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美的集团:2020年年度报告(英文版) 下载公告
公告日期:2021-04-30

Midea Group Co., Ltd.

The 2020 Annual Report

30 April 2021

Section I Important Statements, Contents and DefinitionsThe Board of Directors, the Supervisory Committee, directors, supervisors and seniormanagement of Midea Group Co., Ltd. (hereinafter referred to as the “Company”)hereby guarantee that the information presented in this report is free of anymisrepresentations, misleading statements or material omissions, and shall togetherbe wholly liable for the truthfulness, accuracy and completeness of its contents.All directors of the Company attended the Board meeting to review this Annual Report.There are no directors, supervisors, or senior management who do not warrant orwho dispute the truthfulness, accuracy and completeness of the contents of thisAnnual Report.The financial statements for 2020 have been audited by PricewaterhouseCoopersZhong Tian LLP and have obtained an unqualified audit report.Mr. Fang Hongbo, Chairman of the Board and CEO of the Company and Ms. ZhongZheng, Director of Finance of the Company, have represented and warranted that thefinancial statements in this report are true and complete.The Board has considered and approved the following dividend payout plan for theyear 2020: based on the 6,916,495,109 shares at the disclosure date of this report (thetotal share capital of 7,047,686,070 shares minus the repurchased 131,190,961 sharesin the repo securities account at that date), it is proposed that the Company shoulddistribute a cash dividend of RMB16 (tax inclusive) per 10 shares to all theshareholders and should not convert capital surplus into share capital. When theprofit distribution plan is implemented, if any change occurs to the total shareseligible for profit distribution, the profit distribution plan shall be based on the totalshares eligible for profit distribution at the book closure date of the profit distribution,and the dividend per share shall be adjusted under an unchanged total distribution

amount.The future plans and some forward-looking statements mentioned in this report shallnot be considered as virtual promises of the Company to investors. Therefore,investors are kindly reminded to pay attention to possible investment risks.This report has been prepared in both Chinese and English. Should there be anydiscrepancies or misunderstandings between the two versions, the Chinese versionshall prevail.

Contents

SECTION I IMPORTANT STATEMENTS, CONTENTS AND DEFINITIONS ...............................SECTION II COMPANY PROFILE AND KEY FINANCIAL RESULTS ..........................................SECTION III BUSINESS PROFILE .............................................................................................SECTION IV PERFORMANCE DISCUSSION AND ANALYSIS ..................................................SECTION V SIGNIFICANT EVENTS ..........................................................................................SECTION VI CHANGES IN SHARES AND INFORMATION ABOUT SHAREHOLDERS ............SECTION VII INFORMATION ABOUT DIRECTORS, SUPERVISORS, SENIORMANAGEMENT AND EMPLOYEES............................................................................................SECTION VIII CORPORATE GOVERNANCE ............................................................................SECTION IX FINANCIAL REPORT .............................................................................................SECTION X DOCUMENTS AVAILABLE FOR REFERENCE ......................................................

Definitions

Term DefinitionThe “Company”, “Midea”, “Midea Group” or the “Group” Midea Group Co., Ltd.Midea Holding Midea Holding Co., Ltd.TLSC Toshiba Lifestyle Products & Services CorporationKUKA KUKA AktiengesellschaftReporting Period 1 January 2020 to 31 December 2020

Section II Company Profile and Key Financial Results

1. Corporate Information

Stock abbreviation Midea Group Stock code 000333Stock exchange where theshares of the Company arelisted

Shenzhen Stock ExchangeName of the Company inChinese

美的集团股份有限公司Abbr. of the Company name inChinese

美的集团Name of the Company inEnglish (if any)

Midea Group Co., Ltd.Abbr. of the Company name inEnglish (if any)

Midea GroupLegal representative Fang HongboRegistered address

Midea Headquarters Building, No. 6 Midea Avenue, Beijiao Town, Shunde District,

Foshan City, Guangdong Province, ChinaPostal code 528311Business address

Midea Headquarters Building, No. 6 Midea Avenue, Beijiao Town, Shunde District,

Foshan City, Guangdong Province, ChinaPostal code 528311Company website http://www.midea.comE-mail IR@midea.com

2. Contact Us

Board Secretary Representative for Securities AffairsName Jiang Peng You MingyangAddress

Midea Headquarters Building, No. 6 MideaAvenue, Beijiao Town, Shunde District,Foshan City, Guangdong Province, China

Avenue, Beijiao Town, Shunde District,Foshan City, Guangdong Province, China

Tel.0757-22607708 0757-23274957Fax0757-26605456E-mailIR@midea.com

3. Information Disclosure and Place Where the Annual Report Is Kept

Newspaper designated by the Company for informationdisclosure

China Securities Journal, Securities Times and ShanghaiSecurities NewsWebsite designated by the China Securities RegulatoryCommission (CSRC) for the publication of the AnnualReport

http://www.cninfo.com.cnPlace where the Annual Report of the Company is kept Company Investor Relations Department

4. Company Registration and Alteration

Organization code 91440606722473344CChanges in main business activitiessince the Company was listed (if any)

NoneChanges of controlling shareholder ofthe Company (if any)

None

5. Other Relevant Information

Accounting firm engaged by the CompanyName of the accounting firm PricewaterhouseCoopers Zhong Tian LLPBusiness address of theaccounting firm

11/F., PricewaterhouseCoopers Center, 2 Corporate Avenue, 202 Hu Bin Road,Huangpu District, Shanghai 200021, PRCName of accountants writingsignatures

Yao Wenping and Qiu XiaoyingSponsor engaged by the Company to continuously perform its supervisory function during the ReportingPeriod

□Applicable √N/A

Financial advisor engaged by the Company to continuously perform its supervisory function during theReporting Period

√Applicable □N/A

Name of the financial

advisor

Business office of the financial advisor

Representative of the

financial advisor

Supervisory period

CITIC Securities Tower, No.8 Zhongxin

3rd Road, Futian District, Shenzhen,

518048, PRC

Wu Renjun, ChenJianjian, Li Haoran, LiChang, Li Wei and Liu

Kun

2019.6.21-2020.12.31

6. Key Accounting Data and Financial Indicators

Whether the Company performed a retroactive adjustment to or restatement of accounting data

□Yes √No

2020 2019

2020-over-2019

change (%)

2018Operating revenue (RMB'000)

278,216,017

284,221,249

2.16%

259,664,820

Net profit attributable to shareholders ofthe Company (RMB'000)

24,211,222

27,222,969

12.44%

20,230,779

Net profit attributable to shareholders ofthe Company before non-recurringgains and losses (RMB'000)

22,724,392

24,614,653

8.32%

20,058,155

Net cash flows from operating activities(RMB'000)

38,590,404

29,557,117

-23.41%

27,861,080

Basic earnings per share (RMB/share) 3.93

3.60

9.17%

3.08

Diluted earnings per share (RMB/share)

3.90

3.58

8.94%

3.05

Weighted average ROE (%)

24.95%

26.43%

-1.48%

25.66%

31 December2020

31 December

2019

Change of 31December 2020over 31 December

2019

31 December

2018Total assets (RMB'000)

360,382,603

301,955,419

360,382,603

19.35%

263,701,148

Net assets attributable to shareholdersof the Company (RMB'000)

101,669,163

117,516,260

15.59%

83,072,116

Total share capital of the Company on the last trading session before disclosure:

Total share capital of the Company on the last tradingsession before disclosure (share)

7,047,686,070

Fully diluted earnings per share based on the latest share capital above:

Dividend paid to preference shareholders 0

Fully diluted earnings per share based on the latestshare capital above (RMB/share)

3.86

7. Differences in Accounting Data under Domestic and Overseas Accounting

Standards

7.1 Differences in the net profit and net assets disclosed in the financial reports prepared under

China Accounting Standards (CAS) and International Financial Reporting Standards (IFRS)

□Applicable √N/A

No such differences for the Reporting Period.

7.2 Differences in the net profit and net assets disclosed in the financial reports prepared under

CAS and foreign accounting standards

□Applicable √N/A

No such differences for the Reporting Period.

7.3 Reasons for the differences

□Applicable √N/A

8. Key Financial Results by Quarter

RMB'0002020 Q1 2020 Q2 2020 Q3 2020 Q4Operating revenue58,013,031

81,053,991

77,693,764

67,460,463

Net profit attributable toshareholders of the Company

4,810,977

9,117,318

8,090,006

5,204,668

Net profit attributable toshareholders of the Companybefore non-recurring gains andlosses

4,816,912

8,640,132

7,158,544

3,999,065

Net cash flows from operatingactivities

7,668,597

10,736,894

6,609,144

4,542,482

Whether there are any material differences between the financial indicators above or their summationsand those which have been disclosed in the Company’s quarterly or semi-annual reports

□Yes √No

9. Non-recurring Gains and Losses

√Applicable □N/A

RMB'000Item 2020 2019 2018 NoteGain or loss from disposal of non-current assets

-

52,424

-131,131

222,204

Except for effectively hedging business related to

normal business operations of the Company,gain or loss arising from the change in the fair

2,204,165

676,430

-842,408

value of financial assets held for trading,derivative financial assets, financial liabilitiesheld for trading, derivative financial liabilities,other non-current financial assets and available-for-sale financial assets, as well as investmentincome or loss produced from the disposal of

aforesaid financial assets and liabilitiesOther non-operating income and expensesexcept above-mentioned items

1,378,105

the

1,347,788

1,091,473

Less: Corporate income tax 765,871

394,095

207,870

Minority interests (after tax) 155,659

12,162

90,775

Total 2,608,316

1,486,830

172,624

--

Explain the reasons if the Company classifies an item as a recurring gain/loss item, which is defined asa non-recurring gain/loss according to the definition in the <Explanatory Announcement No. 1 onInformation Disclosure for Companies Offering Their Securities to the Public—Non-Recurring Gains andLosses>, or is enumerated as a non-recurring gain/loss in the said explanatory announcement

□Applicable √N/A

No such cases for the Reporting Period.

Section III Business Profile

1. Business Scope in the Reporting Period

1.1 Summary of business scope

Midea is a global technology group comprising five major business divisions: the Smart Home BusinessGroup, the Electromechanical Business Group, the HVAC & Building Technologies Division, the Robotics& Automation Division, and the Digital Innovation Business. Midea offers diversified products and services.Specifically, the Smart Home Business Group, as the main operating entity of smart appliances, smarthome and related peripheral industries and ecological chains, undertakes the construction of intelligentscenarios for end users, user operations and data value discovery, and is committed to providing thebest experience of whole-house smart home appliances and service.The Electromechanical BusinessGroup is capable of carrying out professional R&D, production, and sales of high-precision corecomponents such as compressors, motors, chips, industrial control, and cooling modules. It operatesmany brands including GMCC, Welling, MR, TOSHIBA, HICONICS, SUNYE, DORNA, SERVOTRONIX,etc., with its products widely used in home appliances, 3C products, new energy vehicles and industrialautomation, among others. The HVAC & Building Technologies Division is dedicated to providing energy,HVAC, elevator, control and other products, solution packages and services for buildings and publicfacilities. Meanwhile, it actively explores new business models and forms, with an aim to become aleading manufacturer with the related key technologies and manufacturing capability. The Robotics &Automation Division primarily focuses on providing solutions of industrial robotics, automatic logisticssystems, and transmission systems for future factory-related fields, as well as solutions for health care,entertainment, new consumption, etc. The Digital Innovation Business includes new business arising fromthe business model transformation of Midea Group such as intelligent supply chains and IndustrialInternet, which can provide software services, unmanned retail solutions, and production services, amongothers, for the digital transformation of enterprises.With “Bring Great Innovations to Life” as its corporate vision, “Integrate with the World, to Inspire YourFuture” as its mission, and “Embrace what’s next - Aspiration、Dedication、Collaboration、Innovation”

as its values, Midea integrates global resources and promotes technological innovation to create a betterlife for over 400 million users, major customers and strategic partners in different areas worldwide everyyear with satisfying products and services. In face of higher requirements for products and services in thedigital Internet era, Midea has upgraded its strategic focus to “Technology Leadership, Direct to Users,Digitization & Intelligence Driven, and Global Impact” in 2020, so as to rebuild Midea in the new era.Midea, a global operating company, has now established a global platform with around 200 subsidiaries,28 R&D centers, 34 major manufacturing bases, and approximately 150,000 employees. Its businesscovers more than 200 countries and regions. Overseas, Midea has 18 R&D centers and 17 majormanufacturing bases in more than ten countries, with around 30,000 employees. 22 currencies are usedby Midea in settlement. In addition, Midea is the majority shareholder of KUKA, a Germany-based world-leading company in robotics and automation, with a stake of approximately 95%.

1.2 Position in home appliance industry

Midea ranks No. 229 on the 18th Forbes Global 2000 list released in May 2020, moving up 24 placescompared to last year. In addition, it ranks No. 307 on the 2020 Fortune Global 500 list, moving up 5places from the year before and marking its fifth year on the list; and ranks No. 35 on the 2020 FortuneChina 500 list, the highest-ranking among the home appliance industry in the country for six consecutiveyears. Meanwhile, Midea takes the lead among domestic home appliance makers by ranking No. 33 onthe 2021 Brand Finance Tech 100 list released by Brand Finance, a British brand assessment institution.Also, Midea ranks No. 33 on the 2020 BrandZ? Top 100 Most Valuable Chinese Brands list, with itsbrand value up 26%. Midea has been given excellent credit ratings by the three major international creditrating agencies, Standard & Poor’s, Fitch Ratings and Moody’s. The ratings are in a leading positionamong home appliance manufacturers worldwide as well as among Chinese non-state-ownedenterprises.Midea’s major home appliances all took up a larger share in the domestic market in 2020. Its core productcategory, residential air-conditioners, in particular, saw a much bigger share in all channels, with thelargest online market share of nearly 36% and an offline market share of over 33%.

The table below shows the offline market shares and rankings of the Company’s primary home applianceproducts (by retail sales) in 2020:

Product categoryMarket shareRankingResidential air conditioners 33.8% 2Laundry appliances 26.4% 2

Refrigerators 12.5% 2Rice cookers 44.7% 1Electric pressure cookers 45.1% 1Induction cookers

48.8% 1Electric radiators 47.7% 1Water dispensers 40.9% 1

Blenders

35.6% 2Microwave ovens 44.4% 2

Electric ovens 37.4% 2

Electric fans 37.9% 1Electric kettles

39.6% 1Electric water heaters

18% 3Dishwashers

10.2% 3Range hoods 8.8% 3Midea’s online retail sales during 2020 exceeded RMB86 billion, up by over 25% YoY and accounting forover 45% of its domestic sales. Midea boasts the largest online market share among home appliancemakers in China. During the business peak period of “Double 11” in 2020, Midea products recorded totalonline sales of more than RMB11.3 billion. Midea remains the best-selling home appliance manufactureron the three major e-commerce channels—Tmall, JD, and Suning—for eight consecutive years.The table below shows the online market shares and rankings of the Company’s primary home applianceproducts (by retail sales) in 2020:

Product categoryMarket shareRankingResidential air conditioners 35.9% 1

Laundry appliances 33.6% 2

Refrigerators 17.2% 2Rice cookers 30.6% 1Electric pressure cookers 42.4% 1

Induction cookers 51.5% 1Electric radiators

21.8% 1Water dispensers

22.4% 1Water purifiers 14% 1Microwave ovens

49% 1Electric ovens

24.1% 1Electric fans

22.1% 1Electric kettles

30.6% 1Electric water heaters 31.9% 1

Gas water heaters

18.3% 2Dishwashers 26.7% 2

Gas stoves 13.2% 2Range hoods 17% 3

Blenders

11.9% 3

2. Significant Changes in the Main Assets

2.1 Significant changes in the main assets

Main assetsReasons for any significant changeLong-term equity investmentsUp 3.96% YoYFixed assets Up 2.65% YoYIntangible assets Down 0.40% YoYConstruction in progress Up 23.66% YoY

Financial assets held for trading

Up 2493.10% YoY, primarily driven by

structured depositsDerivative financial assets

Up 113% YoY, primarily driven by

the reclassification of investments in
changes in the fair value of derivative financial

instrumentsReceivables financing

Up 83.75% YoY, primarily driven by

receivable measured at fair valueLoans and advances Up 51.52% YoY, primarily driven by changes in the financial businessOther current assets

Down 49.12% YoY, primarily driven by the reclassification

an increase in accounts receivable and notesof investments in

structural depositsOther non-current financial assets Up 92.04% YoY, primarily driven by an increase in investments

2.2 Main assets overseas

□Applicable √N/A

3. Core Competitiveness Analysis

3.1 As one of the leaders among the global household appliance makers and a dominator in the

major appliance sectors, Midea Group provides high-quality, one-stop home solutions through itswide product range, complete with full specifications.As a white goods and HVAC enterprise with a whole industrial chain and full product line, Midea Grouphas developed a complete industrial chain combining R&D, manufacturing and sales of core componentsand finished products, supported by an industry-leading R&D center and manufacturing technologies ofcore components (such as compressors, electrical controls, magnetrons and controllers), and ultimatelybased on its powerful capabilities in logistics and services. Midea owns top brands of household applianceand HVAC in China. Its dominance in the major appliance and HVAC markets means that it can providea wide range of competitive product sets. It also means internal synergies in brand awareness, pricenegotiation as a whole, customer needs research and R&D investments. Compatibility, coordination andinteraction among household appliances have become increasingly important since smart home isgaining popularity. With a full product line, Midea has had a head start in providing a combined andcompatible smart home platform with integrated home solutions for customers.

3.2 Global R&D resource integration capabilities, adherence to the strategy of “Technology

Leadership”, as well as continuing lead in R&D and technical innovationThe Group is focused on building a competitive, multi-layered global R&D system centering on userexperience and product functions, which represents world-class R&D input and strength. With nearlyRMB45 billion invested in R&D over the past five years, the Group has set up a total of 28 researchcenters in 11 countries to gradually build up a “2+4+N” global R&D network and gain the advantage ofscale in this respect. Domestically, Midea Global Innovation Center in Shunde District, Foshan City andMidea Global Innovation Center in Shanghai are the cores of Midea’s R&D arm. Overseas, with MideaAmerica Research Center, Midea Germany Research Center, Midea Japan Research Center and MideaMilan Design Center as the cores, Midea makes use of the regional technological advantages, integratesglobal R&D resources, and builds these facilities into complementary regional R&D centers. Followingthe strategy of “Technology Leadership”, it attracts more professional talent and builds an organic globalR&D network. It has over 15,000 R&D employees and over 500 foreign senior experts. While establishingits own research centers around the world, Midea also works on constructing an open platform ofinnovative ecosystems. The Group cooperates with domestic and foreign scientific research institutions,such as Massachusetts Institute of Technology, University of California, Berkeley, University of Illinois atUrbana-Champaign, Stanford University, Purdue University, University of Maryland, The University ofSheffield, Polytechnic University of Milan, Tsinghua University, Shanghai Jiao Tong University, ZhejiangUniversity, the Chinese Academy of Sciences, Harbin Institute of Technology, Xi’an Jiaotong University,Huazhong University of Science and Technology and South China University of Technology, in order toestablish joint labs for deepening technological cooperation. The Group also carries out strategiccooperation with tech giants such as BASF and Honeywell to build a global innovation ecosystem. TheGroup’s long-term focus on building technology, marketing, design, product and open innovation systems,building a cutting-edge research system and building reserves in technology for mid/long term, hasprovided a solid foundation for the Group to maintain technical superiority across the globe.

3.3 Stronger Global Impact fueled by Midea’s continual global resource allocation and

investments, globally-advanced manufacturing capabilities and advantage of scaleThe success of a series of global acquisitions and new business expansion moves has further solidifiedMidea’s global operations and leading advantages in robotics and automation. With the world’s leading

production capacity and experience, and a wide variety of products as well as its production bases allover the world, the Group has been able to expand rapidly into the emerging overseas markets and isbecoming a stronger competitor in those mature overseas markets. The Group is one of the biggestmanufacturers in the world for many product categories, which gives it competitive edges in efficiencyimproving and cost reducing that its overseas competitors are unable to replicate. Overseas sales of theGroup accounts for more than 40% of the total sales revenue. Its products have been exported to over200 countries and regions, and it owns 17 overseas manufacturing bases and 24 overseas operatingagencies. Midea’s global operations system has been further improved through the reform of internationalbusiness organizations towards diverse business models. It also increases investments in overseasbusiness operations, focuses on the needs of local customers and enhances product competitiveness ina bid to promote significant growth in its Own Branding & Manufacturing (OBM) business. In addition,with a deep knowledge and understanding on product characteristics and product demands in overseasmarket, Midea is promoting worldwide branding and expansion through global collaboration andcooperation. In this way, the global competitiveness of Midea is increasing steadily.

3.4 Broad channel networks and a well-established smart supply chain system ensuring the

steady growth of Midea’s domestic salesBy virtue of years of development and investments, Midea Group has formed an all-dimensional marketcoverage. In the mature first and second-tier markets, the Company has developed and maintained goodpartnerships with large home appliance retail chains. While in the broad third and fourth-tier markets, theCompany uses flagship stores, specialty shops, traditional channels and new channels as effectivesupplements. Currently, the Company has already covered the markets at all tiers. Additionally, theCompany's dominance in branding, products, offline channels and logistics distribution have also createdpowerful guarantees for the Company's rapid expansion of its e-commerce business and channels.Midea’s online retail sales during 2020 exceeded RMB86 billion, up by over 25% YoY. It remains the best-selling home appliance manufacturer on major e-commerce channels such as Tmall, JD, and Suning foryears consecutively.Making full use of the digital technology, Annto Logistics Technology Co., Ltd. (Annto), a subsidiary ofMidea, refines its nationwide logistics network through the big data technology to build a smart and digital

distribution platform. Annto concentrates its resources on urban distribution and is able to provide fullyvisualized direct distribution services covering every town and village of the country. Relying on nearly140 urban distribution centers nationwide, it covers more than 97% of towns and villages across thecountry. It can finish the delivery to 21,418 (or 51% of) towns and villages within 24 hours and to 38,744(or 87% of) towns and villages within 48 hours in the country. Additionally, Annto focuses on connectingits whole ToC service process, as well as refines its network of delivery and installation services in pursuitof integrated delivery and installation services and better user experience.

3.5 A user experience-oriented reform of “Comprehensive Digitalization and Comprehensive

Intellectualization” that focuses on “Digitization & Intelligence Driven” to make Midea a leader inthe IoT eraMidea has put in place and will prioritize the development of the Midea Cloud Sales commercial platformsupported by unified data and technology platforms, the IoT ecosystem platform, and the IndustrialInternet platform of “M.IoT”, with an aim to become a world-leading technology group driven by digitization& intelligence. On one hand, it promotes deep integration of the digital technology and business in thewhole value chain, with the view to becoming an icon in digitalization. On the other hand, with foresight,it plans for whole new products, services and business models centering on smart technologies, productsand scenes, so as to outcompete Internet companies. With continual investment and research in artificialintelligence (AI), silicon chip, sensor, big data, cloud computing and other new technologies, Midea hasbuilt the biggest AI team in the household appliance industry, which is committed to enabling products,machines, production processes and systems to sense, perceive, understand and judge, driven by thecombination of big data and AI, in order to create smart appliances without any assistance in interaction.Focusing on “people and their family”, Midea builds a whole value chain of IoT. Breakthroughs have beenmade in user data protection, content operation for smart scenes, smart connection technology, the smarthome ecosystem, cloud platforms, the smart voice function, the big data-based cloud housekeeperservices, etc. By doing so, Midea is able to offer complete smart home solutions for users, as well as toempower its business partners.Upon years of digital transformation, Midea has successfully materialized operations driven by softwareand data through its value chain, connecting end to end and covering planning and R&D, Product

Ordering, intelligent scheduling, flexible manufacturing, coordinative supply, product quality tracking,logistics, installation & post-sale services, etc. The Group’s digital platform has made come true C2Mflexible manufacturing, platform-based and modularized R&D, digitalized production techniques andsimulation, intelligent logistics, digital marketing, digital customer service, etc. By way of integrating theIoT capabilities of its AI Innovation Center, Software Engineering Institute, IT Department, IoT Division,Smart Home Business Group, Robotics & Automation Division, HVAC & Building Technologies Division,Digital Innovation Business and other organs, Midea has established a unified IoT technology platform.Its Industrial Internet platform has been upgraded to “M.IoT 2.0”, including two “Lighthouse Network”factories, which are swiftly applied to other Midea manufacturing bases across the world and provideproducts and services for around 300 customers in more than 40 market segments. Therefore, it is safeto say that Midea has built a solid foundation regarding Industrial Internet systems.

3.6 Sound corporate governance mechanism and effective incentive scheme to provide a solid

foundation for Midea’s sustained and steady developmentPaying close attention to the construction of a governance framework, regarding its corporate control,centralization and decentralization systems, the Group formed a mature management system forprofessional managers. The divisional system has been in operation for many years, and its performance-oriented evaluation and incentive mechanism featuring full decentralization has become a training andgrowth platform for the Group's professional managers. The Group's primary senior management teamconsists of professional managers who have been trained and forged in the operational practices of MideaGroup. They have been working for Midea on average for more than 15 years, all with rich professionaland industrial experience, deep understanding and insights of the global home appliance industry andrelated industries, and accurate understanding of the industry environment and corporate operationsmanagement. The Company's advantages in such systems and mechanisms have laid a solid foundationfor the efficient and effective business operations, as well as the promising, stable and sustainable futuredevelopment of the Company. At present, the Company has launched seven Stock Option IncentiveSchemes, four Restricted Share Incentive Schemes, six Global Partner Stock Ownership Schemes andthree Business Partner Stock Ownership Schemes for key managerial and technical personnel, markingthe establishment of a governance structure aligning the interests of senior management and core

business backbones with that of all shareholders, as well as the formulation of an incentive schemecomprising long and short-term incentives and restrains.

Section IV Performance Discussion and Analysis

1. Overview

1.1 Industry Overview

A. Home Appliance IndustryAs China’s consumer market took a heavy hit in the COVID-19 pandemic in 2020, people’s life styles andconsumption custom have changed, giving birth to new spending trends and forms. According to thestatistics published by the China Household Electric Appliance Research Institute (CHEARI) and theNational Household Electrical Appliance Industry Information Center, in 2020, the domestic retail sales ofhome appliances was RMB729.7 billion, down 9.2% year-on-year; and the exports of home appliances(exclusive of color TVs) reached RMB458.2 billion, up 24.2% year-on-year. Currently, the world is still ina grave and complex situation due to the pandemic, with unprecedented challenges for economicdevelopment. Nevertheless, in the medium and long run, upgrading of the industrial structure, stableincrease of household income, diversified consumption, the national policy support for the green andsmart industries, as well as upgrading of the standards for home appliances will create new opportunitiesand growth points. According to the 2020 Annual Report of China’s Household Electrical ApplianceIndustry published by CHEARI and the National Household Electrical Appliance Industry InformationCenter together, under the pressure of the pandemic, three trends occurred in the development of thedomestic home appliance industry in 2020: The “major” development trend, segmented demand marketand novel marketing model. The “major” development trend primarily includes the development directionof healthy, smart and high-end products, which will become the main market that home appliancemanufacturers would compete for. The segmented demand market has a booming growth and displaysa trend of diversity, especially in the small domestic appliances market where the diversified demand ofconsumers is more extensive, which requires the manufacturers to explore further. Novel marketingmodels emerge in an endless stream. These new tools such as live streaming can effectively reduceintermediate processes and can help to form competitive selling prices and more effective access tocustomers, especially for small domestic appliances that require no installation.

According to the data from the National Household Electrical Appliance Industry Information Center, thedomestic retail sales of air conditioners was RMB147.5 billion in 2020, down 22.8% year-on-year. In termsof product performance, the functions of air conditioners have been expanded from cooling and heatingto humidity, air cleanness and freshness, etc. Fresh-air air conditioners saw a year-on-year upswing ofover 150% in offline retail sales, in addition to a year-on-year surge of nearly 180% in online retail sales.Meanwhile, the market share of air conditioners which are capable of self-cleaning by retail sales alsoregistered a significant expansion (over 4% online and close to 13% offline). In addition, the pandemic,the implementation of the new energy efficiency standards, as well as a rise in raw material prices in thesecond half of 2020 further boosted the market prices of air conditioners. High-end products embraced alarger market share and a further structure upgrade. Data show that variable frequency floor-standingand wall-mounted air conditioners combined took up an over-92% offline market share by unit sales in2020, up 7% year-on-year.According to the data from the National Household Electrical Appliance Industry Information Center, thedomestic retail sales of laundry appliances was RMB65.74 billion in 2020, down 6.8% year-on-year. Dueto the pandemic, the online sales of laundry appliances reached RMB32.38 billion in the year, a year-on-year increase of 8.9%. The amount represented 49.3% of the total sales, almost a tie with the offlinemarket. In the upgrade of the laundry appliance market, in terms of the product types, the market shareof front-loading products keeps growing stably. In 2020, the market share (by retail sales) increased to

79.8%, with the market share by unit sales reaching 58.8%, making such products the mainstream of the

market. Specifically, the market share by retail sales of front-loading washer-dryers also increased to

45.4%. Compared with top-loading washing machines, front-loading products are of a higher price but

consume less energy, deliver greater cleanness, and cause less tear and wear, which represent aninevitable trend of consumption upgrading. Product specifications continue to upgrade. The products of8kg have been completely replaced by that of 10kg. The offline unit sales of 10kg washers occupiedapproximately a 50% market share, which contributed 61.5% of sales, with an increase of over 10% fromthe previous year. In addition, the products with an over-10kg capacity and separate washing and dryingsections are highly favored by the high-end market. The design of such products focuses more on thinnermachines and space saving. The sterilization technology of laundry appliances has matured. Due to thepandemic, the offline market shares by retail sales and unit sales of the products with the sterilization

function reached 36.4% and 48.2%, respectively. The progress of function expansion from “wash” to“wash and care” still keeps going. For example, air washing, steam washing, and steam and iron washingare strong supplements for the traditional function of washing on eliminating odor, removing wrinkles,sterilizing and eradicating mites, preventing allergy, avoiding laundry detergent residue, and preservingthe texture of clothes. The offline market share of products with the function of air washing increasedsignificantly to 36.7% in 2020. Because the drying function brings the advantages of saving time, beingconvenient, non-ironing, and saving indoor space, the retail sales of clothes dryers in the domestic marketwere RMB2.26 billion in 2020, an increase of 46.2% year-on-year. Meanwhile, the growth momentum ofdomestic brands was strong, and the offline retail sales of domestic brands in 2020 increased nearly 200%year on year. Specifically, the heat pump condenser dryer is rapidly occupying the offline market. In 2020,its offline market shares by retail sales and unit sales reached 94.6% and 96.2%, respectively.According to the data from the National Household Electrical Appliance Industry Information Center, thedomestic retail sales of refrigerators were RMB93 billion in 2020, down 2.8% year-on-year. In thedomestic market, online and offline sales differed in performance, with a rise of 13.6% and a decline of

12.4% respectively compared to last year. Nevertheless, product upgrading was prominent. The unit sales

of multi-door refrigerators continued to grow with their offline market share up by nearly 7% from last yearto 42% in the year under review. Due to consumers' increased willingness to pursue quality life, the trendof high-end products becomes obvious, and the offline market share by unit sales of refrigerators with aunit price of over RMB10,000 increased significantly. In particular, the market share (by retail sales) ofproducts with a unit price of over RMB14,000 increased 2%. Intelligent technologies of high-end productsbring consumers novel experience. For instance, COLMO, a refrigerator brand of Midea, can select themost accurate storage pattern in the background to provide nutritious food for users through the “AIIntelligent Solutions Whole Food Ingredient” technology. The pandemic increased the demand forrefrigerator's functions on product sterilization, health and other aspects. New refrigerators launched allfocused on these functions. For example, Midea Refrigerator manages to remove odor in 19 minutesbased on the “PST + super magnetic electrolysis odor-free technology”. Consumers' requirements forrefrigerators have upgraded from “being able to freeze food” to “being able to freeze food well” and “beingable to freeze food healthily”. Aside from that, products meeting the needs of different scenes likecosmetics, baby food, and breast milk through providing independent and separate storage space also

present a trend of scale expansion.According to the data from the National Household Electrical Appliance Industry Information Center, thedomestic retail sales of kitchen appliances was RMB167.44 billion in 2020, down 4.8% year-on-year.Industrial landscape shows a further concentration of market shares to top brands in the industry. Offlinemarket shares of top five range hood brands reached 74.8%; and the market shares of top five gas waterheater brands reached 72.6%. The kitchen appliance market continues to move towards high-endproducts, as high-quality and high-end products become preferable to consumers. To state with numbers,in 2020, the offline sales of high-end range hoods above RMB6,000 and high-end gas stoves aboveRMB3,500 saw an increase of 2.3% and 4.5%, respectively. The market continues to see productupgrading. The offline market share of range hoods with a fan that rotates 20m?/min of air has drasticallyincreased to 22.6%, up 8.2% year-on-year. The market share of gas stoves offering up to 5kw fire hasincreased to 11.4%, up 2.6% year-on-year. The market share of large-sized built-in ovens of above 70Lcapacity has soared up to 38.7%, up 10.1% year-on-year. For other products, the sales growth ofemerging products, as represented by dishwashers and integrated stoves, has continued to led theindustry all year round, as a result of following the market trends of “healthy products” and “product suites”.The sales of dishwashers were RMB8.45 billion, up 24.6% year-on-year, of which online sales took up apercentage of 49.2%. In terms of products, large capacity and effective sterilization have been the twomajor functions focused for developing dishwashers. Online and offline market shares of dishwasherswith large capacity of up to 13 sets of bowls reached 36.2% and 42.1%, respectively, up around 10%. Aspandemic control continues to be stressed in daily life, sterilization has been required more than ever.High-temperature sterilization, UV sterilization, ion sterilization and other technologies have been widelyapplied. The sales of integrated stoves reached RMB17.68 billion, up 13.7% year-on-year. Specifically,the growth of online sales and offline sales were 35% and 5.6%, respectively. Due to the pandemicsituation, the offline channel flow of integrated stoves switched to online channels. Live streamingmarketing has contributed to the growth of sales despite the encumbrance met in offline channels.However, this kind of online marketing requires more efficient full-link service capacity from manufacturersand vendors. At the current stage, competition of online markets is stressing more on products than cheapprices. As a result of lockdown and social distancing, the need for high-end kitchen appliances includingsteamers and ovens has been surging, which provided a good opportunity for the development of

integrated stoves. In 2020, the online market share of integrated stove with steamer-oven reached 25.6%,representing the biggest growth in all categories.According to the data from the National Household Electrical Appliance Industry Information Center, thedomestic sales of small domestic appliances was RMB128.4 billion in 2020, down 0.5% year-on-year, ofwhich the online sales took up a percentage of 68.8%. In all categories, the sales of traditional productsin 2020 have not seen a promising growth. The annual sales of rice cookers were RMB13.61 billion, andthe retail sales have been down 13.2% year-on-year. However, the market of emerging and health-friendlysmall domestic appliances told a different story. The diversified and individualized consumer needs haveresulted in rapid growth for these products, driving the emergence of more niche products includingjuicers, toasters, muddlers, breakfast machines, etc. While this kind of creative small domestic appliancesis not faced to mass consumers, they are designed into diverse categories and with more specifiedfunctions. The exterior design for these products jumps outside the traditional visual pattern for domesticappliances and they cover all-scene application for all ages from infants, teenagers to seniors. In addition,the small smart domestic appliances for pets are also one of the most fast-growing categories. The annualsales of blenders reached RMB13.62 billion, up 7.7% year-on-year, of which the online sales took up apercentage of 60.7%. Functions that can solve pain points of consumers including silent mode, auto-cleaning and detachability of products have been designed upon needs. For example, the online sales ofproducts equipped with silent settings have seen an increase of over 150% year-on-year. The sales ofhealth-friendly vacuum cleaners during the COVID-19 pandemic were also promising. In 2020, thedomestic sales of vacuum cleaners were RMB23.18 billion, up 15.3% year-on-year, of which the onlinesales took up a percentage of over 80%. By categories, as consumption upgrading has made vacuumcleaners an integral part of domestic appliances, the online unit sales of handheld vacuum cleaners hasseen a year-on-year increase of 48.8%; and the unit sales of robot cleaners and dust mite vacuumcleaners has both seen a year-on-year increase of 13.9%. As the needs for house cleaning continue togrow, multiple new cleaning appliances such as steam mops and scrubbers have emerged. By industriallandscape, the distance on product competitiveness between domestic brands and foreign brands isgradually narrowing, as Chinese enterprises have been making various breakthroughs on digital motorsand other core technologies. As the data show, four out of the Top 5 brands on the online retail sales listare Chinese brands, with a combined percentage of 41.3%, achieving a steady year-on-year growth. By

development of product technologies, the competition in the vacuum cleaner market has switched itsfocus from price and capacity to user experience. Accordingly, new technologies including integration ofmoping and vacuuming, automatic dust collector, self-cleaning mops and bendable fronts have beendeveloped. These new technologies have solved pain points of consumers from multiple dimensions andimproved user experience.According to the data from the National Household Electrical Appliance Industry Information Center, theonline retail sales of home appliances in China amounted to RMB336.8 billion in 2020, up 8.4% year-on-year, accounting for a market share of 46.2%; while the offline retail sales amounted to RMB392.9 billion,down 20.2% year-on-year, accounting for 53.8%. In light of channel retail sales, most product categoriesincluding refrigerators, laundry appliances, kitchen appliances and small domestic appliances achievedgrowth in the online market. The offline market, on the other hand, saw a year-on-year decline in mostproduct categories, especially the traditional major appliances. That said, due to the gradual recovery ofconsumer confidence and the fast growth in the high-end market, more consumers spend on qualityproducts in the offline market. According to the data from the National Household Electrical ApplianceIndustry Information Center, 2020 witnessed a substantial increase in the offline unit sales of Grade 1variable frequency air conditioners, 400L-plus refrigerators, heat pump dryers, water purifiers with a unitprice of over RMB5,000, vacuum cleaners with a unit price of over RMB4,000, etc. In terms of channelevolvement, the booming digital economy accelerated the integration of online and offline channels, witha surge of new models and forms boosting consumption upgrading. Meanwhile, the rising interactivemarketing models such as live streaming and e-commerce, the innovative C2M model, the Internet, AI,big data and the like are pushing the retail sector into a new phase featuring “all channels, all scenes andall links”.B. Robotics and Industrial Automation IndustryAccording to MIR, the shipment of industrial robotics was 171,490 units in China in 2020, representingan increase of 14.8% year-on-year. In terms of the market changes throughout the year, the pandemichas not changed the prosperous trend in markets. Though the economy dropped sharply in the firstquarter due to the shock on markets brought by the pandemic, the domestic economy continuouslyrecovered its operation as the prevention and control of the pandemic gradually stepped into a stable

stage since the second quarter. In addition, a large number of orders in manufacturing flew back underthe impact of the severe overseas situation of pandemic, which also sped up the quick recovery of themarket, presenting a tendency of opening low and rising in the year. By industry, the electronic industryand the general industrial investment served as the main growth momentum for the market. Substantialinvestment was made in various industries including smart phones and components, intelligent wearables,laptops, Li-ion batteries, photovoltaic power, metal processing and food and beverage. Besides, owing tothe pandemic, the demand for the anti-pandemic and treatment supplies surged, and the application ofrobotics in new occasions was continuously expedited by the demand for nucleic acid and serology testsand the delivery of medical supplies. By application, the integration between robotics and technology wascontinued to be deepened. The application of robots was further expanded from “transfer-based” tasksto “processing-based” tasks. As a result, the robotic industry has made a further breakthrough ininnovative applications such as soft float in die-casting, chair panel drilling, FPC-FFC connectors,welding-cutting of medium-thick plates, as well as mixed robotic palletizers. In addition, according toanalysis from the GGII, it is predicted that the overall market of industrial robotics will present a tendencyof growth in the next two years. In detail, it is expected that some segments will achieve a record highgrowth, and the pattern of product segments will be reshaped. Specifically, multi-joint robotics mainlydepended on the small six-axis robotics as driving force which attracted various manufacturers, mainlyfocusing on the industrial applications such as 3C and new-energy products. The demand in theautomobile industry tended to be stable, producing a limited general driving effect. Similarly, the demandfor medium-load and large-load products witnessed limited growth. As for robotics, the SCARA roboticsbenefited from the demand in the 3C industry, reaching a market growth of above 30%. The delta roboticsachieved a market growth of about 20% in the first half of 2020 owing to the impact of the food andmedicine segments. The collaborative robot market received increasing popularity in the segments ofservices and attracted a lot number of manufacturers to put in a larger deal of effort on services, as thoughthe overall growth of the market slowed down a bit.In terms of policy support, the Ministry of Industry and Information unveiled in 2020 the Guiding Opinionson the Development of Industrial Big Data for the purposes of implementing the national big datadevelopment strategy, furthering the digital transformation of industries, unlocking the potential ofindustrial data resource elements, and accelerating the development of the industrial big data industry.

In March 2020, the Central Politburo Standing Committee of the Communist Party of China put forwardin a meeting to speed up the construction of new infrastructure including 5G networks and data centers.In April 2020, the National Development and Reform Commission defined clearly the scope of newinfrastructure for the first time, which comprises information, integrated and innovative infrastructure. InMay 2020, it was mentioned in the Report on the Work of the Government 2020 that support should befocused on new infrastructure, new urbanization initiatives and major projects such as transportation andhydraulic engineering. As China vigorously encourages the construction of new infrastructure, theindustrial robotics industry is considered to have enormous potential. From the perspective of localgovernment policies, relevant policies were issued by local governments to promote the development ofthe robot industry. For example, Jiangsu Province issued the Opinions on Deeply Pushing forwardDevelopment of Digital Economy, Guangdong Province issued the Implementation Plan of GuangdongProvince for Promoting New Infrastructure Construction in Three Years (2020-2022) and the Work Planfor Building a National Digital Economy Innovation and Development Pilot Zone in Guangdong Province,and Shanghai City issued the Plan for Special Actions of Building 100+ Smart Factories in Shanghai City.According to the latest statistics of IFR, in terms of industrial robotic density (the average number ofindustrial robotics per 10,000 workers), Singapore continues to rank No.1 in the world with 918 robotics,while the robotic density of China has surpassed France for the first time and has risen to 187, up 33%compared with that in 2018 and far beyond the global average of 113, indicating great potential andprospects. Supported by diverse factors such as flexible demands of the manufacturing sector, decliningdemographic dividend, emerging markets and the development of innovative technologies, industrialrobotics will be applied to more and more areas.

