2014 Semi-annual Report of Midea Group Co., Ltd.
Midea Group Co., Ltd.
2014 Semi-annual Report
August 2014
2014 Semi-annual Report of Midea Group Co., Ltd.
Section I. Important Reminders, Contents & Definitions
The Board of Directors, the Supervisory Committee as well as all directors, supervisors and senior
management staff of Midea Group Co., Ltd. (hereinafter referred to as “the Company”) warrant that
this report is factual, accurate and complete without any false record, misleading statement or
material omission. And they shall be jointly and severally liable for that.
All directors have attended the board session for reviewing this report.
The Company plans not to distribute cash dividends or bonus shares or turn capital reserve into
share capital.
Mr. Fang Hongbo, chairman of the Board and president of the Company, and Ms. Yuan Liqun,
responsible person for the Company’s financial affairs, have represented and warranted that the
financial statements in this report are factual, accurate and complete.
This report has not been audited by a CPAs firm.
The future plans and some other forward-looking statements mentioned in this report shall not be
considered as virtual promises of the Company to investors. And investors are kindly reminded to
pay attention to possible investment risks.
This report is prepared in both Chinese and English. Should there be any discrepancy between the
two versions, the Chinese version shall prevail.
2014 Semi-annual Report of Midea Group Co., Ltd.
Contents
Section I. Important Reminders, Contents & Definitions ....................................... 2
Section II. Company Profile ....................................................................................... 5
Section III. Highlights of Accounting Data & Financial Indicators ....................... 7
Section IV. Report of the Board of Directors .......................................................... 10
Section V. Significant Events .................................................................................... 37
Section VI. Change in Shares & Shareholders ....................................................... 60
Section VII. Preferred Shares................................................................................... 66
Section VIII. Directors, Supervisors & Senior Management Staff ....................... 67
Section IX. Financial Report .................................................................................... 70
Section X. Documents Available for Reference..................................................... 118
2014 Semi-annual Report of Midea Group Co., Ltd.
Definitions
Term Refers to Definition
Company, the Company, or Midea Group Refers to Midea Group Co., Ltd.
Little Swan Refers to Wuxi Little Swan Company Limited
TITONI Refers to TITONI Investments Development Ltd.
GD Midea Holding Refers to GD Midea Holding Co., Ltd.
Reporting period Refers to 1 Jan. 2014-30 Jun. 2014
2014 Semi-annual Report of Midea Group Co., Ltd.
Section II. Company Profile
I. Basic information of the Company
Stock Abbreviation Midea Group Stock Code
Stock exchange listed with Shenzhen Stock Exchange
Chinese name of the Company 美的集团股份有限公司
Abbr. of the Chinese name of
美的集团
the Company (if any)
English name of the Company
MIDEA GROUP CO.,LTD.
(if any)
Legal Representative Fang Hongbo
II. Contact information
Company Secretary Securities Affairs Representative
Name Jiang Peng Wang Jing
Midea Headquarters Building, No. 6 Meidi Dadao, Beijiao Town, Shunde District, Foshan City,
Contact address
Guangdong Province, China
Tel. 0757-26605456 0757-26334559
Fax 0757-26651991
E-mail IR@midea.com
III. Other information
1. Ways to contact the Company
The registered address, office address and their postal codes, website address and email address of the Company did not change
during the reporting period. The said information can be found in the 2013 Annual Report.
2. About information disclosure and where this report is placed
The newspapers designated by the Company for information disclosure, the website designated by CSRC for disclosing this report
and the location where this report is placed did not change during the reporting period. The said information can be found in the 2013
Annual Report.
3. Change of the registered information
The registration date and place of the Company, its business license No., taxation registration No. and organizational code did not
2014 Semi-annual Report of Midea Group Co., Ltd.
change during the reporting period. The said information can be found in the 2013 Annual Report.
4. Other relevant information
No change occurred to other relevant information of the Company during the reporting period. The said information can be found in
the 2013 Annual Report.
2014 Semi-annual Report of Midea Group Co., Ltd.
Section III. Highlights of Accounting Data & Financial Indicators
I. Major accounting data and financial indicators
Does the Company adjust retrospectively or restate accounting data of previous years due to change of any
accounting policy or correction of any accounting error?
