the Company’s
on derivatives between the reporting period	derivatives business as compared to last reporting period.
and thelastreporting period
	Opinion of independent directors: Commencement of foreign exchange derivatives
	business by the Company was beneficial to the Company in the prevention of
Specific opinions of independent Directors
	exchange rate fluctuation risks. The Company has devised the Internal Control
on the derivatives investment and risk
	System for Forward Foreign Exchange Capital Transactions to strengthen internal
control of the Company
	control and enhance the management of foreign exchange risks by the Company,
	and the targetedriskcontrol measures adopted were practicable.

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

DEFINITIONS

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

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

• 30 -

“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

• 31 -