1.2 Analysis of the Company’s Main Business

Domestic consumption and production are expected to be affected to some degree in the short run bythe COVID-19 outbreak in 2020. Meanwhile, the COVID-19 has been spreading overseas since lateFebruary 2020. And the political and economic environment has become more complicated both at homeand abroad. Midea in 2020 can be summarized into five phases: the quick response in the domesticoutbreak of the pandemic in the first phase, the resumption of work/production in the second phase, theshift of focus from resumption of production to normal operation in the third phase, the catching up on

progress in the fourth phase, and the reflection, innovation and reform in the fifth phase. In light of itsoperating results and the performance of its team, Midea has weathered the storm in the year, deliveringa better-than-expected operating performance. This is partly attributable to its quick response andeffective measures with respect to the pandemic. More importantly, the organizational agility and businessresilience that Midea has long been cultivating through a series of reforms and adjustments in the pastyears have further boosted its “immunity”. All these efforts have resulted in improving trends in keyperformance indicators such as channel inventories and net cash flows from operating activities, betterproduct quality and reputation, as well as strengthened competitiveness in various product categoriesand global operation synergies. In the year, Midea has redefined the five business divisions for evengreater growth space, and has established the new strategic focus with “Technology Leadership” as thecore. Meanwhile, it firmly adhered to “Comprehensive Digitalization and ComprehensiveIntellectualization”, and continued to promote recreation of the corporate culture. Efforts were also madeto promote high-performance operations in the whole value chain, continuously optimize the Company’sproduct mix according to the consumption upgrade trends, and construct sustainable competitiveness forthe future through internal growth. For 2020, Midea achieved, on a consolidated basis, total revenue ofRMB285.710 billion, up 2.27% YoY; and a net profit attributable to shareholders of the Company ofRMB27.223 billion, up 12.44% YoY.In 2020, the Company carried out the following main tasks:

A. Focused on users, continuously refined the whole value chain, as well as upgraded businessscenes, products and servicesIn order to carry on with the “customer-oriented” strategic reform, the Company creates more user valuein business scenes, products and services which are in direct contact with users, builds a customer-oriented organization and digital experience management system, as well as continuously promotesexperience refinement in the whole value chain. In terms of business scenes, offline flagship store, homedecoration store, multi-category store and new retail store are reshaped based on the new retailtechnology and user analysis. This, together with refined shopping paths and improving onlineconsultation on e-commerce platforms, help sufficiently satisfy user demand for user scene-basedinteractions, shopping convenience and individualized shopping guide, thus further improving shopping

experience. Meanwhile, the customer groups under the membership system in all distribution channelsoffer an opportunity for users to share, which can trigger fission expansion of the customer base. In termsof product development, an information experience platform is put in place to understand life styles andpotential demand of customers in different scenes. Through involving customers in the whole R&Dprocess and profound R&D and technological accumulation, the Company is able to solve experiencebottlenecks and pain points in the industry, offer customers better-than-expected product innovation, andboost customer satisfaction and loyalty. In respect of smart products, the Company continues to createsurprises based on customers’ life styles and diverse user scenes. As for service experience, with thehelp of Internet tools, Midea goes beyond the traditional model to build a “Service + Internet” platform, inaddition to continuous investments in service certainty, value-added services and active service.Meanwhile, by means of digital service, as well as platform-based and modularized R&D and production,Midea takes the lead to explore the C2M model for its home appliance products, offering single productcustomization and product suite customization for the whole house for consumers with home decorationneeds. These measures to improve service experience are part of Midea’s efforts to deliver better productexperience throughout the product life cycle. In terms of industrial design, Midea leads the way in userexperience and interaction upgrading with ongoing innovations. In 2020, Midea won a total of 87 industrialdesign awards, including 25 Red Dot Design Awards, 29 iF Design Awards, 27 IDEA Awards and 6 G-mark Awards.For smart living room scenes:

Midea Air Conditioner continued to lead the way in the industry in terms of innovation. Launched initiallyin the industry, Midea iColor XT Series Air Conditioner applies the unique third generation wind guidingtechnology to the omnidirectional revolving air duct, and such integrated flow duct is extended by 30%outside. The technology allows the 180° turning of the spherical revolving air duct to precisely lead thewind direction and deliver wind to the entire space in a wide-angle manner, realizing a more completerange of flow coverage so as to cool or warm the space as expected more quickly. Based on suchachievements, it has been granted several awards such as the 2020 User Experience Innovation ProductGold Award by IFA, the 2020 G-mark Award and the 2020 China Household Appliances Innovation Award.Midea Freshness Pro Artistic Floor-Standing Air Conditioner, innovatively adopts the dual-duct design in

the aviation sector. Through the axial inner duct and the centrifugal outer duct, strong cold wind canbecome soft, achieving a breezeless and comfortable feeling. Air flows from the top air outlet, axial airoutlet and centrifugal air outlet interact to form an even wind and a constant temperature field across theentire space, upgrading user experience. This product ensures fresh air in the entire space by replacingthe stale air with fresh air under micro-positive pressure and delivering the fresh air through multipleoutlets. Besides, the industrial design of the product is inspired by “Chinese gardens”, which helps theproduct win the awards including the Best Product Award at AWE 2020 and the 2020 CMF Design Award.Midea Children's Air Conditioner II has upgraded its smart cold-prevention function to achieve real-timemonitoring. It is equipped with a customized breezeless and smart voice functions. Additionally, it is ableto quickly distinguish a baby’s crying and send notification to the user. The design of Midea Artistic Floor-Standing Air Conditioner was inspired by Beijing's CITIC Tower. Its breezeless function has beenupgraded to “customized breezeless” to meet the needs of customers with different physiques. The high-end version of this product is the first in the industry to be equipped with a central voice system thatunderstands multiple dialects. Midea Breezeless II Floor-Standing Air Conditioner is equipped with a freshair function. Its fresh air volume is 90m?/h, allowing those indoors to enjoy healthy air without openingwindows. The fresh air function is able to run independently. With H13 filters, it is able to achieve a one-time filtration efficiency of over 99%. Midea U is a new product lately launched for the overseas market.Developed by using the CDOC approach and equipped with an innovative insulating U-slot and the “NoiseBarrier” technology featuring noise absorption from both the inside and outside, it allows users to freelyopen or close windows whenever running Midea U, with little noise from the outside. It was awarded theGold Medal with the Congratulations of Jury at the 2021 International Exhibition of Inventions of Geneva.In May 2020, a total of 20 Midea air conditioner models received the “CVC Hygiene and Health Certificatefor Consumer Electric Appliance Product”.Midea has launched Xiaofangwu Dehumidifier, the first dehumidifier of which both the machine body andthe water tank can be folded for storage. It boasts a beautiful appearance and futuristic technology. Andthe awards it has won include the Gold Medal at the 2021 International Exhibition of Inventions of Geneva.In terms of portable air conditioners, Midea continued to focus on the customers' pain points and madesome progress. The newly launched Real Cool series reaches a cooling speed twice faster than that oftraditional products and an 8-meter distance of wind delivery through the initial hose-in-hose ventilation

system and the 102° coverage of wind delivery. This, together with an over-50% increase in energyefficiency, this product raises the standards of the portable AC industry. Midea’s new air circulation fan,with a uniquely designed appearance, realizes indoor circulation for a better indoor environment. Basedon Midea's patented Turbo Flow technology, this new product is able to function at a large capacity andfor an ultra-long distance, making cross-room air delivery a real possibility and enabling full-houseventilation in just five minutes. Powered by Midea’s unique internal rotation technology and universal balljoint technology, it features free 360° rotation to accelerate air flow in a room. With a stepless slider, itcan circulate air without direct blowing, and, with a special infinite sliding rod, can also achieve 90° cyclingwithout direct blowing.Equipped with the Lift-away function and its canister sliding along the rail, Midea Space Travel VacuumCleaner, with the suction power of 80W but reduced noise, has the best performance in floor brushingand floor or carpet dust removal among vacuum cleaners with the same suction power. Being the bestanti-hair wrap vacuum cleaner, Space Travel applies the anti-hair wrap technology with independentintellectual property rights of Midea, which is based on the eccentric design of drive device of hair removaltechniques. In addition to PVA-coated cotton, built-in planetary gear motor, solid-liquid waste separation,antibacterial deodorization and other leading technologies, Midea Handheld Electric Mop features alsoserves as a reminder of clean water, lack of water and full sewage tank. Midea Z7 Vacuum Cleaner, withthe new-generation vibration damping and noise reduction technologies, the anti-vibration technology ofan independently mounted motor module and the technology of labyrinth-shaped air ducts, achieves thelowest noise and vibration for the whole machine and the handheld part among products with the samepower, showing the excellent performance in vibration damping and noise reduction in the industry. Withan optimized duct system from efficient runner technology and minimized resistance of the runner, Mideacaptures the high-efficiency matching point between the air duct and the electric fan in Z7, achieving 35%efficiency of the whole machine, inserting itself into the first tier in the industry. Midea M7 Robot Cleaneris able to remove dust efficiently. The robot features a high-performance LDS 8M detection radius, anenvironmental scanning frequency up to 3,000Hz, a floating suction design, and a combination of bilateraland V-shaped roller brushes. With a high-capacity water tank and intelligent mopping technology, the M7can sweep and mop floors intelligently. Midea V5 Rechargeable Push-Rod Vacuum Cleaner has a high-efficiency digital motor, able to produce 100W of suction power. With an electric soft velvet brush, it

efficiently removes and absorbs dust. Its handheld component, 1.4KG only, is convenient to operate. Andit is capable of running for up to 45 minutes, thus meeting the requirements of whole-house cleaning.For smart balcony scenes:

COLMO Space Capsule Series Dual-Tub Front-Loading Washing Machine features the largest-capacityupper tub of 5kg and lower tub of 10kg in the industry. In a true technological breakthrough, the upperand lower tubs are able to conduct washing and spin-drying at the same time, a first practice in theindustry. Therefore, the washing machine can maintain extremely low vibration and noise, even whenrunning at high intensity and a high speed. The two tubs work without interference with each other,showing the industry a new way of sorting laundry and setting a new standard of 6S sorting laundry withseparation, capacity, silence, health, luxury care and built-in in one device. Besides, the built-in washingmachine adopts the one screen for two tubs control technology and the door caulking technology fromthe automobile industry. Upon technology upgrades, the capacity of the tubs is increased by one to twokilograms while harmful substances generated in the production process are reduced through a tallermachine and the paint-free technology. Midea Steam Non-Iron Series Clothes Dryer, with the steamgenerator jetting superheated steam to the super capacity tub, can get the clothing wrinkle-free whiledrying. Besides, the aseptic tub made of stainless steel with the UV sterilization function makes thoroughsterilization possible and obtain the COVID-19 inactivation certification. Based on the unique “dual-strokeclutch mechanism”, Midea Top-Loading Dual-Drive Quick-Wash Series uses the counterrotating of thepulsator and the inner tub to produce dual forces, simulating the tumbling and rinsing effects of washingby hand with dual water flows. It can deliver more cleanness and effectively prevent clothes from tangling.According to tests, compared with the single-drive washing machine, this dual-drive product can deliver15% more cleanness and 8% less tear and wear. Little Swan H36 Heat Pump Dryer is equipped with aunique steam-drying and non-iron technology. This technology guides water molecules into clothingfibers' non-crystalline areas, thereby maintaining swelling and enhancing the flexibility and softness ofthe fiber molecules. By doing so, it delivers better drying effects. Equipped with a 10KG heat pump anda 125L capacity, the dryer is able to instantly dry a whole family's worth of bedding and clothes. Equippedwith a unique UV sterilization technology, it kills over 99% of mites in the clothes, as certified by China’stesting authorities. The 4.5-cubic-feet top-loading washing machine targeted at the North America market

is equipped with a butterfly-shaped infusion structure, functioning in three steps of water intake,dispersion and rotation while putting detergent in automatically in two times, where a tornado-like powerfulwater force collides and impacts with the up-and-down tumbling clothes to effectively remove stains,achieving much more cleanness. Meanwhile, five products won the Red Dot Award, including Little SwanUltra Fine Bubble Water Cube Drum TG100-14366WMUDT, COLMO Cloud Atlas Series Washer-DryerCLDQ10, Beverly Tiancheng Series One-Tub Tech BVL3J110IY, Midea Front-Loading Washing MachineMD100V11D, and Toshiba Samurai T07.For smart kitchen scenes:

I-Family Built-in Kitchen Appliance Suite, winner of the Best Product Award at AWE 2020, features aminimalist design. Based on the fourth generation's nearly-soundless dual air duct design, the range hoodof the product suite is capable of a cooking-smoke escape rate as low as 3%. Its filter net is removableand dishwasher-washable. The embedded smoke sensor technology can reduce noise to as low as 42dB.The stove is equipped with two latest-technology latent wick burners, uniform temperature and intelligentcooking algorithms able to reproduce Michelin-grade chef cooking results, and enables automaticingredient matching and cooking with 50+ smart recipes. With a modularized Chinese-style basket forbowls and dishes, an industry first, the dishwasher saves users from bending over and reduces washtimes by 30%. With another industry first—the standing rinsing arm—the dishwasher's cleaning rate isincreased by 60%. COLMO-S67 Range Hood brings users a new experience of sight, sound, smell, tasteand touch. Users can enjoy cooking without being bothered by smoke since the range hood carries thepioneering third-generation AG air duct system, which features vertical suction to allow no escape ofsmoke. In addition, this product employs an advanced radar-based smoke capture technology, which isa smart control technology based on smoke conditions to offer a “hands free” experience. Meanwhile, itsinnovative flat control panel is ergonomic and easy to operate. Midea Charcoal Stove-Q67T Gas Stoveis designed to meet the different taste needs of family members, which is equipped with a burner forflash-fry and a charcoal burner for stewing, providing 14 kinds of fire. COLMO-QF3 Gas Stove, a designcombining simplicity with the special 360° edge-polished glass panel, enables accurate temperaturecontrol through a 225°-wide screen to achieve infinitely variable and accurate control for various cookingneeds. And the modular design of the major component makes it easy to clean.

Midea D3/D5 Jimu Microwave Oven is surprisingly easy to operate with a large display screen and asingle knob. It also boasts a food-grade cavity and a dual-power baking system. Powered by twinturbochargers, Midea Turbo Fresh Steamer features adjustable superheated steam. With combinedcharcoal jet roasting technology and high-temperature steam degreasing algorithm, it achieves uniform-temperature cooking. Its M-type copper tubing can condense up to 10 liters of saturated steam per minutefor zero steam overflow. Employing an infrared detector, Midea Constant Temperature CookingMicrowave Oven allows accurate temperature control from 30°C to 100°C since microwave algorithmsare adopted. An intelligent defrosting function is available with the efficiency increased by 25%, providingfast cooking experience. “Fresh” Steamer-Oven features the micro-pressure steam and charcoal grillfunctions, though which nutrition can be effectively retained with flavor released. High-temperaturesteaming and baking allows the cooking for health food of fat and salt reduction while the zero steamemission technology enables the steamer-oven to have a dew point of less than 50 degrees Celsius anda condensate recovery of up to 150g, effectively enhancing the cooking experience. It was granted the“Product Innovation Award” at the 16th China Household Appliances Innovation Award. Midea MasterMicro Combi Steamer Cooking Oven, integrates the functions of microwave, steamer and oven withseven main functions of cooking, and provides the steaming of 1850W, grill of 230 degrees like that ofcharcoal grill in kiln and fat and salt reduction. Moreover, recipes for over 200 dishes are available at theAPP for better user experience. It won the “Good Product” award from China Household ElectricAppliance Research Institute. Midea Chujian Oven, with seven baking modes and accurate temperaturecontrol function, can connect with WiFi intelligently and access the massive AI cloud recipes. The productwon the Technology Innovation Pioneer Award from China Household Electric Appliance ResearchInstitute. Adopting the steamer calorie burning technology, Kamen vortex street fatty solution at hightemperature, full-frequency-domain and loosely-coupled microwave fat burning and instant charcoal grillwith graphite and carbon for fat removal as well as MIX fat burning curve, the oven achieves 89% increasein fat removal year-on-year, and the “steamer + fat and salt reduction” cooking technology is VDE-certified.Focused on the new consumer trend of holistic health, Midea has launched a series of products including“Low-Sugar Rice Cooker”, “Low-Fat Electric Pressure Cooker”, “Constant Temperature Induction Cooker”,and “Smart, Variable Frequency and Washable Blender”. “Low-Sugar Rice Cooker” is a product of fiveyears' R&D and innovative sugar-leaching technology. This consists of the three-step cooking technology

of “high power boiling, powerful sugar leaching, and constant-temperature steaming”, by which the ricecooker is able to reduce the reducing sugar and resistant starch content by 50% and 23% respectively,effectively reducing sugar intake and suppressing increases in blood glucose increase after meals. Thisis the first low-sugar rice cooker certified by China Household Electric Appliances Research Institute(CHEAR). It sets a new trend that “a rice cooker without a low-sugar function is not a good rice cooker”.“Low-Fat Electric Pressure Cooker” is equipped with “mellow but fat-cutting” technology. Throughpressure-variable boiling, the cooker is able to enhance aroma and remove as much as over 92% of fat.“Constant Temperature Induction Cooker” is equipped with the industry-leading technology of “protrudingtemperature measurement and frequency conversion temperature constancy”, transforming the cookerfrom a conventional heating device to a professional cooking device with precise temperature control.The cooker is able to make a variety of constant-temperature foods without producing cooking smokethroughout the entire process. The cooker supports different cooking methods, such as shallow frying,frying, boiling, stewing, and deep-frying. Smart, Variable Frequency and Washable Blender adopts asmart, variable-frequency and constant-speed blending technology to achieve more delicate cuts andmore easily absorbed nutrition. Also, it is equipped with removable blades, an electroless body andunderneath heating—all technological firsts in the industry, is easy to clean in a thorough manner for theentire body is washable in water.COLMO B3 Dishwasher is equipped with a VF dual-drive system and disrotatory arms for thoroughtableware cleaning. COLMO B3 can clean valuable tableware to the third level of disinfection. With theapplication of intelligent storage technology, COLMO B3 can store tableware for up to 168 hours, makingit an “all-in-one” appliance for tableware washing, disinfection, drying, and storage. Utilizing the ultra finebubble technology, COLMO EVO Series Active Water Purifier V7 Pro can effectively oxidize anddecompose organic pollutants and kill almost all bacteria found in drinking water. It is also equipped witha warm washing function. It is NSF-certified and a winner of the Best Product Award at AWE 2020 andthe National Level Leader Honor. Midea Chinese-style Sterilization Dishwasher GX1000 is a dishwashingsolution perfect for health, cleanness, and intelligence. In terms of technologies, its quint-rotatory armssuper cleaning patented technology can remove stubborn stains. The main body is kept fresh and cleandue to the original photocatalyst odor-free system. The layered washing function satisfies personalizeddemands. Top-control and front-display design, the top knife and fork basket, and no-bending-over

operation are ergonomically convenient.Midea Zero Staleness Water Purifier is the world's only large-capacity water purifier certified by NSF,establishing a benchmark of zero staleness, thanks to its original zero staleness technology. The saltremoving rate of the first cup of water exceeds 70%. Each cup of filtered water is directly drinkable.Moreover, the original 10-year RO filter technology of Midea addresses the issue of frequentreplacements of the filter. With whole new technologies plus the patented slow stripping & rotary deep-cleaning system, the RO filter and the entire water system of the machine can be fully self-cleaning.Therefore, the product was granted the 2020 Red Star Design Award. Midea YR1908 I-Family WaterDispenser embraces a pioneering whole-process sterilization system. Its sterilization rate is over 99%,attributable to the bacteriological filtration membrane, high-temperature dynamic sterilization, and self-reflow. Water safety is guaranteed during the whole process from inflow to outflow. Furthermore, theoriginal dual-core heating technology enables the thermostatic precision at the outlet to reach ±1°C.In June 2020, the “Pesticide-Residue-Free Series” (“the Research and Application of the Pesticide-Residue-Free Technology of Deep UV Light + Photocatalyst in the Home Appliance Industry”) and the“Odor-Free Series” (“the Research and Application of the Odor-Free Technology of Catalysis-AssistedNon-Thermal Plasma in the Home Appliance Industry”), two of Midea’s core technologies for refrigerators,were both certified as “Internationally Advanced” by industry experts. The technologically innovative“Pesticide-Residue-Free Series” adopts deep UVC light in its fruit&vegetables zone, a drawer design forthe refrigerating chamber that allows for high photolysis efficiency, as well as the light energy iontechnology to degrade pesticide residue in fruits and vegetables in a highly effective manner, therebydelivering a green and healthy life for users. Likewise, the innovative “Odor-Free Series” generates low-temperature plasmas within the refrigerator via a miniaturized high-voltage power supply and thedielectric barrier discharge technology, so as to stimulate odor-decomposing catalysts for an odorless,highly sterile environment in just 19 minutes and keep the food safe. This technology is leading theindustry into “a new era of fast and clean refrigerating experience”. Six-Door Slim-Design ToshibaRefrigerator, launched by TLSC, adopts a pioneering star-rated cuisine and atomized fresh-keepingtechnology. This model is able to defrost food without compromising its original flavor, slightly freeze foodin a short time, and accurately adjust ambient temperatures required for the optimal flavoring of meat

ingredients. Its fruit&vegetables compartment is equipped with imported UNIT moisturizing films to keepfruit and vegetables hydrated and fresh. The humanized design of the “itouch” door, the middlefruit&vegetables compartment, and the external wall made from aircraft-grade insulation materials, allhelp to reduce the thickness of the safe and freezer walls by 60% and 44% respectively, achieving “largecapacity in a compact size”.For smart bathroom scenes:

Midea Morning Dew Electric Water Heater CQ6, a newly launched product, was recognized as a “CertifiedIntelligent Product” at the China Smart Home International Summit Forum. In line with the concept of“clean water life”, Midea adopted a creative all-time magnetic cleaning system, including pre-filtration,purification, post-cleaning and whole-process monitoring. The sterilization rate is up to 99%. The four-in-one process guarantees clean water. Pain points of general electric water heaters, such as dirt, bacteria,and insufficient water for showering, are solved, so customers can enjoy a comfortable shower. MideaArtificial Sunlight UV8 Gas Water Heater is the first zero cold water product with UV sterilization functionin the industry. The UV sterilization function has two models, cold and hot. The real-time sterilization rateat the flow rate of 13L/min surpasses 99%. Highlights in the appearance include a quite big roundmembrane and the arc smile-like light effect at the bottom. During the Double 11 shopping festival in 2020,this product was ranked first in prices among high-end products in the industry. Besides, it was grantedthe Enterprise Standard Innovation Award at the 16th China Household Appliances Innovation Award andcertified by authoritative agencies. Midea Heaven Spring Series HTL8 Gas Water Heater is the first dual-nuclear-magnetic-cleaning zero cold water product in the industry. It effectively addresses the issues ofcold water at the beginning of a shower and the fluctuation in water temperature during a shower due tothe start and stop of the machine. It also features Midea's pressurized circulating water pump andpatented constant temperature chamber. Midea's zero-fluctuation electric control algorithm and four-segment precise combustion technology keep shower water temperatures constant. Meanwhile, theexternal magnetic cleaning device actively inhibits scale formation in water heaters and pipes. COLMOEVO Series Refrigeration Pipeline Machine is equipped with an ultra-real touch screen, a first practice inthe industry. It can accurately carry out user-input instructions. With just one touch on its screen, userscan immediately access iced or heated water, thus satisfying their diversified water needs.

The intelligent bath heater launched by Midea Intelligent Lighting & Controls Technology Co., Ltd. wonthe first China Mark granted by T?V S?D for household heaters. Product experience and safety areguaranteed by an overheat protection thermostat, thermal fusing, overcurrent protection, an electriccontrol box of inflaming retarding class 5VA, and four-layer fireproofing and inflaming retarding of thewhole machine. Meanwhile, the small-mesh high-density silver ion filter screen blocks mosquitoes or dustthat breeds bacteria. Additionally, fresh air is conveyed to render a healthy shower. What's more, a 120°wide-angle swing and high-power heating can quickly raise the temperature in one minute and evenlyheat the shower room. The heating mode is compound and cyclical. For intelligent applications, it can becontrolled via an App. Intelligent constant temperature and drying can be started by pressing one key.B. Adhered to the strategy of “Technology Leadership”, increased R&D investments andefficiency, built a global R&D platform, and put in place a R&D system featuring digitalization andresponsive innovationMidea continued to invest in R&D, made innovations with respect to mechanism, and developed moreleading products through both excellent user experience and differentiated technologies, reform of thewhole value chain of R&D using digital technology, and deep integration of big data technology and R&D.It kept reforming its product development model according to the strategic focus of “Leading Products”.An innovative R&D model featuring a “Four-Tier R&D System” from the organizational dimension and“Three Generations” from the technology dimension has been put in place to support the fulfillment of thegoal of “Being the Number One or the Only One” in respect of various product categories. Centering oncustomer needs and based on different organizations and technologies, the Company carries outinnovative product development, research on cutting-edge platforms, research on core components,creation of differentiated selling points and improvement of the basic product performance. Through groupdevelopment of products across the world and building of a global product platform, Midea is building“Technology Leadership”. As of the end of 2020, Midea boasts eight corporate technology or industrialdesign centers at the state level, in addition to nearly 40 enterprise technology, engineering or designcenters at the ministerial or provincial levels.Midea Group never stops its core technology research. In 2020, a number of technological achievementsmade under the leadership of Midea were all certified as “Internationally Advanced” upon authoritative

review, including “the Research and Industrialization of Source Transformation Technology for AdaptableVariable-Frequency Air Conditioners”, “the Research and Application of Intelligent Regulation Technologyfor Residential VRF Air-Conditioning System Under Multi-Temperature And -Humidity Scenes”, “the R&Dand Industrialization of Key Technology for Comfortable and Efficient Window Air Conditioners”, “theResearch and Application of Key Green Manufacturing Technology of Efficient Room Air Conditioners”,“the Research of Key Technology for the Design and Application of Disrotatory Fans”, “the Research andApplication of the Pesticide-Residue-Free Technology of Deep UV Light + Photocatalyst in the HomeAppliance Industry”, “the Development and Application of the Temperature-and-Humidity-Control Fast-and-Strong-Heating VRF System Technology (Enhanced Vapor Injection)”, “the Research and Applicationof Key Technology for Oil and Salt Control for Microwaves, Steamers and Ovens”, “the Research andIndustrialization of Key Technology for the Compact Efficient Low-Noise Magnetron”, “the Research andApplication of Key Technology for RF Roasting and Compound Cooking Based on Dual Solid-StateSource Closed-Loop Control”, “the Research and Industrialization of Odor and Fume PurificationTechnology for Steamer-Ovens”, “the Research and Application of High-Temperature Steam GenerationTechnology for Residential Steaming, Baking, and Cooking Appliances”, and “the Research andApplication of Key Technology for Smart Energy Saving of Wide-Temperature-Range Heat RecoveryVRF”. In 2020, a total of nine Midea products won a “Best Product Award” at AWE 2020. Additionally,Midea Residential Air Conditioner was granted the “Outstanding Contribution Award for Energy Efficiencyand Environmental Protection” by the United Nations Industrial Development Organization for itscontinuous research and breakthroughs in regard of the environment-friendly refrigerant of R290 and therelated environmental protection technology. Meanwhile, “the Key Technology of Wide-Ambient-Temperature Energy-Efficient Air-Source Heat Pump for Heating and Its Industrialization” with Midea andShanghai Jiao Tong University as the applicants won China Energy Conservation Association Sci-TechProgress Award in Energy Conservation and Emission Reduction (First Prize).While carrying out the core technology research, Midea has attached great importance to thetransformation of R&D achievements. In 2020, Midea was granted 2,890 invention patents in China, and570 patents abroad, representing the most patents industrywide for five straight years. By the end of2020, the total number of patent applications of Midea (inclusive of TLSC) exceeded 160,000 and morethan 62,000 patents were granted. Midea continues to improve patent quality. A visualized tool for

reviewing the quality of patent applications has been developed and fully utilized for better patent quality.Upon three years of focusing on the quality instead of quantity in terms of patents, the patent quality ofMidea has improved remarkably. Midea’s “High-Frequency Fast Cooling and Heating AC Technology”won a Gold Award at the 2020 21st China Patent Awards. In addition, the “Intelligent Power Module” andother technologies of Midea won 2 Silver Awards and 15 Excellence Awards at the 2020 21st ChinaPatent Awards, as well as 1 Invention Gold Award at the 7th Guangdong Patent Awards. Meanwhile,closely following the strategy of “Technology Leadership”, Midea are applying for thousands of patentsregarding breezeless, disrotatory, brushless motor, smart home and other cutting-edge technologies.Midea Group has been sticking to the double drivers of “production innovation + standard innovation”,implementing the standardization strategy of “innovation patent, patent standardization, standardinternationalization, Midea standards going global”, and making active steps towards contributing to thestandardization of industrial technologies. In 2020, Midea Group took part in the formulation/revision of633 standards, including 27 international standards, 234 national standards, 145 industry standards, and227 group standards. These standards include the CHCT-JSGF-080-2020 Technical Specifications forSplit-type Air Conditioners with Breezeless Model for the breezeless technology, the Standard forRequirements of Evaluating Intelligent Performance of Refrigeration Appliances, the Automatic ElectricalControls for Household and Similar Use—Particular Requirements for Humidity Sensing Controls, theHeat Pump Water Heater for Household and Similar Application, the Cold and Hot Water Supply UnitsIntegrating Air Source and Heat Pump, the Sound Quality Ergonomics Evaluation of the HouseholdAppliances Noise—Part I: Refrigerator, the Household and Similar Adjustable Frequency ConvertersSafety—Part 4: Particular Requirements for Adjustable Frequency Converters for Washing Machines, theTechnical Specification of Intelligent Power Module for Household Appliances, the Automatic ElectricalControls—Humidity Sensor, the Household and Similar Electrical Appliances—Test Code for theDetermination of Airborne Acoustical Noise: Particular Requirements for Fans, the MeasurementMethods for Electromagnetic Fields of Household Appliances and Similar Apparatus with regard toHuman Exposure, the Standard Tableware for Energy and Water Efficiency Tests of Dishwashers, theMinimum Allowable Values of the Energy Efficiency and Energy Efficiency Grades for Electric Ovens forHousehold and Similar Use, and the Technical Specification for Green-Design Product Assessment—Electric Rice Cookers. In addition, Midea serves as the leader of the Intelligent Home Appliance Working

Group of TC212/WG9 National Standard Committee of Automatic Controls for Household Use. Midea'sair conditioners, refrigerators, and laundry appliances were included in the Demonstration Projects ofApplication of 100 Group Standards for 2020 of the Ministry of Industry and Information Technology ofthe People's Republic of China (MIIT). Midea Refrigerator won the “Outstanding Contribution Award”granted by the National Standard Committee of Automatic Controls for Household Use. Additionally, aproject with Midea Air Conditioner as a participant was granted the “First Prize of the Standard InnovationContribution Award of China”, and has been recognized as an “Enterprise Standard Leader” for threeconsecutive years, with five enterprise standards and 169 products selected in 2020.C. Deepened the channel transformation, further improved the channel efficiency and rebuilt theretail service ability so as to achieve direct connection with customersWith the rising of different consumer circles and fragmented communication, online sales as a percentageof Midea’s total sales surpassed 45% during the pandemic in 2020, and online and offline marketsintegrate at a faster speed. Integrating different levels and characteristics of different channels, as wellas centering on changes to customers’ needs and ways of spending, Midea drives the retailtransformation based on user demands and experience, and keeps refining the retail operations system,so as to achieve direct connection with customers in terms of retail sales. This mainly involves thefollowing aspects. Firstly, being customer experience-oriented, it provides just the shopping experiencewanted by customers through more than 460 Midea Smart Life Experience Centers for users with housedecoration demands in cities and prefectures across the country, over 2,350 Midea flagship stores indistricts and counties, as well as 6,370 Midea multi-category stores in towns and villages. Secondly,Midea proposed new marketing methods covering all links based on user demands. The Company builttouchpoints in all links through data driving, user stratification, content + livestreaming + interaction, userasset precipitation + activity, and performed lean management. Besides, it satisfied the differentiateddemands of consumer groups, such as home decoration customers, mothers and infants, the elderly, andfollowers and members by jointly building data, marketing, and systematic tools with e-commerceplatforms. The third is the launch of smart scenes in stores. It fully upgraded intelligent terminals bycentering on smart scenes. The number of retail outlets providing samples of intelligent models anddemonstrating intelligent scenes has exceeded 35,000. More than 550 EDIS smart home service outlets

provide home decoration, space transformation, and intelligent product suites and services to output andperfect home appliance packages of Midea. Fourthly, Midea constantly promoted collaborative supplychain projects with e-commerce platforms by taking advantage of its professional abilities in the wholesupply chain from design, delivery, installation to operations and maintenance. In the meantime, theCompany can materialize rational restocking, automatic order reviewing, intelligent distribution ofinventory, quantitative and attribution analysis of profit and loss through the connection of end-to-endsystems, data-driven approaches, and intelligent tools. It continuously narrowed the gap between supplyand demand and effectively turn operations more intelligent and lean. Fifthly, in regard to the channelreform, Midea perfected the middle platform of Midea Cloud Sales, deepened unified warehousing anddistribution, and constantly optimized delivery and installation integration to achieve a shared inventorysystem, maximize inventory sharing, and improve user experience. In addition, the Company realizedintelligent decision-making regarding the optimal warehouse network, inventory strategies, dynamicreplenishment, and intelligent transfer by introducing digital decision-making models and algorithms inorder to strongly support the business reform. As for the marketing approach of live streaming, multiplemodels such as all-star recommendation, boss live streaming and top geek recommendation are adoptedto promote Midea’s e-commerce marketing. By attracting more traffic to live streaming rooms throughmore entrances, sales through the live streaming channel quickly rise as a percentage of total sales.Further, live streaming is also moving from offering preferences and benefits and introducing products tomore professional and abundant content. As external live streaming platforms can deliver “what you seeis what you get” for consumers and formulate a trading closed loop, these platforms have become newchannels contributing to growth in Midea’s sales.Being customer-oriented, and based on consumer needs and service scenes, Midea promotes digitaltransformation and reform across the service system in pursuit of direct connection with customers interms of services. Firstly, Midea’s service charges are available online and transparent. Customers canget access to all of Midea’s service charge standards. In 2020, more than 41 million customers paid theirrates in a transparent manner, and inquiry calls about service charges went down over 90%. Secondly,the Company accelerated to enable intelligent customer services and took the lead in launching functionslike intelligent voice and text robots, intelligent knowledge searching, and intelligent quality check.Meanwhile, convenient, efficient, and high-quality services were offered through the IoT-based one-key

service work order. Thirdly, the service operation system was changed. The direct-pay engineer modelwas adopted with a coverage ratio of over 85%. Direct order distribution fully went live with a coverageratio exceeding 75%. In the meantime, the service assessment system was further reconstructed tovisualize service quality. Fourthly, interaction between after-sales and pre-sales links in the value chainis further enhanced in bid to drive sales through service and increase user royalty to Midea’s productsand brands. To encourage repeat purchases, a “backpacker” model is promoted in after-sales service,which generated sales of over RMB1.3 billion. Finally, Midea continues to improve its delivery-installationintegrated service capability for all of its home appliances. By 2020, it has completed the delivery-installation integrated service network which covers over 2,700 districts and counties across the country,with more than 28,000 installation technicians, as part of its efforts to offer users one-stop after-salesservice solutions in respect of all household appliances. In 2020, Midea continued to lead the way in theindustry regarding service quality, and topped the rating charts of e-commerce platforms with respect toair conditioners, refrigerators, laundry appliances and so on.Midea strove to expand engineering sales and promote new breakthroughs, with a purpose of enhancingits ToB competitiveness. Midea recorded a year-on-year growth of over 35% in ToB sales in 2020, withan addition of more than 300 trade customers and over 500 product categories. In the industry dimension,the trade customer base in the real estate sector kept expanding from the existing top 20 in the sector,with a preliminary four-level customer receiving system and an enhanced collaboration system in place.In terms of the business with chain operators, Midea adapted itself to changes in the market environment.In addition to deepening the cooperation with top chain operators, it explored new opportunities byimplementing new business forms in respect of apartments to be fully furnished, co-marketing, etc., aswell as achieved sales in key pilot programs in the real estate sector. Also, it reshaped the business ofspecial channels and its pricing system towards professional operations, explored new business forms inrespect of shopping platforms that allow installment buying, and carried out in-depth marketingcooperation with strategic customers in the finance sector. As a result, this business saw a year-on-yeargrowth of more than three times in sales.Under the background of Midea Group promoting the T+3 business model deep reform, Annto furtherpromoted the logistics reform. Upon completing the implementation of the unified warehousing and

distribution strategy, Annto focuses on two new approaches--intercity shuttles and urban long-term-cooperation vehicles to boost delivery efficiency, thus providing a strong support for the improvement ofcirculation efficiency of the sales channels. Meanwhile, it comprehensively improves ToC logistics. Basedon user needs, Annto refines and integrates its warehouse network across the country, and strengthensthe cultivation and expansion of end outlets, which enables it to provide accurate delivery-installationintegrated service for users. In this way, products can be delivered directly to users in the offline retaillink, thus significantly improving user experience. In terms of business expansion outside Midea Group,Annto closely focused on its core business of integrated warehousing and distribution services. Anntocan distribute from one warehouse and multiple warehouses to anywhere in the country. A logisticsservice platform covering various industries, product categories and scenes has been put in place.Meanwhile, client satisfaction has been further boosted through enhancing key capabilities of less-than-truck-load transportation, urban distribution, and integrated delivery and installation services. In 2020, theurban distribution and home distribution business scale of Annto saw a steadily increasing market share.D. Promoted “Global Impact”, enhanced localized operations overseas and accelerated thecooperative integration of TLSCMidea further promoted its global business layout to solidify its global competency. It formulated a globalsupply cooperative mechanism, strengthened localized operations overseas, and promoted productglobalization and regionalization. Its overseas business spans more than 200 countries and regions inNorth America, South America, Europe, Asia, Africa and Oceania. Meanwhile, guided by the market andfocusing on users, Midea builds a global user research network with foresight. Midea Germany ResearchCenter is newly established to strengthen research on the needs of European users. And more resourceshave been provided for user research centers in the U.S., Italy, Brazil, India and Singapore. In order toimprove the operating efficiency of core overseas business, Midea exerted great efforts to build theintelligent overseas commercial system, constantly deepened its data-based business decision-makingcapability, and created an overseas digital operation platform. Three major business regions and 23overseas branches were covered. A total of 45 key indicators were included, such as sales, finance,supply chain, products, retail, and e-commerce. Furthermore, real-time online business, datatransparency and sharing, and early risk warning became available.

In 2020, Midea continued to promote breakthroughs with regard to overseas channels. Over 17,000 newretail outlets selling own-branded products were launched overseas to improve distribution channels.Meanwhile, digital tools were used to empower channels, improving efficiency and capability. Also, Mideacontinued to refine the global customer base, dig down on core customers across the globe, and capturecustomer value. Currently, it has over 60,000 active trade customers in its overseas operations, providingstrong support for continual growth. Meanwhile, Midea accelerated the development of its overseas e-commerce business and refined its global e-commerce system, which has covered core markets includingthe US, Canada, Mexico, Brazil, Italy, the UK, Germany, Saudi Arabia, India, Russia, Japan, Malaysia,Vietnam, Thailand, and Singapore. Moreover, e-commerce platform coverage has been further improvedto include major global platforms such as Amazon, Ali-express, Flipkart, Shopee, and Lazada. And Mideais also trying to get its products on regional e-commerce platforms like Otto in Germany, Submarino andShoptime in Brazil, as well as Wayfair in the US. In terms of product breakthroughs, e-commerce productsare growing more competitive. Midea’s microwave ovens have taken up a market share as high as 50%in the US. U Shape, a window air conditioner of Midea, is the first crowdfunding project with over US$1million on Indiegogo. New product development progressed steadily. And the percentage of smart homeproducts kept expanding and they were gradually introduced to mainstream e-commerce platforms. Asfor marketing breakthroughs, in response to the shutdown of physical stores during the pandemic in 2020,all overseas sales units swiftly embraced new marketing models. A series of diverse online marketingactivities were launched across the world, including online conferences of sales agents, online businesspromotion conferences, KOL live streaming, new media promotion, online theme marketing, etc., asmeans for boosting online ToB and ToC sales. And these new marketing models have become a newnormal for Midea and continue to contribute to its growth. Meanwhile, Midea has deepened its globalmanufacturing network. Based on the existing overseas manufacturing bases, it built the local capacityof manufacturing bases in Thailand, Egypt, Brazil, etc. for products like residential air conditioners,refrigerators, laundry appliances, kitchen appliances, and water heaters. Additionally, the successfuldomestic practices of lean manufacturing were applied to overseas manufacturing bases to increaseefficiency. Also, Midea promoted local manufacturing of core components in overseas plants, and furtherupgraded the overseas manufacturing bases for better product quality and faster delivery. In themeantime, it refined the “Local Supply” cycle, and improved the global manufacturing and deliverycapability so as to ensure the overseas operating capability amid the anti-globalization trend. Another

move was to improve the global logistics and service system. On one hand, the international logisticsfunctions were integrated to establish a professional global logistics platform. And strategic partnershiphas been established with world-leading logistics companies for better global logistics efficiency. On theother hand, a global service management system covering the whole service cycle has been put in placeto promote responsive and active global service. The overseas iSERVICE system and the cloud callplatform have covered close to 50 countries and regions. Additionally, regional spare parts emergencyresponse centers have been set up to further boost customer satisfaction. In regard to overseas branding,overall planning is implemented for branding expenditures. While maintaining sufficient offline exposurefor its brands, Midea also invested greatly in online branding. Meanwhile, the international presence ofits brands was enhanced by way of sponsoring global and regional football teams and sports events.In face of a heavy hit to Japan’s consumer market from the COVID-19 pandemic in 2020, TLSC madefull use of the online channel to promote its products and sales while ensuring the safety of its employees.Its ability to deal with market changes and maintain operating resilience has been proved. TLSCcontinued to deepen the reform of its organizational structure and business model, and a dedicated teamhas been set up to work on the online channel, which resulted in a year-on-year rise of 30% in onlinesales during 2020. Furthermore, the pre-sales and after-sales teams have been refined, the staffstreamlining has been furthered, and a job rotation system has been implemented to boost organizationalvitality. TLSC continued to boost synergies with the Group and the relevant divisions on branding, R&Dand innovation, supply chain integration, quality improvement, etc., so as to build a strong productportfolio for the global market together. While ensuring its supply during the pandemic, TLSC managedto launch Toshiba-branded products to more than 60 countries or regions. Also, it optimized the productstructure to increase gross profits and strictly controlled expenses and costs, which helped improveprofitability significantly. In 2020, the retail sales of home appliances in Japan were flat year-on-year,while TLSC recorded a growth of 4% against the prevailing trend, with its market share for six majorproduct categories up to over 11%, as well as a larger market share in respect of air conditioners,refrigerators, laundry appliances, microwave ovens, etc. Through a series of reform and adjustments,TLSC recorded its best earnings in the last decade or so, with a considerable improvement in both thegross profit margin and the expense ratio.

E. Stepped up the comprehensive digitalization and industrial internet programs to materializedata- and platform-based operations in the whole value chain, and thus to become morecompetitive in the digital eraFocusing on “Digitization & Intelligence Driven”, Midea achieves changes in the format of products, driveshardware sales through software sales and intensifies contents and services; and achieves changes inbusiness methodology, promotes reforms in research, production and sales, and fosters disruptivechanges in existing business models through an Internet mindset and Internet tools. The comprehensivedigitalization program has produced preliminary results. With respect to R&D, Midea focuses on “Directto Users”, as well as builds digital capabilities such as user access, mid- and long-term trend analysis,and evaluation by users, so as to build an R&D capability that is customer-oriented. Meanwhile, a globalproduct platform has been put in place, which features the shift from single product development toplatform development to support C2M customization. Midea has established its own digital platforms forR&D, including GPM, MPLM and other industrial software platforms. The development efficiency isimproved by 27%, while the test period, shortened by 32%. In addition, the Company further standardizedits parts and accessories to cut costs and raise efficiency. Materials were downsized by over 50%. Morethan RMB300 million of costs were accumulatively saved. Meanwhile, the manufacturing link saw theintroduction of smart algorithms. Procurement efficiency and the ability to respond fast were improved.Also, Midea promoted the self-developed MRP system and smart scheduling, as well as refined the multi-factory coordinative production plan and the value flow procurement plan. Additionally, digital qualitymanagement was continuously propelled to extend to the suppliers and the market end. The quality cloudallows for more standardized and transparent control of the supply chain process and of finished products.Relying on M.IoT, Midea continued to promote digitalization in respect of safety, environment and energy.It has materialized EHS visualized management and smart early warning systems in factories by suchsmart means as mobile solutions and Internet access solutions for equipment. Also through the IndustrialInternet platform, Midea assists upstream suppliers in digital transformation, promotes transparency andefficiency of data information in the value chain, and optimizes suppliers' inventory management. In themarketing link, Midea adhered to the customer-oriented principle and focused on building the MideaCloud Sales platform. Smart order execution, unified warehousing and distribution, shared inventory, one-stop delivery, integrated delivery and installation services, big data-based intelligent analysis, etc. are

now available. As such, Midea has further boosted the order execution efficiency in channels, the retailend and the supply chain, as well as improved online and digital operations in all channels. Through the“online streaming + cloud-based order placing” model of Midea Cloud Sales, distributors can learn aboutMidea’s marketing policies and the selling points of its products in an timely manner before placing anorder online. Meanwhile, the membership system jointly established with retail stores can attract moreusers, encourage retail stores to take part in member activities, improve buying experience, and boostuser royalty. In regard with after-sales services, business reform was carried out to improve serviceexperience. Close attention was paid to charge transparency, after-sales returns and exchanges, and theintegrated services of delivery and installation. As a result, the rate of unreasonable charges was cut by68%. The online payment rate reached 76%. The service processing period was shortened dramaticallyby greatly raising the service uptime. The customer satisfaction rate has been improved to over 98%. Theproportion of the integrated service of delivery and installation constantly increased and surpassed 60%,basically achieving full coverage. The direct-management and direct-payment transformation has beencarried out for more than 9,000 service centers and 13,000 engineers to strengthen the control of after-sales services and enhance the dispatching efficiency. During the operation process, in-depth explorationis made in the best digital practice of talent development, and the establishment of talent analysis models,talent label systems and the talent portrait system is accelerated to lay a solid foundation for the intelligentapplication of human resources. Besides, aimed at standardizing the management procedure andimproving operating efficiency and service quality, we have made continuous efforts to improve theemployee management system, optimize the user experience of mobile office applications, and enhanceoffice efficiency and the capability of comprehensive digitalization. With the “International 632 Project” asthe core, Midea continues with the digital transformation of its overseas business so as to boost globalcompetitiveness under the new circumstances. The global order processing mechanism was launched toconnect overseas marketing and manufacturing in an effective and automatic manner. The digitalmarketing capability of overseas e-commerce was strengthened, and the e-commerce ToC businessoperation model was fully turned online. It is expected that the efficiency will increase by over 50%.Midea accelerates in respect of 5G+Industrial Internet. Midea Microwave & Cleaning Appliance5G+Industrial Internet Application Demonstration Park has achieved full 5G coverage and built a basicinformation network integrating the traditional network + 5G to realize efficient communication between

the corporate intranet and the extranet. It has been recognized by the Department of Industry andInformation Technology of Guangdong Province as one of the first demonstration industrial parks for“5G+Industrial Internet”. It was also selected as a “Lighthouse Network” factory by the World EconomicForum, making Midea the company with the most “Lighthouse Network” factories in China. In 2020, MideaGroup launched “5G+Industrial Internet” pilot programs across 11 parks of 7 business divisions throughstrategic cooperation with the three major telecom carriers in China and such manufacturers as Huawei.Midea further promotes the business application of AI by fully covering the business scenes of intelligentR&D, intelligent manufacturing, intelligent offices, intelligent operations and PaaS capability open-upbased on AI quality testing platforms and AI open platforms. In terms of intelligent R&D, the use of AI canidentify differences between drawings and scanned copies, assist in precision comparison to reduce theworkload of manual comparison by 30%, and realize the traceability of all test contents. Scan the codeto output the comparison results. In terms of intelligent manufacturing, the application of AI is promotedin inspection of PCB, the appearance of laundry appliances, cartons, ink-jet of cartons, components, theanti-creeping system in the footing, etc., which can help improve the yield substantially. The integrationof 5G + AI can substantially increase testing efficiency.Midea fully promotes the application of cloud computing to support its strategy of comprehensivedigitalization. Positioned as a leading cloud platform in the manufacturing sector, Midea Cloud Platformis established based on the cloud native technology with independent intellectual property rights. It iseasy to extend and takes into account needs in respect of Midea Cloud Sales, Industrial Internet, the IoTecosystem, and third-party developers. So far, 21 PaaS service products and 8 SaaS products have beenlaunched. Targeting corporate customers and based on IaaS and PaaS, the SaaS platform providescomplete management of applications through their entire life cycles and full customer service. It lowersthe threshold for small- and medium-sized enterprises to gain cloud access. It also provides a one-touchfunction to active business applications. With purchasing cloud as a trial program, Midea has providedSRM cloud, sourcing cloud, risk control cloud and other SaaS services for over 3,000 corporatecustomers.F. Promoted the strategy of “Digitization & Intelligence Driven” and accelerated theimplementation of “Comprehensive Intellectualization” to “Customize a Smarter Midea Life for

You”In 2020, with the goal of “Providing the Best Overall User Experience”, M.IoT carried out a series ofchanges to user research, smart scene planning, the IoT products and technology, ecosystemcooperation, IoT operation and more, focusing on connection technology and intelligent security systemupgrades, while accelerating the launch of 5G products and platform-based IoT ecosystem scenes andservice robots. At the same time, focusing on the five themes of safety, health, food, convenience andpersonality, smart scenes and the IoT technology are fully opened to ecosystem partners. And a businessvalue chain of Midea Smart Home, which is based on the life cycle of user experience and is customer-oriented, has been put in place in this way, providing users with all-scene experience services and morequality ecosystem value-added services to create a pan MSmart Life APP ecosystem that focuses on“Customize a Smarter Midea Life for You”. Over 4,000 smart product models are connected to the MideaIoT Developers’ Platform, and the number of connected smart devices went up 103% compared to lastyear, including around 38,000,000 active devices. The MSmartLife APP has been providing services forapproximately 32,000,000 families.Products were upgraded to meet the demands of subdivided user groups. The MSmartLife APP haslaunched over 225 smart scenes so far. Amid the pandemic, the APP upgraded its smart kitchen scenesand released smart and healthy cloud recipes. Healthy recipes were carefully customized to improve theimmunity of users. Health conditions were improved through a reasonable diet. Additionally, “Children'sRecipes” were introduced to satisfy the nutrition recipe demand of children. Owing to the feature of“recording blood sugar” launched on the basis of the Low-Sugar Rice Cooker, the daily blood sugar dataof users can be managed by connecting to glucometer data and low-sugar rice cooking data. Moreover,the recommendation of sugar control recipes can help build healthy eating habits. The fully upgradedMidea Voice-Enabled Air Conditioner allows users to experience the convenience of voice-enableddomestic appliances with its new speech recognition function for mixed dialects. In the meantime, withthe five-dimensional air regulation algorithm developed by Midea, the temperature, wind, humidity,cleanness, and fresh air of air conditioners can be automatically adjusted in accordance with theenvironment where the user is and his/her air preferences. By pressing one key, the user can enjoycomfortable experience. Midea Cloud Housekeeper has been providing services for over 2,700,000 users.