□ Yes √ No
Reporting period Same period of last year YoY +/- (%)
Operating revenues (RMB'000) 77,330,851.84 65,939,479.12 17.28%
Net profit attributable to shareholders of
6,610,132.76 2,646,834.61 149.74%
the Company (RMB'000)
Net profit attributable to shareholders of
the Company after extraordinary gains and 6,667,645.57 2,128,115.51 213.31%
losses (RMB'000)
Net cash flows from operating activities
13,171,462.85 3,569,363.63 269.01%
(RMB'000)
Basic EPS (RMB Yuan/share) 1.57 1.06 48.11%
Diluted EPS (RMB Yuan/share) 1.57 1.06 48.11%
Weighted average ROE (%) 18.97% 16.95% 2.02%
As at the end of the
As at the end of last year +/- (%)
reporting period
Total assets (RMB'000) 118,089,557.79 96,946,024.77 21.81%
Net assets attributable to shareholders of 35,727,510.77 32,847,431.04 8.77%
the Company (RMB'000)
Notes: 1. Midea Group granted 15 additional shares for every 10 shares using the capital reserve on 30 Apr. 2014.
As required, the EPS for the same period of last year shall be measured on the basis of the share capital after the
increment (1,000,000,000 shares for the same period of last year; and 2,500,000,000 after the increment).
2. Midea Group merged with GD Midea Holding through share issuance and share exchange in Sept. 2013.
Pursuant to the accounting standards for income statement preparation, the net profit for the current period was
after Midea Group merged with GD Midea Holding, while the net profit for the same period of last year was
before Midea Group merged with GD Midea Holding when Midea Group held a 41.17% stake in GD Midea
Holding. In order to help investors compare and analysis the overall business performance of Midea Group on the
same basis, relevant items are adjusted as follows based on the pro-forma income statement (i.e. the merger of
Midea Group and GD Midea Holding is deemed to have been finished on 1 Jan. 2013):
2014 Semi-annual Report of Midea Group Co., Ltd.
Jan.-Jun. 2014 Jan.-Jun. 2013 YoY +/- (%)
Net profit attributable to shareholders of the 6,610,132.76 4,178,951.77 58.18%
Company (RMB’000)
Minority interest income (RMB'000) 607,495.31 562,889.18 7.92%
EPS (RMB Yuan/share) 1.57 0.99 58.59%
Number of the Company’s total shares in the trading day before disclosure:
Number of the Company’s total shares in the
4,215,808,472
trading day before disclosure (share)
Whether the Company's share capital changed and the change affected the owners' equity due to reasons like the
issuance of new shares, allotment of shares, equity incentive plans, and repurchases during the time from the end
of the Reporting Period to the date when the Semi-annual Report was released
□ Yes √ No
II. Differences between accounting data under domestic and overseas accounting standards
1. Differences of net profit and net assets disclosed in financial reports prepared under international and
Chinese accounting standards
□ Applicable √ Inapplicable
2. Differences of net profit and net assets disclosed in financial reports prepared under overseas and
Chinese accounting standards
□ Applicable √ Inapplicable
3. Explain reasons for the differences between accounting data under domestic and overseas accounting
standards
□ Applicable √ Inapplicable
III. Items and amounts of extraordinary gains and losses
√Applicable □ Inapplicable
Unit: RMB’000
Item Amount Explanation
Gains/losses on the disposal of non-current assets (including the offset part
-59,759.96
of asset impairment provisions)
Government grants recognized in the current period 449,018.93
Gain/loss on entrusting others with investments or asset management 174,990.06
2014 Semi-annual Report of Midea Group Co., Ltd.
Gain/loss on debt restructuring 1,688.20
Gains and losses on change in fair value from tradable financial assets and
tradable financial liabilities, as well as investment income from disposal of
tradable financial assets and tradable financial liabilities and financial -656,529.00
assets available for sales except for effective hedging related with normal
businesses of the Company
Non-operating income and expenses other than the above -60,340.08
Less: Income tax effects -43,373.67
Minority interests effects (after tax) -50,045.37
Total -57,512.81
Midea Group Co., Ltd. 2014 Semi-Annual Report
Section IV. Report of the Board of Directors
I. Overview
In face of the downward macro-economy, the call-off of the consumption stimulus package, the macro-control of
the real estate policy, etc. in the first half of 2014, growth of the household appliance industry as a whole slowed
down, and the industry entered a new period of restructuring, consumption upgrading and “efficiency comes first”.