With two national patent applications filed for this technology, it can analyze water use habits, identifyseasonal and temperature changes, and accurately predict water demand curves. In this way, userexperience and energy conservation are improved. Meanwhile, with the new function of home applianceturn-off reminder, intelligent detection of the status of home appliances and remote control over homeappliances are enabled to solve the pain point of forgetting to turn off home appliances when leavinghome. By doing so, it can both save energy and ensure safety.By the end of December 2020, Midea has provided users with more value-added services and cross-scene experience through ecosystem cooperation. It launched 12 HarmonyOS-based products fallinginto seven categories. Users can use a HarmonyOS-based mobile to control Midea’s home applianceswithin three seconds. Midea realized the interconnectivity of smart life scenes and offered new experienceof man-machine interaction. In November 2020, Midea participated in the Google Developer Days (GDD)China. As a key smart home partner, it launched the App Flip function in the overseas market. Users canconnect to and control Midea's smart home appliances through the Google smart speaker. All Googleusers enjoy one-key login to the MSmartLife APP. In December 2020, M.IoT and BYD DiLink joined handsto develop the “Car-Home Interconnectivity APP” which fully demonstrates a “Men-Car-LifeInterconnectivity” full-time and whole-range smart lifestyle. The cooperation aimed to provide smart lifeexperience through the seamless connection between the vehicle and the home. No matter at home orin the car, users can connect and interact with Midea’s smart home appliances. In addition, Mideaconducted strategic cooperation with China Telecom to expand its products and content serviceecosystem and with China Electric Power Research Institute, State Grid, in multiple dimensions, such asthe user-side green energy consumption ecosystem, the Energy Internet intelligent power serviceecosystem, and AI in the power sector.Safeguarding user privacy and data security is the top priority for intellectualization. M.IoT is the first toreceive the IT Product Information Security Certificate (Smart Home Products) from the ChinaCybersecurity Review Technology and Certification Center. It has additionally earned multipleinternational security and privacy certifications - including the ePrivacyApp certificate for the MSmartLifeAPP, the PCI DSS certificate at the financial level for data protection, the TRUSTe certificate for M.IoT,the ISO 27001 Information Security Management System (ISMS) certificate for information security

management, and the ISO 27701 certificate for privacy information management. In addition, Midea isalso ETSI 303645-, NIST 8259- and ioXt-certified for privacy protection associated with smart homeappliances. Therefore, Midea Smart Home has reached an internationally advanced level in user dataprotection.G. In view of consumer stratification, launched multiple brands and enhanced the promotion ofthe core values of these brands to empower retail sales and user operationSince 2018, Midea Group has launched a number of new brands, including COLMO targeting high-endconsumers, BUGU targeting online consumers, WAHIN targeting young consumers. Always upholdingthe brand philosophy of “Technology Serve the Nature of Life and Design Maximize the Value ofRationalism”, COLMO is committed to providing AI-powered home appliances with premium quality andthe self-learning capability for high-end consumers. In 2020, for the brand end, COLMO centered on “LifeEvolution”, stressed brand cultural value, and cooperated with the cultural platforms, Vistopia.com.cn andOwspace.com. Meanwhile, it probed into independent IPs, sponsored the interview program, LifeEvolution, and joined hands with Fashion Group to present the annual rational aesthetics-based lifeceremony. Furthermore, it kept expressing its opinions on rational aesthetics, deepening the spiritualresonance with global super individuals, and leading advanced life evolution. In terms of products,COLMO launched the whole new 145N Solution, which focuses on family life (four major scenes—livingroom, kitchen, bathroom, wash and care) and creates the whole scene of AI-powered high-end smart lifefor high-end consumers through intelligent integrated appliances, IoT interconnection systems and AIlearning brain. A slew of other new products were also launched, including TURING Residential CentralAir Conditioner Floor Heating Hydraulic Module, TURING Steam Oven, and products for the aforesaidfour major scenes, such as Mantle Lava 513 Refrigerator, Separate Space Capsules Washing Machine,EVO Series S67 Range Hood, V7 Active Water Purifier, etc. COLMO won a total of 12 design awards in2020, including an iF Design Award and a Red Dot Design Award for BLANC Range Hood-Stove-Dishwasher Suite, as well as an iF Design Award for TURING Small Multi-Split Residential Central AirConditioner. In respect of marketing, COLMO has provided service for over 100,000 families across theworld since the launch of its products, with certain products enjoying a prominent high-end market shareas an icon for high-end home appliances. For instance, COLMO enjoys a market share of nearly 24% in

respect of wall-mounted residential air conditioners with a unit price of over RMB7,000; and a marketshare of over 20% in respect of floor-standing residential air conditioners with a unit price of overRMB20,000. As for user experience and channels, COLMO, being customer-oriented, builds diverseterminal experience space, including Product Category Zone, AI Smart Experience Space, and AI SmartExperience Hall. So far, nearly 5,000 stores and outlets have been put in place nationwide, which willprovide more scene-based experience and smart experience.In 2020, BUGU recorded operating revenue of over RMB200 million, surging 260% year-on-year. Thisnew brand aggressively grew against the trend. For the branding end, BUGU, as a brand targeting onlineconsumers, endeavored to make breakthroughs and innovation in marketing and business models andperfected the hot-selling product marketing model featuring “Hot-selling Products and Constant Effortsfor Product Category”. In the meantime, it gave full play to the multi-category synergistic advantages andachieved steady structural growth, while meeting the personalized demands of new-generation Internetusers. For instance, the portable juicer designed for young users was ranked first among similar productsin sales in July, as more than 200,000 such juicers were sold. The small saucepan targeting students wasthe best-selling saucepans at T-mall during the Double 11 shopping festival. The countertop dishwasherwas promoted to young people in small towns and tenants through channels outside the official websitelike TikTok and ranked among top regarding sales at T-mall and JD for several consecutive months. Interms of the product end, BUGU, based on the market analysis of the Z-generation, deeply expandedadvantageous product categories, earnestly developed new categories, created a smart and interestinglife scene system, covering diversified demands of young people, such as a healthy diet, healthcare,sports, and pets. In response to the facial attractiveness economy, BUGU launched a personal careproduct line, producing electric toothbrushes, hair dryers and massage devices. Furthermore, inconsideration of the demand of young and fashionable parents who were born after the 1990s, it offeredproducts for mothers and infants covering the whole cycle. BUGU Smart Milk Modulator is the first smartconstant temperature milk modulator in the industry. Meanwhile, BUGU seized opportunities arising fromthe single economy by creating personalized products for young people who often eat alone, such aselectric lunch boxes, individualized blenders, egg boilers, and portable kettles. For the pet consumptioneconomy, it launched a smart voice feeder for pets for the first time in 2020. Besides, its products coveredall pet scenes from pet feeding, interaction, to care. On the ecosystem side, BUGU has adhered to the

concept of inclusiveness and openness and actively performed cooperation in multiple dimensions, suchas portals, platforms, channels, and scenes. It has planned, developed, and introduced five categories ofecosystem products, namely, smart home, healthcare, intelligent sports, gadgets, and consumables, bycentering on “Men-Home-Life” and observing the principle of “supplementing scenes, raising stickiness,and intelligence and high frequency”. It has cooperated with quite a few partners in varied ways, includingChina Telecom, Mendale, Orvibo, YPOO, and Ximalaya.com. So far, they have jointly developed 119products. It took the lead in creating the “ecosystem column” at Midea Shopping Mall and put ecosystemproducts on the shelves of more than 3,000 physical stores. On the user side, BUGU persists in takingthe joint creation with users as its core strategy. Through the joint creation platform—the “BUGU ResearchInstitute”, users can take part in the whole product process from conceptual design to public testing. Sofar, “BUGU Research Institute” has launched three programs and received about 1,000 pieces of advicefrom nearly 300 users. By December 2020, BUGU has attracted up to 2,600,000 fans, selling over3,100,000 units of products in the year. On the sales side, BUGU's sales over the first five months of2020 exceeded last year's total sales. Particularly, BUGU recorded a 1,750% year-on-year increase inTmall sales on the first day of the “618” shopping festival, while its online sales during the “Double 11”shopping festival exceeded RMB26 million, surging 170% compared to last year. With respect to otherchannels, in addition to strategic cooperation with China Telecom and Honor, BUGU has partnered upwith special channels including banks and air lines, for more opportunities to get access to customers.WAHIN continues to establish connections with the young circles characterized by AGC and pop culturesby offering products featuring “Trendy Designs, Practical Functions and Fun Interactions”. Based on thecharacteristics of every product category, active efforts are made to expand sales channels. As a result,WAHIN recorded operating revenue of nearly RMB2.9 billion during 2020, representing a surge of morethan 200% compared to last year. In 2020, a number of Midea's business divisions launched their productpipelines for the WAHIN brand, which carried out active marketing on the Z-generation. On the eve of the“618” Shopping Festival in 2020, WAHIN launched its first celebrity live streaming for all productcategories. The total number of viewers reached 6.1 million, while total interactions exceeded 4.6 millionUV, facilitating sales to exceed RMB15 million on that day. At the eve of the Double 11 shopping festival,all product categories of WAHIN cooperated with the 2020 Chongqing Women's Half Marathon. Throughonline and offline integration, the brand was exposed to over 26 million audiences on the Internet, which

effectively attracted customers for sales. In 2020, WAHIN continued to devote enormous resources inmainstream e-commerce platforms for its air conditioners. Its overall sales exceeded RMB1 billion, up130% year-on-year. The sales during the Double 11 shopping festival reached RMB360 million with ayear-on-year increase of over 250%. More than 190,000 WAHIN laundry appliances were sold in 2020.Clothes dryers were also included in its product categories. In addition to the launch of the trendy drinksrefrigerator series catering to young consumers, “Xiaofendan” Mini-Fridge focusing on the cosmeticsscene has emerged at just the right moment. The unit sales of this product reached 30,000 units withinthe month following its launch, and the online sales of WAHIN refrigerators approximated RMB470 millionthroughout the year. WAHIN Kitchen Appliance generated sales of more than RMB1.2 billion in 2020, a200% growth from last year, with the “618” and “Double 11” retail sales up 220% and 210% respectivelycompared to 2019. In terms of branding, WAHIN deploys a 2D virtual spokesperson - WAHIN Girl - tocarry its brand image. Through continuous cooperation with external platforms, WAHIN broadens itsboundary while persists in appealing to the young consumers.H. Seized market opportunities amid domestic and international circulations, made technologicalbreakthroughs and innovations, and kept improving the ToB business landscapeThe management model adopts the operation of product company that integrates production, researchand marketing, subdivides operating entities, delegates operating rights, and stimulates operating vitality;mature businesses actively improve operating quality and contribute operating value; new businessesmust actively seize market opportunities, expand business boundaries, and form Key technology andproduct capabilities.In 2020, the two ToB business divisions, that is, the Electromechanical Business Group and the HVAC &Building Technologies Division, were included in the five major business divisions of Midea. TheElectromechanical Business Group is engaged in the production of core components and accessoriesand precision manufacturing-related industries. And it is committed to becoming a world-leading andinnovation-driven enterprise of core components and accessories. Currently, it has established abusiness layout consisting of four major business segments, namely, home appliances, new energyvehicals, industrial control, and 3C products, and eight major product companies. Besides, it keepsexpanding its business boundaries and improving its capacities. In 2020, the Electro-Mechanical

Research Institute was established, aiming to achieve technological breakthroughs in various sectors. Inthe year, the Company entered the industrial control and new energy fields by acquiring Hiconics Eco-energy Technology Co., Ltd. (Hiconics). Meanwhile, it further scaled up its presence in industrialautomation and power and electronics software. The Foshan Xingtan Base was newly established tomake a forward-looking layout in intelligent manufacturing of mechanical and electrical products andserve as an Industry 4.0 intelligent manufacturing demonstration base in China and a world-class“Lighthouse Network” factory. Hitachi Compressor (Thailand) Ltd. (HCTL) was acquired to greatly raisethe annual capacity of refrigerator compressors and further improve the global supply of core components.With respect to market expansion, the Electromechanical Business Group made constant efforts for homeappliances. According to ChinaIoL.com, the sales of residential air conditioner compressors grew 6%year-on-year against the trend and accounted for over 40% of the global sales in 2020, thus stablymaintaining first place in the world. More than 36 million refrigerator and freezer compressors were sold,representing 17% of the global sales. Midea entered the first echelon of the industry. Over 200 millionmotors for home appliances were sold. In particular, the sales of motors for residential air conditionersand laundry appliances accounted for 37% and 18% of the global figures, respectively, and took the firstplaces in the industry. Moreover, the Electromechanical Business Group conscientiously developed chipsfor home appliances. Its products were related to MCU, power, power supply, and the IoT. In regard tonew business, resources were input in the master motor, the thermal management system, and EPSmotors of new energy vehicles (NEVs). In addition, Midea has established strategic cooperation withseveral leading enterprises. It also focused on core technologies of the industrial control field, such ashigh- and low-voltage frequency converters, servo motors, servo drives, and servo systems. Furthermore,it strengthened the connection among basic technologies in 3C products. The ElectromechanicalBusiness Group regarded the heat dissipation module as an entry point and achieved rapid and steadyprogress. In terms of technological innovation, as a leader in the manufacturing of core components forhome appliances, the Electromechanical Business Group won multiple honors in 2020. For example, itwas granted the titles “Leader Brand of 2020-2021 Air Conditioner Compressor Industry” at the China AirConditioner Industry Symposium and “Research Center of Refrigeration Compressor EngineeringTechnology in Light Industry of China”. Besides, it won the “China Cooling & Heating IntelligentManufacturing Awards—Intelligent Chip Award” for four consecutive years. What's more, breakthroughswere made in respect to multiple core technologies. In this respect, two provincial patent gold awards,

one provincial patent silver award, and three provincial patent excellence awards were granted. MideaVariable Frequency Compressor for Residential Air Conditioners under the New Energy EfficiencyStandard was granted the “Award for Core Component of 2020-2021 Air Conditioner Industry” at theChina Air Conditioner Industry Symposium. Midea won the “China Machinery Industry Science andTechnology Award (Special Prize)” for its key breakthrough technology of diffusion welding, the “ChinaNational Light Industry Council Science and Technology Award (First Prize)” for its new sliding-vane high-efficiency compressor technology, and the “Award for Core Component of 2020 Air Conditioner Industry”for its lubrication and antifriction technology for the pump body of a compressor. In addition, Servotronix'sproducts and technologies have occupied a dominant position in the domestic direct drive market. In2020, the company was recognized as a “CDDIA 2020 Influential Direct Drive Brand” by the China DirectDrive Industrial Alliance. It won the “CDDIA 2020 Innovative Direct Drive Technology Award” for itsCDHD2 drive. In August 2020, it launched the rotary servo drive, BDHDE, in China to meet the localizationdemand in the industrial automation field.The HVAC & Building Technologies Division developed a strategic cooperative partnership with WinoneElevator Co., Ltd. (Winone) in 2020. Thus, it has entered the elevator industry and upgraded to be aprovider of building equipment. It strives to become a new force in the building equipment industry andcreate intelligent and future-oriented solutions for buildings. With respect to market performance, thelargest domestic market share remained with Midea Commercial Air Conditioners in 2020 according tothe Mechanical and Electrical Information-Central Airconditioning Market magazine. Midea has constantlyfocused on projects and business patterns, and kept expanding its business to commercial real estate,rail transit, agriculture, forestry, animal husbandry, and fishery, and industrial enterprises. For instance,its super-efficient intelligent environmental control system and smart operation and maintenance cloudplatform for the Guangzhou Metro project were certified as “Internationally Advanced”. For the real estatesector, Midea has won the Golden Brick Award for China Real Estate and the titles of Preferred CentralAir Conditioner Brand for Real Estate and Best Supplier of Chinese Real Estate for several consecutiveyears. It has developed a long-term strategic partnership with over 50 top 100 real estate companies.Moreover, the Company has constantly made breakthroughs in new fields. For example, it developed aproduction environment solution for the manufacturer of Lianhua Qingwen Jiaonang (literally LotusScourge-clearing Capsules) to boost the efficient production of drugs during the outbreak. It assisted in

the construction of Tesla Giga Shanghai and offered an intelligent heating and ventilation solution. Itcustomized an exclusive solution for the integrated refrigeration station for the Pengcheng CloudBrain-2Project. In addition, Midea joined hands with China Aviation Cloud (CAC) to jointly launch the Bingqianseries array-type air conditioners for machine rooms and with Ningsuan Technology Group to jointlycreate an innovative solution of evaporative cooling with heat recovery. In regard to product innovation,Midea has applied the PCI sterilization technology to the existing product portfolio to protect the health ofusers. Based on the combination of “floor heating + commercial air conditioner”, Midea All-Season Multi-Functional Series Floor-Heating Air Conditioner adopts the all DC variable frequency air-source heatpump technology and is equipped with a unique “multi-dimensional temperature control system”. Itsprecise temperature control can help reduce temperature fluctuations and improve user experience, whilefloor heating provides the comfort of “warm feet and a cool head” and meet diversified home demands.Midea HVAC & Building Technologies Division, as a leading brand in the air source heat pump industryin China, was awarded several major honors in the industry in 2020. For example, Midea Commercial AirConditioner Sterilization Box was granted the world’s first Tick-Mark for air-conditioning sterilizationproduct, and Midea Commercial Air Conditioners was honored as the “Leading Brand in China’s HeatPump Industry” for eight consecutive years. Midea VRF LCD Segment Display Screen Wander LeadController is a winner of the iF Award. The “Enhanced Vapor Injection (EVI) Air-Conditioning System” andthe “Heat-Pump Water Heater and Its Control Methods” were granted the First and Third Prizes of the 4thEnergy Conservation and Environmental Protection Patent Award, respectively. “The Key Technology ofWide-Ambient-Temperature Energy-Efficient Air-Source Heat Pump for Heating and Its Industrialization”jointly developed by Midea and Shanghai Jiao Tong University as the applicants won the 2020 ChinaEnergy Conservation Association Sci-Tech Progress Award in Energy Conservation and EmissionReduction (First Prize). “The Key Energy-saving Technology and Industrialization of Wide-range EfficientVRF” with Midea and Shanghai Jiao Tong University as the applicants won the 2020 China Associationof Inventions Invention and Entrepreneurship Award.I. Promoted innovation in robotic product development, accelerated integration and expansion ofthe robotics business for the China marketKUKA, a subsidiary of Midea, is the first robotic manufacturer in the world to introduce sensitive

lightweight robots into the production plant, as well as the first manufacturer with a product range coveringcollaborative robots, mobile robots and industrial heavy-duty robots. In the automotive sector, KUKAcontinues to maintain its advantages and unveiled the world’s first industrial robot with digital motionmodel - the new-generation high-load versatile robot KR QUANTEC-2 in 2019. The robot can effectivelyreduce costs for customers and offers substantially enhanced performances, precision and speed. In thegeneral industrial sector, KUKA launched in 2020 the Second-Generation New KR QUANTEC CastingRobot, which is equipped with a new digital motion mode and is able to deliver excellent production qualityeven in a high-temperature environment. In the second half of the year, KUKA successively launchednew KR CYBERTECH nano and KR SCARA robots. For the load level below 6kg, the working range ofKR SCARA is 500mm or 700mm. Its cycle time is as short as only 0.36s or 0.38s. Due to its high efficiencyand low costs, it benefits automation in the cost-sensitive market. For the low load level between 6-10kg,the new KR CYBERTECH nano robot can transfer, weld, stack, and bond. It is faster and highly precise,while its investment and maintenance costs are low. Therefore, it is suitable for the production chainrequiring high economic efficiency. In the motion control sector, KUKA launched Robot Control SystemKR C5. With powerful compatible hardware, more intelligent software and better technical performance,robots equipped with this system consume less power under the same conditions. In the logistics sector,targeting the industrial status where an increasing number of orders are placed online, the new-generation robot-based order sorting solution ItemPiQ, as a perfect example of the integration of know-hows by KUKA and Swisslog, combines new robotic technology and intelligent visual system and featuresefficient sorting performances and machine-learning functions. In the electronic industry, new KR 4AGILUS released in 2020 has a load level below 4kg. Its compact design makes it perfect for robot-basedautomatic production. This robot can be installed in any location and at any angle. Its working range canbe extended to 600mm. As its working range has been expanded by nearly 40%, it is highly precise evenin the narrowest space. In view of the pandemic in 2020, KUKA continued to extend the application of itsrobots in the medical sector. Based on KUKA’s LBR Med, Life Science Robotics, a Denmark-basedcompany, developed automatic medical equipment ROBERT, which can help move a patient’s body whenhe is receiving treatment. This can reduce physical contact between the therapist and the patent and stopthe COVID-19 virus from spreading through social distancing. KUKA’s KR AGILUS Series Robot is usedby the Aalborg University Hospital in Denmark for blood testing and classification. It can process 3,000blood samples per day, which is much more efficient than the manual method. In the Bulovka Hospital in

Prague, KUKA’s LBR iiwa Robot helps medical workers carry out throat swab sampling on potentialCOVID-19 patients.Affected by the COVID-19 pandemic spreading across the globe, economies worldwide have shut downone after another, and some of KUKA's customers have also temporarily closed their factories andreduced their investment activities, resulting in a significant decline in KUKA's main business. Under theimpact of the pandemic, demand for industrial robotics is expected to decline in 2020 compared to theprior year. Fortunately, in the mid-to-long term after the pandemic, demand for industrial robotics andautomation solutions will further increase and related investment activities postponed due to thepandemic will also resume swiftly. In 2020, regarding the automotive sector, KUKA received, at thebeginning of the year, orders from a European customer for three automobile engine assembly lines worthmillions of euros per line. In April 2020, KUKA also signed a framework agreement with BMW Group toprovide about 5,000 robots for BMW’s new production lines of automobile across the world. KUKA alsowon a contract for Audi’s automatic automobile production line to provide 42 industrial robotics for seamsealing and installation. KUKA obtained an order from Mercedes-Benz at the end of 2020, involving theengineering construction, assembly, and debugging of several body-in-white production lines. Throughits technical expertise and hundreds of KUKA industrial robots, it will provide the customer with a flexibleproduction scheme. Thanks to the previous good cooperation, SEOJIN, a South Korean company, as amajor auto part supplier of automobile enterprises like Hyundai and Kia, ordered 185 robots from KUKAfor manufacturing processes like welding and processing. Most of the robots were KR QUANTEC seriesproducts. In the NEV field, the Volkswagen Zwickau-Mosel Plant was transformed to produce electricvehicles (EVs), after inputting approximately EUR1.2 billion at the end of 2020. It is estimated that it willproduce approximately 300,000 EVs in 2021. KUKA and Volkswagen will constantly deepen theircooperation at the plant to build a production line of EVs. This task involves more than 1,700 KUKA robotsfor body manufacturing and assembly, including KR QUANTEC, KR FORTEC, and LBR iiwa series.Besides, KUKA’s robots have also participated in the manufacturing of the expandable battery systemfor Volkswagen with a mileage of over 500km. KUKA, as a participant of Germany’s first battery electricvehicle (BEV) plant, will endeavor to drive the electrification and technological change of the automobileindustry. KUKA obtained, in the first half of the year, a battery assembly line contract worth as much astens of millions of euros, which would be used for producing battery systems for high-end electric vehicles.

In May 2020, KUKA provided 50 robotics to the German SAR Group for its electric vehicle automaticproduction line. In November 2020, KUKA obtained the fully electric vehicle ID of the commercial vehiclecompany of Volkswagen. For the BUZZ body-in-white production line, KUKA will handle the design,delivery, assembly, and debugging of the automatic body manufacturing system. All manufacturingprocesses like spot welding, splicing, and stud welding will be adopted for 15 modularized productionlines. In the sector of logistics automation, the European cosmeceuticals chain retailer dm-drogerie marktGmbH built an innovative logistics center costing approximately 100 million euros in Germany this July,which would be equipped with a logistics automation system provided by KUKA’s subsidiary Swisslog. Interms of education and training, KUKA provided Czech Technical University in Prague with 23 robotsworth over EUR1 million, including LBR iiwa, KMR iiwa, and ready2_educate cell. These robots will beutilized by the new international research center of the university. In the sector of 3D printing, in responseto the pandemic, the Italy-based Caracol-AM used KUKA’s robotics to help manufacture protective masksby means of 3D printing, with a daily output of over 1,000 pieces. Moi Composites, an Italian startup,cooperates with leading experts in automation and shipbuilding. They applied KUKAKR QUANTECrobots to build the first fiberglass yacht by 3D printing, thus establishing a new benchmark in theshipbuilding industry. KUKA won the “Global Medical Robotics Company of the Year Award 2020” fromFrost & Sullivan (a consultancy) and the title of “2019 Supplier of the Year” by GM for the fifth time.The integration of KUKA’s robotics business in China has been accelerated. On one hand, under KUKA’snew organizational structure, KUKA China was established in 2019, covering robotics, flexible systems,general industrial automation, intelligent logistics automation and intelligent medical automation. On theother hand, the collaborative advantages of Midea and KUKA have started to show in various aspects,including development of business opportunities, technology sharing, customer service, purchasecollaboration and management improvement, laying a foundation for the fast growth of the industrialautomation business on all fronts. In 2020, KUKA China made breakthroughs in many aspects in spite ofthe impact of the COVID-19 pandemic. In terms of product R&D, it introduced experienced professionals,smoothly furthered the cooperation program in Germany, significantly improved local R&D and testingcapabilities as well as the product matrix. 17 software products, six applications, KR 4 AGILUS, KRSCARA and KR DELTA robotics, as well as Mobile Robot KMP 600-S were launched in the year. As formarketing, a value chain-driven business model has been put in place, significantly boosting the efficiency

of sales and channel management of robot ontology, which was well-received by customers, indicatingthe gradual introduction of digital products into the market. Upon the application of KUKA Robot LBS,KMS, Martec, and WeChat 24-hour Online Customer Service further improved business operationefficiency through digital control measures in R&D, sales and post-sales. The increasing efficiency of thewhole value chain is demonstrated by shortened product delivery, a guaranteed speed of response tocustomer demand, constantly improving supply systems and testing means, and significantly bettermaterial quality. As such, the customer-oriented principle has taken shape.In the automotive sector, against the backdrop of COVID-19 and the trade war-induced economicdownturn, QUANTEC Series II was launched and found favor among automobile manufacturers in termsof product iteration. The competitive edge with respect to Sino-foreign joint ventures has been solidified.KUKA China signed a new framework agreement with SAIC Volkswagen and received orders from BMWand Mercedes-Benz factories in China. KUKA China also expanded its cooperation with Chinese automanufacturers - for example, Geely. KUKA China is now a robot supplier for Geely's ChangxingProduction Base. In the new energy vehicle industry, KUKA China obtained orders respectively amountingto tens of millions euros from Weltmeister and Human Horizons. Capitalizing on the continuous growth inthe commercial vehicle market, KUKA China also won commercial vehicle project orders from FAW FAC,FAW-GM, FAW Jiefang, Changan Kuayue, Chery Kaiyi, etc. Meanwhile, KUKA China has vigorouslydeveloped applications for the assembly shop. It launched a following tire installation project at the FAW-Volkswagen Foshan Plant. It also jointly developed an AI-based anti-collision system with Midea Cloudfor the project. KUKA China has made significant progress in the NEV electric driver test technology anddeveloped overall technical competence in hardware systems, software development, and systemintegration. It delivered the first test station to the Volvo Zhangjiakou Plant in January 2021 and theautomatic assembly and test line of NEV batteries to the FAW-Volkswagen Foshan Plant in 2020,providing effective support for the commissioning of the customers. KUKA China has been highlyrecognized for its technical competence and quick response. Additionally, it will develop business andtechnologies in lithium batteries and fuel cells. In regard to consumer products, KUKA Robotics bringabout technical superiority to food, beverage, medicine, and tobacco industries, amid the huge challengesposed by the pandemic. A higher automation rate is required in the industry due to the pandemic. KUKA'sautomation solutions can flexibly satisfy the personalized demands of customers in food, beverage,

medicine, production, distribution, and logistics industries. KUKA has continuously made breakthroughsin new fields of consumer products. The 3D vision robot gumming application technology developed forthe shoemaking industry and the food-grade Delta robot for food and pharmaceutical industries are typicalexamples. Moreover, breakthroughs have been achieved in other newly developed industries, such askey recreational projects like universal studios and the first application of KUKA robots in the tire industry.KUKA has established a partnership with relevant new customers. As for the medical logistics sector, atthe beginning of the pandemic in China, Swisslog Healthcare under KUKA joined hands with Midea Groupto donate 20 automated guided vehicles (AGVs) to makeshift hospitals in Wuhan for fighting COVID-19.The Shanghai Public Health Clinical Center, which also received and treated COVID-19 patients duringthe pandemic, was equipped with a steel pipe pneumatic logistics system from Swisslog Healthcare,greatly enhancing the efficiency of treatment. In 2020, this business showed significant year-on-yeargrowth and developed dozens of new customers nationwide. Meanwhile, it simultaneously completed itsR&D of related products in China and a strategic layout for hospitals’ overall systems. For instance,Swisslog won the bid for the West China Hospital project in Tianfu to provide the pneumatic tube system,the box transmission system, the waste blanket and gown recovery system, and the operating room-storage and supply room transmission system for the hospital. Additionally, it has developed the domesticintelligent rail trolley, and the PIVAS ivONE system is in the pipeline. In the sector of warehousing andlogistics, Swisslog successfully won orders from a famous daily necessities direct selling enterprise inNorth America to provide a complete logistics automation system for its brand-new distribution center inShanghai. The order was worth over RMB100 million. In addition, KUKA China successfully signed acontract with a world-leading semiconductor company in Shanghai to supply the AutoStore system andmake it the most robot-equipped in the Asia-Pacific region. In the second half of 2020, it took part in theShenzhen Distribution Center project of the semiconductor company, which will be equipped with theAutoStore Black Line, the first high-speed robotic trolley system in China. The aforesaid project involvesa total amount of over RMB100 million. In addition, KUKA has been playing an active part in raising MideaGroup’s intelligent manufacturing level. By the end of 2020, the robot density of Midea is close to 240units per 10,000 persons. In the near future, this number is expected to reach 360 units per 10,000persons.J. Deepened the long-term incentive and protected the interests of shareholders

In 2020, Midea continued to encourage the core management to take responsibility for the Company’slong-term development and growth by further enhancing its long-term incentive schemes. Midea haslaunched seven stock option incentive schemes, four restricted share incentive schemes, six globalpartner stock ownership schemes and three business partner stock ownership schemes, which havehelped, in a more effective manner, to align the long-term interests of senior management and corebusiness backbones with that of all shareholders.Midea Group protects its shareholders’ interests by ensuring a consistent dividend policy. It shares itsgrowth with shareholders by putting forward cash dividend plans (including that of 2020) with a totalamount of nearly RMB58 billion since Group listing in 2013. In addition to the consistent dividend payouts,the Company has carried out a string of share repurchase plans. Subsequent to a share repurchase ofRMB4 billion in 2018, to further stabilize the market capitalization and protect the shareholders’ interests,the Company has launched share repurchase plans for three consecutive years since 2019. And therepurchased shares would be used for equity incentive schemes and/or employee stock ownershipschemes. During the period from 2019 to 31 December 2020, Midea has used nearly RMB6 billion forthe share repurchases.

2. Analysis of Main Business

2.1 Overview

Same with the contents presented in “1. Overview” of this section

√Yes □No

See “1. Overview” of this section.

2.2 Revenues and Costs

2.2.1 Breakdown of operating revenue

Unit: RMB’000

2020 2019

YoY Change (%)Amount

revenue (%)

Amount

As a percentageof total operating

revenue (%)

Total284,221,249

278,216,017

2.16%

By business segmentManufacturing256,694,589

90.32%

254,286,134

91.40%

0.95%

By product categoryHVAC121,215,043

42.65%

119,607,379

42.99%

1.34%

Consumer appliances 113,890,764

40.07%

109,486,791

39.35%

4.02%

Robotics andautomation systems

21,588,782

7.60%

25,191,964

9.05%

-14.30%

By geographical segmentPRC163,139,841

57.40%

161,432,313

58.02%

-0.63%

Outside PRC 121,081,408

42.60%

116,783,704

41.98%

0.63%

Note: Consumer appliances in the table above primarily include refrigerators, laundry appliances, kitchen appliances andsmall domestic appliances.

2.2.2 Business segments, products or geographical segments contributing over 10% of the

operating revenue or profit

√Applicable □N/A

Unit: RMB’000

OperatingRevenue

Cost of sales

Gross profit

margin

YoY change of

operatingrevenue (%)

YoY change of

cost of sales

(%)

YoY change of

gross profitmargin (%)By business segmentManufacturing256,694,589

188,335,826

26.63%

0.95%

6.65%

-3.92%

By product categoryHVAC121,215,043

91,925,363

24.16%

1.34%

12.62%

-7.59%

Consumer appliances

113,890,764

79,112,626

30.54%

4.02%

5.46%

-0.95%

Robotics andautomation systems

21,588,782

17,297,837

19.88%

-14.30%

-13.31%

-0.92%

By geographical segmentPRC163,139,841

122,571,889

24.87%

1.06%

10.56%

-6.46%

Outside PRC 121,081,408

90,267,703

25.45%

3.68%

3.70%

-0.01%

Under the circumstances that the statistical standards for the Company's main business data adjusted inthe Reporting Period, the Company's main business data in the recent year is calculated based onadjusted statistical standards at the end of the Reporting Period

□Applicable √N/A

2.2.3 Whether revenue from physical sales is higher than service revenue

√Yes □No

Business segment

Item Unit 2020 2019 YoY Change (%)Home appliances

Sales

In thousandunits/sets

507,591.4

456,680.2

11.15%

Output Ditto 510,986.9

465,063.3

9.87%

Inventory Ditto 62,511.8

59,169.3

5.65%

2.2.4 Execution of significant sales contracts in the Reporting Period

□Applicable √N/A

2.2.5 Breakdown of cost of sales

By business segment

Unit: RMB’000Businesssegment

Item

2020 2019

YoY Change

(%)Amount

of total cost of

sales (%)

Amount

As a

As a percentagepercentage

of total cost ofsales (%)Homeappliances

Raw materials144,479,295

84.47%

134,231,337

85.69%

7.63%

Labor costs 11,066,122

6.47%

9,711,741

6.20%

13.95%

Depreciation 3,009,985

1.76%

2,673,507

1.71%

12.59%

Energy 2,567,340

1.50%

2,255,630

1.44%

13.82%

2.2.6 Changes in the scope of the consolidated financial statements for the Reporting Period

√Yes □No

The detailed information of major subsidiaries included in the consolidation scope in current year is setout in Notes 5 and 6. Entities newly included in the consolidation scope in current year include MediaGroup (Shanghai) Co., Ltd., Chongqing Midea Commercial Factoring Co., Ltd., Tianjin Annto NetworkTechnology Co., Ltd., Western-style Electric Products Company, Hiconics Eco-Energy Technology Co.,Ltd. and its subsidiaries (hereinafter “Hiconics”), andWINONE Elevator Company Limited and itssubsidiaries (hereinafter “WINONE Elevator”). Please refer to Note 5(1) and Note 5(2)(a) for details. The

detailed information of subsidiaries no longer included in the consolidation scope in current year is setout in Note 5(2)(b).

2.2.7 Major changes in the business, products or services in the Reporting Period

□Applicable √N/A

2.2.8 Main customers and suppliers

Major customers of the CompanyTotal sales to top five customers (RMB'000)

Total sales to top five customers as a percentage of thetotal sales for the year (%)

13.89%

39,476,942.09

Total sales to related parties among top five customersas a percentage of the total sales for the year (%)

Information on top five customersNo. Customer Sales revenue (RMB'000)

As a percentage of the total sales

revenue (%)1 Customer A

23,199,371.94

8.16%

23,199,371.94

2 Customer B

3.13%

8,907,826.58

3 Customer C

0.92%

2,626,776.31

4 Customer D

0.91%

2,599,044.53

5 Customer E

0.75%

2,143,922.73

Total --

13.89%

39,476,942.09

Major suppliers of the CompanyTotal purchases from top five suppliers (RMB'000)

Total purchases from top five suppliers as a percentageof the total purchases for the year (%)

5.14%

10,191,371.51

Total purchases from related parties among top fivesuppliers as a percentage of the total purchases for theyear (%)

Information on top five suppliers of the Company

No. Supplier Purchase (RMB'000) As a percentage of the total purchases (%)

1 Supplier A

2,776,345.52

1.40%

2 Supplier B

2,035,200.92

1.03%

3 Supplier C

1,930,072.00

0.97%

4 Supplier D

0.88%

1,749,648.68

5 Supplier E

0.86%

1,700,104.39

Total --

5.14%

10,191,371.51

2.3 Expense

Unit: RMB'0002020 2019

Reason for any significant changeSelling anddistributionexpenses

27,522,276

YoY Change (%)

34,611,231

-20.48%

General andadministrativeexpenses

9,264,148

9,531,361

-2.80%

Finance costs 2,638,032

2,231,636

18.21%

Research anddevelopmentexpenses

10,118,667

9,638,137

4.99%

2.4 R&D investment

√Applicable □N/A

The Group is focused on building a competitive, multi-layered global R&D system centering on userexperience and product functions, which represents world-class R&D input and strength. With nearlyRMB45 billion invested in R&D over the past five years (more than RMB10 billion in 2020 alone), theGroup has set up a total of 28 research centers in 11 countries to gradually build up a “2+4+N” globalR&D network and gain the advantage of scale in this respect. Domestically, Midea Global InnovationCenter in Shunde District, Foshan City and Midea Global Innovation Center in Shanghai are the cores ofMidea’s R&D arm. Overseas, with Midea America Research Center, Midea Germany Research Center,Midea Japan Research Center and Midea Milan Design Center as the cores, Midea makes use of theregional technological advantages, integrates global R&D resources, and builds these facilities intocomplementary regional R&D centers. Following the strategy of “Technology Leadership”, it attracts moreprofessional talent and builds an organic global R&D network. It has over 15,000 R&D employees andover 500 senior foreign senior experts. While establishing its own research centers around the world,Midea also works on constructing an open platform of innovative ecosystems. The Group cooperates

with domestic and foreign scientific research institutions, such as Massachusetts Institute of Technology、University of California, Berkeley、University of Illinois at Urbana-Champaign, Stanford University, PurdueUniversity, University of Maryland, The University of Sheffield, Polytechnic University of Milan, TsinghuaUniversity, Shanghai Jiao Tong University, Zhejiang University, the Chinese Academy of Sciences, HarbinInstitute of Technology, Xi’an Jiaotong University, Huazhong University of Science and Technology andSouth China University of Technology, in order to establish joint labs for deepening technologicalcooperation. The Group also carries out strategic cooperation with tech giants such as BASF andHoneywell to build a global innovation ecosystem. The Group’s long-term focus on building technology,marketing, design, product and open innovation systems, building a cutting-edge research system andbuilding reserves in technology for mid/long term, has provided a solid foundation for the Group tomaintain technical superiority across the globe.Information about R&D investment

2020 2019 YoY Change (%)Number of R&D personnel16,071

13,727

17.08%

R&D personnel as apercentage of totalemployees

10.77%

10.18%

0.59%

R&D expense (RMB’000) 10,118,667

9,638,137

4.99%

R&D investment as apercentage of operatingrevenue

3.56%

3.46%

0.10%

Note: The R&D personnel in the table above exclude those of KUKA.

2.5 Cash flow

Unit: RMB'000

Item 2020 2019 YoY Change (%)Subtotal of cash inflows fromoperating activities

252,985,046

252,123,178

0.34%

Subtotal of cash outflows due tooperating activities

223,427,929

213,532,774

4.63%

Net cash flows from operatingactivities

29,557,117

38,590,404

-23.41%

Subtotal of cash inflows from 147,012,656

89,004,610

65.17%

investing activitiesSubtotal of cash outflows due toinvesting activities

182,323,319

112,112,311

62.63%

Net cash flows from investingactivities

-35,310,663

-23,107,701

-52.81%

Subtotal of cash inflows fromfinancing activities

54,749,413

20,015,594

173.53%

Subtotal of cash outflows due tofinancing activities

55,505,708

23,289,195

138.33%

Net cash flows from financingactivities

-756,295

-3,273,601

76.90%

Net increase in cash and cashequivalents

-6,893,252

12,489,478

-155.19%

Explanation of why the data above varied significantly

√Applicable □N/A

a. Primarily driven by an increase in cash paid to acquire investments, net cash flows from investingactivities decreased 52.81% from last year.b. Primarily driven by an increase in cash received from issuance of short-term financing bonds, net cashflows from financing activities increased 76.90% from last year.c. Primarily driven by a decrease in net cash flows from investing activities, net increase in cash and cashequivalents decreased 155.19% from last year.Explanation of main reasons leading to the material difference between net cash flows from operatingactivities during the Reporting Period and net profit for the year

□ Applicable √ N/A

3. Analysis of Non-Core Business

□Applicable √N/A

4. Assets and Liabilities

4.1 Material changes of asset items

The Company first adopted the new accounting standards governing revenue in 2020 and adjusted therelevant financial statement items at the beginning of the year accordingly.

Unit: RMB'000

31 December 2020 1 January 2020

Change in

(%)

Explanation about anymaterial changeAmount

As apercentage of

total assets

(%)

Amount

As apercentage oftotal assets(%)Cash at bankand on hand

81,210,482

percentage

22.53%

70,916,841

23.49%

-0.96%

Accountsreceivable

22,978,363

6.38%

18,663,819

6.18%

0.20%

Inventories 3,236,848

0.90%

4,009,176

1.33%

-0.43%

Investmentproperties

31,076,529

8.62%

28,434,223

9.42%

-0.80%

Long-termequityinvestments

405,559

0.11%

399,335

0.13%

-0.02%

Fixed assets 2,901,337

0.81%

2,790,806

0.92%

-0.11%

Construction inprogress

22,239,214

6.17%

21,664,682

7.17%

-1.00%

Short-termborrowings

1,477,302

0.41%

1,194,650

0.40%

0.01%

Long-termborrowings

9,943,929

2.76%

5,701,838

1.89%

0.87%

Contract assets

42,827,287

11.88%

41,298,377

13.68%

-1.80%

Contractliabilities

18,400,922

5.11%

18,436,559

6.11%

-1.00%

Other currentliabilities

49,803,172

13.82%

36,870,072

12.21%

1.61%

4.2 Assets and liabilities measured at fair value

√Applicable □N/A

Unit: RMB'000

Item

Openingbalance

Profit or lossfrom changein fair valueduring theperiod

Cumulative fairvalue

toequity

change chargedAmount

provide

d forimpairm

ent in

theperiod

Purchased in

the period

Sold in the

period

Otherchanges

Closingbalance

Financial assets

1. Financial asset held

for trading (excludingderivative financialassets)

53,394,976

1,676,000

78,798,119

102,130,917

-137,728

31,600,450

2. Derivative financial

assets

295,984

524,880

354,741

12,823

1,188,428

3. Receivables

financing

7,565,776

27,778,080

814505

828,660

35,358,011

4. Other investments in

equity instruments

55,298

-8,647

46,651

Sub-total of financialassets

61,256,736

2,200,880

354,741

106,631,497

102,945,422

695,108

68,193,540

Investment properties

Productive living assets

Others

Sub-total of the above 61,256,736

2,200,880

354,741

106,631,497

102,945,422

695,108

68,193,540

Financial liabilities 27,132

137,336

19,479

-3,211

180,736

Whether there were any material changes on the measurement attributes of major assets of the Companyduring the Reporting Period

□ Yes √ No

Explanation of reasons leading to the material changes on the measurement attributes of major assetsof the Company during the Reporting Period, as well as their effects on the operating results and financialcondition

4.3 Restricted asset rights as of the end of this Reporting Period

As of the end of this Reporting Period, there were no such circumstances where any main assets of theCompany were sealed, distrained, frozen, impawned, pledged or limited in any other way.

5. Investment made

5.1 Total investment amount

√Applicable □N/A

Total investment amount of Reporting

Period (RMB'000)

Total investment amount of last year

(RMB'000)

YoY Change (%)

182,323,319112,112,311

62.63%

5.2 Significant equity investment made in the Reporting Period

□Applicable √N/A

5.3 Significant non-equity investments ongoing in the Reporting Period

□Applicable √N/A

5.4 Financial investments

5.4.1 Securities investments

√Applicable □N/A

Unit: RMB’000

Type

ofsecurities

Code of

securitiesAbbreviation ofsecurities

Initialinvestment cost

Measurementmethod

Code ofOpening

carryingamount

Profit or

change

in fairvalueduring

theperiod

Cumula

loss fromtive fair

value

toequity

Purchased in

theperiod

Sold in

theperiod

Profit orloss in

theperiod

Closingcarryingamount

Accountin

g title

Fund

ingsour

ce

Overseaslistedstock

1810

XIAOMI-

W

1,272,584

Fairvaluemethod

936,358

1,364,35

-36,933

-

-876,650

1,653,77

1,676,54

Financialassetheld fortrading

OwnfundsOverseaslistedstock

DNK Danke 172,190

Fairvaluemethod

-

-135,066

-1,998

172,19

-

-135,066

35,126

Financialassetheld fortrading

OwnfundsDomesticallylistedstock

688018

Systems

14,625

Espressif

Fairvaluemethod

150,993

-22,334

-

-

-7,011

-15,950

128,032

Financialassetheld fortrading

OwnfundsDom688165EFORT178,534

Fair-

249,200

-

226,06-

249,200

475,260

Financial Own

esticallylistedstock

valuemethod

assetheld fortrading

funds

Total1,637,933

--

1,087,35

1,456,15

-38,931

398,25

-883,661

1,751,95

2,314,96

-

--

5.4.2 Derivatives investments

√Applicable □N/A

Unit: RMB'000

Operatingparty

Relationship

with

theCompany

Rel

transaction

Typeofderiva

tive

ated

Initialinvestme

ntamount

Starting

date

Ending

date

Openinginvestme

ntamount

Purchase

d inReporting Period

SoldinRepor

tingPerio

d

Amou

ntprovid

ed for

impairment

(ifany)

Closinginvestme

ntamount

investment

amount

as apercentage of

theCompa

ny’sclosing

netassets

Actualgain/loss

inReporting

Period

Futurescompany

No No

Futurescontracts

1,377

01/01/20

31/12/2

1,377

- - -

0.0001

%

248,83

6

Bank No No

FXderivatives

267,475

01/01/20

31/12/2

267,475

44,681

30,41

-

1,007,58

0.8574

%

1,869,95

Total 268,852

3

-- -- 268,852

44,681

30,41

-1,007,58

0.8574

%

2,118,78

9

Source of derivativesinvestment funds

All from the Company’s own fundsLitigation involved (ifapplicable)

N/ADisclosure date of theannouncement aboutthe board’s consent forthe derivativeinvestment (if any)

30/04/2020

Disclosure date of theannouncement aboutthe general meeting’sconsent for thederivative investment (ifany)

22/05/2020

Risk analysis ofpositions held inderivatives during theReporting Period andexplanation of controlmeasures

not limited to marketrisk, liquidity risk, creditrisk, operational risk,legal risk, etc.)

(Including butFor the sake of eliminating the cost risk of the Company's bulk purchases of raw materials as a

result of significant fluctuations in raw material p

rate fluctuation, realizi

ng the preservation and appreciation of forex assets, reducing forex

liabilities, as well as achieving locked-

and control against derivatives investment and position risks, details of which are desc

ribed as

follows:

relationship between the Company and the agencies.

Control measures: The Company has designated relevant responsible departments to enhance learning of laws and regulations and market rules, conducted strict examination and verification

of contracts, defined responsibility and obligation well, and streng

requirements of the laws and regulations and internal management system of the Company.

2. Operational risk: Imperfect internal process, st

aff, systems and external issues may cause the Company to suffer from loss during the course of its futures business and forex funds business. Control measures: The Company has not only developed relevant management systems that clearly defined the assignment of responsibility and approval process for the futures business

and forex funds business, but also established a comparatively well-develop

business, decision-making and trading processes.

3. Market risk: Uncertainties caused by changes in the prices of bulk commodity and exchange

rat

establish and maintain hedging positions in futures operations, or the fo

rex funds required for performance in forex funds operations being unable to be credited into account could also result

in loss and default risks.

be conducted by

adhering to prudent operation principles. For futures business, the futures transaction volume and application have been determined strictly according to the requirements

of production & operations, and the stop-loss mechanism has been implemented. Besides

occupied, floating gains and losses, margin amount available and margin am

ount required for intended positions. As for forex funds business, a hierarchical management mechanism has been implemented, whereby the operating unit which has submitted application for funds business

should conduct risk analysis on the conditions and en

business on a timely basis to ensure proper funds arrangement before the expiry dates.Changes in marketprices or fair value ofderivative productsduring the ReportingPeriod, specificmethods used andrelevant assumptionand parameter settingsshall be disclosed foranalysis of fair value ofderivatives

1. Gain from futures contracts during the Reporting Period was RMB248,836,000.

2. Gain from FX derivatives during the Reporting Period was RMB1,869,953,000.

3. Public quotations in futures market or forward forex quotations ann

vironment affecting operating profit and loss, evaluate the possible greatest revenue and loss, and report the greatest acceptable margin ratio or total margin amount, so that the Company can update operating status of the funds
ounced by the Bank of

China are used in the analysis of derivatives fair value.

Explanation ofsignificant changes inaccounting policies andspecific financialaccounting principles inrespect of theCompany's derivatives

as compared to theprevious ReportingPeriod

No change

Special opinionsexpressed byindependent directorsconcerning theCompany's derivativesinvestment and riskcontrol

for the Reporting Period
The Company's independent directors are of the view that the futures hedging business is an

effective instrument for the Company to elimin

improved through the fore

x funds business, so as to maintain and increase the value of foreign exchange assets and the abovementioned investment in derivatives can help the Company to fully bring out its competitive advantages. Therefore, it is practicable for the Company to carry

out derivatives investment business, and the risks are controllable.

5.5 Use of funds raised

□ Applicable √ N/A

No such cases in the Reporting Period.

6. Sale of Major Assets and Equity Interests

6.1 Sale of major assets

□Applicable √N/A

No such cases in the Reporting Period.

6.2 Sale of major equity interests

□ Applicable √ N/A

7. Analysis of Major Subsidiaries

√Applicable □N/A

Main subsidiaries and joint stock companies with an over 10% influence on the Company’s net profitCompany name

Companytype

Businessscope

Registered capital

Totalassets (inRMBmillion)

Net

RMBmillion)

Operating

RMBmillion)

revenue (inOperating

profit (inRMBmillion)

(in RMBmillion)Guangdong MideaKitchen AppliancesManufacturing Co.,Ltd.

Subsidiary

Manufacturingof homeappliances

USD72million

Net profit
17,976.46

14,407.31

6,369.45

1,821.82

1,589.79

GD Midea Air-ConditioningEquipment Co.,Ltd.

Subsidiary

Manufacturingof airconditioners

RMB854million

37,034.15

4,350.11

46,322.47

339.80

415.92

Foshan ShundeMidea ElectricalHeating AppliancesManufacturing Co.,Ltd.

Subsidiary

Manufacturingof homeappliances

USD42million

14,931.98

7,580.76

10,698.15

1,420.91

1,241.10

Wuhu Midea Kitchen& Bath AppliancesMfg. Co., Ltd.

Subsidiary

Manufacturingof waterheaters

RMB60million

13,950.03

1,171.59

11,879.86

1,084.47

941.00

Acquisition and disposal of subsidiaries during the Reporting Period

√Applicable □N/A

The detailed information of major subsidiaries included in the consolidation scope in current year is set

out in Notes 5 and 6. Entities newly included in the consolidation scope in current year include MediaGroup (Shanghai) Co., Ltd., Chongqing Midea Commercial Factoring Co., Ltd., Tianjin Annto NetworkTechnology Co., Ltd., Western-style Electric Products Company, Hiconics, andWINONE Elevator. Please

refer to Note 5(1) and Note 5(2)(a) for details. The detailed information of subsidiaries no longer includedin the consolidation scope in current year is set out in Note 5(2)(b).

8. Structured Bodies Controlled by the Company

□Applicable √N/A

9. Outlook for the Future Development of the Company

9.1 Development strategies of the Company

With “Bring Great Innovations to Life” as its corporate vision, “Integrate with the World, to Inspire yourFuture” as its mission, and “Embrace What’s Next - Aspiration、Dedication、Collaboration、Innovation”as its values, Midea adheres to its new strategic focus of “Technology Leadership, Direct to Users,Digitization & Intelligence Driven, and Global Impact” and focuses on “Comprehensive Digitalization andComprehensive Intellectualization”, in pursuit of a new Midea in the new era. It integrates global resources,follows the customer-oriented principle, and builds key technology barriers by way of technologicalinnovation and quality improvement, so as to achieve global leadership with respect to principal productcategories and new business breakthroughs, as well as to maintain technology leadership. It aims toestablish direct connection with customers in terms of mindsets, products, buying, services, etc. throughdigitalization and intellectualization in its operations. Supported by data- and platform-based operationsin the whole value chain, Midea strives to boost its business competitiveness and become morecompetitive in the digital era by implementing the strategy of “Digitization & Intelligence Driven”. It willalso promote global operations and try to lay a solid foundation in this regard and enhance global impactthrough promoting its own branded products. It will promote efficiency driven growth by improvingmanagement, manufacturing and asset efficiency to create more cost efficiency. Additionally, it willstrengthen its ToB business to build new business platform and growth points. It aims to create a betterlife for over 400 million users, major customers and strategic partners in different areas worldwide everyyear with satisfying products and services.

9.2 Key operation points in 2021

In 2021, based on the core strategic focus with “Technology Leadership” as the core, Midea will promotedevelopment both in the ToB and ToC business, as well as carry out transformation in both the domesticand overseas operations. With innovation, breakthroughs and planning as the keynote, it will make clearthe five business divisions, promothe the implementation of the four strategic focus, as well as ensureenough breakthroughs regarding management systems, the organizational structure and mechanisms.Specific priority tasks are set out below:

a. Midea will firmly increase R&D investment and build up the R&D scale advantage in key technologies,cutting-edge technologies, basic technologies, digitalization and intellectualization in particular. Driven bytechnology as the fundamental approach, it will make breakthroughs and build key technology barriers inall the product categories. Also, it will see to the full implementation of the customer-oriented principlewith respect to all the products, services and business models. By way of “Comprehensive Digitalizationand Comprehensive Intellectualization”, increasing efficiency internally and developing customersexternally, as well as deepening the R&D model of “Three Generations”, Midea is implementing thestrategy of “Being the Number One or the Only One”. Meanwhile, efforts will be made in bringing in toptalent, promoting a distributed working system and talent diversity at home and abroad, strengthening theglobal R&D network, refining the global R&D system, and building up an R&D-centric and innovation-driven model, with a purpose of maintaining technology leadership in a comprehensive manner.b. Midea will keep a high-quality development direction and stick to internal, sustained and effectiveorganic growth. It will promote the T+3 business model reform and high-performance operations in thewhole value chain in every link from product planning to after-sales service, so as to increase efficiencyin the whole value chain and the data-driven efficiency. Channel reform will be firmly pushed forward forthe front-end market in pursuit of better profitability. In order to win in competition, it is important to develophigh-end products to refine the product mix. Breakthroughs must be made in a faster manner regardingsmall and major appliances, in addition to the promotion of products catering to new consumption trends.Midea will explore new models, business and product categories and make breakthroughs in these areas.It will plan for, establish and refine business middle platforms, especially data and technology middleplatforms. In the meantime, it will maintain overall consistency by sticking to “One Midea, One System,

One Standard”. It will also maintain effective investments, control non-operating expenses, increase laborproductivity, improve human resource allocation efficiency, promote lean management and provide freshimpetus for continual growth through relentless innovation.c. For the domestic market, Midea will focus on promoting “One Midea” for users, enhance the basicsystems, and set up a unified business language and rules. It will also make use of the advantages ofsynergies, reinforce the result-oriented process control and improve operating efficiency.Intellectualization and digitalization will be deepened in the exclusive shop system. Specific measuresinclude rebuilding smart experience scenes at the retail end and the whole sales service process fromthe customers’ angle, enhance customers’ smart perception, building smart service package platformsfor home decoration customers and companies and communities, as well as constructing Midea’sintelligent terminal network. With specific objectives, Midea will continue to deepen platform reform andincrease efficiency, look for incremental systems, expand sources of sales, and improve efficiency at thefront and back end through the data middle platform. In terms of the ToB business, Midea will implementsales incremental approaches, make breakthroughs for new business, build the middle platform capabilityfor the engineering business, and expand its presence in the real estate industry by covering all keycustomers, making breakthroughs in the cooperation with regional strategic target customers, andincreasing sales to key target customers. In addition, operational professionalism is further enhancedwith regard to the chain operator business, the special channel business, etc., generating breakthroughsand growth in sales. Midea will deepen the reform of the service engineer model, rebuild the whole serviceprocess from the customers’ angle, and solve their pain points. The “get a new one instead of repairs”service is implemented for all the small domestic appliances, with super-fast identification and get-a-new-one services. And an industry-leading smart home service platform is being built. Meanwhile, it willcontinue to increase the efficiency of the supply chain system, enhance the advantage of Midea’s all-channels coverage, rebuild business processes and push forward the construction of a shared inventorysystem.d. For the overseas market, Midea will firmly carry forward the strategy of “Global Impact”, and adhere tothe strategies of being customer-oriented and leading products. Leveraging its advantageous global R&Dand user research networks, as well as benchmarking to other top brands across the globe, Midea will

continue to launch differentiated and innovative products to solve users’ pain points, enlarge themainstream market share and give play to its advantage of various product categories. It will continue toimprove the ability to operate multiple brands in the overseas market, refine the differentiated productportfolios of the brands, and carry out global and regional branding activities through digital marketing toboost the brands’ presence and reputation. Meanwhile, cross-border e-commerce will be promoted. Thefocus has shifted from product marketing to brand marketing. Midea will embrace digital and contentmarketing, work on new media and social media operation, and establish customer- and brand-orientedbusiness models. It will quickly upgrade its organizing capability to fully promote the development of theoverseas e-commerce business. Meanwhile, Midea will break through strategic markets, stick to a long-termist approach, implement business models with direct connection with customers and build upcapabilities by way of continuous product innovation. In addition to building the brand image of MSmartin a comprehensive manner in key strategic markets, Midea will enhance local capabilities in relation tocustomer insights, R&D and manufacturing. In terms of overseas channels, Midea will focus itsadvantageous resources on breaking through substantial channels. It plans to set up over 20,000 self-branded sales units in 2021 to boost channel vitality and enlarge the channel percentage. Digital toolsare used to empower and increase the efficiency of the value chain of all the channels. And the D2Cchannel will be the focus to get closer to consumers and achieve direct connection with them. Meanwhile,channel reform and empowerment will be deepened. Midea will continue to boost channel vitality andincrease channel efficiency. It will further its channel reform centering on empowering channel customersand increasing channel efficiency. A coordination platform will be put in place for key overseas channels.And one-stop services will be provided for customers at different levels, including product customization,order placing, automatic settlement, policy delivery, live-streaming training, etc. Also, digitalization will bepromoted for the overseas commercial operations. Midea will continue to strengthen data analysis for theoverseas business, particularly the e-commerce data analysis platform, the retail store shopping guidemonitoring system, the automatic data and product analysis system, and the smart warning module. Itwill effectively deepen the transformation towards digitalization in international operations for datatransparency and sharing, as well as for higher coordination efficiency. In addition, the global logisticsand service capability will be improved. Midea will improve the one-stop services of distribution,installation and repair for strategic markets, set up regional pre-warehouses, and substantially accelerateorder execution and boost customer satisfaction using the intelligent supply chain replenishing algorithm.

TLSC will enhance the in-depth cooperation with key customers and all the business divisions of theGroup, take proactive actions to deal with risks, firmly promote business reform, and focus on the Japanmarket. Firstly, in terms of products, it will focus on the real needs of customers, strengthen manufacturingcoordination with the Group’s business divisions, continue to improve the product quality and productportfolio, and ensure the timely supply of products and service spare parts. Secondly, it will promote alean and transparent sales system, accelerate reforms in relation to single-store and per-capita efficiency,further refine the e-commerce organizational system, and expand online sales as a percentage of thetotal revenue. Finally, the 632 program and the related system development will be furthered to improvethe capability of digitalized management.e. In light of different needs from different consumer groups, Midea will carry out long-term planning,improve its multi-brand matrix, and refine its high-end brand portfolio. COLMO, the brand targeting high-end consumers, will launch whole new product suites for all scenes, expand its channel network, andupgrade the scene-based and smart experience at the retail end. BUGU, the brand targeting onlineconsumers, will integrate internal and external resources to provide individualized experience for users,and establish all-scene ecosystem cooperation with external manufacturers to create innovativemarketing and business models. Meanwhile, consistency towards customers will be promoted. Beingcustomer-oriented, Midea will give play to its multi-category synergistic advantages, provide productsuites for customers based on scenes, and provide customized and integrated home solutions with fullcategories of the household appliances.f. Midea will boost its competitiveness in the digital era by implementing the strategy of “Digitization &Intelligence Driven”. It will strengthen the building of Midea as a digitalized enterprise, improve the digitaloperational methods and systems, support the integration of every link of Midea’s value chain by digitalmeans, and optimize efficiency, value creation and the fulfillment of operating objectives throughdigitalization. Effort will also be made to refine the Midea Cloud Sales platform, promote digital reform inmarketing, as well as further build and optimize digitalized Industrial Internet factories. And it willstrengthen digital support for the “Global Impact” strategy. Measures to be taken include enhancing thedata platform and data governance to promote data-driven improvement in operations. Meanwhile, Mideawill continue to increase its investment in the R&D of IoT basic technology. Upholding the customer-

oriented principle, it is dedicated to building an industry-leading open IoT platform featuring multiplescenes, entries and applications. Focusing on user research, smart scene experience, solution packages,smart marketing upgrading and one-stop delivery, among others, Midea will provide more families withsmart life services which are convenient, safe and reliable.g. Midea will beef up KUKA’s localized operations in China, increase investment in the development andapplication of robotics, as well as foster R&D innovation of core components and software systems. Interms of marketing, Midea will maintain leadership in the auto sector and take active steps to explore newareas including general industrial manufacturing, electronics, medical care and logistics, services, etc.Concerning operation, it will concentrate on R&D, supply chain management, high-performanceoperations and digitalization, among others, so as to build the core competitiveness of the robotics andindustrial automation business in a faster manner.

9.3 Key capital expenditure plan in future

To adapt to changes in the industry environment, the Company will focus its 2021 investments ontechnological innovation, product quality improvement, robotics and industrial automation systems,digitalization, e-commerce channel expansion and new retail channels construction, new brand marketing,global operations capability improvement and the smart home strategy. Meanwhile, the Company willstrictly control investment in infrastructure and capacity expansion, as well as non-operating expenditures.The capital expenditures will primarily come from the Company’s own funds.

9.4 Main risks in future development

a. Risk associated with the COVID-19 outbreakThe fluctuations and repeated outbreaks of the COVID-19 pandemic may impact the demand, productionand sales of the Company’s products and services. Pandemic control measures, such as lockdown, socialdistancing, and travel restrictions, reduce customer mobility. Other consequences include limitedproduction and operations in some regions, the shutdown of retail outlets, suspended customeroperations, and increased logistics costs. All these factors bring about uncertainties and challenges tothe normal functioning of the Company and the market environment.

b. Risk of macro economy fluctuationThe market demand for the Company’s consumer appliances, HVAC equipment, industrial robotics,among other products, can be easily affected by the economic situation and macro control. If the globaleconomy encounters a heavy hit and consumer demand slows down in growth, the growth of theindustries in which the Company operates, may slow down accordingly, and as a result, this may affectthe product sales of Midea Group.c. Risks in the fluctuation of production factorsThe raw materials required by Midea Group to manufacture its consumer appliances and corecomponents primarily include different grades of copper, steel, aluminum, and plastics. At present, thehousehold appliance manufacturing sector belongs to a labor intensive industry. If the price of rawmaterials fluctuate largely, or there is a large fluctuation in the cost of production factors (labor, water,electricity, and land) caused by a change to the macroeconomic environment and policy change, or thecost reduction resulted from lean production and improved efficiency, as well as the sale prices of endproducts cannot offset the total effects of cost fluctuations, the Company’s business will be influenced tosome degree.d. Risk in global asset allocation and overseas market expansionInternationalization and global operations is a long-term strategic goal of the Company. The Companyhas built joint-venture manufacturing bases in many countries around the world. Progress has been madeday by day regarding the Company’s overseas operations and new business expansion. However, itsefforts in global resource integration may not be able to produce expected synergies; and in overseasmarket expansion, there are still unpredictable risks such as local political and economic situations,significant changes in law and regulation systems, and sharp increases in production costs.e. Risk in foreign exchange losses caused by exchange rate fluctuationAs Midea carries on with its overseas expansion plan, its overseas sales have accounted for more than40% of the total revenues. Any sharp exchange rate fluctuation might not only bring negative effects on

the overseas operations of the Company, but could also lead to exchange losses and increase its financecosts.f. Market risks brought by trade frictions and tariff barriersDue to the rise of anti-globalization and trade protectionism, China will see more uncertainties in exportin 2021. The trade barriers and frictions of some major markets will affect the export business in the shortrun, as well as marketing planning and investment in the medium and long run. Political and compliancerisks are rising in international trade. These can mainly be seen on compulsory safety certificates,international standards and requirements, and product quality and management systems certification,energy-saving requirements, the call for increasingly strict environmental protection requirements, as wellas with rigorous requirements for recycling household appliances waste. Trade frictions caused by anti-dumping measures implemented by some countries and regions aggravate the burden in costs andexpenses for household appliance enterprises, and have brought about new challenges to marketplanning and business expansion for enterprises.In face of the complicated and changeable environment and risks at home and abroad, Midea will strictlyfollow the Company Law, the Securities Law, the CSRC regulations and other applicable rules, keepimproving its governance structure for better compliance, and reinforce its internal control system so asto effectively prevent and control various risks and ensure its sustained, steady and healthy development.

10. Visits Paid to the Company for Purposes of Research, Communication, Interview,

etc.

10.1 In the Reporting Period

√Applicable □N/A

Date PlaceWay of visit

Type of

visitor

Visitor Discussions

Index to maininquiry information

January

2020

S

hanghai

One-on-

onemeeting

AberdeenStandardInvestments,Boyu Capital,

InstitutionJanus Henderson

Investors, MFSInternational,

channel reform

? 3. Please

summarize

integration and expansion of Midea

. 4. How does Midea improve user

Log Sheet ofInvestor RelationsActivities for 14January 2020disclosed on

Moore CapitalManagement

service quality?

14 March2020

MideaGroupHQ

By phone

, etc.

I

FountainCapResearch &Investment (HK)Co Ltd, HarvestGlobalInvestment, GICPrivate Limited,GuocoManagement Co.Limited, etc.

nstitution1. Please describe Midea's changes

in the retail network given

is Midea's in

tegration with KUKA? 3.

Please briefly explain Midea’s

Midea’s

corporate governance

mechanism.

Log Sheet ofInvestor RelationsActivities for 14March 2020disclosed on

15 May

2020

MideaGroup

HQ

By phone

www.cninfo.com.cn

I

Investors

1. Midea ranks No. 36 on the 2019

nstitution

Fortune China 500 list, the highest-ranking among the home appliance

industry in the country for five

consecutive years

player in the home

appliance

industry, what's Midea’s

strategy of Midea? 2. How

does

Midea adjust channels, given

franchised stores of home

appliances in villages and towns)

like third-

view e-

commerce platforms and

channels like Pinduoduo? 4. What

Midea’s

future strategic plan for

home appliances? What does Midea

think of t

he future development of

the small

progress of Midea’s

channel reform

strategy. 6. How is the air-

Log Sheet ofInvestor RelationsActivities for 15May 2020disclosed on

conditioner pricing this year? How towww.cninfo.com.cn

expansion? 7. Midea

established a

new IoT D

company, in April this y

ear. What's

the strategic objective

division? Does Midea

have any

plans fo

objective? How will the IoT D

ivision

implement the strategic plans?

27 May2020

MideaGroup

HQ

By phone

I

nstitution

Broad PeakMaster Fund IILtd, FILInvestmentManagement Ltd,

Limited, Point 72AssetManagement,Principal AssetManagement

, etc.1. Please briefly introduce the

integration of TLSC

progress has Midea made in

the technological innovation of smart home? 3. Please briefly talk about the development of WAHIN in 2019.

4. Midea

D

ivision, based on the IoT company,

t

objective of this division?

Log Sheet ofInvestor RelationsActivities for 27May 2020disclosed on

his year. What's the strategicwww.cninfo.com.cn

23 June

2020

MideaGroupHQ

By phone

I

nstitution

Invesco GreatWall Fund

Ltd. (IGW), PHCapital, SoochowAsset

Management Co.,

Ltd., MaxwealthFund, GreenCourt CapitalManagementLimited, HarvestFund, Bank ofCommunicationsSchroder Fund

Ltd (BOCOMSchroders),Minsheng RoyalFund

Management Co.,

Ltd., Cathay LifeInsurance, New

App as an entry

to provide complete

solutions

2019? 3. Please br

iefly explain the

profit of the overseas operations

Please summarize the mid-to-

long

term strategic planning

directions in the next five years.

Log Sheet ofInvestor RelationsActivities for 23June 2020disclosed on

and majorwww.cninfo.com.cn

China Fund,Foresea LifeInsurance, BOSCAsset, Zhong OuAMC, etc.

9 July2020

MideaGroupHQ

By phone

I

nstitution

GW&KInvestmentManagementLLC, Teng YuePartners LP,MatthewsInternationalCapital, IvyInvestmentManagementCompany, WellsCapitalManagement

1. Please briefly describe the mid-to-

, etc.long term planning and profitability

of the KUKA business

how to effectively manag

e the

overseas operations and apply

efficient systems of Midea

to those

operations for better outcomes

incentive mechanisms.

Log Sheet ofInvestor RelationsActivities for 9 July2020 disclosed on

? 3. Please briefly talk about the development of Annto. 4. Please summarize the governance andwww.cninfo.com.cn

30 July

2020

MideaGroup

HQ

By phone

I

nstitution

Oriental AlphaFund, Ping AnFund, YinhuaFund, Bank ofChina InvestmentManagement,SinolinkSecurities,BOCOMSchroders,Morgan StanleyChina, Nan ShanLife Insurance,Harvest Fund,China Asset

1. Midea

Management, etc.established a new IoT

Division, b

t

his year. What's the strategic

objective

Industrial Internet? What new

development directions will Midea

have? 3. Please briefly describe th

e development of channels. 4. Please

summarize innovations

commercial air conditioners.

Log Sheet ofInvestor RelationsActivities for 30July 2020disclosed on

in relation towww.cninfo.com.cn

2020

MideaGroup

HQ

By phone

September

I

APS AssetManagement,CalamosAdvisors, DymonAsia Capital,FidelityManagement &Research,Hardman

1. Please talk about the e-

nstitutioncommerce business in the first half of the year. 2. Please briefly talk about the latest

development of BUGU. 3. How is the

patented technologies?

Log Sheet ofInvestor RelationsActivities for 16September 2020disclosed on

IoT development? 4. What innovation has Midea achieved inwww.cninfo.com.cn

Johnston GlblAdv Llc, etc.

2020

MideaGroup

HQ

By phone

November

I

Tiger Pacific,BotongInvestment,China Fund, FirstState Cinda Fund

nstitutionManagement Co.,

Ltd., EverbrightTrust, TruValueAssetManagement, etc.

1. Midea's R&D investment

and

layout. 2. What's Midea's next move

regarding

the strategy of

“Technology Leadership”?

Log Sheet ofInvestor RelationsActivities for 27November 2020disclosed on

Times of visit 243Number of visiting institutions 2,545Number of visiting individuals 125Number of other visitors 0

www.cninfo.com.cnSignificant undisclosed information disclosed,

revealed or leaked

No

Section V Significant Events

1. Profit Distribution and Converting Capital Surplus into Share Capital for Common

Shareholders

Formulation, execution or adjustments of profit distribution policy, especially cash dividend policy, forcommon shareholders in the Reporting Period

□Applicable √N/A

Cash dividend to common shareholders in the past three years (including the Reporting Period)

Unit: RMB

Year

Cash dividends

(tax included)

Net profitattributable to

commonshareholders ofthe Company in

year

Ratio of

cashdividends

the consolidated statement in theto net profit attributable

to comm

shareholders in theconsolidate

dstatementin the year

Cashdividends inother forms

(such as

sharerepurchase)

onRatio of cash

dividends inother formsto net profitattributableto common

in the

consolidated

statement in

the year

Total cashdividends(inclusive ofthose in other

forms)

cashdividends(inclusive of

those in

other forms)

to net profitattributableto commonshareholder

s in the

the year2020

11,066,392,174.

consolidated statement in
27,222,969,000

40.65%

2,700,000,00

9.92%

13,766,392,174.

40

50.57%

2019

11,131,489,692.

24,211,222,000

45.98%

3,200,000,00

13.22%

14,331,489,692.

59.19%

2018

8,561,589,853.7

20,230,779,000

42.32%

4,000,000,00

19.77%

12,561,589,853.

62.09%

The Company made a profit in the Reporting Period and the profit distributable to common shareholdersof the Company (without subsidiaries) was positive, but it did not put forward a preliminary plan for cashdividend distribution to its common shareholders

□Applicable √N/A

2. Preliminary Plan for Profit Distribution and Converting Capital Surplus into Share

Capital for the Reporting Period

√ Applicable □ N/A

Bonus shares for every 10 shares (share)

Dividend for every 10 shares (RMB) (taxincluded)

Additional shares converted from capitalsurplus for every 10 shares (share)

Total shares as the basis for the preliminaryplan for profit distribution (share)

6,916,495,109

Cash dividends (RMB) (tax inclusive) 11,066,392,174.40

Cash dividends in other forms (such as sharerepurchase) (RMB)

2,700,000,000

Total cash dividends (inclusive of those inother forms) (RMB) (tax inclusive)

Distributable profits (RMB) 25,795,300,000

13,766,392,174.4

Percentage of total cash dividends (inclusiveof those in other forms) in the total distributedprofit (%)

100%

Cash dividend policy adoptedW

here the Company is at a mature stage of development and has significant expenditure arrangements, cash dividends

shall account for at least 40% of the total distributed profit when carrying out profit distribution.

Details about the preliminary plan for profit distribution and converting capital surplus into share capitalAccording to the Auditor’s Report PwC ZT Shen Zi (2021) No. 10017 issued by PricewaterhouseCoopers

here the Company is at a mature stage of development and has significant expenditure arrangements, cash dividends

Zhong Tian

LLP, the parent company realized a net profit of RMB15,187,038,000 for 2020

. Pursuant to the relevant provisions under

the Articles of Association, it provided 10% as statutory surplus reserve, namely RMB1,518,704,000

profits at the beginning of the year of RMB23,249,372,000

and minus the profit distributed in the year of

RMB11,122,406,000, the actual distributable profit would be RMB25,795,300,000.

3. Performance of Undertakings

3.1 Undertakings of the Company’s actual controller, shareholders, related parties and acquirer, as well as the Company and other

commitment makers fulfilled in the Reporting Period or ongoing at the period-end

√ Applicable □ N/A

Undertaking

Undertakinggiver

Type ofundertaki

ng

Details of undertaking

Undertaking date

Term Particulars on the performance

Undertaking made

documents orshareholdingalternationdocuments

Controllingshareho

in offeringlder and

actualcontroller

Maintenance ofindependence

rele

vant laws and regulations and regulatory documents. They will faithfully fulfill the above undertaking, and assume the corresponding legal liability. If they fail to fulfill their obligations

and responsibilities conferred by the undertaking, they will bea

rules, regulations and regulatory documents.

28/03/2013

r the corresponding legal liabilities according to relevant laws,

Long-standing

1. There has been no violation of this

undertaking.

Controllingshareho

actualcontroller

Avoidingcompetition withintheindustry

lder and2. In order to avoid possible competition within the industry between Midea Group and Midea Holding and its controlled enterprises as well as He Xiangjian, his immediate family and

his controlled companies, Midea Holding and

undertaken as follows:

(1) None of the entities or individuals mentioned above is or will be engaged in the same or similar business as the existing main business of Midea Group and its controlled companies. They are28/03/2013

Long-standing

2. There has been no violation of this

undertaking.

institutions or economic organizations;

(2) If Midea Group and

its controlled companies expand their business on the basis of the existing ones to those where the above mentioned related entities or individuals are already performing such production and operations, as long as He

Xiangjian is still the actual controll

within a reasonable period;

(3) If Midea Group and its controlled companies expand their

business

shareholder, t

hey would undertake as not to engage in competitive business to the new ones of Midea Group and its

controlled companies;

Midea Hold

ing is identified as the controlling shareholder of Midea Group, and He Xiangjian the actual controller, they will

not change or terminate this undertaking.

above undertaking, and assume the

corresponding legal responsibilities. If they fail to fulfill their obligations and

laws, rules, regulations and regulatory documents.

Controllingshareho

responsibilities conferred by the undertaking, they would bear the corresponding legal responsibilities according to relevant
lder and

actualcontroller

Regulation ofrelatedtransactions

Xiangjian have undertaken as follows:

(1) They will regulate any related transactions with Midea Group and its controlled companies using their utmost efforts to reduce them. For unavoidable related transactions with Midea Group

and its controlled companies, inc

laws, regulations, rules, other regulatory

documents, and relevant provisions of the Articles of Association of Midea Group. They guarantee to offer fair prices for related transactions, and fulfill the information disclosure obligations in respect of the

related transactions according to related l

damage the interests of its shareholders at

their advantages

during the related transactions.

general meeting of Midea Group;

28/03/2013

(2) They shall fulfill the obligation of withdrawing from voting that involves the above mentioned related transactions at the

Long-standing

3. There has been no violation of this

undertaking.

(3) The related subject mentioned above shall

independent third party in any fair market transactions.

(4) In accordance with effective laws, regulations or other

regulatory documents of People's Republic of China, as long a

not change or terminate this undertaking.

(5) Midea Holding and He Xiangjian will faithfully fulfill the above

undertaking and

regulatory documents.

Controllingshareho

assume the corresponding legal liabilities. If they fail to fulfill their obligations and responsibilities conferred by the undertaking, they will bear the corresponding legal responsibilities according to relevant laws, rules, regulations and
lder and

actualcontroller

TradeUnionCommitteetransferring itslimitedequity ofMideaGroup

4. On 4 January 2001, the Midea Trade

On MideaUnion Committee signed the "Equity Transfer Contract" with five people, namely He Xiangjian, Chen Dajiang, Feng Jingmei, Chen Kangning and Liang Jieyin, where it transferred all its limited equity of Midea

Group (22. 85%) respectively to those five people.

opinions, therefore there was no dispute or potential dispute.

On 28 June 2013, Foshan Shunde Beijiao General Union, superior department of Midea Trade Union Committee, issued a confirmation letter to the fact that the Midea Trade Union Committee funded the establishment of Midea Group Co., Ltd.

In addition the letter

28/03/2013

also confirmed that the council of Midea

Long-standing

4. So far, this shareholding transfer has not

brought about any loss caused by any disputeor potential disputes. There has been noviolation of this undertaking.

agreement from all staff committee members.Midea Holding and He Xiangjian, respectively the

controlling shareholder and actual controller of Midea Group Co., Ltd. have undertaken as follows: For any loss to Midea Group caused by any dispute or potential dispute arising from the matters of equity

transfer mentioned above, they are willing to assum

for such loss.

Controllingshareho

e full liability
lder and

actualcontroller

IssuesaboutPaymentof theStaffSocial

and theHousing

Provident

Fundinvolvedin MideaGroup'sOverallListing

for (1) paying such expenses and related expenses o

n time based on the requirements of relevant state departments if Midea Group is required to be liable for the payment of staff social insurance, housing provident fund and the payment required by relevant state authorities prior to this merger, (2)

paying

and its subsidiaries are required to pay them in advance.

28/03/2013

corresponding compensation for all direct and indirect losses incurred by Midea Group and its subsidiaries due to this merger, (3) indemnifying and holding harmless Midea Group and its subsidiaries in time from such expenses when Midea Group

Long-standing

5. So far, the payment of the staff social

insurance and the housing provident fund hasnot brought about any controversy or potentialdisputes. There has been no violation of thisundertaking.

Controllingshareho

Issuesaboutasset

lder andalteration,6. Undertakings on issues about asset alteration, asset flaw and

house leasing of Midea Group and its subsidiaries

Long-standing

6. So far, the issues about asset alteration,

asset flaw and house leasing of Midea Groupand its subsidiaries have not brought aboutany controversy or potential disputes. There

actualcontroller

assetflaw andhouse

MideaGroupand itssubsidiaries

Midea Holding and He Xiangjian have undertaken as follows:

leasing of(1) Midea Holding will do its utmost to assist and urge Midea

Group (including i

of losses caused by issues abo

ut renaming procedures of

related assets mentioned above to Midea Group.

land and housing or property declared in related files

of this

merger.

subsidiaries) to re-

apply for corresponding construction procedures and apply for their ownership certificates for houses

without complete procedures, as happened in the past, to ap

the re-

application for real estate registration procedures, Midea

Holding shall do its utmost to provide assistance and be liabl

Midea Group (including its subsidiaries).

(4) Under any circumstances that Midea Group suffers from losses incurred from no longer using these properties or

presently using the land or house

has been no violation of this undertaking. AndMidea Holding shall honor this undertakingbefore its expiration.

in full. Midea Holding shall compensat

claims from any other third party.

(5) Based on issues of defective house leasing declared in

related files of thi

rights claims from a

third party or by means of an administrative authority exercising a right and therefore results in any economic losses due to eviction from rental houses, or any penalties subjected to by competent government departments or any

recourse from related parties.

(includ

ing its subsidiaries) or through any penalties administered by competent government departments. Likewise if the lessor cannot compensate for losses caused by such defective leasing, Midea Holding shall compensate Midea Group for losses caused

by such defective land leasing.

reality and Midea Group has suffered any loss ther

efrom, Midea

Holding shall compensate in cash or make up for Midea Group’

loss upon Midea Group’

s notice in writing within 30 days when

the loss occurs and the loss amount is definite.Whethertheundertaking isfulfilledon time

Yes

Specificreasonsfor failingto fulfillanyundertaking andplan forthe nextstep

N/A

3.2 Where any earnings forecast was made for any of the Company’s assets or projects and the

Reporting Period is still within the forecast period, the Company shall explain whether theperformance of the asset or project reaches the earnings forecast and why

□Applicable √N/A

4. Occupation of the Company’s Capital by the Controlling Shareholder or Its Related

Parties for Non-Operating Purposes

□Applicable √N/A

No such cases in the Reporting Period.

5. Explanation of the Board of Directors, the Supervisory Committee and Independent

Directors (If Any) Regarding the "Non-standard Audit Opinion" for the ReportingPeriod

□Applicable √N/A

6. Reason for Changes in Accounting Policies, Accounting Estimates and Accounting

Methods as Compared to the Financial Report for the Prior Year

√ Applicable □ N/A

7. Reason for Retrospective Restatement of Major Accounting Errors during the

Reporting Period

□Applicable √N/A

8. Reason for Changes in Scope of the Consolidated Financial Statements as

Compared to the Financial Report for the Prior Year

√ Applicable □ N/A

The detailed information of major subsidiaries included in the consolidation scope in current year is setout in Notes 5 and 6. Entities newly included in the consolidation scope in current year include MediaGroup (Shanghai) Co., Ltd., Chongqing Midea Commercial Factoring Co., Ltd., Tianjin Annto NetworkTechnology Co., Ltd., Western-style Electric Products Company, Hiconics Eco-Energy Technology Co.,Ltd. and its subsidiaries (hereinafter “Hiconics”), andWINONE Elevator Company Limited and its

subsidiaries (hereinafter “WINONE Elevator”). Please refer to Note 5(1) and Note 5(2)(a) for details. The

detailed information of subsidiaries no longer included in the consolidation scope in current year is setout in Note 5(2)(b).

9. Engagement and Disengagement of CPA Firm

CPA firm at presentName of the domestic CPA firm PricewaterhouseCoopers Zhong Tian LLPThe Company’s payment to the domestic CPA firm RMB8.953 millionConsecutive years of the audit service provided by thedomestic CPA firm

Six yearsNames of the certified public accountants from thedomestic CPA firm

Yao Wenping and Qiu XiaoyingConsecutive years of the audit service provided by thecertified public accountants from the domestic CPA firm

One year and four years respectivelyWhether the CPAs firm was changed in the current period

□Yes √No

Engagement of any CPAs firm for internal control audit, financial advisor or sponsor

√ Applicable □ N/A

The Company appointed PricewaterhouseCoopers Zhong Tian LLP as the internal control auditor for thecurrent year. The total amount paid by the Company to PricewaterhouseCoopers Zhong Tian LLP for itsfinancial statement and internal control audit services for 2020 was RMB8.953 million.

10. Possibility of Delisting after Disclosure of this Report

□Applicable √N/A

11. Bankruptcy and Reorganization

□Applicable √N/A

No such cases in the Reporting Period.

12. Material Litigation and Arbitration

□Applicable √N/A

No such cases in the Reporting Period.

13. Punishments and Rectifications

□Applicable √N/A

No such cases in the Reporting Period.

14. Credit Conditions of the Company as well as Its Controlling Shareholder and

Actual Controller

□Applicable √N/A

15. Implementation of any Equity Incentive Scheme, Employee Stock Ownership

Scheme or Other Incentive Measures for Employees

√Applicable □N/A

A. Overview of the Second Stock Option Incentive Schemea. The Company convened the 21st Meeting of the 3rd Board of Directors on 5 June 2020, at which theProposal for the Retirement of Unexercised Stock Options under the Second Stock Option IncentiveScheme upon Expiry was reviewed and approved. As the Second Stock Option Incentive Scheme expiredon 26 May 2020, the Company agreed to retire the 22,000, 34,000, 37,000 and 47,900 stock options thathad been previously granted to Xia Manya, Yu Xiaoping, Fu Shengbin and Zeng Min respectively butwere unexercised upon expiry.During the Reporting Period, 9,744,890 shares were exercised under the Second Stock Option IncentiveScheme.B. Overview of the Third Stock Option Incentive Schemea. The Company convened the 21st Meeting of the 3rd Board of Directors on 5 June 2020, at which theProposal for the Adjustment to the Exercise Price for the Third Stock Option Incentive Scheme wasreviewed and approved. As the 2019 Annual Profit Distribution had been carried out, the exercise pricefor the Third Stock Option Incentive Scheme was revised from RMB17.85 to RMB16.26 per share.b. The Company convened the 23rd Meeting of the 3rd Board of Directors on 24 July 2020, at which the

Proposal for the Retirement of Unexercised Stock Options under the Third Stock Option IncentiveScheme upon Expiry was reviewed and approved. As the second exercise period of the Third StockOption Incentive Scheme expired on 27 June 2020 and the relevant unexercised stock options were notallowed for exercise from that date, the Company agreed to retire the 75,000, 70,000, 75,000, 60,000and 30,000 stock options that had been previously granted to Fu Shengbin, Ren Junfu, Yuan Dong, YangHui and Liao Zhiwen respectively but were unexercised upon expiry.During the Reporting Period, 20,583,246 shares were exercised under the Third Stock Option IncentiveScheme.C. Overview of the Fourth Stock Option Incentive Schemea. The Company convened the 21st Meeting of the 3rd Board of Directors on 5 June 2020, at which theProposal for the Adjustments to the Exercise Price, Incentive Recipients and Their Exercisable StockOptions for the Fourth Stock Option Incentive Scheme was reviewed and approved. As the 2019 AnnualProfit Distribution had been carried out, the exercise price for the Fourth Stock Option Incentive Schemewas revised from RMB30.22 to RMB28.63 per share. Meanwhile, it was agreed to adjust the incentiverecipients and their exercisable stock options for the Fourth Stock Option Incentive Scheme due to thedeparture, positional changes, low individual or business division performance appraisals or other factorsof some incentive recipients. Upon the adjustments, the number of locked-up stock options granted tothem was reduced from 26,740,000 to 23,867,600.b. The Proposal for Matters Related to the Stock Option Exercise for the Third Exercise Period of theFourth Stock Option Incentive Scheme was also reviewed and approved. Because the exerciseconditions have grown mature for the third exercise period, a total of 1,070 incentive recipients who havebeen verified for the Fourth Stock Option Incentive Scheme have been allowed to exercise 23,867,600stock options in the third exercise period (ended 11 May 2021).c. The Proposal for the Retirement of Unexercised Stock Options under the Fourth Stock Option IncentiveScheme upon Expiry was also reviewed and approved. As the Fourth Stock Option Incentive Schemeexpired on 11 May 2020, the Board of Directors of the Company agreed to retire the 19,500 and 30,000

stock options that had been previously granted to Huang Yongsong and Yu Shengming respectively butwere unexercised upon expiry.During the Reporting Period, 24,274,206 shares were exercised under the Fourth Stock Option IncentiveScheme.D. Overview of the Fifth Stock Option Incentive Schemea. The Company convened the 21st Meeting of the 3rd Board of Directors on 5 June 2020, at which theProposal for the Adjustment to the Exercise Price for the Fifth Stock Option Incentive Scheme and theProposal for the Adjustments to the Incentive Recipients and Their Exercisable Stock Options for the FirstPhase of the Grant under the Fifth Stock Option Incentive Scheme were reviewed and approved. As the2019 Annual Profit Distribution had been carried out, the exercise price for the first phase of the grantunder the Fifth Stock Option Incentive Scheme was revised from RMB55.04 to RMB53.45 per share, andthe exercise price for the reserved stock options from RMB45.87 to RMB44.28 per share. Meanwhile, itwas agreed to adjust the incentive recipients and their exercisable stock options for the Fifth Stock OptionIncentive Scheme due to the departure, positional changes, low individual or business divisionperformance appraisals or other factors of some incentive recipients. Upon the adjustments, the numberof locked-up stock options granted to them was reduced from 54,420,000 to 42,101,750.b. The Proposal for Matters Related to the Stock Option Exercise for the First Exercise Period of the FirstPhase of the Grant under the Fifth Stock Option Incentive Scheme was also reviewed and approved.Because the exercise conditions have grown mature for the first exercise period, a total of 1,044 incentiverecipients who have been verified for the Fifth Stock Option Incentive Scheme have been allowed toexercise 10,241,750 stock options in the first exercise period (ended 6 May 2021).During the Reporting Period, 9,110,719 shares were exercised under the Fifth Stock Option IncentiveScheme.E. Overview of the Sixth Stock Option Incentive Schemea. The Company convened the 21st Meeting of the 3rd Board of Directors on 5 June 2020, at which the

Proposal for the Adjustment to the Exercise Price for the Sixth Stock Option Incentive Scheme wasreviewed and approved. As the 2019 Annual Profit Distribution had been carried out, the exercise pricefor the Sixth Stock Option Incentive Scheme was revised from RMB52.87 to RMB51.28 per share.F. Overview of the Seventh Stock Option Incentive Schemea. On 28 April 2020, the Seventh Stock Option Incentive Scheme (Draft) of Midea Group Co., Ltd(hereinafter referred to as the “Seventh Stock Option Incentive Scheme (Draft)”) and its abstract werereviewed and approved at the 20th Meeting of the 3rd Board of Directors, and the incentive recipient listfor the Seventh Stock Option Incentive Scheme (Draft) was examined at the 14th Meeting of the 3rdSupervisory Committee.b. On 22 May 2020, the Company convened the 2019 Annual General Meeting of Shareholders, at whichthe Proposal on the Seventh Stock Option Incentive Scheme (Draft) and Its Abstract, the Proposal on theImplementation and Appraisal Measures for the Seventh Stock Option Incentive Scheme, the Proposalfor Asking the Meeting of Shareholders to Authorize the Board to Handle Mattes Related to the SeventhStock Option Incentive Scheme and other relevant proposals were reviewed and approved.For this Incentive Scheme, the Company intended to grant 65,260,000 stock options to 1,425 incentiverecipients with the exercise price being RMB52.02 per share.c. In light of the authorization given at the 2019 Annual General Meeting of Shareholders, the Companyconvened the 23rd Meeting of the 3rd Board of Directors on 5 June 2020, at which the Proposal for theAdjustments to the Exercise Price, Incentive Recipient List and Number of Stock Options to Be Grantedfor the Seventh Stock Option Incentive Scheme, the Proposal for the Determination of the Grant Date forthe Seventh Stock Option Incentive Scheme and the Proposal for the Grant-Related Matters for theSeventh Stock Option Incentive Scheme were reviewed and approved. As such, the Company agreed togrant stock options to incentive recipients on 5 June 2020 with the exercise price revised from RMB54.17per share to RMB52.87 per share. Due to 2 incentive recipients’ departure from the Company, they wereno longer eligible for the Seventh Stock Option Incentive Scheme and the stock options granted to themwere cancelled. Therefore, the Board adjusted the number of incentive recipients from 1,425 to 1,423,

and the number of stock options from 65,260,000 to 65,180,000.The Company originally intended to grant 65,260,000 stock options to 1,425 incentive recipients.However, due to 5 incentive recipients’ departure from the Company or being without a securities account,they were no longer eligible for the Seventh Stock Option Incentive Scheme. Therefore, the Boardadjusted the number of incentive recipients from 1,425 to 1,420, and the number of stock options from65,260,000 to 65,020,000. On 8 July 2020, the Company completed the registration of the grant of stockoptions under the Seventh Stock Option Incentive Scheme.d. In accordance with the Accounting Standard No. 11 for Business Enterprises—Share-Based Paymentsand the Accounting Standard No. 22 for Business Enterprises—Recognition and Measurement ofFinancial Instruments, the Company chose the Black-Scholes model to measure the fair value of stockoptions. Upon the measurement on 5 June 2020 of the fair value of the 65,180,000 stock options grantedby the Company using the said model, the theoretical value of these stock options wasRMB1,001,164,400, which would be amortized within the 36 months after the date of grant. The saidamortization of cost was expected to have an impact on the Company’s net profit of the current period tosome degree, but it would not affect the Company’s operating results to a great extent.G. Overview of the 2017 Restricted Share Incentive Schemea. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2017, 2018and 2019 Restricted Share Incentive Schemes was approved at the 17th Meeting of the 3rd Board ofDirectors on 10 January 2020. As such, it was agreed to repurchase and retire 679,000 restricted sharesthat had been granted to 16 personnel but were still in lockup, for the reasons of their departure from theCompany, violation of company rules, low individual performance appraisals, position change or otherfactors.Also, the Proposal on the Satisfaction of the Conditions for the Second Unlocking Period for the ReservedRestricted Shares of the 2017 Restricted Share Incentive Scheme was approved at the aforesaid meeting.A total of 42 personnel were eligible for this unlocking, with 1,340,750 restricted shares (0.02% of theCompany’s total existing share capital) unlocked and allowed for public trading on 19 February 2020, of

which senior management Xiao Mingguang unlocked 50,000 shares.b. The Company submitted the application to China Securities Depository and Clearing Co., Ltd.(Shenzhen branch) (hereinafter referred to as “CSDC Shenzhen”) for the retirement of the 679,000restricted shares under the 2017 Restricted Share Incentive Scheme that had been granted but were stillin lockup. On 10 March 2020, as confirmed by CSDC Shenzhen, the retirement of the said restrictedshares had been completed.c. The Company convened the 21st Meeting of the 3rd Board of Directors on 5 June 2020, at which theProposal for the Adjustment to the Repurchase Price for the 2017 Restricted Share Incentive Schemewas reviewed and approved. As the 2019 Annual Profit Distribution had been carried out, the repurchaseprice for the first phase of the grant was revised from RMB13.36 to RMB11.77 per share, and therepurchase price for the reserved restricted shares from RMB25.49 to RMB23.90 per share.Also, the Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2017Restricted Share Incentive Scheme was approved at the said meeting. As such, it was agreed torepurchase and retire 187,500 restricted shares that had been granted to 3 personnel but were still inlockup, for the reasons of their business unit’s 2019 performance appraisal result being “just so-so”, lowindividual performance appraisals for 2019, violation of company rules or other factors.Also, the Proposal on the Satisfaction of the Conditions for the Third Unlocking Period for the First Phaseof the Grant under the 2017 Restricted Share Incentive Scheme was approved at the aforesaid meeting.A total of 99 personnel were eligible for this unlocking, with 5,532,500 restricted shares (0.0790% of theCompany’s total existing share capital) unlocked and allowed for public trading on 22 June 2020, of whichsenior management Hu Ziqiang, Zhang Xiaoyi and Zhong Zheng unlocked 100,000, 70,000 and 60,000shares respectively.d. The Company submitted the application to CSDC Shenzhen for the retirement of the 187,500 restrictedshares under the 2017 Restricted Share Incentive Scheme that had been granted but were still in lockup.On 31 July 2020, as confirmed by CSDC Shenzhen, the retirement of the said restricted shares had beencompleted.