To promote efficiency and upgrade products, to enhance the development of intelligent products and the
e-commerce layout, and to promote innovation in technology, marketing channels and service modes became the
core driving force for household appliance makers to keep growing. In the first half of the year, sub-industries of
household appliances started to polarize in growth. Among them, the A/C industry remained the sub-industry with
the most certain growth in the consumer appliance industry, with a continuously strong sale at home. The kitchen
appliance industry kept a fast and stable growth. And the refrigerator and washing machine industries were almost
the same in growth. Along with consumption upgrading, high-end household appliances became a more and more
obvious trend in the industry. The proportions of inverter air conditioners, cooling & heating air conditioners,
multi-door and side-by-side combination refrigerators, roller washing machines, high-end kitchen appliances and
small household appliances increased, with their average prices increasing and their profit growth much faster
than the income growth. Leading enterprises in the industry still relied on their absolute advantages in brand and
channel, and at the same time increased their inputs to R&D and new product development, which promoted
competition marketization and business centralization. They maintained a sound and fast growth over the average
level in the industry.
In general, the driving forces of the household appliance industry in China remain, which are as below:
1. China’s economy is still in the process of speed-up industrialization and urbanization. In 2017, the urbanization
rate is expected to reach 57%, and the per capita GDP is expected to reach USD10,000, which means there’s large
space for improvement both in quantity and quality. The development of urbanization, construction of new rural
areas, improvement of living condition and per capita income, together with the low overall ownership rate of
house appliances in third and fourth tier cities, will make the undeveloped consumption demand keep releasing.
2. The stock quantity of household appliances has excessed 1.6 billion. The demand of upgrading appliances starts
to become the significant driving motivation for sales volume growth. The upgrade of appliances in performance
Midea Group Co., Ltd. 2014 Semi-Annual Report
and quality in aspects of energy-saving, environmental protection, intellectualization, networking, breakthrough in
industrial design, and etc., will effectively push forward the consumption upgrade of household appliances, lead
the improvement of optimization of product structure and profitability of household appliance enterprises, and
offset some negative influences brought by the fluctuation of real estate sales.
3. The maturity of intelligent control technology, electronic information technology, the technology of internet of
things, and related supporting technologies, as well as the popularization of smart mobile terminals, will
effectively drive the fast development of smart household appliances. The development trend of smart home has
gradually become the industry consensus. Household appliances is transforming from manufacturers of single
products to providers with service of integrated solutions of smart home for clients, facing great growth space.
According to the forecast of All View Consulting, the income of smart appliances will reach RMB1 trillion in
2020.
4. The potential of global household appliance market is tremendous. With the fast economy growth of markets in
emerging countries, the overseas markets still waits for big moves. Chinese household appliance enterprises,
especially the leading enterprises, have possessed globally competitive power.
II. Main businesses analysis
(1) Overview
In the first half year of 2014, guided by three main strategies of “products lead, efficiency drives, and operation
globalizes”, the Company deepened its transformation, focused on improving products and efficiency,
continuously strengthened profitability and operation quality, and further stabilized competitive market advantage
by the synergy of multiple products. In the first half of the year, the operating revenues of the Company achieved
a year-on-year increase of 17.28%, the net profit attributable to the Company calculated with the same caliber
increased 58.18% as compared with the same period of last year, the general gross margin of 25.85% increased by
2.92% as compared with the same period of last year, the overall rate of net profit attributable to the Company of
8.51% reached a year-on-year increase of 2.18% as calculated with the same caliber, and the net cash flows from
operating activities amounted to RMB 13.171 billion, representing a year-on-year growth of 269.01%.
Key work in the 1st half of Y2014 is listed below:
(1) Insisting on investment on R&D of customers, continuous optimization of product structure, and stable
Midea Group Co., Ltd. 2014 Semi-Annual Report
enhancement of product power
The Company, according to the basic sense of making better products, insisted on customer research and product
development, resulting to continuous optimized product structure, stable enhancement of high-end product ratio,
continuous strengthened profitability, and increasingly improved public praises for products.
In the field of household air conditioners, the ECO energy-saving product series, advertised as “lower to one kwh
electric power per night”, fully expanded the scale to three main series covering 16 product types, which formed
sales mix of luxurious, high-end, and mid-end products equipped with super excellent market competitiveness. By
technology cooperation with Aliyun and dependency on advanced technologies such as IOT (hereinafter referred
to Internet of Things) and cloud computing,