H. Overview of the 2018 Restricted Share Incentive Schemea. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2017, 2018and 2019 Restricted Share Incentive Schemes was approved at the 17th Meeting of the 3rd Board ofDirectors on 10 January 2020. As such, it was agreed to repurchase and retire 1,586,500 restricted sharesthat had been granted to 33 personnel but were still in lockup, for the reasons of their departure from theCompany, violation of company rules, low individual performance appraisals, position change or otherfactors.b. The Company submitted the application to CSDC Shenzhen for the retirement of the 1,586,500restricted shares under the 2018 Restricted Share Incentive Scheme that had been granted but were stillin lockup. On 10 March 2020, as confirmed by CSDC Shenzhen, the retirement of the said restrictedshares had been completed.c. The Company convened the 21st Meeting of the 3rd Board of Directors on 5 June 2020, at which theProposal for the Adjustment to the Repurchase Price for the 2018 Restricted Share Incentive Schemewas reviewed and approved. As the 2019 Annual Profit Distribution had been carried out, the repurchaseprice for the first phase of the grant was revised from RMB26.27 to RMB24.68 per share, and therepurchase price for the reserved restricted shares from RMB22.29 to RMB20.70 per share.Also, the Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2018Restricted Share Incentive Scheme was approved at the said meeting. As such, it was agreed torepurchase and retire 1,021,000 restricted shares that had been granted to 18 personnel but were still inlockup, for the reasons of their departure from the Company, position change, low individual performanceappraisals for 2019, violation of company rules or other factors.Also, the Proposal on the Satisfaction of the Conditions for the First Unlocking Period for the First Phaseof the Grant under the 2018 Restricted Share Incentive Scheme was approved at the aforesaid meeting.A total of231 personnel were eligible for this unlocking, with 3,704,125 restricted shares (0.0529% of theCompany’s total existing share capital) unlocked and allowed for public trading on 1 July 2020, of whichsenior management Hu Ziqiang, Xiao Mingguang, Zhang Xiaoyi and Zhong Zheng unlocked 25,000,

25,000, 25,000 and 20,000 shares respectively.d. The Company submitted the application to CSDC Shenzhen for the retirement of the 1,021,000restricted shares under the 2018 Restricted Share Incentive Scheme that had been granted but were stillin lockup. On 31 July 2020, as confirmed by CSDC Shenzhen, the retirement of the said restricted shareshad been completed.I. Overview of the 2019 Restricted Share Incentive Schemea. The Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2017, 2018and 2019 Restricted Share Incentive Schemes was approved at the 17th Meeting of the 3rd Board ofDirectors on 10 January 2020. As such, it was agreed to repurchase and retire 1,241,000 restricted sharesthat had been granted to 21 personnel but were still in lockup, for the reasons of their departure from theCompany, position change or other factors.b. The Company submitted the application to CSDC Shenzhen for the retirement of the 1,241,000restricted shares under the 2019 Restricted Share Incentive Scheme that had been granted but were stillin lockup. On 10 March 2020, as confirmed by CSDC Shenzhen, the retirement of the said restrictedshares had been completed.c. The Company convened the 21st Meeting of the 3rd Board of Directors on 5 June 2020, at which theProposal for the Adjustment to the Repurchase Price for the 2019 Restricted Share Incentive Schemewas reviewed and approved. As the 2019 Annual Profit Distribution had been carried out, the repurchaseprice was revised from RMB25.79 to RMB24.20 per share.Also, the Proposal on the Repurchase and Retirement of Certain Incentive Shares under the 2019Restricted Share Incentive Scheme was approved at the said meeting. As such, it was agreed torepurchase and retire 1,010,000 restricted shares that had been granted to 15 personnel but were still inlockup, for the reasons of their departure from the Company, position change, violation of company rulesor other factors.d. The Company submitted the application to CSDC Shenzhen for the retirement of the 1,010,000

restricted shares under the 2019 Restricted Share Incentive Scheme that had been granted but were stillin lockup. On 31 July 2020, as confirmed by CSDC Shenzhen, the retirement of the said restricted shareshad been completed.J. Overview of the 2020 Restricted Share Incentive Schemea. On 28 April 2020, the 2020 Restricted Share Incentive Scheme (Draft) of Midea Group Co., Ltd(hereinafter referred to as the “2020 Restricted Share Incentive Scheme (Draft)”) and its abstract werereviewed and approved at the 20th Meeting of the 3rd Board of Directors, and the incentive recipient listfor the 2020 Restricted Share Incentive Scheme (Draft) was examined at the 14th Meeting of the 3rdSupervisory Committee.b. On 22 May 2020, the Company convened the 2019 Annual General Meeting of Shareholders, at whichthe Proposal on the 2020 Restricted Share Incentive Scheme (Draft) and Its Abstract, the Proposal onthe Implementation and Appraisal Measures for the 2020 Restricted Share Incentive Scheme, theProposal for Asking the Meeting of Shareholders to Authorize the Board to Handle Mattes Related to the2020 Restricted Share Incentive Scheme and other relevant proposals were reviewed and approved. Forthis scheme, the Company intended to grant 34,180,000 restricted shares (0.49% of the Company’s totalexisting issued share capital) to 520 incentive recipients with the price being RMB26.01/share.c. In light of the authorization given at the 2019 Annual General Meeting of Shareholders, the Companyconvened the 21st Meeting of the 3rd Board of Directors on 5 June 2020, at which the Proposal for theAdjustment to the Grant Price of the 2020 Restricted Share Incentive Scheme, the Proposal for theDetermination of the Grant Date for the 2020 Restricted Share Incentive Scheme and the Proposal forthe Grant-Related Matters for the 2020 Restricted Share Incentive Scheme were reviewed and approved.As such, the Company agreed to grant 34,180,000 restricted shares to 520 incentive recipients on 5 June2020 under the said scheme with the price revised from RMB26.01 per share to RMB24.42 per share.d. The Company had intended to grant 34,180,000 restricted shares to 520 incentive recipients. However,after the date of grant, 14 incentive recipients left the Company or gave up subscription, and the 935,000restricted shares that had been granted to them were cancelled. As such, the Company actually granted

33,245,000 restricted shares to 506 incentive recipients, including 120,000 shares to senior managementWang Jinliang. Zhonghui Certified Public Accountants LLP issued on 6 July 2020 the Capital VerificationReport ZHKY [2020] No. 5044, verifying the payments as of 30 June 2020 by the 506 incentive recipientsfor share subscription under the 2020 Restricted Share Incentive Scheme. As verified, as of 30 June2020, the Company had received RMB811,842,900.00 from the 506 incentive recipients for restrictedshare subscription. After the grant, the total share capital of the Company remained the same, and therestricted shares rose by 33,245,000.00 due to the equity incentive and the unrestricted public sharesdecreased by 33,245,000.00.e. As per the CSRC’s Measures for the Administration of Equity Incentives of Listed Companies, and asconfirmed by the Shenzhen Stock Exchange and CSDC Shenzhen, the shares under the Company’s2020 Restricted Share Incentive Scheme had been registered and were allowed for public trading on 14July 2020.f. A total of 33,245,000 shares were granted under the 2020 Restricted Share Incentive Scheme, with adifference of approximately RMB918,226,900 between the amount received for the restricted sharesgranted and the share repurchase cost of approximately RMB1,730,069,800. As required by theAccounting Standard for Business Enterprises No. 37—Presentation of Financial Instruments, where afinancial instrument or a part thereof is an equity instrument, the issuer shall treat it as a change in equitywhen issuing (including refinancing), repurchasing, selling or cancelling the instrument. Meanwhile, inaccordance with the regulations concerning stock option incentives for employees through sharerepurchase in the Guidelines on the Application of the Accounting Standard for Business Enterprises No.11—Share-Based Payment, upon the receipt of employees’ payments for purchasing the enterprise’sshares in exercise, the enterprise shall write off the cost of treasury stock that is handed over toemployees and the cumulative capital surplus (other capital surplus) during the vesting period, and thedifference shall be treated as an adjustment to capital surplus (share premium). Therefore, theimplementation of the 2020 Restricted Share Incentive Scheme will not have a material impact on theoperating results of the Company.K. Overview of the Second Global Partner Stock Ownership Scheme

a. Under the Second Global Partner Stock Ownership Scheme, a total of 1,684,540 shares had beenvested in the Company’s incumbent senior management (FangHongbo, Yin Bitong, Gu Yanmin, Wang

Jianguo and Wang Jinliang), and a total of 1,179,170 shares had been vested in other incentive recipients,totaling 2,863,710 shares. The remaining unvested 1,010,880 shares and the corresponding dividends(if any) had been taken back by the administrative committee of this scheme for no compensation, andwould be sold at a proper timing before this scheme expired. The earnings on the sale would belong tothe Company.b. The Proposal on the Extended Duration of the Second Global Partner Stock Ownership Scheme wasapproved at the 18th Meeting of the 3rd Board of Directors on 22 February 2020. As proposed by theadministrative committee of this scheme, the Board agreed to extend the duration of this scheme fromfour years to five years, i.e. to 24 March 2021.c. The Company disclosed on 8 September 2020 the Announcement on the Completion of Share Clearing& Early Termination of the Second Global Partner Stock Ownership Scheme. As per the relevantprovisions of the Second Core Management and Global Partner Stock Ownership Scheme of MideaGroup Co., Ltd. (Draft), this scheme was completed and terminated ahead of schedule.As of the end of the Reporting Period, the Second Global Partner Stock Ownership Scheme wascompleted.L. Overview of the Third Global Partner Stock Ownership Schemea. The Company disclosed the Reminder of the Completion of Vesting under the Third Global PartnerStock Ownership Scheme & the Expiry of the Lockup Period on 2 June 2020. As such, the final 30%installment of shares under the Third Global Partner Stock Ownership Scheme had been vested, markingthe completion of this scheme. A total of 1,552,618 shares had been vested in the Company’s incumbentsenior management (Fang Hongbo, Yin Bitong, Gu Yanmin, Wang Jianguo, Wang Jinliang and XiaoMingguang), and a total of 718,800 shares had been vested in other incentive recipients, totaling2,271,418 shares. The remaining unvested 575,027 shares and the corresponding dividends (if any) hadbeen taken back by the administrative committee of this scheme for no compensation, and would be sold

at a proper timing before this scheme expired. The earnings on the sale would belong to the Company.As of the end of the Reporting Period, a total of 2,846,445 shares were held under the Third GlobalPartner Stock Ownership Scheme, representing 0.0405% of the Company’s total share capital.M. Overview of the Fourth Global Partner Stock Ownership Schemea. Under the Fourth Global Partner Stock Ownership Scheme, the total shares to be granted were2,714,700 shares (1,564,200 shares for senior management Fang Hongbo,Yin Bitong, Gu Yanmin, WangJianguo and Wang Jinliang, and the other 1,150,500 shares for other core management personnel). Dueto certain incentive recipients’ position change or departure from the Company in the duration of theFourth Global Partner Stock Ownership Scheme, there are remained 603,840 shares unallocated underthis scheme. As per the Fourth Global Partner Stock Ownership Scheme (Draft), these unallocatedshares and the corresponding dividends (if any) had been taken back by the administrative committee ofthis scheme for no compensation, and would be sold at a proper timing before this scheme expired. Theearnings on the sale would belong to the Company.As of the end of the Reporting Period, a total of 3,318,540 shares were held under the Fourth GlobalPartner Stock Ownership Scheme, representing 0.0472% of the Company’s total share capital.N. Overview of the First Business Partner Stock Ownership Schemea. Under the First Business Partner Stock Ownership Scheme, the total shares to be granted were1,151,687 shares (182,566 shares for senior management Zhang Xiaoyi, Xiao Mingguang, Hu Ziqiang,Liu Min and Jiang Peng, and the other 969,121 shares for other core management personnel). Due tocertain incentive recipients’ position change or departure from the Company in the duration of the FirstBusiness Partner Stock Ownership Scheme, there are remained 627,613 shares unallocated under thisscheme. As per the First Business Partner Stock Ownership Scheme (Draft), these unallocated sharesand the corresponding dividends (if any) had been taken back by the administrative committee of thisscheme for no compensation and belonged to the Company. In this case, the Company still had to returnthe performance bonuses corresponding to these unallocated shares under this scheme to the relevantsenior management.

As of the end of the Reporting Period, a total of 1,779,300 shares were held under the First BusinessPartner Stock Ownership Scheme, representing 0.0253% of the Company’s total share capital.O. Overview of the Fifth Global Partner Stock Ownership Schemea. The Company’s performance requirement for the Fifth Global Partner Stock Ownership Scheme is aweighted average ROE not lower than 20% for 2019. According to the 2019 Annual Auditor’s Report forMidea Group Co., Ltd. issued by PricewaterhouseCoopers China (LLP), this ROE requirement has beenmet at 26.43%.b. The Company disclosed the Announcement on the Share Allocation and Vesting under a Partner StockOwnership Scheme on 27 July 2020. A total of 3,732,075 of the Company’s shares were repurchased forthis scheme. As per the Fifth Global Partner Stock Ownership Scheme (Draft), the administrativecommittee of this scheme confirmed the number of shares to be granted to each partner, with the totalshares to be granted being 2,988,966 shares (2,001,374 shares for senior management Fang Hongbo,Yin Bitong, Gu Yanmin, Wang Jianguo and Zhang Xiaoyi, and the other 987,592 shares for other coremanagement personnel).Due to certain incentive recipients’ position change or departure from theCompany in the duration of the Fifth Global Partner Stock Ownership Scheme, there are remained743,109 shares unallocated under this scheme. As per the Fifth Global Partner Stock Ownership Scheme(Draft), these unallocated shares and the corresponding dividends (if any) had been taken back by theadministrative committee of this scheme for no compensation, and would be sold at a proper timing beforethis scheme expired. The earnings on the sale would belong to the Company.As of the end of the Reporting Period, a total of 3,732,075 shares were held under the Fifth Global PartnerStock Ownership Scheme, representing 0.0531% of the Company’s total share capital.P. Overview of the Second Business Partner Stock Ownership Schemea. The Company’s performance requirement for the Second Business Partner Stock Ownership Schemeis a weighted average ROE not lower than 20% for 2019. According to the 2019 Annual Auditor’s Reportfor Midea Group Co., Ltd. issued by PricewaterhouseCoopers China (LLP), this ROE requirement hasbeen met at 26.43%.

b. A total of 1,867,845 of the Company’s shares were repurchased for the Second Business Partner StockOwnership Scheme. As per the Second Business Partner Stock Ownership Scheme (Draft), theadministrative committee of this scheme confirmed the number of shares to be granted to each partner,with the total shares to be granted being 1,377,859 shares (220,124 shares for senior management WangJinliang, Xiao Mingguang, Liu Min, Jiang Peng and Zhong Zheng, and the other 1,157,735 shares forother core management personnel). Due to certain incentive recipients’ position change or departure fromthe Company in the duration of the Second Business Partner Stock Ownership Scheme, there areremained 489,986 shares unallocated under this scheme. As per the Second Business Partner StockOwnership Scheme (Draft), these unallocated shares and the corresponding dividends (if any) had beentaken back by the administrative committee of this scheme for no compensation and belonged to theCompany. In this case, the Company still had to return the performance bonuses corresponding to theseunallocated shares under this scheme to the relevant senior management.As of the end of the Reporting Period, a total of 1,867,845 shares were held under the Second BusinessPartner Stock Ownership Scheme, representing 0.0266% of the Company’s total share capital.Q. Overview of the Sixth Global Partner Stock Ownership Schemea. The Sixth Global Partner Stock Ownership Scheme was approved at the 20th Meeting of the 3rd Boardof Directors on 28 April 2020 and the 2019 Annual General Meeting of Shareholders on 22 May 2020.The shares for this scheme would be obtained from the Company’s securities account for repurchase ina non-transaction transfer and put into the securities account of “Midea Group Co., Ltd.—the SeventhEmployee Stock Ownership Scheme” for management.b. The Sixth Global Partner Stock Ownership Scheme was funded by the Company’s special fund ofRMB184.10 million for this scheme. With an average repurchase price of RMB52.04/share as the pricefor transferring the shares in the repurchase securities account to the securities account of the SixthGlobal Partner Stock Ownership Scheme, the shares to be transferred would be 3,537,663.c. According to the Confirmation of Securities Transfer received by the Company from CSDC Shenzhenon 13 July 2020, 3,537,663 shares (0.0504% of the Company’s total existing share capital) had been

transferred from the Company’s securities account for repurchase to the securities account of “MideaGroup Co., Ltd.—the Seventh Employee Stock Ownership Scheme” in a non-transaction transfer on 10July 2020. As required by the Sixth Global Partner Stock Ownership Scheme (Draft), the sharestransferred to the securities account of the Sixth Global Partner Stock Ownership Scheme would belocked up from 14 July 2020 to 13 July 2021.As of the end of the Reporting Period, a total of 3,537,663 shares were held under the Sixth GlobalPartner Stock Ownership Scheme, representing 0.0503% of the Company’s total share capital.R. Overview of the Third Business Partner Stock Ownership Schemea. The Third Business Partner Stock Ownership Scheme was approved at the 20th Meeting of the 3rdBoard of Directors on 28 April 2020 and the 2019 Annual General Meeting of Shareholders on 22 May2020. The shares for this scheme would be obtained from the Company’s securities account forrepurchase in a non-transaction transfer and put into the securities account of “Midea Group Co., Ltd.—the Eighth Employee Stock Ownership Scheme” for management.b. The Third Business Partner Stock Ownership Scheme was funded by the Company’s special fund andthe performance bonuses for senior management of RMB97.50 million. With an average repurchase priceof RMB52.04/share as the price for transferring the shares in the repurchase securities account to thesecurities account of the Third Business Partner Stock Ownership Scheme, the shares to be transferredwould be 1,873,559.c. According to the Confirmation of Securities Transfer received by the Company from CSDC Shenzhenon 16 July 2020, 1,873,559 shares (0.0267% of the Company’s total existing share capital) had beentransferred from the Company’s securities account for repurchase to the securities account of “MideaGroup Co., Ltd.—the Eighth Employee Stock Ownership Scheme” in a non-transaction transfer on 15July 2020. As required by the Third Business Partner Stock Ownership Scheme (Draft), the sharestransferred to the securities account of the Third Business Partner Stock Ownership Scheme would belocked up from 17 July 2020 to 16 July 2021.As of the end of the Reporting Period, a total of 1,873,559 shares were held under the Third Business

Partner Stock Ownership Scheme, representing 0.0267% of the Company’s total share capital.

16. Significant Related Transactions

16.1 Related transactions arising from routine operation

√Applicable □N/A

transactionparty

Relation

RelatedType of

thetransactionContent

transac

tion

PricingprincipleTrans

s of theaction

price

Transacti

onamount(RMB’000

)

Propo

rtionin thetotalamounts oftransaction

samekind(%)

Approvedtransaction

line(RMB’000)

Overappro

vedline

of theMode of

settlement

Obtaina

blemarket

pricefor thetransaction of

thesame

kind

Disclos

uredate

disclo

sedinformation

InforeEnvironmentTechnologyGroupCo.,Ltd.

Controlled byfamilymember ofCompany’sactualcontroller

Procurement

Procurement ofgoods

Market price

- 951,20

Index to the
1

0.48%

1,500,000

No

Payment afterdelivery

-

2020-4-

www.cninfo.com.cn

Orinko

Plastics

Group

Controlled byfamilymember ofCompany’sactualcontroller

Procurement

Procurement ofgoods

Market price

- 1,238,81

0.62%

7

1,700,000

No

Payment afterdelivery

-

2020-4-

www.cninfo.com.cn

MideaRealEstate

Controlled byCompa

Sale

Sale ofgoods

Market price

198,90

3

0.07%

4,710,00

No

Payment afterdelivery

-2020-4-

www.cninfo.com.

Limited

ny’sactualcontroller

cn

Total -- --2,388,921

Holding

-- 3,671,000

--

-- --Details of any sales return of alarge amount

ZeroGive the actual situation in theReporting Period (if any) where aforecast had been made for thetotal amounts of routine related-party transactions by type tooccur in the current period

The line for routine related transactions between the Company and the related

parties and their subsidiaries did not exceed the total amount of routine related

transactions estimated by the Company by type.Reason for any significantdifference between thetransaction price and the marketreference price (if applicable)

N/A

16.2 Related transactions regarding purchase or sales of assets or equity interests

□Applicable √N/A

No such cases in the Reporting Period.

16.3 Related transactions arising from joint investments in external parties

□Applicable √N/A

No such cases in the Reporting Period.

16.4 Credits and liabilities with related parties

□Applicable √N/A

No such cases in the Reporting Period.

16.5 Other significant related transactions

√Applicable □N/A

a. The Proposal for Related Transactions with Shunde Rural Commercial Bank in 2020 was reviewedand approved at the 20th Meeting of the 3rd Board of Directors held on 28 April 2020 and later at the

2019 Annual General Meeting of Shareholders held on 22 May 2020.In 2020, the deposit balance of the Company in Shunde Rural Commercial Bank shall not exceed RMB7billion and neither shall the credit balance provided by the bank to the Company exceed RMB7 billion.Meanwhile, the total amount of notes discounted by the Company for the bank and loans from the formerto the latter shall not exceed RMB2 billion in the year.Index to the announcement about the said related transactions disclosed

Title of announcement Disclosure date Disclosure websiteAnnouncement on Related Transactions with Rural

Commercial Bank in 2020

30/04/2020 www.cninfo.com.cn

There were no other significant related transactions in the Reporting Period.

17. Significant Contracts and Their Execution

17.1 Trusteeship, contracting and leasing

17.1.1 Trusteeship

□Applicable √N/A

No such cases in the Reporting Period.

17.1.2 Contracting

□Applicable √N/A

No such cases in the Reporting Period.

17.1.3 Leasing

□Applicable √N/A

No such cases in the Reporting Period.

17.2 Major Guarantees

√Applicable □N/A

17.2.1 Guarantees provided

Unit: RMB'000Guarantees provided by the Company and its subsidiaries for external parties (excluding those for subsidiaries)

Guaranteed party

Disclosure date oftheguarantee lineannouncement

Line ofguarantee

Actual

date (date

ofagreement

signing)

Actualguarantee amount

occurrence

Type ofguarantee

Termofguarantee

Due

Guar

or notantee

for arelated

or not

No such casesTotal external guarantee line approved during theReporting Period (A1)

Total actual externalguarantee amount during

the Reporting Period (A2)

Total approved external guarantee line at the end ofthe Reporting Period (A3)

Total actual externalguarantee balance at theend of the ReportingPeriod (A4)

Guarantees provided by the Company for its subsidiaries

Guaranteed party

Disclosuredate of theguarantee

lineannounce

ment

Line ofguarantee

Actual

occurrence

date (dateofagreement

signing)

Actualguarantee

amount

Type ofguarantee

occurrence

Termofguarantee

Due

Guar

or notantee

for arelate

d

or not

Midea Group Finance Co., Ltd.2020-4-30 9,900,000

-

Joint liability

Oneyear

No NoGD Midea Air-

Conditioning Equipment

Co.,Ltd.

2020-4-30 14,882,200

2020-1-16 2,629,620

Joint liability

Oneyear

No NoGuangzhou Hualing RefrigeratingEquipment Co.,ltd.

2020-4-30 1,163,000

Joint liability

Oneyear

No NoFoshan Midea Carrier Air-

Conditioning

Equipment Co., Ltd.

2020-4-30 361,200

-

Joint liability

Oneyear

No NoGuangdong Midea Precision MoldingTechnology Co., Ltd.

2020-4-30 62,700

-

Joint liability

Oneyear

No No

Guangdong Midea Kitchen Appliances

Manufacturing Co., Ltd.

2020-4-30 5,190,000

2020-1-9

1,493,010

Joint liability

Oneyear

No NoGuangdong Witol Vacuum ElectronicManufacture Co.,Ltd

2020-4-30 100,000

2020-1-22

10,330

Joint liability

Oneyear

No No

GD Midea Heating & VentilatingEquipment Co., Ltd.

2020-4-30 2,000,000

2020-1-10

60,500

Joint liability

Oneyear

No NoGuangdong Midea-SIIX ElectronicsCo., Ltd.

2020-4-30 150,000

-

Joint liability

Oneyear

No NoGuangdong Midea Commercial Air-Conditioning Equipment Co., Ltd.

2020-4-30 200,000

-

Joint liability

Oneyear

No NoGuangdong Midea Consumer ElectricManufacturing Co., Ltd.

2020-4-30 290,000

2020-1-19

Joint liability

Oneyear

No NoFoshan Shunde Midea ElectricalHeating Appliances ManufacturingCo., Ltd.

2020-4-30 1,210,000

2020-1-13

Joint liability

Oneyear

No NoGD Midea Environment AppliancesMfg. Co.,Ltd.

2020-4-30 420,000

-

Joint liability

Oneyear

No NoGuangdong Midea Cuchen CompanyLtd.

2020-4-30 5,000

-

Joint liability

Oneyear

No NoGD Midea Caffitaly Coffee MachineManufacturing Co., Ltd.

2020-4-30 15,000

-

Joint liability

Oneyear

No NoMain Power Inno Tech (Shenzhen)Manufacturing Co., Ltd.

2020-4-30 45,000

-

Joint liability

Oneyear

No NoFoshan Shunde Midea WashingAppliances Manufacturing Co., Ltd.

2020-4-30 2,200,000

2020-1-6

166,230

Joint liability

Oneyear

No NoGuangdong Midea Kitchen & BathAppliances Manufacturing Co., Ltd.

2020-4-30 436,000

-

Joint liability

Oneyear

No NoFoshan Shunde Midea WaterDispenser Manufacturing CompanyLimited

2020-4-30 710,000

2020-2-13

9,010

Joint liability

Oneyear

No NoFoshan Midea Chungho WaterPurification Equipment. Co., Ltd.

2020-4-30 142,000

-

Joint liability

Oneyear

No NoGuangdong Meizhi CompressorLimited

2020-4-30 230,000

2020-1-17

2,950

Joint liability

Oneyear

No NoGuangdong Meizhi Precision-Manufacturing Co., Ltd

2020-4-30 90,000

-

Joint liability

Oneyear

No NoGuangdong Welling MotorManufacturing Co., Ltd.

2020-4-30 230,000

2020-2-5

5,340

Joint liability

Oneyear

No NoFoshan Welling Washer MotorManufacturing Co., Ltd.

2020-4-30 350,000

2020-1-2

2,090

Joint liability

Oneyear

No NoGuangdong Midea EnvironmentalTechnologies Co., Ltd.

2020-4-30 50,000

-

Joint liability

Oneyear

No NoGuangdong Welling Auto Parts Co.,2020-4-30 20,000

-

Joint liabilityOneNo No

Ltd. year

Co. Ltd.

2020-4-30 1,070,000

Ningbo Midea United Materials Supply

2020-1-10

154,350

Joint liability

Oneyear

No NoGuangzhou Kaizhao Commercial andTrading Co.,Ltd

2020-4-30 75,500

-

Joint liability

Oneyear

No No

Guangdong Midea Intelligent Robotics

Co., Ltd.

2020-4-30 50,000

-

Joint liability

Oneyear

No NoServotronix Motion TechnologyDevelopment (Shenzhen) Ltd.

2020-4-30 10,000

-

Joint liability

Oneyear

No NoMidea Group E-Commerce Co., Ltd.2020-4-30 130,000

-

Joint liability

Oneyear

No NoAnnto Logistics Technology Co., Ltd. 2020-4-30 1,430,000

2020-2-25

616,930

Joint liability

Oneyear

No NoGuangdong Midea Smart LinkTechnologies Co., Ltd.

2020-4-30 41,200

2020-3-23

3,610

Joint liability

Oneyear

No NoGD Midea Group Wuhu Air-Conditioning Equipment Co.,Ltd.

2020-4-30 1,100,000

-

Joint liability

Oneyear

No NoWuhu Maty Air-ConditioningEquipment Co., Ltd

2020-4-30 800,000

-

Joint liability

Oneyear

No NoWuhu Midea Kitchen AppliancesManufacturing Co., Ltd.

2020-4-30 4,020,000

-

Joint liability

Oneyear

No NoHefei Hualing Co., Ltd.2020-4-30 1,700,000

2020-2-3

3,710

Joint liability

Oneyear

No NoHubei Midea Refrigerator Co., Ltd. 2020-4-30 230,000

2020-4-10

-

Joint liability

Oneyear

No NoHefei Midea Refrigerator Co., Ltd.2020-4-30 903,000

-

Joint liability

Oneyear

No NoGuangzhou Midea HualingRefrigerator Co., Ltd.

2020-4-30 1,345,000

2020-3-19

1,030

Joint liability

Oneyear

No NoHefei Midea Heating & VentilatingEquipment Co., Ltd.

2020-4-30 548,000

2020-3-13

Joint liability

Oneyear

No NoHefei Midea-SIIX Electronics Co.,Ltd. 2020-4-30 230,000

-

Joint liability

Oneyear

No NoHefei M&B Air ConditioningEquipment Co., Ltd.

2020-4-30 40,800

2020-4-14

Joint liability

Oneyear

No NoWuhu Midea Life Appliances Mfg Co.,Ltd.

2020-4-30 2,000,000

2020-6-22

902,850

Joint liability

Oneyear

No NoWuhu Midea Kitchen & BathAppliances Mfg. Co., Ltd.

2020-4-30 1,930,000

2020-2-13

11,030

Joint liability

Oneyear

No No

Anhui Meizhi Compressor Co., Ltd.2020-4-30 110,000

2020-3-12

Joint liability

Oneyear

No NoAnhui Meizhi Precision ManufacturingCo., Ltd.

2020-4-30 60,000

2020-2-12

Joint liability

Oneyear

No NoWelling (Wuhu) Motor ManufacturingCo., Ltd.

2020-4-30 10,000

2020-5-18

1,310

Joint liability

Oneyear

No NoWuhu Welling Motor Sales Co., Ltd. 2020-4-30 800,000

-

Joint liability

Oneyear

No NoAnhui Welling Auto Parts Co. , Ltd. 2020-4-30 50,000

2020-1-10

2,820

Joint liability

Oneyear

No NoWuxi Little Swan General ApplianceCo., Ltd.

2020-4-30 100,000

2020-2-25

-

Joint liability

Oneyear

No NoWuxi Little Swan Electric Co., Ltd. 2020-4-30 2,000,000

2020-1-31

8,550

Joint liability

Oneyear

No NoHefei Midea Laundry Appliance Co.,Ltd.

2020-4-30 1,180,000

2020-1-21

5,760

Joint liability

Oneyear

No NoJiangsu Midea Cleaning AppliancesCo., Ltd

2020-4-30 90,000

-

Joint liability

Oneyear

No NoMidea Group Wuhan RefrigerationEquipment Co.,Ltd.

2020-4-30 63,800

-

Joint liability

Oneyear

No NoHandan Midea Air-ConditioningEquipment Co.,Ltd.

2020-4-30 110,000

-

Joint liability

Oneyear

No NoChongqing Midea GeneralRefrigeration Equipment Co., Ltd.

2020-4-30 180,000

2020-3-10

3,780

Joint liability

Oneyear

No NoMidea Intelligent Lighting & ControlsTechnology Co., Ltd.

2020-4-30 261,000

2020-3-11

-

Joint liability

Oneyear

No NoChangzhou Welling MotorManufacturing Co., Ltd.

2020-4-30 5,000

-

Joint liability

Oneyear

No NoHuaian Welling Motor ManufacturingCo., Ltd.

2020-4-30 10,000

2020-4-24

Joint liability

Oneyear

No NoZhejiang Meizhi Compressor Co., Ltd.

2020-4-30 3,000,000

2020-3-13

2,006,340

Joint liability

Oneyear

No NoNingbo Annto Logistics Co., Ltd.2020-4-30 10,000

-

Joint liability

Oneyear

No NoReis Robotics (Kunshan) Co., Ltd. 2020-4-30 120,750

-

Joint liability

Oneyear

No NoKUKA Systems (China) CO., Ltd. 2020-4-30 245,000

2020-1-16

78,400

Joint liability

Oneyear

No No

KUKA Robotics Manufacturing ChinaCo.,Ltd

2020-4-30 115,000

-

Joint liability

Oneyear

No NoKUKA Robotics (Shanghai) Co.,Ltd. 2020-4-30 115,000

-

Joint liability

Oneyear

No NoShanghai Swisslog Healthcare Co.,Ltd.

2020-4-30 8,000

-

Joint liability

Oneyear

No NoSwisslog (Shanghai) Co., Ltd. 2020-4-30 110,000

2020-1-13

41,750

Joint liability

Oneyear

No NoShanghai Swisslog LogisticsAutomation Co. Ltd.

2020-4-30 60,000

-

Joint liability

Oneyear

No NoMidea International CorporationCompany Limited

2020-4-30 11,830,000

2020-1-17

7,803,910

Joint liability

Oneyear

No NoMidea International Trading CompanyLimited

2020-4-30 2,222,430

2020-1-2

-

Joint liability

Oneyear

No NoWelling International Hong Kong Ltd 2020-4-30 182,000

-

Joint liability

Oneyear

No NoMidea Electric Trading (Singapore)Co.,Pte. Ltd.

2020-4-30 4,996,000

2020-1-3

361,400

Joint liability

Oneyear

No No

Corporation and its subsidiaries

2020-4-30 2,667,450

Toshiba Lifestyle Products & Services

2020-1-3

582,950

Joint liability

Oneyear

No NoOrient Household AppliancesLtd.(Orient)

2020-4-30 120,000

2020-1-31

-

Joint liability

Oneyear

No NoMidea Consumer Electric Vietnam 2020-4-30 112,000

-

Joint liability

Oneyear

No NoConcepcion Midea Inc. 2020-4-30 112,000

2020-3-24

-

Joint liability

Oneyear

No NoMidea Italia S.R.L. 2020-4-30 140,000

-

Joint liability

Oneyear

No NoMidea Scott & English ElectronicsSdn. Bhd.

2020-4-30 206,500

2020-1-30

-

Joint liability

Oneyear

No NoMidea Mexico, S. De R.L. De C.V. 2020-4-30 180,000

2020-3-13

-

Joint liability

Oneyear

No NoMidea Electric Trading (Thailand)Co.,Ltd.

2020-4-30 105,000

-

Joint liability

Oneyear

No NoMidea America Corp 2020-4-30 669,000

2020-2-10

-

Joint liability

Oneyear

No NoPt. Midea Planet Indonesia 2020-4-30 56,000

2020-1-15

-

Joint liability

Oneyear

No No

Midea Electrics Egypt 2020-4-30 175,000

-

Joint liability

Oneyear

No NoMidea Europe Gmbh 2020-4-30 70,000

-

Joint liability

Oneyear

No NoMidea America (Canada) Corp 2020-4-30 70,000

-

Joint liability

Oneyear

No NoServotronix Motion Control Ltd. 2020-4-30 940

-

Joint liability

Oneyear

No NoMidea Austria Gmbh 2020-4-30 5,700

-

Joint liability

Oneyear

No NoClivet Spa 2020-4-30 79,300

-

Joint liability

Oneyear

No NoMidea Electric Netherland (I) 2020-4-30 31,446,110

2020-1-1

28,856,400

Joint liability

Oneyear

No NoTotal guarantee line for subsidiaries approvedduring the Reporting Period (B1)

122,364,580

Total actual guaranteeamount for subsidiariesduring the ReportingPeriod (B2)

68,421,730

Total approved guarantee line for subsidiaries atthe end of the Reporting Period (B3)

122,364,580

Total actual guaranteebalance for subsidiariesat the end of theReporting Period (B4)

45,827,970

Guarantees between subsidiaries

Guaranteed party

Disclosure date of

theguarante

e lineannounce

ment

Line ofguarante

e

Actual

date (date

ofagreement

signing)

Actualguarantee amount

occurrence

Type ofguarantee

Term

ofguarantee

Due

Guar

or notantee

for arelated

or not

No such casesTotal guarantee amount (total of the above-mentioned three kinds of guarantees)Total guarantee line approved during the ReportingPeriod (A1+B1+C1)

122,364,580

Total actual guaranteeamount during theReporting Period(A2+B2+C2)

68,421,730

Total approved guarantee line at the end of theReporting Period (A3+B3+C3)

122,364,580

Total actual guaranteebalance at the end of theReporting Period(A4+B4+C4)

45,827,970

Proportion of the total actual guarantee amount (A4+B4+C4) in net assetsof the Company

39.00%

Of which:

Amount of guarantees provided for shareholders, the actual controller andtheir related parties (D)

Amount of debt guarantees provided directly or indirectly for entities with aliability-to-asset ratio over 70% (E)

37,095,660

Portion of the total guarantee amount in excess of 50% of net assets (F) 0

Total amount of the three kinds of guarantees above (D+E+F) 37,095,660

Joint responsibilities possibly borne for undue guarantees (if any)

Provision of external guarantees in breach of the prescribed procedures (ifany)

N/A

N/A

17.2.2 Illegal provision of guarantees for external parties

□ Applicable √ N/A

No such cases in the Reporting Period.

17.3 Entrusted cash management

17.3.1 Entrusted asset management

□ Applicable √ N/A

No such cases in the Reporting Period.

17.3.2 Entrusted loans

□ Applicable √ N/A

No such cases in the Reporting Period.

17.4 Other significant contracts

□ Applicable √ N/A

No such cases in the Reporting Period.

18. Social Responsibility (CSR)

18.1 Measures taken to fulfill CSR commitment

The Company has voluntarily disclosed its CSR work. Attaching great importance to protecting the legalrights and interests of its shareholders, employees, consumers and business partners, as well as thegovernment, the community and other stakeholders, the Company sticks to harmonious common growthwith them, honors its commitments, abides by law and moral principles, and continue to contribute to thesustainable development of the society and the environment. For further information, see the Company’sCorporate Social Responsibility Report 2020 released on www.cninfo.com.cn.

18.2 Measures taken for targeted poverty alleviation

A. Summary of the work done for targeted poverty alleviation during the yearIn 2020, Midea provided counterpart aid funds of RMB9.60 million, RMB5 million and RMB1.13 millionrespectively to Leizhou and Xuwen in Zhanjiang City and Liangshan Yi Autonomous Prefecture in SichuanProvince for local industrial development, education improvement, infrastructure improvement, livingenvironment improvement and other poverty alleviation purposes. By doing so, it has provided strongsupport to help lift registered impoverished households from poverty and win the battle against povertynationwide.During the COVID-19 pandemic, Midea Group was amongst the first companies to respond andparticipate in frequent support missions. It has donated anti-pandemic materials and home appliancesworth approximately RMB116 million in total to Hubei Province, Guangdong Province, Shanghai, etc.,making a contribution in the fight against the pandemic.

Indicator

Measurementunit

Quantity/ProgressI General information —— ——Of which: 1. Monetary inputs RMB’00015,730

2. Supplies converted to cash RMB’000

3. Number of registered impoverished individuals that

the Company has helped lift from poverty

Person22,730

II Inputs by item —— ——

1. Poverty alleviation through industrial development —— ——Of which: 1.1Type of poverty alleviation projects throughindustrial development

—— Helping develop tourism

1.2 Number of poverty alleviation projects through

industrial development

Number ofproject

1.3 Input amount to poverty alleviation projects through

industrial development

RMB’000 3,995

1.4 Number of registered impoverished individuals that

the Company has helped lift from poverty

Person 6,344

2. Poverty alleviation through labor migration —— ——

3. Poverty alleviation through relocation —— ——

4. Poverty alleviation through education —— ——Of which: 4.1 Input amount for impoverished students RMB’000

4.2 Number of students that the Company has helped Person

4.3 Input amount

impoverished areas

RMB’000 1,924.4

5. Poverty alleviation through improving health conditions —— ——

6. Poverty alleviation through improving environment —— ——Of which: 6.1 Type of project —— Improving environment

6.2 Input amount RMB’000 160

7. Assurance of minimum living standard —— ——

8. Social assistance in poverty alleviation —— ——Of which 8.1 Input amount for poverty alleviation in East andWest China

RMB’000 1,130

8.2 Input amount for fixed-point poverty alleviation RMB’000

8.3 Input amount to poverty alleviation public welfare

foundations

RMB’000

9. Other projects —— ——Of which 9.1 Number of projects

Number ofproject

9.2 Input amount RMB’000 8,520.6

9.3 Number of registered impoverished individuals that

the Company has helped lift from poverty

Person 17,560III Awards received (content, level) —— ——

16.2.2 Targeted poverty alleviation plans for the coming future

Midea Group will follow the relevant requirements of the Party and the government to continue to solidifyand expand the achievements in the targeted poverty alleviation campaign, and play its part in therevitalization of the countryside. It will continue to spread positive energy, motivate those who have beenlifted from poverty towards a better life, as well as boost the sense of fulfillment, happiness and the senseof pride among them.

18.3 Environmental protection

Whether the Company or any of its subsidiaries is declared a heavily polluting business by the environmental protection authorities

√ Yes □ N/A

Name of

theCompan

y orsubsidiary

Majorpollutants

Discharge method

Number ofdischargeoutletsDistribution of discharge

outlets

Concentrat

of thedischarge(unit: mg/m?)

Pollutant dischargestandards

Totaldischarge

(ton)

Approve

d totaldischarg

e (ton)

ExcessdischargeFoshanShunde

Midea

ion
Washing

Applianc

esManufact

uringCo., Ltd.

(the

andSterilizingAppliances Park)

COD

Discharge after being treated bywastewater treatment system andreaching the standard

The southern side of 2#plant in the Washing andSterilizing Appliances Park

Washing

The discharge limits of

water pollutants inGuangdong (DB44/26-

2001)

0. 1620 0.228 No

SS 29 0.0224 / NoBOD5 16 0.1320 / NoPetroleum 2.77 0.0035 / NoBenzene

High altitude discharge after beingtreated by waste gas treatment station

The southern side of 2#plant in the Washing andSterilizing Appliances Park

1.0×10

-2

Emission standard of

for furniture manufacturing(DB44/814-2010)

0.02 / No

volatile organic compounds

Toluene and

xylene

2.13 0.1843 / No

VOCS 16.1 0.75 / No

FoshanShundeMidea

Applianc

esManufacturingCo., Ltd.(theRangeHoodandStovePark)

COD

Discharge to the municipal sewagesystem after being treated bywastewater treatment system

The northeastern side of2# plant in the ThirdIndustrial Zone

The discharge standard ofwater pollutants forelectroplating inGuangdong (DB441597-

2015)

0.3846 2.41 No

SS 25 0.15 / NoPetroleum 0.16 0.0013 / NoAmmonianitrogen

1.72 0.0183 0.45 NoBenzene

High altitude discharge after beingtreated by waste gas treatment station

Washing

The northern and eastern

sides of 2# plant in theThird Industrial Zone

1.0×10

-2

Emission standard of airpollutants for industrial kilnand furnace (GB-9078-1996) / The emission limit

of gas pollutants in

Guangdong(DB-44/27-

2007)

0.02 / No

Toluene and

xylene

1.35 0.0686 / NoVOCS 25.9 0.9365 / No

Soot 14.5 0.0732 / NoSulfurdioxide

Less than the

limit of 3

0.02 0.114 No

Nitrogen

oxide

41 0.64 0.726 No

WuhuMideaKitchen& BathAppliances Mfg.Co., Ltd.

COD

Discharge after being treated bywastewater treatment system andreaching the standard

Toluene andWestern gate of the Wuhu

plant

Integrated wastewater

discharge standard(GB8978-1996)

135.07 / No

Ammonianitrogen

1.34 6.78 / NoBOD

47.4 73.46 / NoPetroleum 0.24 0.31 / No

Soot

15m high altitude discharge 45Plants

<20

Emission standard of air

pollutants for boiler(GB13271-2014)

0.005 / No

Sulfurdioxide

<50 / / NoNitrogenoxide

<150 0.102 / No

Soot

High altitude discharge after beingtreated by waste gas treatment station

<50

Integrated emissionstandards for atmosphericpollutants(GB16297-

1996)

0.93 / No

Xylene <10 0.032 / NoVOCs <20 0.0687 / No

HefeiMideaHeating

&Ventilatin

gEquipme

nt Co.,Ltd.

COD

Discharge after being treated bywastewater treatment system andreaching the standard

The eastern side of 1#

plant

Implementation of thetakeover standards of theWestern Hefei Group

wastewater treatment plant

and integrated wastewater

discharge standard(GB8978-1996) third-level

3.89 / No

Ammonianitrogen

0.083 0.0807 / No

NMHC

RTO equipment 1

1 set at the northeastern

side of 3# plant

4.21

Integrated emissionstandards for atmosphericpollutants GB16297-1996

second-level

0.124

/ NoCondensation + degreasing + filtering

+ activated carbon + catalytic

combustion equipment

1 set at the southwestern

side of 4# plant

1.85 0.054Water spraying + activated carbon

equipment

2 sets at 1# plant and 1

set at 2# plant

6.5 0.19UV + activated carbon equipment 1 1 set at 2# plant 3.1 0.09Particles Filter cartridge dust collector 3

2 at 2# plant and 1 at 4#

plant

30 0.45 / No

HefeiMidea

COD

Discharge after being treated bywastewater treatment station

The eastern side ofwastewater treatment

station

Implementation of thetakeover standards of the

Western Hefei Group

25.000

58.150 No

LaundryApplianc

e Co.,

Ltd.(monitor

municipalgovernm

ent)

Ammonianitrogen

The eastern side ofwastewater treatment

station

1.5

ed by thewastewater treatment plant

and integrated wastewaterdischarge standard(GB8978-1996) third-level

0.6 / No

Particles

treated by cyclone + filter cartridge

dust collector

1 outlet at 2# plant, 1outlet at 6# plant

<20

Table 5 of the EmissionStandards of IndustrialPollutants in the SyntheticResin Industry (GB 31572-2015): Special EmissionLimit Requirements

3.12 / No

Particles

15m high altitude discharge after being
15m high altitude discharge after being

treated by water spraying + dedusting+ UV photolysis + activated carbon

1 outlet at 3# plant

<20 1.27 / NoNMHC 1.46 0.1 / NoNMHC

treated by waste gas treatment station

3 1 outlet at 2# plant 2.25 2.00 / NoNMHC

15m high altitude discharge

treated by waste gas treatment station

6 outlets at 6# plant

1.11 2.69 / NoNMHC

treated by low-temperature plasma

1 outlet at 1# plant, 1outlet at 5# plant

2.215 0.16 / NoNMHC

15m high

15m high altitude discharge after being
altitude discharge after being treated by photocatalyst and activated

carbon

1 1 outlet at 3# plant 4.3 0.85 / No

GDMidea

Air-Conditio

ningEquipme

nt

COD

Discharge after being treated by

wastewater treatment station

The southeastern side of

4# plant

The discharge standard of

water pollutants forelectroplating (DB441597-

2015) chart 2 PRD

standard

13.89 / No

Ammonianitrogen

1.75 0.46 1.510 NoSS 19 3.56 / NoPetroleum 3.63 0.68 / No

CODDischarge after being treated by

The eastern side of 2#

The discharge limits of

5.6 9.59 No

Co.,Ltd.

SS

wastewater treatment station plant

water pollutants(DB44/26-2001)

1.6 / No

Ammonianitrogen

3.9 0.013 / NoPetroleum 6.22 3.88 / No

VOCs(dusting)

15m high altitude

treated by spray tower + activated

carbon

3 4# plant 22

Emission standard of

discharge after beingvolatile organic compounds

for furniture manufacturing(DB44/814-2010) the

second time period

4.12

/

No

VOCs

(screenprinting)

15m high altitude discharge

treated by environmental protection

equipment

4 1#, 5#, 9#, 11# plants 1.79

Emission standard of

after beingvolatile organic compounds

for printing industry(DB44/815-2010)

0.224 No

NMHC

&condenser)

(evaporator15m high altitude discharge after being

treated by environmental protection

equipment

2 10# plants 30

Emission standard of

for printing industry(DB44/815-2010)Emission limits of airpollutants(DB44/27-2001)the second time

period

15 / No

NMHC(electronic)

15m high

volatile organic compounds

altitude discharge after being

treated by environmental protection

equipment

6 2#, 5# plants 26.7 18.32 / No

WuhuMaty Air-Conditio

ningEquipme

COD

Discharge after being treated bywastewater treatment station

The northern side of the

park

Integrated wastewater

discharge standard(GB8978-1996)chart 4

third-level

11.66 / No

SS 50 12.7 / NoBOD 9 2.3 / NoAmmonianitrogen

35 9.6 / No

nt Co.,

Ltd

Petroleum 0.5 0.1 / No

Particles

treated by environmental protection

equipment

5 2# plant <20

Integrated emissionstandards for atmosphericpollutants(GB16297-

1996)

1.52 / No

VOCs 8 2#, 3# plants 19

15m high altitude discharge after beingEmission Control Standard

for Industrial EnterprisesVolatile OrganicCompounds (DB13-2322-

2016)

14.9 / No

NOX 3 3# plant 17

Integrated emissionstandards for atmosphericpollutants(GB16297-

1996)

1.22 / No

SO

3 3# plant 8 0.45 / No

Guangdo

ngMeizhiPrecision

-Manufact

uringCo., Ltd

COD

Discharge after being treated bywastewater treatment station

Near the wastewatertreatment station in thenorth side of the plant

The discharge limits of

water pollutants inGuangdong DB-44/26-2001 the second time

period first-level

12.43 16.28 No

Ammonianitrogen

2.12 1.24 2.034 No

GuangdoCOD 1Near the wastewater

The discharge standard of

3.115 6.046 No

ngMeizhiCompressorLimited

Ammonianitrogen

Discharge after being treated by

wastewater treatment station

treatment station in thenorth side of the plant

0.282

water pollutants forelectroplating DB-441597-2015, before 1 September

2012

0.154 0.756 No

FoshanShundeMidea

HeatingAppliancesManufact

uringCo., Ltd.

CODcr

Discharge after being treated bywastewater treatment system andreaching the standard

Waste water treatmentstations 1 and 2 of 3#

plant

The discharge standard of

water pollutants for

electroplating(DB44/1597-2015)

18.934 21.304 No

Petroleum 1.44 0.127 / NoAmmonianitrogen

0.81 0.77 4.26 No

Electrical

Toluene and

xylene

High altitude discharge after beingtreated by waste gas treatment station

Toluene and

2 at 3# plant, outlets 1, 2and 3 for waste gas fromwave-soldering, paintingand drying at 6# plant,outlets 1 and 2 for wastegas from reflow soldering

at 6# plant

2.46

Table 1 of the Discharge

Standard of VolatileOrganic ChemicalCompounds in theFurniture Making Industry

(DB44/814-2010):

Discharge Limits for VOCs

Waste gas sprayers 1 andthrough Exhaust Funnel/for

Time Period II

3.013 / No

VOCs

High altitude discharge after beingtreated by waste gas treatment station

17.28 20.32 / No

NMHC

High altitude discharge after beingtreated by waste gas treatment station

Outlet of injection moldingwaste gas in the southside of 1# plant, outlet ofinjection molding waste

plant

1.99

Table 4 of the EmissionStandards of IndustrialPollutants in the SyntheticResin Industry (GB 31572-2015): Emission Limits of

Air Pollutants

0.48 / No

Particles Pulsed jet cloth filtering 4

Outlets 1

waste gas at 3# plant,

outlets 1 and 2 of polishing

waste gas at 3# plant

9.3

Table 2 of the EmissionLimits of Air Pollutants(DB44/27-2001): EmissionLimits of Industrial Waste

0.733 0.2223 No

Sulfurdioxide

High altitude discharge after beingtreated by waste gas treatment station

Gas (Time Period 2), Level

Oxidation wire roof of 3#

plant

3 0.144 1.17 NoNitrogen

oxide

Drying furnace of 3# plant 33.5 1.135 12.9827 NoCookingfume

Discharge after being treated by waste

gas treatment station

South and east sectioncanteens

0.88

Emission Standard ofCooking Fume (Trial)(

18483-2001)

0.083 / No

Guangdo

GB

ng Midea

Consum

erElectricManufact

uringCo., Ltd.

CODcr

Discharge after being treated bywastewater treatment system and

reaching the standard

Wastewater treatment

station

The discharge standard of

water pollutants for

electroplating(DB44/1597-2015)

2.875 4.8 No

Petroleum 0.2275 0.01363 / Noss 8.5 0.5093 / NoAmmonianitrogen

6.73 0.4032 0.96 NoBenzene

High altitude discharge after beingtreated by waste gas treatment station

ng Midea

Spraying waste gas outlet

at 1# plant

0.01

Table 1 of the Discharge

Standard of Volatile

Organic ChemicalCompounds in theFurniture Making Industry

(DB44/814-2010):

Discharge Limits for VOCs

through Exhaust Funnel/for

0.001 / No

Toluene

High altitude discharge after beingtreated by waste gas treatment station

2.4 0.276 / NoXylene

High altitude discharge after beingtreated by waste gas treatment station

3.14 0.35 / No

xylene

High altitude discharge after beingtreated by waste gas treatment station

Toluene and

4.618 0.52 / No

VOCs

High altitude discharge after beingtreated by waste gas treatment station

17.4

Time Period II

1.47 / No

NMHC

High altitude discharge after beingtreated by waste gas treatment station

Injection molding wastegas outlet in the southernside of 2# plant, injectionmolding waste gas outletin the northern side of 2#

plant

1.818

Table 4 of the EmissionStandards of IndustrialPollutants in the SyntheticResin Industry (GB 31572-2015): Emission Limits ofAir Pollutants

0.407 / No

Particles Pulsed jet cloth filtering 2

Sanding waste gas outlet

at 1# plant, polishing

waste gas outlet at 1#

plant

14.25

Table 2 of the EmissionLimits of Air Pollutants(DB44/27-2001): EmissionLimits of Industrial Waste

0.339 / No

Sulfurdioxide

High altitude discharge after beingtreated by waste gas treatment station

Gas (Time Period 2), Level

1 Drying furnace at 1# plant

Not detected / 0.028 NoNitrogen

oxide

High altitude discharge after beingtreated by waste gas treatment station

25 0.1196 0.131 NoCooking

fume

gas treatment facility

1 Canteen of 1# plant 0.8275

Emission Standard ofCooking Fume (Trial)(GB

18483-2001)

0.123 / No

AnhuiMeizhiCompressor Co.,

Ltd.

COD

Discharge after being treated bywastewater treatment system andreaching the standard

The western side of thecomprehensivewastewater treatment

station

Implementation of thetakeover standards of the

Western Hefei Group

Discharge after being treated by wastewastewater treatment plant

and integrated wastewater

discharge standard(GB8978-1996) third-level

5.96 / No

Ammonianitrogen

1.60 0.196 / No

Particles

Collected by gas trap hood+15m high

exhaust cylinder

No. 1 workshop weldingsoot discharge outlet for

waste gas

<20

Integrated emissionstandards for atmosphericpollutants(GB16297-

1996)

10.076 65.45 No

outlet for the welding

waste gas

<20Waste gas outlet of 1#heat-treating furnace atNo. 2 workshop

<20

Emission standard of airpollutants for industrial kilnand furnace(GB9078-

1996)Waste gas outlet of 2#heat-treating furnace atNo. 2 workshop

<20

Waste gas outlet for diecasting at No. 2 workshop

<20

Integrated emissionstandards for atmosphericpollutants(GB16297-

1996)Waste gas outlet for diecasting at No. 4 workshop

<20

Integrated emissionstandards for atmosphericpollutants(GB16297-

1996)Emission standard of airpollutants for industrial kilnand furnace(GB9078-

1996)

Waste gas outlet of 1#heat-treating furnace atNo. 4 workshop

<20Waste gas outlet of 2#heat-treating furnace atNo. 4 workshop

<20Waste gas outlet for

No. 3 workshop dischargeelectrophoresis and drying

at No. 1 workshop

<20

Integrated emissionstandards for atmosphericpollutants(GB16297-

1996)

Waste gas outlet for

at No. 3 workshop

<20

Integrated emissionstandards for atmosphericpollutants(GB16297-

1996)Waste gas outlet of 1#-3#

furnaces

<20

Emission standard of airpollutants for boiler(GB13271-2014)

Sulfurdioxide

Collected by gas trap hood+15m high

exhaust cylinder

Waste gas outlet of 1#-3#

furnaces

1.5

Emission standard of airpollutants for boiler(GB13271-2014)

2.82 112.2 No

Outlet of 1# heat-treatingfurnace at No. 2 workshop

electrophoresis and drying

<3

Integrated emissionstandards for atmosphericpollutants GB16297-1996

second-level

Outlet of 2# heat-treatingfurnace at No. 2 workshop

<3Waste gas outlet for diecasting at No. 2 workshop

<3Outlet of 1# heat-treatingfurnace at No. 4 workshop

<3Outlet of 2# heat-treatingfurnace at No. 4 workshop

<3Waste gas outlet for diecasting at No. 4 workshop

<3

Nitrogenoxide

Collected by gas trap hood+15m high

exhaust cylinder

Waste gas outlet of 1#-3#

furnaces

Emission standard of air

pollutants for boiler(GB13271-2014)

3.69 33.24 No

Outlet of 1# heat-treatingfurnace at No. 2 workshop

<3

Integrated emissionstandards for atmospheric

Outlet of 2# heat-treatingfurnace at No. 2 workshop

<3

pollutants GB16297-1996

second-levelWaste gas outlet for diecasting at No. 2 workshop

<3Outlet of 1# heat-treatingfurnace at No. 4 workshop

<3Outlet of 2# heat-treatingfurnace at No. 4 workshop

<3Waste gas outlet for diecasting at No. 4 workshop

<3

VOCs

Collected by gas trap hood+15m high

exhaust cylinderDirect-

high exhaust cylinder

Waste gas outlet of thedrying furnace at No. 1workshop

1.35

fired waste gas incinerator+15mEmission Control Standard

for Industrial Enterprises

Volatile OrganicCompounds (DB12/ 524-

2020)

0.187 21.6 No

Waste gas outlet of 1#drying furnace at No. 3

workshop

0.985

Die casting at No. 2

workshop

0.323

Die casting at No. 4workshop

0.52

Guangdo

KitchenAppliances

COD

Discharge to the municipal sewagesystem after being treated bywastewater treatment system

The eastern side ofwastewater treatmentstation in Malong base

The discharge limits of

water pollutants inGuangdong (DB-44/26-

201)

10.90 22.77 No

Ammonianitrogen

2.7 0.74 4.554 NoParticles 20m high altitude discharge 11626 outlets at A1 plant, 50

16.1

Emission standard of air

28.01 / No

Manufact

uringCo., Ltd.

Sulfurdioxide

outlets at A2 plant, 21outlets at B2 plant, 9outlets at C2 plant, 2outlets at C3 plant, 1

at wastewater treatmentstation and 7 outlets at

canteen

pollutants for industrial kilnand furnace(GB-9078-1996)/ The emission limit

of gas pollutants inGuangdong(DB-44/27-

2007)

0.00 1.055 No

Nitrogen

oxide

7 0.26 10.314 NoBenzene

High altitude discharge after beingtreated by waste gas treatment station

outlet

0.773 0.02 / No

Toluene and

xylene

13.8 5.94 / NoVOCs 47 39.46 / NoNMHC 18.4 3.22 / NoStyrene 9.34 1.13 / NoCooking

fume

0.78 0.13 / No

FoshanWellingWasher

MotorManufact

uringCo., Ltd.

Benzene

Activated carbon + UV photolysis +

catalytic combustion

Waste gas outlet near 2#

plant

Emission standard of

Toluene andvolatile organic compounds

for furniture manufacturing(DB44/814-2010) thesecond time period

0 / No

volatile organic compounds
Toluene and

xylene

Activated carbon + UV photolysis +

catalytic combustion

Waste gas outlet near 2#

plant

2.71

Emission standard of

for furniture manufacturing

(DB44/814-2010) thesecond time period

0.87 / No

VOCs

Activated carbon + UV photolysis +

catalytic combustion

Waste gas outlet near 2#

plant

18.85

Emission standard of

for furniture manufacturing(DB44/814-2010) the

second time period

5.97 17.83 No

Welling(Wuhu)

MotorManufact

uringCo., Ltd.

Particles

Collected by gas trap hood + dust

volatile organic compoundscollector + activated carbon +15m high

exhaust cylinder

Exhaust funnels 1 and 2for mold injection

21.5

Integrated emissionstandards for atmosphericpollutants(GB16297-

1996)

23 5 No

VOCs

collector + activated carbon +15m high
Collected by gas trap hood +15m high

exhaust cylinder

Waste gas outlets 1-7 ofthe die casting workshop

2.75

Emission standard of airpollutants for industrial kilnand furnace(GB9078-

1996)

3.388 0.9 No

VOCs Activated carbon + UV photolysis 2

Exhaust funnels 1 and 2for dip coating

26.1

Hebei Province Standard

DB13/2322-2016 The

Concentration Limits atEmission Reference Pointfor Coating Operations

31 3 No

COD

Discharge after being treated bywastewater treatment system andreaching the standard

General wastewater outlet

Integrated wastewater

discharge standard(GB8978-1996)chart 4

third-level

65 / NoAmmonianitrogen

20 7 / NoBOD 12.3 13.486 / No

SS 59 12.5 / NoPetroleum 0.95 1.04 / No

AnhuiCOD

Discharge after being treated by

The south side of Building

Integrated wastewater

32.4 / No

Meizhi

Manufact

uringCo., Ltd.

Ammonianitrogen

wastewater treatment system andreaching the standard

Precision6 for night shift at the north

side of the plant area

2.4

discharge standard(gb8978-1996), chart 4,

level 3

2.6214 / No

BOD 14 12.474 / No

SS 22 16.2 / NoPetroleum 0.73 1.126 / No

Particles

Collected by gas trap hood +21m high

exhaust cylinder

1-8# welding waste gas

outlets

7.3

Integrated emissionstandards for atmosphericpollutants GB16297-1996,chart 2, level 2

1.877.4

/

No9#-

10# welding waste gas

outlets

7.1

2# outlet of stator + rotorheat-treating furnace

0.672

Emission standard of airpollutants for industrial kilnand furnace GB9078-

10# welding waste gas
1996,

chart 2, level 2

4.7256 No

3# outlet of 2# stator heat-

treating furnace

0.9

1# outlet of stator + rotor

heat-treating furnace

0.7992

Outlet at the head of 3#

stator furnace

0.3384

Outlets at the head of 2#

furnace

0.7848

Outlets at the tail of 3#

stator furnace and 4# rotor
and 4# stator furnaces and comprehensive outlet for 4

aluminum melting

furnaces

0.7704

Waste gas outlet ofaluminum melting furnace

0.4608

Sulfurdioxide

exhaust cylinder

1# outlet of heat-treating

furnace

3.0

Emission standard of airpollutants for industrial kilnand furnace GB9078-

Collected by gas trap hood +21m high1996,

chart 2, level 2

0.68 / No

2# outlet of heat-treating

furnace

10.0

Nitrogen

oxide

exhaust cylinder

2# outlet of stator + rotor

heat-treating furnace

2.6616

6.7416 / No

3# outlet of 2# stator heat-

treating furnace

1.5456

1# outlet of stator + rotorheat-treating furnace

2.5344

VOCs

Direct-

Collected by gas trap hood +21m high
fired waste gas incinerator+21m

high exhaust cylinder

1# outlet for waste gasfrom drying

0.5256

Chart 1 of Hebei Province

Standard—EmissionControl Standard forIndustrial Enterprises

Volatile Organic

Compounds (DB13/2322-

2016)

2.2038 / No

9-10# outlets for waste

gas from drying

25.3

GDMideaEnvironmentAppliances Mfg.Co.,Ltd.

VOCs

Gas trap hood + dry filtering + UV +activated carbon + 15m high altitude

discharge

During the screen printing

process

1.21

Emission standard of

for printing industry(DB44/815-2010)

0.068 0.07 No

volatile organic compounds
Dry filtering + UV + activated carbon +

catalytic combustion + 15m high

altitude discharge

Outlet for waste gas from

dip coating, drying and

hardening

Emission standards forodor pollutants (GB14554-

93)

3.19 3.42 No

Gas trap hood + dry filtering + UV +activated carbon + 15m high altitude

discharge

process

0.15

Emission Limits of AirPollutants (DB44/27-

During the manual welding2001):

Time Period 2, Level 2

and

Emission standards forodor pollutants (GB14554-

93)

0.005 0.009 No

Gas trap hood + dry filtering + UV +activated carbon + 15m high altitude

discharge

During the wave

process (paste printingand wave reflow)

1.24

Emission Limits of AirPollutants (DB44/27-

soldering2001):

Time Period 2, Level 2

and

Emission standards forodor pollutants (GB14554-

93)

0.078 0.086 No

NMHC

Gas trap hood + dry filtering + UV +activated carbon + 15m high altitude

discharge

Exhaust funnel for wastegas from the baking and

injection moldingprocesses

2.78

Emission Standards ofIndustrial Pollutants in the

Synthetic Resin Industry

(GB 31572-2015)

1.278 1.432 No

Particles

Gas trap hood + water spraying + dryfiltering + UV + activated carbon +15m high altitude discharge

Outlet for waste gas fromdusting, electrophoresis

and hardening

Emission Limits of AirPollutants (DB44/27-

Time Period 2, Level 2

and

Emission standards forodor pollutants (GB14554-

93)

0.973 1.05 No

Cooking

fume

2001):
Water wash hood + electrostatic range

hood + 15m high altitude discharge

Cooking fume outlet at

canteen

0.3

Emission Standard ofCooking Fume(GB

18483-2001)

0.287 0.4 No

HubeiMideaRefrigera

tor Co.,

Ltd.

COD

Domestic sewage in the plant isdischarged to the municipal sewagesystem after being treated by the

septic tank

Domestic sewage outlets

at the plant

Integrated wastewaterdischarge standard(GB8978-1996)

6.89 15 No

Ammonianitrogen

5.18 1.36 2.5 NoBOD 9.8 2.25 / No

SS 35 8.04 / NoAnimal andvegetable

oil

0.67 0.15 / NoPetroleum 0.70 0.16 / No

COD

Freezer spaying waste water isdischarged to the municipal sewagesystem after floatation +

aerobic sludge digestion + filtration

and other processes

Waste water outlets at thefreezer branch plant

Integrated wastewater

discharge standard(GB8978-1996)

2.94 15 No

Ammonianitrogen

4.49 0.20 2.5 NoBOD 26.8 1.08 / No

SS 21 0.85 / NoAnimal andvegetable

oil

1.82 0.07 / NoPetroleum 1.28 0.05 / No

Guangzhou MideaHualingRefrigerator Co., L

td.

NMHC,

odorconcentratio

n, andVOCS

High altitude discharge after beingtreated by waste gas treatment

acidification +station

(UV photolysis + light and oxygen

purification)

1# outlet: upper platformof central air-conditioning

room of 2# plant

station2# outlet: external platform

of rolling line of 2# plant

5.5

For NMHC, Table 4 of the

Emission Standards ofIndustrial Pollutants in theSynthetic Resin Industry

(GB 31572-2015):

Emission Limits

3.3 / No

3# outlet: platform ofextruding line of 3# plant4# outlet: platform on 2/Fof plastic injection room

For odor concentration,

Table 2 of Emissionstandards for odorpollutants (GB14554-93):

Emission LimitsFor VOCs

of Air Pollutants (DB44/27-2001): Time Period 2,Level 2 (Limits for NMHC)

WuxiLittleSwanElectricCo., Ltd.

COD

Discharge to the municipal sewage

system

Exit at the middle gate of

the plant

Integrated wastewaterdischarge standard(GB8978-1996)

30.744

123.899

NoSS 45 8.724 87.2473 NoAnimal andvegetable

oil

1.33 1.1718 10.7034 NoTotalphosphorus

, Emission Limits

1.95 0.3155 1.0701 NoTotalnitrogen

32.5 3.7618 11.2612 NoAmmonianitrogen

25.6 2.6796 6.6906 NoParticles High altitude discharge after treatment

11 Buildings A, C, and D

ND

Integrated emissionstandards for atmosphericpollutants(GB16297-1996)/Tianjin Emission

0.2601 2.0696 No

VOCS

Direct discharge

0.49 0.4562 1.2218 NoSulfurdioxide

5 0.0903 0.624 No

Nitrogen

oxide

Control Standard forIndustrial Enterprises

Volatile OrganicCompounds (DB12/524-2014)/

of Industrial Pollutants inthe Synthetic ResinIndustry (GB 31572-2015)/

Emission standard of airpollutants for boiler(GB13271-2014)

0.598 3.38 No

Chongqi

GeneralRefrigera

tionEquipment Co.,Ltd.

Anionicsurfactant

Discharge after being treated bywastewater treatment system andreaching the standard

ng MideaGeneral waste water outlet

of the plant

Provincial DischargeStandard of Main WaterPollutants for ChemicalIndustry Park (GB/T4754-

2011)

Provincial DischargeStandard of Main WaterPollutants for ChemicalIndustry Park (DB50/457-

2012)

0.000035

0.001121

NoCOD 32000 0.001794

0.02802

NoSuspendedsolids

8000 0.000448

0.02242

NoPH value / / / NoAmmonianitrogen(NH3-N)

4210 0.000236 / NoFive-day

BOD

15000 0.000841

0.01681

NoToluene

High altitude discharge after beingtreated by waste gas treatment station

4 1# and 4# workshops

0.101

Limit of HarmfulSubstances of Industrial

Protective Coatings

0.0054 8.7048 No

Benzene 0.077 0.0041 1.404 No

NMHC 4.07 0.225 28.08 No

Xylene 1.77

(GB30981-2020); Fugitive

Emission Standard of

Volatile OrganicCompounds (GB37822-2019);

Standard of Air Pollutants(DB50-418-2016)

0.084 2.808 No

Particles 15.7 0.5054 2.2464 No

HuaianWelling

MotorManufacturingCo., Ltd.

Particles

Gas trap hood + cotton filter +activated carbon + 15m high exhaust

cylinder

5# waste gas outlet:

outside the inductor dip

coating room8# waste gas outlet:

outside the reactor dip

coating room

7.1

Integrated emissionstandards for atmospheric

pollutants(GB16297-

1996)

0.585 0.97 No

NMHC 1.84

Integrated emissionstandards for atmosphericpollutants(GB16297-

1996)

0.1870 0.3078 No

Styrene /

Emission standards forodor pollutants (GB14554-

93)

/ 0.032 No

MideaGroupWuhanRefrigera

tionEquipme

ntCo.,Ltd.

PH value

Discharge after being treated bywastewater treatment system andreaching the standard

1 West of the plant

7.38-7.48

Integrated wastewater

discharge standard(GB8978-1996)

/ / NoSuspended

solids

21 / / NoFive-day

COD

53.6 / / No

COD 150 2.19 19.60 NoPetroleum 0.24 / / NoAmmonianitrogen

0.152 0.002 1.764 NoFluoride 11.1 / / NoTotal zinc 3.38 / / NoParticles

1. Water spraying + low-temperature

plasma; direct-fired TO furnace

2. Frame filtration + activated carbon

UV photolysis + carbon absorption

4. Activated carbon

5. RTO regenerative combustion

Northwestern corner of 1#plant; central 1# plant

0.129

Integrated emissionstandards for atmosphericpollutants(GB16297-

1996)

1.548

2.775 No

Sulfurdioxide

Northeastern corner of 3#

plant

0.0278

0.334

0.405 No

Nitrogenoxide

1 West Gate 2 of 4# plant 0.1458

1.750

1.89 No

VOCs 2

West Gate 2 of 5# plant,West Gate 1 of 5# plant

0.129

2.270

/ No

The construction of pollution prevention facilities and their operationDuring the Reporting Period, all subsidiaries have strictly abided by the laws and regulations related to environment protection, and no majorenvironmental pollution incidents occurred. All subsidiaries have set up reliable waste water and gas treatment systems. Through regular monitoring,

supervision and inspection mechanisms, as well as third-party testing, it is ensured that the discharge of waste water, waste gas and solid waste duringthe production and operation process meets the national and local laws and regulations. There is no excessive discharge by any subsidiary, which is incompliance with the relevant requirements of the environment administrations.The environmental effect evaluation of construction projects and other administrative permits in relation to environmental protectionAll subsidiaries strictly observe the laws and regulations governing environmental protection, and all construction projects are in compliance with theenvironmental effect requirements and other rules, with no misdeeds during the Reporting Period. Once a construction project is finished, a third-partytesting institution is hired to examine indexes including waste water, waste gas and noise, and the compilation and approval of the environmental effectevaluation report is finished in time.Contingency plans for environmental accidentsAll subsidiaries have finished the compilation and approval of their contingency plans for environmental accidents. Emergency mechanisms forenvironmental pollution accidents have been established and improved, and the subsidiaries’ ability to deal with environmental pollution accidents hasbeen enhanced, so as to maintain social stability, protect the lives, health and properties of the public, protect the environment, and promote acomprehensive, coordinated and sustainable development of the society.According to the accident levels, subsidiaries have formulated rules covering working principles, contingency plans, risk prevention measures,commanding departments, responsibilities and labor division, and have filed these contingency plans with the government.Environment self-monitoring plans

All the subsidiaries have formulated their own environment self-monitoring plans according to China’s relevant laws and regulations, , which include: 1)Waste gas pollution source monitoring: Sampling points are set at various discharge ports of waste gas for monitoring on a quarterly basis; 2) Wastewater pollution source monitoring: Samples are fetched at intake and outlet ports of waste water treatment stations to monitor changes of pollutionsource of waste water and up-to-standard emission of waste water after being treated at the waste water treatment stations. Monitoring items includeCODcr, SS and petroleum, etc. The data is uploaded to the governmental monitoring authority online and the government authority conducts real-timemonitoring; 3) Noise monitoring: Noise monitoring points are set at noise sensitive points and on the border of factories. Noise is monitored once inspring and summer respectively and at daytime and at nighttime respectively each time; 4) Solid waste pollution source monitoring: Hazardous wasteproduced from the subsidiaries is handed over to the units with qualifications for treatment, monitoring systems are established, and related managementforms and accounts are set up.Other environment-related information that should be made publicNoneOther environment-related informationNone

19. Other Significant Events

□Applicable √N/A

20. Significant Events of Subsidiaries

√Applicable □N/A

Midea Group acquired, through its subsidiary GD Midea Heating & Ventilating Equipment Co., Ltd.(hereinafter referred to as “Midea Heating & Ventilating”), a controlling interest in Hiconics Eco-energyTechnology Co., Ltd. (hereinafter referred to as “Hiconics”, a company listed on the ChiNext Board of theShenzhen Stock Exchange by the stock code of 300048) by an agreement (hereinafter referred to as the“Acquisition”).On 25 March 2020, Midea Heating & Ventilating entered into the Share Transfer Agreement with ShanghaiShangfeng Group Co., Ltd. (hereinafter referred to as “Shangfeng Group”) and Liu Jincheng. A total of208,685,418 shares (approximately 18.73% of Hiconics’s total share capital) were acquired in theAcquisition, with a total payment of RMB742,582,087. Midea Heating & Ventilating entered into the VotingRights Entrustment Agreement with Shangfeng Group and Ye Jinwu, which agreed to entrust the votingrights in respect of their holdings of 55,747,255 shares in Hiconics (approximately 5% of Hiconics’s totalshare capital) to Midea Heating & Ventilating on an irrevocable basis for a term of 15 months commencingfrom the settlement date of the Acquisition, which makes Midea Heating & Ventilating have control overthe voting rights in respect of a total of 264,432,673 shares in Hiconics (approximately 23.73% ofHiconics’s total share capital).On 30 April 2020, China Securities Depository and Clearing Co., Ltd. (Shenzhen branch) issued theConfirmation of Transfer of Securities Ownership, representing the completion of the transfer of all the208,685,418 non-restricted public shares in Hiconics in the Acquisition.

Section VI Changes in Shares and Information about

Shareholders

1. Changes in Shares

1.1 Changes in shares

Unit: share

Before

Increase/decrease in Reporting Period

(+/-)

AfterShares

Percentage (%)

New issue Others Subtotal Shares

Percentage(%)

1. Restricted shares

165,402,513

2.37

17,460,118

17,460,118

182,862,631

2.60

1.1 Shares held by the

state

1.2 Shares held by state-

owned corporations

1.3 Shares held by other

domestic investors

163,369,513

2.34

16,415,618

16,415,618

179,785,131

2.56

Among which: Sharesheld by domesticcorporations

2,363,601

0.03

2,363,601

0.03

Sharesheld by domesticindividuals

161,005,912

2.31

16,415,618

16,415,618

177,421,530

2.52

1.4 Shares held by

foreign investors

2,033,000

0.03

1,044,500

1,044,500

3,077,500

0.04

Among which: Sharesheld by foreigncorporations

Sharesheld by foreignindividuals

2,033,000

0.03

1,044,500

1,044,500

3,077,500

0.04

2. Non-restricted shares 6,806,497,061

97.63

63,801,425

-23,185,118

40,616,307

6,847,113,368

97.40

2.1 RMB common shares 6,806,497,061

97.63

63,801,425

-23,185,118

40,616,307

6,847,113,368

97.40

2.2 Domestically listed

foreign shares

2.3 Overseas listed

foreign shares

2.4 Other

3. Total shares 6,971,899,574

100.00

63,801,425

-5,725,000

58,076,425

7,029,975,999

100.00

Reasons for the changes in shares

√Applicable □N/A

a. As the conditions for the second unlocking period for the reserved restricted shares of the 2017Restricted Share Incentive Scheme had been satisfied, the 1,340,750 restricted shares of a total of 42eligible employees were unlocked and allowed for public trading on 19 February 2020, including 53,000restricted shares of foreign employees.b. As the conditions for the third unlocking period for the first phase of the 2017 Restricted Share IncentiveScheme had been satisfied, the 5,532,500 restricted shares of a total of 99 eligible employees wereunlocked and allowed for public trading on 22 June 2020, including 150,000 restricted shares of foreignemployees.c. As the conditions for the first unlocking period for the first phase of the 2018 Restricted Share IncentiveScheme had been satisfied, the 3,704,125 restricted shares of a total of 231 eligible employees wereunlocked and allowed for public trading on 1 July 2020, including 187,500 restricted shares of foreignemployees.d. For the reasons of certain incentive recipients’ departure from the Company, violation of company rules,position change, individual performance appraisal result being “substandard” or other factors, theCompany repurchased and retired 679,000 shares of 16 incentive recipients under the 2017 RestrictedShare Incentive Scheme on 10 March 2020, 1,586,500 shares of 33 incentive recipients under the 2018Restricted Share Incentive Scheme, and 1,241,000 shares of 21 incentive recipients under the 2019Restricted Share Incentive Scheme, totaling 3,506,500 restricted shares (including 125,000 restrictedshares of foreign employees).e. For the reasons of certain incentive recipients’ business unit’s 2019 performance appraisal result being

“just so-so”, departure from the Company, violation of company rules, position change, individualperformance appraisal result being “substandard” or other factors, the Company repurchased and retired187,500 shares of 3 incentive recipients under the 2017 Restricted Share Incentive Scheme on 31 July2020, 1,021,000 shares of 18 incentive recipients under the 2018 Restricted Share Incentive Scheme,and 1,010,000 shares of 15 incentive recipients under the 2019 Restricted Share Incentive Scheme,totaling 2,218,500 restricted shares (including 175,000 restricted shares of foreign employees).f. 33,245,000 restricted shares (repurchased shares) were granted to 506 employees (including1,510,000 restricted shares to foreign employees) under the 2020 Restricted Share Incentive Scheme,with no change to the total share capital of the Company. These shares would be allowed for publictrading on 14 July 2020.g. In 2020, the incentive recipients of stock options chose to exercise 63,801,425 shares, which havebeen registered into the Company’s share capital.h. In 2020, locked-up shares held by senior management increased by 517,493 shares.Approval of share changes

□ Applicable √ N/A

Transfer of share ownership

□ Applicable √ N/A

Progress of any share repurchase

√ Applicable □ N/A

a. The Proposal on the Plan for the Repurchase of Some Public Shares (hereinafter referred to as the“2020 Repurchase Plan”) was approved at the 18th Meeting of the 3rd Board of Directors on 21 February2020. As such, the Company was agreed to repurchase, with its own funds, no less than 40,000,000shares and no more than 80,000,000 shares by way of centralized bidding at a price not exceedingRMB65/share (adjusted to a price not exceeding RMB63.41/share upon the implementation of the 2019Annual Profit Distribution Plan). All the repurchased shares would be used for the Company’s equityincentive schemes and/or employee stock ownership schemes.

As disclosed in the Announcement on the Completion of the Implementation of the Share RepurchasePlan dated 23 October 2020, during the repurchase period, the Company had repurchased 41,826,050shares (0.5953% of the Company’s total share capital as of 21 October 2020) by way of centralizedbidding. With the highest trading price being RMB74.99/share and the lowest being RMB46.30/share, thetotal payment amounted to RMB2,697,409,655.33 (exclusive of trading fees). Therefore, the Companyhas repurchased over 40,000,000 shares (the lower limit for this share repurchase) for the 2020Repurchase Plan, and the fact that the Company’s share price has been consistently higher than theupper limit of the repurchase price has made continued repurchase unlikely. Therefore, theimplementation of this share repurchase plan has been completed.So far, cumulatively 10,635,020

repurchased shares have been transferred. If the Company does not use the repurchased shares for theaforesaid purposes within 36 months upon the completion of the share repurchase, the unused shareswill be retired following the relevant procedure.Progress of any repurchased share reduction through centralized price bidding

□ Applicable √ N/A

Effects of changes in shares on basic EPS, diluted EPS, net assets per share attributable to commonshareholders of the Company and other financial indexes over the last year and the last Reporting Period

□Applicable √N/A

Other contents that the Company considers necessary or is required by the securities regulatoryauthorities to disclose

□Applicable √N/A

1.2 Changes in restricted shares

√ Applicable □ N/A

Unit: shareName of shareholder

Openingrestricted

shares

Unlocked in

currentperiod

Increased in

currentperiod

Closingrestricted

shares

Reason for change Date of unlocking

Incentive recipients

of 2017 Restricted Share Incentive Scheme (first

phase) ①

6,140,000

5,532,500

Lockup according to

the Scheme

22 June 2020

Incentive recipients

Incentive Scheme ②

2,924,750

of reserved restricted shares under 2017 Restricted Share

1,340,750

1,325,000

Lockup according to

the Scheme

19 February 2020

Incentive recipients

phase) ③

17,094,000

of 2018 Restricted Share Incentive Scheme (first

3,704,125

11,232,375

Lockup according to

the Scheme

1 July 2020Incentive recipients ofreserved restrictedshares under 2018Restricted ShareIncentive Scheme ④

2,420,000

1,970,000

Lockup according to

the Scheme

10 May 2021Incentive recipients

Incentive Scheme ⑤

28,560,000

of 2019 Restricted Share

26,309,000

Lockup according to

the Scheme

10 July 2021Incentive recipients

2020

Restricted Share

Incentive Scheme

33,245,00033,245,000Lockup according to

the Scheme

14 July 2021

Zhang Xiaoyi 273,875

151,056

424,931

Lockup for seniormanagementposition

-

Jiang Peng 458,475

114,525

343,950

Lockup for seniormanagementposition

-

Xiao Mingguang 66,250

153,750

220,000

Lockup for seniormanagementposition

-

Zhong Zheng 11,152

87,212

98,364

Lockup for seniormanagementposition

-

Hu Ziqiang 0

225,000

225,000

Lockup for seniormanagementposition

-

Zhu Fengtao 765,300

15,000

780,300

Locked-

a former seniorexecutiveassociated with hisformer tenure

-

Total58,713,802

up shares of

10,691,900

33,877,018

76,173,920

-- --

Notes: ① 607,500 restricted shares in total for the first phase of the 2017 Restricted Share IncentiveScheme that had been granted but were still in lockup were retired on 10 March 2020 and 31 July 2020,reducing the closing restricted shares by 607,500 shares.

② 259,000 reserved restricted shares under the 2017 Restricted Share Incentive Scheme that had been

granted but were still in lockup were retired on 10 March 2020, reducing the closing restricted shares by259,000 shares.

③ 2,157,500 restricted shares in total for the first phase of the 2018 Restricted Share Incentive Scheme

that had been granted but were still in lockup were retired on 10 March 2020 and 31 July 2020, reducingthe closing restricted shares by 2,157,500 shares.

④ 450,000 reserved restricted shares in total under the 2018 Restricted Share Incentive Scheme that

had been granted but were still in lockup were retired on 10 March 2020 and 31 July 2020, reducing theclosing restricted shares by 450,000 shares.

⑤ 2,251,000 restricted shares in total for the 2019 Restricted Share Incentive Scheme that had been

granted but were still in lockup were retired on 10 March 2020 and 31 July 2020, reducing the closingrestricted shares by 2,251,000 shares.

2. Issuance and Listing of Securities

2.1 Securities (excluding preference shares) issued in the Reporting Period

□Applicable √N/A

2.2 Changes in total shares of the Company and the shareholder structure, as well as the asset

and liability structures

√ Applicable □ N/A

The total shares of the Company were 6,971,899,574 at the beginning of the Reporting Period. Duringthe Reporting Period, 63,801,425 awarded stock options were exercised and registered; and a total of5,725,000 restricted shares under the 2017, 2018 and 2019 Restricted Share Incentive Schemes wererepurchased and retired. As such, total shares are 7,029,975,999 at the end of the Reporting Period.

2.3 Existing staff-held shares

□Applicable √N/A

3. Shareholders and Actual Controller

3.1 Total number of shareholders and their shareholdings

Unit: shareTotal numberof commonshareholdersat the end ofthe ReportingPeriod

226,871

Total number of

common

the prior month-end before thedisclosure dateof the annualreport

404,034

shareholders at

Total number ofpreferenceshareholders withresumed votingrights at theperiod-end (if any)

Total number of

preferenceshareholderswith resumedvoting rights atthe prior month-end before thedisclosure dateof the annualreport (if any)

5% or greater common shareholders or top 10 common shareholdersName ofshareholder

Nature ofshareholder

Shareholdingpercentage (%)

Total common

shares held atthe period-

Increase/decrease duringtheReporting

Period

Number ofrestrictedcommonshares held

Number ofnon-restricted

common

shares held

Pledged or frozen

sharesStatu

s

Shares

Midea HoldingCo., Ltd.

Domesticnon-state-ownedcorporation

30.86%

end

2,169,178,713

-42,867,900

2,169,178,713

Pledg

ed

100,000,000

Hong KongSecuritiesClearingCompany Limited

Foreigncorporation

15.05%

1,057,722,637

-119,585,807

1,057,722,637

China SecuritiesFinance Co., Ltd.

State-ownedcorporation

2.82%

198,145,134

198,145,134

Fang Hongbo

Domesticindividual

1.66%

116,990,492

-20,000,000

102,742,869

14,247,623

Canada PensionPlan InvestmentBoard- own

Foreigncorporatio

1.48%

103,913,897

-16,465,170

103,913,897

funds (stockexchange)

nCentral HuijinAssetManagement Ltd.

State-

owned

corporatio

n

1.28%

90,169,354

90,169,354

Huang Jian

Domestic

individual

1.25%

88,030,000

-2,200

88,030,000

UBS AG

Foreign

corporatio

n

0.79%

55,877,225

18,513,229

55,877,225

Li Jianwei

Foreign

individual

0.72%

50,300,000

-1,400,000

50,300,000

Yuan Liqun

Domestic

individual

0.60%

42,125,195

-10,748,375

42,125,195

Strategic investors or general

corporations becoming top-ten common shareholdersdue to placing of new shares

N/ARelated-parties or acting-in-concert parties among theshareholders above

N/A

Top 10 non-restricted common shareholdersName of shareholder

Number of non-

restricted common shares

held at the period-end

Type of sharesTypeSharesMidea Holding Co., Ltd. 2,169,178,713

restricted common shares

RMB common stock 2,169,178,713

Hong Kong Securities Clearing

Company Limited

1,057,722,637

RMB common stock 1,057,722,637

China Securities Finance Co.,Ltd.

198,145,134

RMB common stock 198,145,134

Canada Pension PlanInvestment Board- ownfunds (stock exchange)

103,913,897

RMB common stock 103,913,897

Central Huijin AssetManagement Ltd.

90,169,354

RMB common stock 90,169,354

Huang Jian 88,030,000

RMB common stock 88,030,000

UBS AG 55,877,225

RMB common stock 55,877,225

Li Jianwei 50,300,000

RMB common stock 50,300,000

Yuan Liqun 42,125,195

RMB common stock 42,125,195

Merrill Lynch International40,958,596

RMB common stock 40,958,596

Related-parties or acting-in-concert parties among the topten non-restricted commonshareholders and between thetop ten non-

shareholders and the top tencommon shareholders

N/A

Explanation on the top 10common shareholdersparticipating in securitiesmargin trading (if any)

1. The Company’s shareholder Yuan Liqun holds 9,138,000 shares in the Company

through her common securities account and 32,987,195 shares in the Companythrough her account of collateral securities for margin trading, representing a totalholding of 42,125,195 shares in the Company.

Did any of the top 10 common shareholders or the top 10 non-restricted common shareholders of theCompany conduct any promissory repurchase during the Reporting Period

□Yes √No

No such cases in the Reporting Period.

3.2 Controlling shareholder

Name of controlling

shareholder

Legalrepresentative / companyprincipal

Date ofestablishment

Credibility codeMain business scope

Midea Holding Co., Ltd.

restricted common

He Xiangjian

2002-08-05

914406067429989733

Manufacture and commerce investment;domestic commerce and materials supplyand marketing industry (excluding state-designated monopoly); CP software andhardware development; industrial productdesign; information technology consultingservices, providing investment consultantand consulting services; installation,maintenance and after-sales service ofelectric appliances; real estate

intermediary service and forwarding agent

service.Shareholdings of thecontrolling shareholderin other controlled ornon-controlled listedcompanies at home orabroad during the

Apart from a direct control over the Company, Midea Holding does not directly control or haveshares in other listed companies at home or abroad.

Reporting PeriodChange of the controlling shareholder during the Reporting Period

□Applicable √N/A

No such cases in the Reporting Period.

3.3 Actual controller and acting-in-concert parties thereof

Name of the actual controller

Relationship with

94.55%

the actual controller

Nationality

Right of residence in other countries or

regionsHe Xiangjian

Actual controllerhimself

The People'sRepublic of China

the actual controller

NoMain occupation and duty Incumbent board chairman of Midea Holding Co., Ltd.Domestically and overseas listedcompanies controlled in the last10 years

Midea Group (000333.SZ), KUKA (KU2.DE), Hiconics (300048.SZ),

Estate (3990.HK),

Little Swan (A: 000418.SZ; B: 200418) (delisted in 2019), and

Welling Holding (00382.HK) (delisted in 2018)Whether the Company has any shareholder with a greater than 10% interest at the ultimate control level

□ Yes √ No

Shareholders with a greater than 5% interest at the ultimate control level

□Applicable √N/A

Change of the actual controller during the Reporting Period

□Applicable √N/A

No such cases in the Reporting Period.

Ownership and control relations between the actual controller and the Company

He Xiangjian

The actual controller controls the Company via trust or other ways of asset management

□Applicable √N/A

3.4 Other corporate shareholders with a shareholding percentage above 10%

□Applicable √N/A

3.5 Limits on the Company’s shares held by its controlling shareholder, actual controller,

reorganizer and other commitment subjects

□Applicable √N/A

Midea Group Co., Ltd.

0.25%

30.86%

Midea Holding Co., Ltd.

Section VII Information about Directors, Supervisors, Senior

Management and Employees

1. Changes in Shareholdings of Directors, Supervisors and Senior Management

Name Office title

Incumbe

nt/Former

Gender

Age

Startingdate oftenure

Endingdate oftenure

Sharesheld atthe year-begin(share)

Sharesincreased attheReportingPeriod(share)

Sharesdecreased

at theReporting

Period

(share)

Otherincrease/

decrease

(share)

Shares heldat the period-

end (share)

FangHongbo

Chairman ofthe Board andCEO

Incumbent

Mal

e

54 2012-8-25 2021-9-25

136,990,

20,000,000

116,990,492

HeJianfeng

Director

Incumbent

Mal

e

54 2012-8-25 2021-9-25 0

YinBitong

Director andVice President

Incumbent

Mal

e

53 2016-12-16

2021-9-25

2,109,65

2,109,655

GuYanmin

Director andVice President

Incumbent

Mal

e

58 2014-4-21 2021-9-25 0

YuGang

Director

Incumbent

Mal

e

62 2018-9-26 2021-9-25 0

XueYunkui

IndependentDirector

Incumbent

Mal

e

57 2018-9-26 2021-9-25 179,914

179,914

GuanQingyou

IndependentDirector

Incumbent

Mal

e

44 2018-9-26 2021-9-25 0

HanJian

IndependentDirector

Incumbent

Female

49 2018-9-26 2021-9-25 0

Dong Chairman of IncuMal35 2020-10-16

2021-9-25 0

Wentao

theSupervisoryCommittee

mbent

e

ZhaoJun

Supervisor

IncumbentMal

e

46 2014-4-21 2021-9-25 0

LiangHuiming

EmployeeSupervisor

Incumbent

Female

38 2017-3-30 2021-9-25 0

WangJianguo

Vice President

Incumbent

Mal

e

45 2017-12-15

2021-9-25 0

ZhangXiaoyi

Vice President

Incumbent

Mal

e

48 2018-4-23 2021-9-25 586,575

70,000

516,575

XiaoMingguang

Vice President

Incumbent

Mal

e

51 2019-3-22 2021-9-25 355,000

105,000

460,000

HuZiqiang

Vice President

Incumbent

Mal

e

64 2014-8-18 2021-9-25 400,000

400,000

WangJinliang

Vice President

Incumbent

Mal

e

54 2014-8-18 2021-9-25 120,000

120,000

240,000

LiGuolin

Vice President

Incumbent

Mal

e

45 2020-7-3 2021-9-25 165,000

100,000

265,000

Liu Min

Chairman oftheSupervisoryCommittee

Former

Female

2016-2-1 2020-10-16

Vice President

Incumbent

2020-10-16

2021-9-25ZhongZheng

Director ofFinance

Incumbent

Female

39 2019-3-22 2021-9-25 201,152

10,000

211,152

JiangPeng

BoardSecretary

IncumbentMal

e

48 2013-10-30

2021-9-25 458,600

100,000

358,600

HelmutZodl

CFO

Former

Mal

e

48 2019-10-22

2021-1-25 0

Total -- -- -- -- -- --

141,566,

20,170,000

335,000

121,731,388

2. Changes in Directors, Supervisors and Senior Management

√Applicable □N/A

Name Office title Type of change DateReasonLi Guolin Vice President Appointed 2020-7-3 -

Liu Min

Chairman of theSupervisory Committee

Former 2020-10-16 Job changeLiu Min Vice President Appointed 2020-10-16 -Dong Wentao

Chairman of theSupervisory Committee

Elected 2020-10-16 -Helmut Zodl CFO Former 2021-1-25 Personal reason

3. Brief Biographies

Professional backgrounds, main work experience and current responsibilities in the Company of theincumbent directors, supervisors and senior managementMr. Fang Hongbo, male, holder of a Master's degree, is the Chairman and CEO of the Company. Hejoined Midea in 1992 and previously served as the General Manager of Midea Air-Conditioning BusinessUnit, CEO of Midea Refrigeration Electric Appliances Group, Chairman and CEO of GD Midea HoldingCo., Ltd.Mr. He Jianfeng, male, holder of a Bachelor's degree, is a Director of Midea Group. He is also theChairman of the Board and President of Infore Investments Holding Group Co., Ltd.Mr. Yin Bitong, male, a Master's graduate, joined Midea in 1999 and served as GM Assistant andMarketing Director of the Residential Air Conditioning Division as well as GM and Director of Wuxi LittleSwan Co. Ltd. He is now a Director and Vice President of Midea Group, a Co-President of the SmartHome Business Group, the President of Midea Residential Air Conditioning Division, and the Presidentof Midea China.

Mr. Gu Yanmin, male, holder of a Doctoral degree, joined Midea in 2000 and has functioned as the Headof Planning & Investment, Head of Overseas Strategy & Development, Vice President and Head ofOverseas Business Development of Midea Air-Conditioning & Refrigeration Group, Head of OverseasStrategy of Midea Group. Currently he is a Director and Vice President of the Company, the President ofthe Robotics & Automation Division, as well as the Chairman of the Supervisory Committee of KUKA.Mr. Yu Gang, male, holder of a Doctoral degree given by the Wharton School of the University ofPennsylvania, is the Honorary Chairman and a co-founder of YHD.COM. He once served as the GlobalSupply Chain Vice President of Amazon and the Global Procurement Vice President of Dell. He is nowthe Executive Chairman of the Board of Directors and a co-founder of 111, Inc., as well as a Director ofMidea Group.Mr. Xue Yunkui, male, is a holder of a Doctoral degree given by the Southwest University and a holderof a Post-Doctoral degree given by the Shanghai University of Finance and Economics. He used to bethe associate dean and a doctoral supervisor at the School of Accountancy of Shanghai University ofFinance and Economics, a Founding Vice President of Shanghai National Accounting Institute andCheung Kong Graduate School of Business, the Secretary-General of China Association of AccountingProfessors, a Vice Chairman of the Steering Committee of the National Accounting Institute under theMinistry of Finance, etc. He is now an accounting professor of Cheung Kong Graduate School of Business,and an Independent Director of Midea Group.Mr. Guan Qingyou, male, is a holder of a Doctoral degree in economics given by the Chinese Academyof Social Sciences and a holder of a Post-Doctoral degree given by the Tsinghua University. He onceworked as a Vice President and the Director of the Research Institute of Minsheng Securities. Currently,he serves as the President and Chief Economist of the Reality Institute of Advanced Finance, a Professorof the Faculty of Economics of Hainan University, a Vice Chairman of China Institute of Private Sector,an Academic Committee of the International Monetary Institute of the Renmin University of China, theChief Economist of Zhongguancun Equity Investment Association and Guangdong Province VentureCapital Association, etc.Ms. Han Jian, female, holder of a Doctoral degree given by the Cornell University, is an associate

professor of management in China Europe International Business School, a co-director of the SinoEuropean Innovation Institute in China and the Sino European Digital Economy and Intelligent EnterpriseResearch Center, as well as an Independent Director of Midea Group.Mr. Dong Wentao, male, a Master's degree graduate, joined Midea in 2016. He used to work in CIMCand ZTE. And he once served in the Legal Affairs Department, the Investor Relations Department, etc. ofMidea Group, with over 10 years of experience in legal affairs, risk control, market value management,capital operation, etc.Mr. Zhao Jun, male, a Master's degree graduate, joined Midea in 2000 and has functioned as the Directorand the CFO of GD Midea Holding Co., Ltd. He is now a Supervisor of the Company, the ExecutivePresident in Midea Holding Co., Ltd., as well as a Non-Executive Director of Midea Real Estate HoldingLimited.Ms. Liang Huiming, female, is a holder of a Bachelor’s degree. Joining Midea in 2007, she used to serveas the Chief Business Administration Commissioner in Midea Group’s Administration and HumanResources Department. She is now the Employee Supervisor of Midea Group.Mr. Wang Jianguo, male, a Master’s degree holder, joined Midea in 1999. He was once the Director ofthe Supply Chain Management Department of Midea Group’s Residential Air Conditioner Division, theDirector of the Administration and Human Resources Department of Midea Group, and the GeneralManager of Midea Group’s Refrigeration Division. Currently, he is a Vice President of Midea Group, a Co-President of the Smart Home Business Group, and the President of Midea International Business.Mr. Zhang Xiaoyi, male, is a holder of a Master’s degree. Joining Midea Group in 2010, he used to serveas the head of the overseas process IT system, the head of the supply chain system, and the IT Directorof Midea Group, etc. He is now a Vice President and the Chief Information Officer of Midea Group.Mr. Xiao Mingguang, male, a holder of a Master’s degree, joined Midea in 2000. He once was the DeputyDirector of the Financial Management Department and the Director of the Operational ManagementDepartment of Midea Group, the Director of the Audit and Supervision Department and a Director of GDMidea Holding Co., Ltd., as well as the Director of Finance of Midea Group, etc. He is now a Vice

President of Midea Group.Mr. Hu Ziqiang, male, holder of a Doctoral degree, joined Midea in 2012, and has formerly worked forGE and Samsung and as a Vice GM in Wuxi Little Swan Co., Ltd. At present he is a Vice President andthe CTO of the Company.Mr. Wang Jinliang, male, holder of a Master’s degree, joined Midea in 1995 and previously worked asthe Vice President of China Marketing in the Company, and was GD Midea Holding’s Vice President andMarketing Head. He is now a Vice President of the Company.Mr. Li Guolin, male, holder of a Master’s degree, joined Midea in 1998 and previously worked as a VicePresident of the Residential Air Conditioner Division, and the President of the Small Domestic ApplianceDivision of Midea Group. He is now a Vice President, and the President of the Manufacturing TechnologyResearch Institute, of the Company.Ms. Liu Min, female, a Master’s degree graduate, joined Midea in 1998. She used to be the GeneralManager of the Overseas Marketing Company under Midea’s Residential Air-Conditioning Division andthe Director of Midea Executive Office. She is now a Vice President, a Vice President of the Robotics &Automation Division, of the Company, as well as a member of KUKA’s Supervisory Committee.Ms. Zhong Zheng, female, a holder of a Master’s degree, joined Midea in 2002. She once was theFinancial Manager of the factory in Guangzhou of the Residential Air Conditioner Division and of domesticand overseas marketing subsidiaries, the Director of Finance of the Financial Center and the ComponentDivision, as well as the Audit Director of Midea Group, etc. She is now the Director of Finance of MideaGroup.Mr. Jiang Peng, male, holder of a Master’s degree, joined Midea in 2007 and used to be theRepresentative for Securities Affairs and Board Secretary for GD Midea Holding Co., Ltd. He is now theBoard Secretary and Director of Investor Relations of Midea Group.

Posts held in shareholding entities

√Applicable □N/A

Name Shareholding entity Position

Beginningdate of office

term

Ending date of

office term

Allowance fromthe shareholdingentityHe Jianfeng

Midea Holding Co., Ltd. President 2016-01 - NoZhao Jun Midea Holding Co., Ltd. Executive President 2020-03 - YesNote N/APosts held in other entities

√Applicable □N/A

Name Other entity Position

Beginning date

of office term

Ending date of

office term

Allowance fromthe entityHe Jianfeng

Infore Investments Holding GroupCo., Ltd.

Ending date of
Chairman of the

Board andPresident

1995-06 - Yes

Gu YanminKUKA

SupervisoryCommittee

2017-01 2024-06 YesYu Gang 111, Inc.

Executive

Chairman of the
Chairman of the

Board

2011-04 - Yes

Xue Yunkui

Ouyeel Co., Ltd.

Independent

Director

2019-08 2022-08 Yes

Management Group Co., Ltd.

Independent

Director

2020-02 2023-02 YesBank of Shanghai Co., Ltd.

Independent

Director

2021-01 2024-01 YesHinova Pharmaceuticals Inc.

Independent

Director

2020-09 2023-09 Yes

Guan Qingyou

Dalian Wanda Commercial

Beijing Rushi Research Information

Consulting Service Co., Ltd.

Board

2017-12 - YesShaanxi International Trust Co., Ltd.

Chairman of the

IndependentDirector

2019-07 2022-07 YesNanhua Futures Co., Ltd.

Independent

Director

2019-02 2022-02 YesShandong Hi-

Co., Ltd.

Independent

Director

2020-06 2023-06 Yes

Speed Road&Bridge
Hangzhou Hikvision Digital

Independent

Director

2021-03 2024-03 Yes

Technology Co., Ltd.Liu MinKUKA

Member of the

SupervisoryCommittee

2017-01 2024-06 YesNote N/A

Punishments imposed in the recent three years by the securities regulators on the incumbent directors,supervisors and senior management as well as those who left in the Reporting Period

□Applicable √N/A

4. Remuneration of Directors, Supervisors and Senior Management

The following describes the decision-making procedures, grounds on which decisions are made andactual remuneration payment of directors, supervisors and senior management.The decision-making remuneration procedure for directors, supervisors and senior management: Theremuneration is proposed by the Board Remuneration Committee and approved by the Board. Decisionsare made finally after the deliberation of shareholders' meeting.The remuneration of directors, supervisors and senior management consist of basic annual paymentsand performance-related annual payments according to the Salary Management System for the Directors,Supervisors and Senior Management which has been approved by the Company. Basic payment isdetermined based on the responsibility, risk and pressure of directors, supervisors and seniormanagement. The basic annual payment remains stable. Performance-related annual payment is relatedto the completion rate of corporate profit, the assessment result of target responsibility system and theperformance evaluation structure of their own department. The remuneration system for directors,supervisors and senior management serves the Company's strategy, and shall be adjusted with theCompany's operating conditions in order to meet the Company’s development requirements. The basisfor adjusting the remuneration of directors, supervisors and senior management are as follows:

a. Wage growth in the industryb. Inflation

c. Corporate earningsd. Organizational structure adjustmente. Individual adjustment due to a change in position

Remuneration of directors, supervisors and senior management during the Reporting Period

Unit: RMB'000NamePositionGenderAge

Former

Total before-tax

remuneration

from theCompany

Remuneration

from relatedparties of the

CompanyFang Hongbo

Chairman of the Boardand CEO

Male 53 Incumbent 12,130He Jianfeng Director Male 53 Incumbent - YesYin Bitong

Director and Vice

President

Male 52 Incumbent 8,840Gu Yanmin

Director and VicePresident

Male 57 Incumbent 5,540Yu Gang Director Male 61 Incumbent 450Xue Yunkui Independent Director Male 56 Incumbent 450Guan Qingyou Independent Director Male 43 Incumbent 450

Han JianIndependent Director Female 48 Incumbent 450Dong Wentao

Incumbent/

Chairman of theSupervisory Committee

Female 35 Incumbent 490Zhao Jun Supervisor Male 45 Incumbent - YesLiang Huiming Employee Supervisor Female 37 Incumbent 250Wang Jianguo Vice President Male 44 Incumbent 5,660Zhang Xiaoyi Vice President Male 47 Incumbent 4,960

Hu ZiqiangVice President Male 63 Incumbent 4,760Wang Jinliang Vice President Male 53 Incumbent 4,310Xiao Mingguang

Vice President Male 50 Incumbent 4,300Liu Min

Chairman of theSupervisory Committee

Female 43 Incumbent 4,620Li GuolinVice President Male 45 Incumbent 4,480Helmut Zodl Chief Financial Officer Male 47 Former 7,770

Zhong Zheng Director of Finance Female 38 Incumbent 3,960

Jiang Peng Board Secretary Male 47 Incumbent 3,070Total -- -- -- -- 76,940 --

Share incentives for directors, supervisors and senior executives in the Reporting Period

√Applicable □N/A

Unit: share

Name Office title

Exercisable shareoptionsfor the

Period

Exercised shareoptionsin theReporting Period

Reporting

Exerciseprice for

share

options in

the

Period(RMB /share)

Marketprice at

Reportingthe end of

the

Period(RMB /share)

ReportingRestricted

sharesheld at

thebeginning

of the

Reporting

Period

shares in

the

Reporting

Period

shares

granted in

the

Period

Grantprice of

the

Reportingrestricted

shares(RMB/sha

re)

sharesheld at

the end of

the

PeriodHuZiqiang

Reporting

VicePresident

-

-

-

98.44

100,000100,000

15.86

100,00025,000

27.57

75,000

XiaoMinggu

ang

VicePresident

210,000105,000

17.85

98.44

100,000

25,000

27.57

75,000

100,000

50,000

27.99

50,000

ZhangXiaoyi

VicePresident

80,00080,000

16.06

98.44

70,000

70,000

15.86

100,000

25,000

27.57

75,000

WangJinliang

VicePresident

-

-

-

98.44

120,000

120,000

24.42

240,000

LiGuolin

VicePresident

-

-

-

98.44

100,000

24.42

100,000

ZhongZheng

Director of

Finance

75,00010,000

17.85

98.44

60,000

60,000

15.86

80,000

20,000

27.57

60,000

Total --

365,000195,000

-- --

830,000375,000220,000

-- 675,000

Note (if any)N/A

5. Staff in the Company

5.1 Number, functions and educational backgrounds of the staff

Number of in-service staff of the Company 1,729Number of in-service staff of main subsidiaries 147,510Total number of in-service staff 149,239Total number of staff with remuneration in the period 149,239Number of retirees to whom the Company or its mainsubsidiaries need to pay retirement pension

2,369FunctionsFunction Number of staffProduction121,579Sales 8,063Technical 16,071Financial 1,830Administrative1,696Total 149,239

Educational backgroundsEducational background Number of staff

Master and doctor 5,491

Bachelor27,770College, technical secondary school 59,393

Others 56,585

Total 149,239Note: The data above have not yet included the staff of KUKA, which are around 14,000.

5.2 Staff remuneration policy

Staff remuneration shall be paid on time according to the Salary Management System. The Companydecides the regular salary of the employees according to the position’s value and evaluationperformances and decides the variable salary according to the Company's and employee’s performance.The remuneration distribution shows more consideration for strategic talent and ensures the marketcompetitiveness in the salary of core talent. The Company shall make dynamic adjustments to the staffremuneration policy according to regional differences, number of employees, staff turnover, environmentchanges in the industry and paying ability of the Company.

5.3 Staff trainings

In Midea, new employees will receive orientation and job-specific skill training or tutoring, while in-serviceones will be given irregular trainings inside or outside the Company to help improve their professionaland universal skills. In this way, Midea people enjoy better development opportunities.Midea has also put in place a multi-tier talent development system, including a mature leadershipdevelopment program comprising the Sailor Project, the Voyager Project and the Pilot Project to cultivatereserve talent for manager, director and general manager.The attendances at internal training sessions were 5,448,046 in 2020, of which 27,467 were managementpersonnel, 2,233,420 technical and marketing personnel and 3,187,159 operational personnel. Thetrainings included:

a. Building Leadership Development Programs such as the Sailor-Voyager-Pilot program and a High-Potential Leaders Training system to facilitate talent management and training. 55 talent trainingprograms were carried out, where 3,205 highly skilled managerial staff were trained for a total of 68,160man-hours.b. Building a professionalism promotion system. 809 such programs were carried out, where 326,282staff were trained for a total of 2,609,472 man-hours.c. Providing channels for common skill improvement. 682 such programs such as the Lecture for Staffwere launched, where 73,679 staff were trained for a total of 262,188 man-hours.d. Improving individual comprehensive ability. 140 external trainings for individuals at junior, middle andsenior levels were organized, where 515 staff were trained for a total of 8,073 man-hours.e. In order to help new graduates develop themselves fast and foster a new power for the Company, 63relevant programs such as the Re-Education of New Graduates, the Training Camp for New Graduates,and the Orientation Training Camp for New Graduates were organized, where 9,647 new graduates weretrained for a total of 256,733 man-hours.

f. Facilitating organizational learning. 6,013 internal sharing sessions were held, where 235,870employees were trained for 367,901 man-hours. With the addition of 888 new internal trainers, annualteaching time reached 7,805 hours in total. And a total of 852 courses were designed in the year.g. 12,399 key technical staff and working team leaders were trained for a total of 258,723 hours.h. 110,728 staff visited M-Learning, a mobile app developed by Midea for online training, for a total of476,721 times in 2020.

5.4 Labor outsourcing

□Applicable √N/A

Section VIII Corporate Governance

1. Basic Situation of Corporate Governance

Any incompliance with the regulatory documents issued by the CSRC governing the governance of listedcompanies

□Yes √No

The Company is constantly improving its corporate governance in strict accordance with the CompanyLaw, the Securities Law and the relevant regulations of the China Securities Regulatory Commission.There are four special committees under the Board, namely the Strategy Committee, the AuditingCommittee, the Nomination Committee as well as the Remuneration and Appraisal Committee. Theywere designed to provide consultation and advice to the Board and validate the professionalization andefficiency of discussions and decision-making. The Company has established clear rules of procedurefor its shareholders' meeting, board of directors, Supervisory Committee and special committees underthe board, as well as the Work Rules for Company Secretary. It has also established a set of standarddocuments including Information Disclosure Management System, Funds Raising Management System,Connected Transaction Management System, Wealth Management Entrustment Management System,Insider Registration System, External Guaranty Decision-making System, Foreign InvestmentManagement System, and Management System for Finance Flow with Connected Parties, InternalAuditing System. The shareholders' meeting, the Board of Directors, the Supervisory Committee andoperations management departments have clear authority and responsibility. Each performs its ownfunctions and maintains its stability effectively. Their scientific decision-making and coordinatedoperations have laid a firm foundation for the sustained, healthy and steady development of the Company.The Company has also launched core management team shareholding plans and equity incentive plansfor core research, quality control, technical, production and management staff, which helps to develop asound shareholding structure for the future growth of the Company.In 2020, the Company won the following honors:

No. 307 of “Fortune Global 500”; No. 229 of “The World’s 2,000 Largest Public Companies” releasedby the Forbes; No. 33 of the “BrandZ? 2020 Top 100 Most Valuable Chinese Brands” jointlyreleased by WPP and Kantar Millward Brown; No.174 of the “2021 Brand Finance Global 500”; the

Golden Bull Award for Social Responsibilities of Listed Companies” by China Securities Journal; andthe “Poverty Alleviation Contribution Award of the Year” at “China ESG Golden Awards 2020”presented by finance.sina.com.cn.

2. Independency of businesses, personnel, assets, organizations, and finance which

are separate from the controlling shareholder

The Company is totally autonomous with respect to business, personnel, assets, organizations, andfinance from Midea Holding Co., Ltd., the controlling shareholder of the Company, therefore maintainingintegrity and independency in both business and operations.

2.1 Business independence:

The Company has a complete industrial chain for its manufacturing business, a completely distinctpurchase and sales system, and an independent and comprehensive business operation capability.

2.2 Personnel independence:

The Company is completely autonomous from the controlling shareholder regarding its personnel. Thelabor, personnel and remuneration management of the company are totally unrelated. All seniormanagement members received remuneration from the Company except those that hold only a director’sposition in the controlling shareholder.

2.3 Asset integrity:

The Company has its own independent production system as well as ancillary production systems andfacilities. Intangible assets such as industrial rights, trademark ownership and non-patent technology areheld by the Company.

2.4 Organization independence:

The Company has set up an independent organizational structure which maintains its independentoperation. The Company has the right to appoint or remove any personnel so there is no overlapping withthe controlling shareholder.

2.5 Financial independence:

The Company's financial management is independent from the controlling shareholder. The Companyhas its own accounting department, accounting system, financial management system, and bankaccounts and independently makes financial decisions and pays its own taxes according to relevant laws.

3. Horizontal Competition

□Applicable √N/A

4. Annual Meeting of Shareholders and Special Meetings of Shareholders Convened

during the Reporting Period

4.1 Meetings of shareholders convened during the Reporting Period

Meeting Type

Investorparticipationratio

Convened dateDisclosure date Disclosure index2020

Meeting ofShareholders

Specialmeeting ofshareholders

First Special

54.4367% 13 March 2020 14 March 2020

Announcement No.2020-023, disclosed onwww.cninfo.com.cn2019 AnnualMeeting ofShareholders

Annualmeeting ofshareholders

57.2182% 22 May 2020 23 May 2020

Announcement No.2020-050, disclosed onwww.cninfo.com.cn2020 SecondSpecial Meetingof Shareholders

Specialmeeting ofshareholders

57.9386% 22 June 2020 23 June 2020

Announcement No.2020-076, disclosed onwww.cninfo.com.cn2020 ThirdSpecial Meetingof Shareholders

Specialmeeting ofshareholders

60.4888% 16 October 2020 17 October 2020

Announcement No.2020-107, disclosed onwww.cninfo.com.cn

4.2 Special meetings of shareholders convened at the request of preference shareholders with

resumed voting rights

□Applicable √N/A

5. Performance of Independent Directors during the Reporting Period

5.1 Attendance of independent directors in Board meetings and meetings of shareholders

Attendance of independent directors in Board meetings and meetings of shareholders

Independentdirector

Presencedue

meetings in

the Reporting

Period(times)

Presence atBoardmeetings onsite (times)

Presence at

Boardmeetings bytelecommunication (times)

Presence atBoardmeetingsthrough aproxy (times)

Absencefrom Boardmeetings(times)

Absencefrom Boardmeetings fortwoconsecutivetimes

Presence atmeetings of

shareholders

(times)Xue Yunkui 11

0 0 No 0

Guan Qingyou 11

0 0 No 1

Han Jian

0 0 No 0

Explanation of absence from Board meetings for two consecutive times

5.2 Objections from independent directors on related issues of the Company

Were there any objections on related issues of the Company from independent directors

□Yes √No

No such cases in the Reporting Period.

5.3 Other details about the performance of duties by independent directors

Were there any suggestions from independent directors adopted by the Company

√Yes □No

During the Reporting Period, independent directors strictly followed related rules, regulations and theArticles of Association. They focused on the Company operation, carried out their duties independentlyand imparted lots of professional advice on perfecting the Company’s systems, daily operations anddecisions. They provided fair advice during the Reporting Period and played an effective role in improvingthe Company supervisory systems and protecting the legal rights of the Company and the shareholdersas a whole.

6. Performance of Duties by Special Committees under the Board during the

Reporting Period

6.1 The Audit Committee under the Board convened four meetings in the Reporting Period, at which the

following proposals were considered and approved: The 2019 Final Account Report, The 2019 AnnualReport & Its Abstract, The Report of the Audit Committee on Concluding and Appraising the 2019 AnnualAudit Work, The Proposal for Appointing an Auditor for the 2020 Annual Result, The Proposal forAppointing an Auditor for the Internal Control in 2020, The Report on the First Quarter of 2020, The 2020Semi-Annual Report and The Report on the Third Quarter of 2020.

6.2 The Remuneration and Appraisal Committee under the Board convened three meetings in the

Reporting Period, at which the following proposals were considered and approved: The RemunerationStandard for Directors, Supervisors and Senior Management for 2019, The Proposal on the SeventhStock Option Incentive Scheme (Draft) and Its Abstract, The Proposal on the 2020 Restricted ShareIncentive Scheme (Draft) and Its Abstract, The Sixth Core Management and Global Partner StockOwnership Scheme of Midea Group Co., Ltd. (Draft) and Its Abstract, The Third Core Management andBusiness Partner Stock Ownership Scheme of Midea Group Co., Ltd. (Draft) and Its Abstract, TheProposal on the Repurchase and Retirement of Certain Incentive Shares under the 2017, 2018 and 2019Restricted Share Incentive Schemes, The Proposal on the Satisfaction of the Conditions for the SecondUnlocking Period for the Reserved Restricted Shares of the 2017 Restricted Share Incentive Scheme,The Proposal for Matters Related to the Stock Option Exercise for the Third Exercise Period of the FourthStock Option Incentive Scheme, The Proposal for Matters Related to the Stock Option Exercise for theFirst Exercise Period of the Fifth Stock Option Incentive Scheme, The Proposal on the Satisfaction of theConditions for the Third Unlocking Period for the First Phase of the 2017 Restricted Share IncentiveScheme, and The Proposal on the Satisfaction of the Conditions for the First Unlocking Period for theFirst Phase of the 2018 Restricted Share Incentive Scheme.

6.3 The Nomination Committee under the Board convened two meetings in the Reporting Period, at which

the following proposals were considered and approved: The Proposal for Vice President Appointment,and The Proposal for the Change of Representative for Securities Affairs.

7. Performance of Duties by the Supervisory Committee

Were there any risks to the Company identified by the Supervisory Committee when performing itsduties during the Reporting Period

□Yes √No

The Supervisory Committee of the Company had no objection to the matters of supervision during theReporting Period.

8. Assessment and Incentive Mechanism for the Senior Management

The Company established an appraisal system on the basis of its target-oriented responsibility systemand adopted an appraisal agreement for senior management members, which determines the appraisalcriterion, appraisal method and measures taken based on the appraisal result. During the ReportingPeriod, the Company has carried out appraisals of senior management members on the basis of itstarget-oriented responsibility system and the appraisal result was reflected in the annual performance-based incentive rewards. Meanwhile, the Company promoted the unification of interests betweenmanagers and shareholders through high-level staff and core management teams' shareholding schemesas well as multiple stock option or restricted share incentive schemes, laying a good foundation for thefuture growth of the Company.

9. Internal Control

9.1 Serious internal control defects found in the Reporting Period

□Yes √No

9.2 Self-evaluation report on internal control

Disclosure date of the internal control self-evaluation report30 April 2021Index to the disclosed internal control self-evaluation report

For details, please refer to the 2020 Self-EvaluationReport on Internal Control, which has been disclosedon www.cninfo.com.cnRatio of the total assets of the appraised entities to theconsolidated total assets

70%Ratio of the operating revenue of the appraised entities to theconsolidated operating revenue

70%Defect identification standardsTypeFinancial-report related Non-financial-report relatedNature standard

For details, please refer to “(c) Basis forinternal control evaluation and

For details, please refer to “(c) Basis forinternal control evaluation andidentification standards for internal control

defects” under Section III of The 2020Self-

disclosed on www.c

ninfo.com.cn dated 30

April 2021.

defects” under Section III of The 2020Self-Evaluation Report on Internal Controldisclosed on www.cninfo.com.cn dated 30April 2021.

Quantitative standard

For details, please refer to “(c) Basis forinternal control evaluation and

defects” under Section III of The 2020Self-

Evaluation Report on Internal Control

disclosed on www.cninfo.com.c

April 2021.

For details, please refer to “(c) Basis forinternal control evaluation andidentification standards for internal controldefects” under Section III of The 2020Self-Evaluation Report on Internal Controldisclosed on www.cninfo.com.cn dated 30April 2021.Number of serious financial-report-related defects

Number of serious non-financial-report-related defects

Number of important financial-report-related defects

Number of important non-financial-report-related defects

10. Auditor’s Report on Internal Control

√Applicable □N/A

Opinion paragraph in the auditor’s report on internal controlThe internal control auditor holds the view that on 31 December 2020, Midea Group maintained an effective internalcontrol of a financial report in all significant aspects based on the General Specifications of Company Internal Controland relevant specifications.Auditor’s report on internalcontrol disclosed or not

Disclosed on www.cninfo.com.cnDate of disclosing the full text ofthe auditor’s report on internalcontrol

30 April 2021Index to the disclosed full text ofthe auditor’s report on internalcontrol

For details, please refer to the 2020 Auditor’s Report on Internal Control, which has

been disclosed on www.cninfo.com.cnType of the auditor’s opinion Standard & unqualifiedSerious non-financial-report-related defects

No

Whether any modified opinions are expressed by the accounting firm in its auditor’s report on theCompany’s internal control

□ Yes √ No

Whether the auditor’s report on the Company’s internal control issued by the accounting firm is consistentwith the self-evaluation report of the Board

√ Yes □ No

Section IX Financial Report

1. Auditor’s report

Type of the auditor’s opinion Unqualified opinionSigning date of the auditor’s report 28 April 2021Name of the auditor PricewaterhouseCoopers Zhong Tian LLPNo. of the auditor’s report PwC ZT Shen Zi (2021) No. 10017Names of certified public accountants Yao Wenping and Qiu Xiaoying

[English Translation for Reference Only]

Auditor’s Report

PwC ZT Shen Zi (2021) No. 10017

(Page 1 of 6)

To the Shareholders of Midea Group Co., Ltd.,
Opinion
What we have audited
We have audited the accompanying financial statements of Midea Group Co., Ltd.

(hereinafter “

”), which comprise:

? the consolidated and company balance sheets as at 31 December 2020;? the consolidated and company income statements for the year then ended;? the consolidated and company cash flow statements for the year then ended;?

ended; and

? notes to the financial statements.
Our opinion
In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated and company

’s financial position of the Group as at 31 December 2020, and their financial

(“CASs”).

performance and cash flows for the year then ended in accordance with the requirements of the Accounting Standards for Business Enterprises
Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing

(“CSAs”). Our responsibilities

s Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with the Code of Ethics for Professional Accountants of the Chines

e Institute of Certified Public Accountants (“CICPA Code”), and we have fulfilled our other

ethical responsibilities in accordance with the CICPA Code.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of

on these matters.

most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
Key audit matters identified in our audit are summarised as follows:
? Recognition of revenue from heating & ventilation, as well as air-conditioner (hereinafter referred to as “HVAC”) and consumer appliances
? Impairment testing of goodwill

PwC ZT Shen Zi (2021) No. 10017

(Page 2 of 6)

Key Audit Matters (Cont’d)How our audit addressed the Key Audit Matter

s

consumer

appliances

- sales of products” and

Note 4(44) “Operating revenue” to the financial statements.

up’s consolidated operating

revenue was RMB284,221,249,000 and the revenue from

HVAC and

was

RMB235,105,807,000

.

HVAC and consumer

appliances

mainly due to the large

overseas

customer base and high volume of sales through various

distribution

. In addition, the amount of

revenue

recognized is material to the

as a whole. Therefore, completing the

necessary

required

substanti

al audit resources.

Regarding the Group’s revenue from sales of

HVAC

, we performed the following procedures:

1. We interviewed management from operation and financial

departments to understand the necessary details of sales

processes

internal control of processes relating to the revenue from

sale of HVAC and consumer appliances designed by

management and tested the operating effectiveness of keycontrols;

2. We reviewed household appliance sales contract template

entered into by and between the Group and the clients fromall distribution channels, and analysed and evaluated theGroup’s accounting policies on the revenue from sales ofHVAC and consumer appliances based on our interviewwith management, understanding of the Group’s business

operation and audit experience;

3. Performed risk assessment through fluctuation analysis of

monthly sales and gross margin by product;

4. Reviewed supporting documents relevant to revenue

recognition on a

sample basis, including sales contracts,

orders, sales invoices, shipping orders, acknowledgement ofgoods receipts signed by customers, billing agreements withcustomers, etc.;

5. Validated the revenue by external confirmation on a

sampling basis;

6. Evaluated whether or not the products sales occurred near

year end was recorded in the proper period by checking thesupporting documents which include acknowledgement ofgoods receipts signed by customers, billing agreements withcustomers or other supporting documents.

HVAC and consumer are supported by the

available evidence.

PwC ZT Shen Zi (2021) No. 10017

(Page 3 of 6)

How our audit addressed the Key Audit Matters

Key Audit Matters (Cont’d)
Impairment

assessment of

Please refer to Note 4(19) “Goodwill” to the financial statements.

y

assessing the recoverable amount of
containing the relevant goodwill, based on the present value of cash flows forecasts. Key assumptions adopted in the impairment testing of goodwill included expected revenue growth rates, EBITDA margins, perpetual annual growth rates, discount rates, etc.

which required

We focused on the impairment assessment o

f the goodwill totalling

RMB25,780,780,000 arising from the business acquisition of KUKA Group and TLSC due to the significance of the goodwill and degree of key estimates and judgements involved in the impairment assessment.Regarding the impairment testing of goodwill arising from the acquisition of KUKA Group and TLSC, we performed the following

procedures:

1.

relating to impairment testing of goodwill, and assessed theinherent risks of material misstatement by considering the

degree of estimation uncertainty and the level of other

inherent risk factors, s

fraud;

2. E

valuated and tested the operating effectiveness of key controls relevant to the impairment testing of goodwill,

including review and approval of key assumptions appliedand internal control over calculating recoverable amountsof the asset group and asset groups containing the allocatedgoodwill;

3. Evaluated the rationality of the asset group

groups identification;

4. Evaluated the rationality of forecasts made by management

by comparing the estimated future cash flows of the prioryear with the actual business performance of the currentyear, and considered whether

the judgement made by

management during the selection of data would give rise toindicators of possible management bias;

5. Evaluated the rationality of key assumptions applied in the

impairment testing of goodwill, such as expected revenue

rates and discount rates by reference to company’shistorical operating performance, future operation plan andmarket developments;

6. Verified the mathematical accuracy of the calculation

process during the impairment assessment of goodwill;

7. Evaluated the appropriateness of the goodwill impairment

testing model and discount rate employed by managementwith the involvement of internal valuation expert.

Based on the work performed,

management’s judgments in goodwill

supported by the available evidences.

PwC ZT Shen Zi (2021) No. 10017

(Page 4 of 6)

Other Information

report of the Group other than the financial statements and

’s report thereon.

our auditor
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of
Management and Those Charged with Governance for the Financial Statements
Management of the Group is responsible for the preparation and fair presentation of these financial statements in accordance with the CASs, and for such internal control as

management

determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing these financial statements, management is responsible for assessing the Group

’s ability to

nt either intends to liquidate the Group or to cease

operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group

’s financial reporting process.

PwC ZT Shen Zi (2021) No. 10017

(Page 5 of 6)

Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether these financial statements as a whole are free from material misstatement, whether due to fraud or

error, and to issue an auditor’s report that

it is not a guarantee that an

audit conducted in accordance with CSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit
in accordance with CSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
? Identify and assess the risks of material misstatement of the financial statements, whether due to

fraud or error, design an

detecting a material misstatement resulting from fraud is higher than for one resulting f

rom error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
? Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.
? Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
? Conclude on the appropriateness of management’s use of the going concern basis of accounting

and, based on the audit evidence obtained, whether a material uncertainty exists related to eventsor conditions that may cast significant doubt on the Group’s ability to continue as a going concern.

inadequate, to modify our

opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
?

Evaluate the overall presentation (including the

financial statements, and whether the financial statements represent the underlying transactions

and events in a manner that achieves fair presentation.
? Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial

statements. We are responsible for the direction, supervision and performance of the group audit.

We remain solely responsible for our audit opinion.

PwC ZT Shen Zi (2021) No. 10017

(Page 6 of 6)

Auditor’s Responsibilities for the Audit of the Financial Statements (Cont’d)
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor

’s report unless l

h the public interest benefits of such communication.

aw or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweig
PricewaterhouseCoopers Zhong Tian

LLP

’s Republic of China

[2

8] April 2021

Signing CPA

Signing CPA

—————————

Yao Wenping(Engagement Partner)

—————————

Qiu Xiaoying

MIDEA GROUP CO., LTD.

CONSOLIDATED AND COMPANY BALANCE SHEETSAS AT 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

ASSETSNote31 December 202031 December 201931 December 202031 December 2019
ConsolidatedConsolidatedCompanyCompany
Current assets
Cash at bank and on hand4(1)81,210,48270,916,84149,240,18052,291,056
Financial assets held for trading4(2)28,239,6011,087,35116,614,658-
Derivative financial assets420,494197,412--
Notes receivable4(3)5,304,5104,768,520--
Accounts receivable4(4)22,978,36318,663,819--
Receivables financing4(6)13,901,8567,565,776--
Advances to suppliers4(7)2,763,7102,246,17745,30636,877
Contract assets4(8)3,236,848——-——
Loans and advances4(9)16,469,06910,869,396--
Other receivables4(5), 17(1)2,973,9452,712,97428,318,67018,369,865
Inventories4(10)31,076,52932,443,399--
Other current assets4(11)33,079,91865,011,02720,533,74542,665,884
Total current assets241,655,325216,482,692114,752,559113,363,682
Non-current assets
Other debt investments4(12)21,456,155-20,064,155-
Long-term receivables4(13)981,6231,208,079--
Loans and advances4(9)1,113,501790,101--
Long-term equity investments4(14), 17(2)2,901,3372,790,80654,991,16152,605,859
Investments in other equity instruments46,651---
Other non-current financial assets4(15)3,360,8491,750,10780,937487,564
Investment properties405,559399,335476,839518,828
Fixed assets4(16)22,239,21421,664,682749,835878,239
Construction in progress4(17)1,477,3021,194,650204,304155,681
Intangible assets4(18)15,422,39315,484,179684,997700,836
Goodwill4(19)29,557,21828,207,065--
Long-term prepaid expenses4(20)1,300,9621,267,12797,078123,548
Deferred tax assets4(21)7,208,6355,768,993287,360189,888
Other non-current assets4(22)11,255,8794,947,60310,141,0314,359,507
Total non-current assets118,727,27885,472,72787,777,69760,019,950
TOTAL ASSETS360,382,603301,955,419202,530,256173,383,632

MIDEA GROUP CO., LTD.

CONSOLIDATED AND COMPANY BALANCE SHEETS (CONT’D)AS AT 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

LIABILITIES AND SHAREHOLDERS’ EQUITYNote31 December 202031 December 201931 December 202031 December 2019
ConsolidatedConsolidatedCompanyCompany
Current liabilities
Short-term borrowings4(25)9,943,9295,701,838799,3144,550,064
Customer deposits and

deposits from banks and

other financial institutions87,53562,477--
Derivative financial liabilities161,22527,100--
Notes payable4(26)28,249,93923,891,600--
Accounts payable4(27)53,930,26142,535,777--
Advances from customers4(28)-16,231,854--
Contract liabilities4(29)18,400,922——-——
Employee benefits payable4(30)6,954,8226,436,109562,954566,861
Taxes payable4(31)5,758,0585,096,2671,326,2191,059,246
Other payables4(32)4,501,3913,800,568123,120,354103,624,998
Current portion of non-current liabilities4(33)6,310,1811,460,1174,000,000-
Other current liabilities4(34)49,852,23939,074,7773,048,79419,539
Total current liabilities184,150,502144,318,484132,857,635109,820,708
Non-current liabilities
Long-term borrowings4(35)42,827,28741,298,3775,800,0004,000,000
Long-term payables13,26033,646--
Provisions298,110353,269--
Deferred income779,729617,155--
Long-term employee benefits payable4(36)2,159,6752,418,563--
Deferred tax liabilities4(21)5,223,9544,556,00267,79259,032
Other non-current liabilities4(37)692,986863,826--
Total non-current liabilities51,995,00150,140,8385,867,7924,059,032
Total liabilities236,145,503194,459,322138,725,427113,879,740
Shareholders' equity
Share capital4(38)7,029,9766,971,9007,029,9766,971,900
Capital surplus4(40)22,488,10519,640,31329,123,54726,592,959
Less: Treasury stock4(39)(6,094,347)(3,759,732)(6,094,347)(3,759,732)
Other comprehensive income4(41)(1,549,003)(711,554)(16,009)1,735
General risk reserve587,984366,947--
Special reserve12,730---
Surplus reserve4(42)7,966,3626,447,6587,966,3626,447,658
Undistributed profits4(43)87,074,45372,713,63125,795,30023,249,372
Total equity attributable to

shareholders of the

Company117,516,260101,669,16363,804,82959,503,892
Minority interests6,720,8405,826,934--
Total shareholders’ equity124,237,100107,496,09763,804,82959,503,892
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY360,382,603301,955,419202,530,256173,383,632

The accompanying notes form an integral part of these financial statements.Legal representative:

Fang Hongbo

Legal representative: Fang HongboPrincipal in charge of accounting: Zhong ZhengHead of accounting department: Chen Lihong

MIDEA GROUP CO., LTD.

CONSOLIDATED AND COMPANY INCOME STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

ItemNote2020201920202019
ConsolidatedConsolidatedCompanyCompany
Total revenue285,709,729279,380,5061,852,3121,767,902
Including: Operating revenue4(44), 17(3)284,221,249278,216,0171,852,3121,767,902
Interest income4(45)1,488,2111,163,180--
Fee and commission income2691,309--
Less: Cost of sales4(44)(212,839,592)(197,913,928)(51,350)(45,823)
Interest costs4(45)(105,168)(122,618)--
Fee and commission expenses(6,972)(11,633)--
Taxes and surcharges4(46)(1,533,646)(1,720,616)(32,546)(37,481)
Selling and distribution expenses4(47)(27,522,276)(34,611,231)--
General and administrative expenses4(48)(9,264,148)(9,531,361)(701,711)(579,072)
Research and development expenses4(49)(10,118,667)(9,638,137)--
Financial income4(50)2,638,0322,231,6361,421,0191,974,379
Including: Interest expenses(1,305,591)(880,703)(1,903,866)(1,402,376)
Interest income3,663,0283,807,1363,352,6333,363,003
Add: Other income4(56)1,424,0901,194,665369,889464,034
Investment income4(54), 17(4)2,362,462164,13212,578,45510,384,466
Including: Investment income from associates402,528506,225216,318272,089
Profit or loss arising from derecognition of financial

assets measured at

amortised costs-(709)--
Gains on changes in fair value4(53)1,762,9501,361,163108,605162,565
Credit impairment losses4(52)(247,605)(96,446)(6,340)(418)
Asset impairment losses4(51)(705,209)(871,909)--
(Losses)/Gains on disposal of assets4(55)(60,523)(131,131)146(1,040)
Operating profit31,493,45729,683,09215,538,47914,089,512
Add: Non-operating income384,986613,310102,42939,832
Less: Non-operating expenses(214,904)(367,288)(116,120)(22,741)
Total profit31,663,53929,929,11415,524,78814,106,603
Less: Income tax expenses4(57)(4,156,997)(4,651,970)(337,750)(420,984)
Net profit27,506,54225,277,14415,187,03813,685,619
(1) Classified by continuity of operations
Net profit from continuing operations27,506,54225,277,14415,187,03813,685,619
Net profit from discontinued operations----
(2) Classified by ownership of the equity
Attributable to shareholders of the Company27,222,96924,211,22215,187,03813,685,619
Minority interests283,5731,065,922--

MIDEA GROUP CO., LTD.

CONSOLIDATED AND COMPANY INCOME STATEMENTS (CONT’D)FOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

ItemNote2020201920202019
ConsolidatedConsolidatedCompanyCompany
Other comprehensive income, net of tax(1,177,809)348,040(17,744)(4,285)
Other comprehensive income attributable to

shareholders of the Company, net of

tax(837,449)283,152(17,744)(4,285)
(1) Other comprehensive income items

which will not be reclassified

subsequently to profit or loss112,388(142,753)--
1) Changes arising from

remeasurement of defined

benefit plan111,895(142,753)--
2) Changes in fair value of

investments in other equity

instruments493---
(2) Other comprehensive income items

which will be reclassified

subsequently to profit or loss(949,837)425,905(17,744)(4,285)
1) Other comprehensive income

that will be transferredsubsequently to profit orloss under the equity

method(20,445)(6,590)(17,744)(4,285)
2) Effective portion of cash flow hedging gains or losses298,721113,890--
3) Differences on translation of

foreign currency financial

statements(1,228,113)318,605--
Other comprehensive income attributable to minority shareholders, net of tax(340,360)64,888--
Total comprehensive income26,328,73325,625,18415,169,29413,681,334
Attributable to shareholders of the Company26,385,52024,494,37415,169,29413,681,334
Minority interests(56,787)1,130,810--
Earnings per share
Basic earnings per share (RMB Yuan)4(58)3.933.60Not applicableNot applicable
Diluted earnings per share (RMB Yuan)4(58)3.903.58Not applicableNot applicable

The accompanying notes form an integral part of these financial statements.

Legal representative: Fang HongboPrincipal in charge of accounting: Zhong ZhengHead of accounting department: Chen Lihong

MIDEA GROUP CO., LTD.

CONSOLIDATED AND COMPANY CASH FLOW STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

ItemNote2020201920202019
ConsolidatedConsolidatedCompanyCompany
1. Cash flows from operating activities
Cash received from sales of goods or rendering of services240,052,501238,815,589--
Net increase in customer deposits and deposits from banks and other financial institutions25,05818,091--
Net decrease in deposits with the Central Bank-693,023--
Cash received from interest, fee and commission1,381,8511,315,921--
Refund of taxes and surcharges6,574,7626,271,733--
Cash received relating to other operating activities4(59)(a)4,950,8745,008,82121,491,32530,809,036
Sub-total of cash inflows252,985,046252,123,17821,491,32530,809,036
Cash paid for goods and services(139,660,744)(130,099,497)--
Net increase in loans and advances(6,078,053)(318,859)--
Net decrease in loans with the Central Bank-(99,754)--
Net increase in balances with the Central Bank(1,274,496)--
Cash paid for interest, fee and commission(113,517)(134,251)--
Cash paid to and on behalf of employees(28,460,318)(26,851,139)(72,404)(52,269)
Payments of taxes and surcharges(13,407,607)(14,897,513)(342,190)(133,421)
Cash paid relating to other operating activities4(59)(b)(34,433,194)(41,131,761)(10,178,648)(6,818,472)
Sub-total of cash outflows(223,427,929)(213,532,774)(10,593,242)(7,004,162)
Net cash flows from operating activities4(59)(c)29,557,11738,590,40410,898,08323,804,874
2. Cash flows (in)/from investing activities
Cash received from disposal of investments141,821,72484,852,601103,460,30056,920,222
Cash received from returns on investments4,874,9904,026,59015,565,10412,812,869
Net cash received from disposal of fixed assets, intangible assets and other long-term assets273,544125,4192551,040
Net cash received from disposal of subsidiaries and other business units42,398-13,000-
Sub-total of cash inflows147,012,65689,004,610119,038,65969,734,131
Cash paid to acquire fixed assets, intangible assets and other long-term assets(4,656,582)(3,451,856)(187,723)(183,326)
Cash paid to acquire investments(176,621,347)(108,457,398)(117,386,281)(88,883,737)
Net cash paid to acquire subsidiaries and other business units(1,045,390)(203,057)--
Sub-total of cash outflows(182,323,319)(112,112,311)(117,574,004)(89,067,063)
Net cash flows (in)/from investing activities(35,310,663)(23,107,701)1,464,655(19,332,932)
3. Cash flows in financing activities
Cash received from capital contributions2,657,4892,897,9172,542,5562,777,490
Including: Cash received from capital contributions by minority shareholders of subsidiaries114,933120,427--
Cash received from borrowings18,070,96117,117,6776,599,31411,059,564
Cash received from issuance of short-term financing bonds33,998,238-33,998,238-
Cash received relating to other financing activities22,725---
Sub-total of cash inflows54,749,41320,015,59443,140,10813,837,054
Cash repayments of borrowings(8,354,338)(8,643,875)(4,550,064)(3,084,500)
Cash paid for repayment of short-term financing bonds(31,000,000)-(31,000,000)-
Cash payments for interest expenses and distribution of dividends or profits(12,822,636)(11,055,769)(12,831,949)(9,740,298)
Including: Cash payments for dividends or profit to minority shareholders of subsidiaries(425,461)(1,651,504)--
Cash payments relating to other financing activities(3,328,734)(3,589,551)(2,934,420)(3,257,482)
Sub-total of cash outflows(55,505,708)(23,289,195)(51,316,433)(16,082,280)
Net cash flows in financing activities(756,295)(3,273,601)(8,176,325)(2,245,226)
4. Effect of foreign exchange rate changes on cash and cash equivalents(383,411)280,376--
5. Net (decrease)/increase in cash and cash equivalents4(59)(c)(6,893,252)12,489,4784,186,4132,226,716
Add: Cash and cash equivalents at the beginning of the year30,441,76017,952,28212,408,65010,181,934
6. Cash and cash equivalents at the end of the year4(59)(d)23,548,50830,441,76016,595,06312,408,650

The accompanying notes form an integral part of these financial statements.Legal representative:

Fang Hongbo

Legal representative: Fang HongboPrincipal in charge of accounting: Zhong ZhengHead of accounting department: Chen Lihong

MIDEA GROUP CO., LTD.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITYFOR THE YEAR ENDED 31 DECEMBER 2020

(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

ItemEquity attributable to shareholders of the Company

Share

Capital

capitalsurplusLess:

Treasury

stockOther

comprehensive

incomeGeneral

risk

Surplus

reservereserve

Undistributed

Minority

profitsinterestsTotal

shareholders’

equity
(Note 4(38))(Note 4(40))(Note 4(39))
Balance at 1 January 20196,663,03118,451,307(4,918,427)(994,706)366,9475,079,09658,424,8689,382,40192,454,517
Movements for the year ended 31 December 2019
Total comprehensive income
Net profit------24,211,2221,065,92225,277,144
Other comprehensive income, net of tax---283,152---64,888348,040
Total comprehensive income---283,152--24,211,2221,130,81025,625,184
Capital contribution and withdrawal by shareholders
Ordinary shares invested by shareholders87,1502,426,916(57,088)----120,4272,577,405
Share-based payment included in shareholders' equity-144,287-----82,268226,555
Others221,719(1,221,661)1,215,783----(3,231,072)(3,015,231)
Profit distribution
Appropriation to general risk reserve---------
Appropriation to surplus reserve-----1,368,562(1,368,562)--
Profit distribution to shareholders------(8,553,897)(1,670,654)(10,224,551)
Transfer from capital surplus to share capital---------
Others-(160,536)-----12,754(147,782)
Balance at 31 December 20196,971,90019,640,313(3,759,732)(711,554)366,9476,447,65872,713,6315,826,934107,496,097

MIDEA GROUP CO., LTD.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (CONT’D)FOR THE YEAR ENDED 31 DECEMBER 2020

(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

ItemEquity attributable to shareholders of the Company

Share

Capital

capitalsurplusLess:

Treasury

stockOther

comprehensive

incomeGeneral

risk

Special

reservereserveSurplus reserve

Undistributed

Minority

profitsinterestsTotal

shareholders’

equity
(Note 4(38))(Note 4(40))(Note 4(39))
Balance at 1 January 20206,971,90019,640,313(3,759,732)(711,554)366,947-6,447,65872,713,6315,826,934107,496,097
Movements for the year ended 31 December 2020
Total comprehensive income
Net profit-------27,222,969283,57327,506,542
Other comprehensive income, net of tax---(837,449)----(340,360)(1,177,809)
Total comprehensive income---(837,449)---27,222,969(56,787)26,328,733
Capital contribution and withdrawal by shareholders
Ordinary shares invested by shareholders63,8012,157,530------89,4652,310,796
Business combinations-----13,618--1,663,7921,677,410
Share-based payment included in shareholders' equity-508,256------55,314563,570
Others(5,725)(193,357)(2,334,615)-----(517,436)(3,051,133)
Profit distribution
Appropriation to general risk reserve----221,037--(221,037)--
Appropriation to surplus reserve------1,518,704(1,518,704)--
Profit distribution to shareholders-------(11,122,406)(417,486)(11,539,892)
Transfer from capital surplus to share capital----------
Special reserve----------
Appropriation in the current period-----165--41206
Use in the current period-----(1,053)--(263)(1,316)
Others-375,363------77,266452,629
Balance at 31 December 20207,029,97622,488,105(6,094,347)(1,549,003)587,98412,7307,966,36287,074,4536,720,840124,237,100
The accompanying notes form an integral part of these financial statements.
Legal representative: Fang HongboPrincipal in charge of accounting: Zhong ZhengHead of accounting department: Chen Lihong

MIDEA GROUP CO., LTD.

COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITYFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

Item

Share

Capital

capitalsurplusLess:

Treasury

stockOther

comprehensive

Surplus

incomereserve

Undistributed

profitsTotal

shareholders’

equity
Balance at 1 January 20196,663,03110,615,389(4,918,427)6,0205,079,09619,486,21236,931,321
Movements for the year ended 31 December 2019
Total comprehensive income
Net profit-----13,685,61913,685,619
Other comprehensive income, net of tax---(4,285)--(4,285)
Total comprehensive income---(4,285)-13,685,61913,681,334
Capital contribution and withdrawal by shareholders
Ordinary shares invested by shareholders87,1502,426,916(57,088)---2,456,978
Share-based payment included in shareholders' equity-226,556----226,556
Others221,71913,372,7501,215,783---14,810,252
Profit distribution
Appropriation to surplus reserve----1,368,562(1,368,562)-
Profit distribution to shareholders-----(8,553,897)(8,553,897)
Transfer from capital surplus to share capital-------
Others-(48,652)----(48,652)
Balance at 31 December 20196,971,90026,592,959(3,759,732)1,7356,447,65823,249,37259,503,892

MIDEA GROUP CO., LTD.

COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (CONT’D)FOR THE YEAR ENDED 31 DECEMBER 2020

(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

Item

Share

Capital

capitalsurplusLess:

Treasury

stockOther

comprehensive

Surplus

incomereserve

Undistributed

profitsTotal

shareholders’

equity
Balance at 1 January 20206,971,90026,592,959(3,759,732)1,7356,447,65823,249,37259,503,892
Movements for the year ended 31 December 2020
Total comprehensive income
Net profit-----15,187,03815,187,038
Other comprehensive income, net of tax---(17,744)--(17,744)
Total comprehensive income---(17,744)-15,187,03815,169,294
Capital contribution and withdrawal by shareholders
Ordinary shares invested by shareholders63,8012,157,530----2,221,331
Share-based payment included in shareholders' equity-566,167----566,167
Others(5,725)(193,357)(2,334,615)---(2,533,697)
Profit distribution
Appropriation to surplus reserve----1,518,704(1,518,704)-
Profit distribution to shareholders-----(11,122,406)(11,122,406)
Transfer from capital surplus to share capital-------
Others-248----248
Balance at 31 December 20207,029,97629,123,547(6,094,347)(16,009)7,966,36225,795,30063,804,829
The accompanying notes form an integral part of these financial statements.
Legal representative: Fang HongboPrincipal in charge of accounting: Zhong ZhengHead of accounting department: Chen Lihong

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

1 General information

The principal business activities of Midea Group Co., Ltd. (hereinafter referred to as “theCompany”) and its subsidiaries (hereinafter collectively referred to as “the Group”) includeresidential air-conditioner, central air-conditioner, heating and ventilation systems, kitchenappliances, refrigerators, washing machines and various small appliances, robotics andautomation system. Other services include the smart supply chain; sale, wholesale andprocessing of raw materials of household electrical appliances; and financial businessinvolved in customer deposits, interbank lendings and borrowings, consumption credits,buyer’s credits and finance leases.

The Company was set up by the Council of Trade Unions of GD Midea Group Co., and wasregistered in Market Safety Supervision Bureau of Shunde District, Foshan on 7 April 2000,with its headquarters located in Foshan, Guangdong. On 30 August 2012, the Companywas transformed into a limited liability company. On 29 July 2013, the Company wasapproved to merge and acquire Guangdong Midea Electric Co., Ltd., which was listed onShenzhen Stock Exchange. On 18 September 2013, the Company’s shares were listed onShenzhen Stock Exchange.

As at 31 December 2020, the Company's share capital is RMB 7,029,975,999, and the totalnumber of shares in issue is 7,029,975,999, of which 182,862,631 shares are restrictedtradable A shares and 6,847,113,368 shares are unrestricted tradable A shares.

The detailed information of major subsidiaries included in the consolidation scope in thecurrent year is set out in Notes 5 and 6. Subsidiaries newly included in the consolidationscope via acquisition in the current year mainly include Hiconics Eco-energy TechnologyCo., Ltd. and its subsidiaries (“Hiconics Eco-energy”) and WINONE ELEVATOR COMPANYLIMITED and its subsidiaries (“WINONE ELEVATOR”), and are detailed in Note 5(1)(a);subsidiaries newly included in the consolidation scope via establishment in the current yearare detailed in Note 5(2)(a); subsidiaries no longer included in the consolidation scope inthe current year are detailed in Note 5(2)(b).

These financial statements were authorised for issue by the Company’s Board of Directorson [28] April 2021.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates

The Group determines specific accounting policies and accounting estimates based on thefeatures of production and operation, mainly including the measurement of expected creditloss (ECL) on receivables and contract assets (Note 2(9(a))), valuation method of inventory(Note 2(11)), depreciation of fixed assets and amortisation of intangible assets (Note 2(14),

(17)), impairment of long-term assets (Note 2(19)) and recognition of revenue (Note 2(26)).

Key judgements and critical accounting estimates and key assumptions applied by theGroup on the determination of significant accounting policies are set out in Note 2(31).

(1) Basis of preparation

The financial statements are prepared in accordance with the Accounting Standard forBusiness Enterprises - Basic Standard, and the specific accounting standards and otherrelevant regulations issued by the Ministry of Finance on 15 February 2006 and insubsequent periods (hereinafter collectively referred to as the “Accounting Standards forBusiness Enterprises” or “CASs”) and the disclosure requirements in the PreparationConvention of Information Disclosure by Companies Offering Securities to the Public No. 15– General Rules on Financial Reporting issued by the China Securities RegulatoryCommission (“CSRC”).

The financial statements are prepared on a going concern basis.

(2) Statement of compliance with the Accounting Standards for Business Enterprises

The financial statements of the Company for the year ended 31 December 2020 are incompliance with the Accounting Standards for Business Enterprises, and truly andcompletely present the consolidated and the Company’s financial position of the Companyas at 31 December 2020 and their financial performance, cash flows and other informationfor the year then ended.

(3) Accounting period

The Company’s accounting year starts on 1 January and ends on 31 December.

(4) Functional currency

The functional currency of the Company is Renminbi (“RMB”). The subsidiaries determinetheir functional currency based on the primary economic environment in which the businessis operated, mainly including EUR, JPY, USD and HKD. The financial statements arepresented in RMB.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(5) Business combinations

(a) Business combinations involving enterprises under common control

The consideration paid and net assets obtained by the Group in a business combination aremeasured at the carrying amount. If the absorbing party was bought by the ultimatecontroller from a third party in prior years, the value of its assets and liabilities (includinggoodwill generated due to the combination) are based on the carrying amount in the ultimatecontroller’s consolidated financial statements. The difference between the carrying amountof the net assets obtained by the Group and the carrying amount of the consideration paidfor the combination is treated as an adjustment to capital surplus (share premium). If thecapital surplus (share premium) is not sufficient to absorb the difference, the remainingbalance is adjusted against retained earnings. Costs directly attributable to the combinationare included in profit or loss in the period in which they are incurred. Transaction costsassociated with the issue of equity or debt securities for the business combination areincluded in the initially recognised amounts of the equity or debt securities.

(b) Business combinations involving enterprises not under common control

The cost of combination and identifiable net assets obtained by the Group in a businesscombination are measured at fair value at the acquisition date. Where the cost of thecombination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable netassets, the difference is recognised as goodwill; where the cost of combination is lower thanthe acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the differenceis recognised in profit or loss for the current period. Costs directly attributable to thecombination are included in profit or loss in the period in which they are incurred. Transactioncosts associated with the issue of equity or debt securities for the business combination areincluded in the initially recognised amounts of the equity or debt securities.

For business combinations achieved by stages involving enterprises not under commoncontrol, previously-held equity in the acquiree is remeasured at its fair value at theacquisition dates, and the difference between its fair value and carrying amount is includedin investment income for the current period. Where the previously-held equity in the acquireeinvolves other comprehensive income under equity method and shareholders’ equitychanges other than those arising from the net profit or loss, other comprehensive incomeand profit distribution, the related other comprehensive income and other shareholders'equity changes are transferred into income for the current period to which the acquisitiondates belong, excluding those arising from changes in the investee's remeasurements ofnet liability or net asset related to the defined benefit plan. The excess of the sum of fairvalue of the previously-held equity and fair value of the consideration paid at the acquisitiondates over share of fair value of identifiable net assets acquired from the subsidiary isrecognised as goodwill.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(6) Preparation of consolidated financial statements

The consolidated financial statements comprise the financial statements of the Companyand all of its subsidiaries.

Subsidiaries are consolidated from the date on which the Group obtains control and are de-consolidated from the date that such control ceases. For a subsidiary that is acquired in abusiness combination involving enterprises under common control, it is included in theconsolidated financial statements from the date when it, together with the Company, comesunder common control of the ultimate controlling party. The portion of the net profits realisedbefore the combination date is presented separately in the consolidated income statement.

In preparing the consolidated financial statements, where the accounting policies and theaccounting periods of the Company and subsidiaries are inconsistent, the financialstatements of the subsidiaries are adjusted in accordance with the accounting policies andthe accounting period of the Company. For subsidiaries acquired from businesscombinations involving enterprises not under common control, the individual financialstatements of the subsidiaries are adjusted based on the fair value of the identifiable netassets at the acquisition date.

All significant intra-group balances, transactions and unrealised profits are eliminated in theconsolidated financial statements. The portion of subsidiaries’ shareholders' equity and theportion of subsidiaries’ net profits and losses and comprehensive incomes for the period notattributable to the Company are recognised as minority interests, net profit attributed tominority interests and total comprehensive incomes attributed to non-controlling interestsand presented separately in the consolidated financial statements under shareholders'equity, net profit and total comprehensive income respectively. Where the loss for the currentperiod attributable to the minority shareholders of the subsidiaries exceeds the share of theminority interests in the opening balance of equity, the excess is deducted against minorityinterests. Unrealised profits and losses resulting from the sales of assets by the Companyto its subsidiaries are fully eliminated against net profit attributable to shareholders of theparent company. Unrealised profits and losses resulting from the sales of assets by asubsidiary to the Company are eliminated and allocated between net profit attributable toshareholders of the parent company and net profit attributable to minority interests inaccordance with the allocation proportion of the parent company in the subsidiary.Unrealised profits and losses resulting from the sales of assets by one subsidiary to anotherare eliminated and allocated between net profit attributable to shareholders of the parentcompany and net profit attributable to minority interests in accordance with the allocationproportion of the parent company in the subsidiary. If the accounting treatment of atransaction is inconsistent in the financial statements at the Group level and at the Companyor its subsidiary level, adjustment will be made from the perspective of the Group.

(7) Determination criterion for cash and cash equivalents

Cash and cash equivalents comprise cash on hand, deposits that can be readily drawn ondemand, and short-term and highly liquid investments that are readily convertible to knownamounts of cash and which are subject to an insignificant risk of changes in value.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(8) Foreign currency translation

(a) Foreign currency transactions

Foreign currency transactions are translated into functional currency using the exchangerates prevailing at the dates of the transactions.

At the balance sheet date, monetary items denominated in foreign currencies are translatedinto functional currency using the spot exchange rates on the balance sheet date. Exchangedifferences arising from these translations are recognised in profit or loss for the currentperiod, except for those attributable to foreign currency borrowings that have been takenout specifically for acquisition or construction of qualifying assets, which are capitalised aspart of the cost of those assets. Non-monetary items denominated in foreign currencies thatare measured at historical costs are translated at the balance sheet date using the spotexchange rates at the date of the transactions. The effect of exchange rate changes on cashis presented separately in the cash flow statement.

(b) Translation of foreign currency financial statements

The asset and liability items in the balance sheets for overseas operations are translated atthe spot exchange rates on the balance sheet date. Among the equity items, the items otherthan undistributed profits are translated at the spot exchange rates of the transaction dates.The income and expense items in the income statements of overseas operations aretranslated at the spot exchange rates of the transaction dates. The differences arising fromthe above translation are recognised in other comprehensive income. The cash flows ofoverseas operations are translated at the spot exchange rates on the dates of the cashflows. The effect of exchange rate changes on cash is presented separately in the cash flowstatement.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020

(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(9) Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and afinancial liability or equity instrument of another entity. A financial asset or a financial liabilityis recognised when the Group becomes a party to the contractual provisions of theinstrument.

(a) Financial assets

(i) Classification and measurement

Based on the business model for managing the financial assets and the contractual cashflow characteristics of the financial assets, financial assets are classified as: (1) financialassets at amortised cost; (2) financial assets at fair value through other comprehensiveincome; (3) financial assets at fair value through profit or loss.

The financial assets are measured at fair value at initial recognition. Related transactioncosts that are attributable to the acquisition of the financial assets are included in the initiallyrecognised amounts, except for the financial assets at fair value through profit or loss, therelated transaction costs of which are recognised directly in profit or loss for the currentperiod. Accounts receivable or notes receivable arising from sales of products or renderingof services (excluding or without regard to significant financing components) are initiallyrecognised at the consideration that is entitled to be charged by the Group as expected.

(i-1) Debt instruments

The debt instruments held by the Group refer to the instruments that meet the definition offinancial liabilities from the perspective of the issuer, and are measured in the following threeways:

Measured at amortised cost:

The objective of the Group’s business model is to hold the financial assets to collect thecontractual cash flows, and the contractual cash flow characteristics are consistent with abasic lending arrangement, which gives rise on specified dates to the contractual cash flowsthat are solely payments of principal and interest on the principal amount outstanding. Theinterest income of such financial assets is recognised using the effective interest method.Such financial assets mainly comprise cash at bank and on hand, loans and advances,notes receivable, accounts receivable, other receivables, debt investments and long-termreceivables, etc. Debt investments and long-term receivables that are due within one year(inclusive) as from the balance sheet date are included in the current portion of non-currentassets; debt investments with maturities of no more than one year (inclusive) at the time ofacquisition are included in other current assets.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020

(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(9) Financial instruments (Cont’d)

(a) Financial assets (Cont’d)

(i) Classification and measurement (Cont’d)

(i-1) Debt instruments (Cont’d)

Measured at fair value through other comprehensive income:

The objective of the Group’s business model is to hold the financial assets to both collectthe contractual cash flows and sell such financial assets, and the contractual cash flowcharacteristics are consistent with a basic lending arrangement. Such financial assets aremeasured at fair value through other comprehensive income, except for the impairmentgains or losses, foreign exchange gains and losses, and interest income calculated usingthe effective interest method which are recognised in profit or loss for the current period.Such financial assets mainly include receivables financing, other debt investments, etc.Other debt investments of the Group that are due within one year (inclusive) as from thebalance sheet date are included in the current portion of non-current assets; other debtinvestments with maturities no more than one year (inclusive) at the time of acquisition areincluded in other current assets.

Measured at fair value through profit or loss:

Debt instruments held by the Group that are not divided into those at amortised cost, orthose measured at fair value through other comprehensive income, are measured at fairvalue through profit or loss. At initial recognition, the Group designates a portion of financialassets as at fair value through profit or loss to eliminate or significantly reduce an accountingmismatch. Financial assets that are due over one year as from the balance sheet date andare expected to be held over one year are included in other non-current financial assets,and others are included in financial assets held for trading.

(i-2) Equity instruments

Investments in equity instruments, over which the Group has no control, joint control orsignificant influence, are measured at fair value through profit or loss under financial assetsheld for trading; investments in equity instruments expected to be held over one year asfrom the balance sheet date are included in other non-current financial assets.

In addition, a portion of certain investments in equity instruments not held for trading aredesignated as financial assets at fair value through other comprehensive income underother investments in equity instruments. The relevant dividend income of such financialassets is recognised in profit or loss for the current period.

(i-3) Derivative financial instruments

The derivative financial instruments held or issued by the Group are mainly used incontrolling risk exposures. Derivative financial instruments are initially recognised at fairvalue on the day when derivatives transaction contract was signed, and subsequentlymeasured at fair value. The derivative financial instruments are recorded as assets whenthey have a positive fair value and as liabilities when they have a negative fair value.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(9) Financial instruments (Cont’d)

(a) Financial assets (Cont’d)

(i) Classification and measurement (Cont’d)

(i-3) Derivative financial instruments (Cont’d)

The method for recognising changes in fair value of the derivative financial instrumentdepends on whether the derivative financial instrument is designated as a hedginginstrument and meets the requirement for it, and if so, the nature of the item being hedged.For derivative financial instruments that are not designated as hedging instruments and failto meet requirements on hedging instruments, including those held for the purpose ofproviding hedging against specific risks in interest rate and foreign exchange but notconforming with requirements of hedge accounting, the changes in fair value are recordedin gains or losses arising from changes in fair value in the consolidated income statement.

Cash flow hedge

The effective portion of gains or losses on hedging instruments is recognised in othercomprehensive income as cash flow hedging reserve, while the ineffective portion isrecognised in profit or loss for the current period. Where the hedge is a forecast transactionwhich subsequently results in the recognition of a non-financial asset or liability, the amountoriginally recognised in other comprehensive income is transferred and included in theinitially recognised amount of the asset or liability. For cash flow hedge beyond the foregoingscope, the amount originally recognised in other comprehensive income is transferred andincluded in profit or loss for the current period during the same time in which the profit orloss is influenced by the hedged expected cash flow. However, if all or part of net lossrecognised directly in other comprehensive income will not be recovered in futureaccounting periods, the amount not expected to be recovered should be transferred to profitor loss for the current period. When the Group revokes the designation of a hedge, a hedginginstrument expires or is sold, terminated or exercised, or the hedge no longer meets thecriteria for hedge accounting, the Group will discontinue the hedge accounting treatmentsprospectively. Where the Group discontinues the hedge accounting treatment for cash flowhedging, for hedged future cash flows that will still happen, the accumulated gains or lossesthat have been recognised in other comprehensive income are retained and subject toaccounting treatment under the subsequent treatment method of aforesaid cash flowhedging reserve; for hedged future cash flows that the forecast transaction will neverhappen, the accumulated gains or losses that have been recognised in other comprehensiveincome are transferred immediately and included in profit or loss for the current period.

(ii) Impairment

Loss provision for financial assets at amortised cost, investments in debt instruments at fairvalue through other comprehensive income, as well as contract assets and financialguarantee contracts is recognised on the basis of ECL.

Giving consideration to reasonable and supportable information on past events, currentconditions, forecasts of future economic conditions and forward-looking information, andweighted by the risk of default, the Group recognises the ECL as the probability-weightedamount of the present value of the difference between the cash flows receivable from thecontract and the cash flows expected to collect.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(9) Financial instruments (Cont’d)

(a) Financial assets (Cont’d)

(ii) Impairment (Cont’d)

As at each balance sheet date, the ECL of financial instruments at different stages aremeasured respectively. 12-month ECL provision is recognised for financial instruments inStage 1 that have not had a significant increase in credit risk since initial recognition; lifetimeECL provision is recognised for financial instruments in Stage 2 that have had a significantincrease in credit risk yet without credit impairment since initial recognition; and lifetime ECLprovision is recognised for financial instruments in Stage 3 that have had credit impairmentsince initial recognition.

For the financial instruments with lower credit risk on the balance sheet date, the Groupassumes there is no significant increase in credit risk since initial recognition and recognisesthe 12-month ECL provision.

For the financial instruments in Stage 1, Stage 2 and with lower credit risk, the Groupcalculates the interest income by applying the effective interest rate to the gross carryingamount (before deduction of the impairment provision). For the financial instruments inStage 3, the interest income is calculated by applying the effective interest rate to theamortised cost (after deduction of the impairment provision from the gross carrying amount).

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020

(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(9) Financial instruments (Cont’d)

(a) Financial assets (Cont’d)

(ii) Impairment (Cont’d)

For notes receivable, accounts receivable, receivables financing and contract assets arisingfrom sales of goods and rendering of services in the ordinary course of operating activities,the Group recognises the lifetime ECL provision regardless of whether there exists asignificant financing component. Since contract assets are related to work in progresswithout invoice, essentially, their risk characteristics are the same as the accountsreceivable of similar contracts. Therefore, the Group believes that the ECL rate of accountsreceivable is an approximation to that of contract assets.

In case the ECL of an individually assessed financial asset cannot be evaluated withreasonable cost, the Group divides the receivables and contract assets into certaingroupings based on credit risk characteristics, then pursuant to which, calculates the ECL.Basis and provision method for determining groupings are as follows:

Notes receivable - Bank acceptance notesBank credit risk grouping
Notes receivable - Trade acceptance notesNon-bank credit risk grouping
Accounts receivableDomestic/overseas business grouping
Contract assetsDomestic/overseas business grouping
Other receivablesSecurity deposit/guarantee payables grouping
Long-term receivablesFinance lease payable grouping
Loans and advancesLoans business grouping

The Group, on the basis of the exposure at default and the lifetime ECL rate, calculates theECL of notes receivable and receivables financing that are classified into groupings withconsideration to historical credit losses experience, current conditions and forecasts offuture economic conditions.

With consideration to historical credit loss experience, current conditions and forecasts offuture economic conditions, the Group prepares the cross-reference between the numberof overdue days of accounts receivable and the lifetime ECL rate, and calculates the ECLof accounts receivable that are classified into groupings.

The Group, on the basis of the exposure at default and the 12-month or lifetime ECL rate,calculates the ECL of other receivables, loans and advances, and long-term receivables thatare classified into groupings with consideration to historical credit losses experience, thecurrent conditions and forecasts of future economic conditions.

The Group recognises the loss provision made or reversed into profit or loss for the currentperiod. For debt instruments held at fair value through other comprehensive income, theGroup adjusts other comprehensive income while the impairment loss or gain is recognisedin profit or loss for the current period.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(9) Financial instruments (Cont’d)

(a) Financial assets (Cont’d)

(iii) Derecognition of financial assets

A financial asset is derecognised when: (i) the contractual rights to the cash flows from thefinancial asset expire, (ii) the financial asset has been transferred and the Group transferssubstantially all the risks and rewards of ownership of the financial asset to the transferee,or (iii) the financial asset has been transferred and the Group has not retained control of thefinancial asset, although the Group neither transfers nor retains substantially all the risksand rewards of ownership of the financial asset.

When a financial asset is derecognised, the difference between the carrying amount andthe sum of the consideration received and the cumulative changes in fair value that arepreviously recognised directly in other comprehensive income is recognised in profit or lossfor the current period, except for those as investments in other equity instruments, thedifference aforementioned is recognised in retained earnings instead.

(b) Financial liabilities

Financial liabilities are classified as financial liabilities at amortised cost and financialliabilities at fair value through profit or loss at initial recognition.

Financial liabilities of the Group mainly comprise financial liabilities at amortised cost,including notes payable, accounts payable, other payables, borrowings and short-termfinancing bonds payable in other current liabilities, customer deposits and deposits frombanks and other financial institutions, borrowings from the Central Bank, long-termpayables, etc. Such financial liabilities are initially recognised at fair value, net of transactioncosts incurred, and subsequently measured using the effective interest method. Financialliabilities that are due within one year (inclusive) are classified as current liabilities; thosewith maturities over one year but are due within one year (inclusive) as from the balancesheet date are classified as current portion of non-current liabilities. Others are classified asnon-current liabilities.

A financial liability is derecognised or partly derecognised when the underlying presentobligation is discharged or partly discharged. The difference between the carrying amountof the derecognised part of the financial liability and the consideration paid is recognised inprofit or loss for the current period.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(9) Financial instruments (Cont’d)

(c) Determination of fair value of financial instruments

The fair value of a financial instrument that is traded in an active market is determined atthe quoted price in the active market. The fair value of a financial instrument that is nottraded in an active market is determined by using a valuation technique. In valuation, theGroup adopts valuation techniques applicable in the current situation and supported byadequate available data and other information, selects inputs with the same characteristicsas those of assets or liabilities considered in relevant transactions of assets or liabilities bymarket participants, and gives priority to the use of relevant observable inputs. Whenrelevant observable inputs are not available or feasible, unobservable inputs are adopted.

(10) Receivables

Receivables comprise accounts receivable, other receivables, notes receivable, long-termreceivables, loans and advances, etc. Accounts receivable arising from sale of goods orrendering of services are initially recognised at fair value of the contractual payments fromthe buyers or service recipients, and subsequently measured at amortised cost lessprovision for impairment using the effective interest method. Provision for impairment ofreceivables are set out in Note 2(9)(a).

(11) Inventories

(a) Classification of inventories

Inventories, including raw materials, consigned processing materials, low valueconsumables, work in progress, contract performance costs and finished goods, aremeasured at the lower of cost and net realisable value.

(b) Costing of inventories

Cost is determined using the first-in, first-out method when issued. The cost of finishedgoods and work in progress comprises raw materials, direct labour and systematicallyallocated production overhead based on the normal production capacity.

(c) Basis for determining net realisable values of inventories and method for making provision

for decline in the value of inventories

Inventories are initially measured at cost. The cost of inventories comprises purchase cost,processing cost and other expenditures to bring the inventories to current site and condition.

On the balance sheet date, inventories are measured at the lower of cost and net realisablevalue.

Net realisable value is determined based on the estimated selling price in the ordinarycourse of business, less the estimated costs to completion and estimated costs necessaryto make the sale and related taxes.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020

(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(11) Inventories (Cont'd)

(c) Basis for determining net realisable values of inventories and method for making provision

for decline in the value of inventories (Cont’d)

Provision for decline in the value of inventories is determined at the excess amount of thecost as calculated based on the classification of inventories over their net realisable value,and are recognised in profit or loss for the current period.

(d) Inventory system

The Group adopts the perpetual inventory system.

(e) Amortisation methods of low value consumables and packaging materials

Low value consumables are expensed in full when issued and recognised in cost of relatedassets or in profit or loss for the current period.

(12) Long-term equity investments

Long-term equity investments comprise the Company’s long-term equity investments in itssubsidiaries, and the Group’s long-term equity investments in its associates and jointventure.

Subsidiaries are the investees over which the Company is able to exercise control. A jointventure is a joint arrangement which is structured through a separate vehicle over which theGroup has joint control together with other parties and only has rights to the net assets ofthe arrangement based on legal forms, contractual terms and other facts and circumstances.Associates are the investees that the Group has significant influence on their financial andoperating policies.

Investments in subsidiaries are presented in the Company’s financial statements using thecost method, and are adjusted to the equity method when preparing the consolidatedfinancial statements. Investments in a joint venture and associates are accounted for usingthe equity method.

(a) Determination of investment cost

For long-term equity investments acquired through a business combination involvingenterprises under common control, the investment cost shall be the absorbing party’s shareof the carrying amount of equity of the party being absorbed in the consolidated financialstatements of the ultimate controller at the combination date; for long-term equity investmentacquired through a business combination involving enterprises not under common control,the investment cost shall be the combination cost.

For business combinations achieved by stages involving enterprises not under commoncontrol, the initial investment cost accounted for using the cost method is the sum of carryingamount of previously-held equity investment and additional investment cost. For previously-held equity accounted for using the equity method, the accounting treatment of related othercomprehensive income from disposal of the equity is carried out on a same basis with theinvestee's direct disposal of related assets or liabilities. Shareholders' equity, which isrecognised due to changes in investee’s shareholders’ equity other than those arising fromthe net profit or loss, other comprehensive income and profit distribution, is accordinglytransferred into profit or loss in the period in which the investment is disposed.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(12) Long-term equity investments (Cont’d)

(a) Determination of investment cost (Cont’d)

For investment in previously-held equity accounted for using the recognition andmeasurement standards of financial instruments, the initial investment cost accounted forusing the cost method is the sum of carrying amount of previously-held equity investmentand additional investment cost. The difference between the fair value and carrying amountfor investment in previously-held equity and the accumulated changes in fair valuepreviously included in other comprehensive income are transferred to profit or loss for thecurrent period accounted for using the cost method.

For long-term equity investments acquired not through a business combination: for long-term equity investments acquired by payment in cash, the initial investment cost shall bethe purchase price actually paid; for long-term equity investments acquired by issuing equitysecurities, the initial investment cost shall be the fair value of the equity securities issued.

(b) Subsequent measurement and recognition methods of gains and losses

For long-term equity investments accounted for using the cost method, they are measuredat the initial investment costs, and cash dividends or profit distribution declared by theinvestees are recognised as investment income in profit or loss.

For long-term equity investments accounted for using the equity method, where the initialinvestment cost of a long-term equity investment exceeds the Group’s share of the fair valueof the investee’s identifiable net assets at the acquisition date, the long-term equityinvestment is measured at the initial investment cost; where the initial investment cost isless than the Group’s share of the fair value of the investee’s identifiable net assets at theacquisition date, the difference is included in profit or loss and the cost of the long-termequity investment is adjusted upwards accordingly.

For long-term equity investments accounted for using the equity method, the Grouprecognises the investment income according to its share of net profit or loss of the investee.The Group discontinues recognising its share of the net losses of an investee after thecarrying amounts of the long-term equity investment together with any long-term intereststhat in substance form part of the investor’s net investment in the investee are reduced tozero. However, if the Group has obligations for additional losses and the criteria with respectto recognition of provisions under the accounting standards on contingencies are satisfied,the Group continues recognising the investment losses and the provisions. The changes ofthe Group’s share of the investee’s owner's equity other than those arising from the net profitor loss, other comprehensive income and profit distribution, are recognised in the Group’sequity and the carrying amounts of the long-term equity investment are adjusted accordingly.The carrying amount of the investment is reduced by the Group’s share of the profitdistribution or cash dividends declared by an investee. The unrealised profits or lossesarising from the transactions between the Group and its investees are eliminated inproportion to the Group’s equity interest in the investees, based on which the investmentgain or losses are recognised. Any losses resulting from transactions between the Groupand its investees attributable to asset impairment losses are not eliminated.

(c) Basis for determining existence of control, joint control, significant influence over investees

Control is the power to govern an investee and obtain variable returns from participating theinvestee's activities, and the ability to utilise the power of an investee to affect its returns.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020

(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(12) Long-term equity investments (Cont’d)

(c) Basis for determining existence of control, joint control, significant influence over investees

(Cont’d)

Joint control is the contractually agreed sharing of control over an arrangement, and relevanteconomic activity can be arranged upon the unanimous approval of the Group and otherparticipants sharing of control rights.

Significant influence is the power to participate in the financial and operating policy decisionsof the investee, but is not control or joint control over those policies.

(d) Impairment of long-term equity investments

The carrying amounts of long-term equity investments in subsidiaries, joint venture andassociates are reduced to the recoverable amounts when the recoverable amounts arebelow their carrying amounts (Note 2(19)).

(13) Investment properties

Investment properties, including land use rights that have already been leased out, buildingsthat are held for the purpose of leasing and buildings that are being constructed ordeveloped for future use for leasing, are measured initially at cost. Subsequent expendituresincurred in relation to an investment property are included in the cost of the investmentproperty when it is probable that the associated economic benefits will flow to the Groupand their costs can be reliably measured; otherwise, the expenditures are recognised inprofit or loss for the period in which they are incurred.

The Group adopts the cost model for subsequent measurement of investment properties.Buildings and land use rights are depreciated or amortised to their estimated net residualvalues over their estimated useful lives. The estimated useful lives, the estimated netresidual values that are expressed as a percentage of cost and the annual depreciation(amortisation) rates of investment properties are as follows:

Estimated useful livesEstimated net residual valuesAnnual depreciation (amortisation) rates
Buildings20 to 40 years5%2.38% to 4.75%
Land use rights40 to 50 years-2% to 2.5%

When an investment property is transferred to owner-occupied properties, it is reclassifiedas fixed asset or intangible asset at the date of the transfer. When an owner-occupiedproperty is transferred out for earning rentals or for capital appreciation, the fixed asset orintangible asset is reclassified as investment properties at its carrying amount at the date ofthe transfer. At the time of transfer, the property is recognised based on the carrying amountbefore transfer.

The investment properties' estimated useful lives, the estimated net residual values and thedepreciation (amortisation) methods applied are reviewed and adjusted as appropriate ateach year-end.

An investment property is derecognised on disposal or when the investment property ispermanently withdrawn from use and no future economic benefits are expected from itsdisposal. The net amount of proceeds from sale, transfer, retirement or damage of aninvestment property after its carrying amount and related taxes and expenses is recognisedin profit or loss for the current period.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020

(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(14) Fixed assets

(a) Recognition and initial measurement of fixed assets

Fixed assets comprise buildings, overseas land, machinery and equipment, motor vehicles,electronic equipment and others.

Fixed assets are recognised when it is probable that the related economic benefits will flowto the Group and the costs can be reliably measured. The initial cost of purchased fixedassets include purchase price, related taxes and expenditures that are attributable to theassets incurred before the assets are ready for their intended use. The initial cost of self-constructed fixed assets is determined based on Note 2(15).

Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed assetwhen it is probable that the associated economic benefits will flow to the Group and therelated cost can be reliably measured. The carrying amount of the replaced part isderecognised. All the other subsequent expenditures are recognised in profit or loss in theperiod in which they are incurred.

(b) Depreciation method for fixed assets

Fixed assets are depreciated using the straight-line method to allocate the cost of the assetsto their estimated net residual values over their estimated useful lives. For the fixed assetsthat have been provided for impairment loss, the related depreciation charge is prospectivelydetermined based upon the adjusted carrying amounts over their remaining useful lives.

The estimated useful lives, the estimated net residual values expressed as a percentage ofcost and the annual depreciation rates of the Group's fixed assets are as follows:

CategoriesEstimated useful livesEstimated net residual valuesAnnual depreciation rates
Buildings15 to 50 years0% - 10%6.7% - 1.8%
Machinery and equipment2 to 25 years0% - 10%50% - 3.6%
Motor vehicles2 to 20 years0% - 10%50% - 4.5%
Electronic equipment and others2 to 20 years0% - 10%50% - 4.5%
Overseas landPermanentNot applicableNot applicable

The estimated useful lives and the estimated net residual values of the Group's fixed assetsand the depreciation methods applied to the assets are reviewed, and adjusted asappropriate at each year-end.

(c) The carrying amount of a fixed asset is reduced to the recoverable amount when the

recoverable amount is below the carrying amount (Note 2(19)).

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(14) Fixed assets (Cont’d)

(d) Basis for identification of fixed assets held under finance leases and related measurement

A lease that transfers substantially all the risks and rewards incidental to ownership of anasset is a finance lease. The leased asset is recognised at the lower of the fair value of theleased asset and the present value of the minimum lease payments. The difference betweenthe recorded amount of the leased asset and the minimum lease payments is accounted foras unrecognised finance charge.

Fixed assets held under a finance lease is depreciated on a basis consistent with thedepreciation policy adopted for fixed assets that are self-owned. When a leased asset canbe reasonably determined that its ownership will be transferred at the end of the lease term,it is depreciated over the period of expected use; otherwise, the leased asset is depreciatedover the shorter period of the lease term and the period of expected use.

(e) Disposal of fixed assets

A fixed asset is derecognised on disposal or when no future economic benefits are expectedfrom its use or disposal. The amount of proceeds from disposal on sales, transfer, retirementor damage of a fixed asset net of its carrying amount and related taxes and expenses isrecognised in profit or loss for the current period.

(15) Construction in progress

Construction in progress is measured at actual cost. Actual cost comprises constructioncosts, installation costs, borrowing costs that are eligible for capitalisation and other costsnecessary to bring the fixed assets ready for their intended use. Construction in progress istransferred to fixed assets when the assets are ready for their intended use, anddepreciation begins from the following month. The carrying amount of construction inprogress is reduced to the recoverable amount when the recoverable amount is below thecarrying amount (Note 2(19)).

(16) Borrowing costs

The borrowing costs that are directly attributable to the acquisition and construction of afixed asset that needs a substantially long period of time for its intended use commence tobe capitalised and recorded as part of the cost of the asset when expenditures for the assetand borrowing costs have been incurred, and the activities relating to the acquisition andconstruction that are necessary to prepare the asset for its intended use have commenced.The capitalisation of borrowing costs ceases when the asset under acquisition orconstruction becomes ready for its intended use and the borrowing costs incurred thereafterare recognised in profit or loss for the current period. Capitalisation of borrowing costs issuspended during periods in which the acquisition or construction of an asset is interruptedabnormally and the interruption lasts for more than 3 months, until the acquisition orconstruction is resumed.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020

(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(16) Borrowing costs (Cont'd)

For the specific borrowings obtained for the acquisition or construction of a fixed assetqualifying for capitalisation, the amount of borrowing costs eligible for capitalisation isdetermined by actual interest expenses deducting any interest income earned fromdepositing the unused specific borrowings in the banks or any investment income arising onthe temporary investment of those borrowings during the capitalisation period.

For the general borrowings obtained for the acquisition or construction of a fixed assetqualifying for capitalisation, the amount of borrowing costs eligible for capitalisation isdetermined by applying the weighted average effective interest rate of general borrowings,to the weighted average of the excess amount of cumulative expenditures on the asset overthe amount of specific borrowings. The effective interest rate is the rate at which theestimated future cash flows during the period of expected duration of the borrowings orapplicable shorter period are discounted to the initial amount of the borrowings.

(17) Intangible assets

Intangible assets include land use rights, patents and non-patent technologies, trademarkrights, trademark use rights and others, are measured at cost.

(a) Land use rights

Land use rights are amortised on the straight-line basis over their approved use period of40 to 50 years. If the acquisition costs of the land use rights and the buildings locatedthereon cannot be reasonably allocated between the land use rights and the buildings, allof the acquisition costs are recognised as fixed assets.

(b) Patents and non-patent technologies

Patents are amortised on a straight-line basis over the statutory period of validity, the periodas stipulated by contracts or the beneficial period.

(c) Trademark rights

The trademark rights is measured at cost when acquired and is amortised over theestimated useful life of 4 to 30 years. The cost of trademark rights obtained in the businesscombinations involving enterprises not under common control is measured at fair value. Assome of the trademarks are expected to attract net cash inflows injected into the Group, themanagement considers that these trademarks have an indefinite useful life and arepresented based upon the carrying amounts after deducting the provision for impairment(Note 4(18)).

(d) Trademark use rights

The trademark use rights is measured at cost when acquired. The cost of trademark userights obtained in the business combinations involving enterprises not under commoncontrol is measured at fair value, and is amortised over the estimated useful life of 40 years.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(17) Intangible assets (Cont’d)

(e) Periodical review of useful life and amortisation method

For an intangible asset with a finite useful life, review of its useful life and amortisationmethod is performed at each year-end, with adjustment made as appropriate.

(f) Research and development (“R&D”)

The expenditure on an internal research and development project is classified intoexpenditure on the research phase and expenditure on the development phase based onits nature and whether there is material uncertainty that the research and developmentactivities can form an intangible asset at the end of the project.

Expenditure on the planned investigation, evaluation and selection for the research ofproduction processes or products is categorised as expenditure on the research phase, andit is recognised in profit or loss when it is incurred. Expenditure on design and test for thefinal application of the development of production processes or products before massproduction is categorised as expenditure on the development phase, which is capitalisedonly if all of the following conditions are satisfied.

? The development of production processes or products has been fully justified by

technical team;? The budget on the development of production processes or products has been

approved by the management;? There is market research analysis that demonstrates the product produced by the

production process or product has the ability of marketing;? There are sufficient technical and financial resources to support the development of

production processes or products and subsequent mass production; and

? Expenditure attributable to the development of production processes or products can

be reliably measured.

Other development expenditures that do not meet the conditions above are recognised inprofit or loss in the period in which they are incurred. Development costs previouslyrecognised as expenses are not recognised as an asset in a subsequent period. Capitalisedexpenditure on the development phase is presented as development costs in the balancesheet and transferred to intangible assets at the date that the asset is ready for its intendeduse.

(g) Impairment of intangible assets

The carrying amounts of intangible assets are reduced to the recoverable amounts whenthe recoverable amounts are below their carrying amounts (Note 2(19)).

(18) Long-term prepaid expenses

Long-term prepaid expenses include the expenditure for improvements to fixed assets heldunder operating leases, and other expenditures that have been incurred but should berecognised as expenses over more than one year in the current and subsequent periods.Long-term prepaid expenses are amortised on the straight-line basis over the expectedbeneficial period and are presented at actual expenditure net of accumulated amortisation.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(19) Impairment of long-term assets

Fixed assets, construction in progress, intangible assets with finite useful lives, investmentproperties measured using the cost model and long-term equity investments in subsidiaries,a joint venture and associates are tested for impairment if there is any indication that theassets may be impaired at the balance sheet date. Intangible assets not ready for theirintended use, intangible assets with infinite useful lives and overseas land are tested at leastannually for impairment, irrespective of whether there is any indication that it may beimpaired. If the result of the impairment test indicates that the recoverable amount of anasset is less than its carrying amount, a provision for impairment and an asset impairmentloss are recognised for the amount by which the asset’s carrying amount exceeds itsrecoverable amount. The recoverable amount is the higher of an asset’s fair value less coststo sell and the present value of the future cash flows expected to be derived from the asset.Provision for asset impairment is determined and recognised on the individual asset basis.If it is not possible to estimate the recoverable amount of an individual asset, the recoverableamount of a group of assets to which the asset belongs is determined. A group of assets isthe smallest group of assets that is able to generate independent cash inflows.

Goodwill that is separately presented in the financial statements is tested at least annuallyfor impairment, irrespective of whether there is any indication that it may be impaired. Inconducting the test, the carrying value of goodwill is allocated to the related asset group orasset groups which are expected to benefit from the synergies of the business combinationIf the result of the test indicates that the recoverable amount of an asset group or assetgroups, including the allocated goodwill, is lower than its carrying amount, the correspondingimpairment loss is recognised. The impairment loss is first deducted from the carryingamount of goodwill that is allocated to the asset group or asset groups, and then deductedfrom the carrying amounts of other assets within the asset group or asset groups inproportion to the carrying amounts of assets other than goodwill.

Once the above asset impairment loss is recognised, it will not be reversed for the valuerecovered in the subsequent periods.

(20) Employee benefits

Employee benefits include short-term employee benefits, post-employment benefits,termination benefits and other long-term employee benefits provided in various forms ofconsideration in exchange for service rendered by employees or compensations for thetermination of employment relationship.

(a) Short-term employee benefits

Short-term employee benefits include employee wages or salaries, bonus, allowances andsubsidies, staff welfare, premiums or contributions on medical insurance, work injuryinsurance and maternity insurance, housing funds, union running costs and employeeeducation costs, short-term paid absences. The employee benefit liabilities are recognisedin the accounting period in which the service is rendered by the employees, with acorresponding charge to the profit or loss for the current period or the cost of relevant assets.Employee benefits which are non-monetary benefits are measured at fair value.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(20) Employee benefits (Cont’d)

(b) Post-employment benefits

The Group classifies post-employment benefit plans as either defined contribution plans ordefined benefit plans. Defined contribution plans are post-employment benefit plans underwhich the Group pays fixed contributions into a separate fund and will have no obligation topay further contributions; and defined benefit plans are post-employment benefit plans otherthan defined contribution plans. During the reporting period, the Group's defined contributionplans mainly include basic pensions and unemployment insurance, while the defined benefitplans are Toshiba Lifestyle Products & Services Corporation (“TLSC”), and KUKAAktiengesellschaft (“KUKA”) and its subsidiaries (“KUKA Group”) provide supplementalretirement benefits beyond the national regulatory insurance system.

Basic pensions

The Group’s employees participate in the basic pension plan set up and administered bylocal authorities of Ministry of Human Resource and Social Security. Monthly payments ofpremiums on the basic pensions are calculated according to prescribed bases andpercentage by the relevant local authorities. When employees retire, the relevant localauthorities are obliged to pay the basic pensions to them. The amounts based on the abovecalculations are recognised as liabilities in the accounting period in which the service hasbeen rendered by the employees, with a corresponding charge to the profit or loss for thecurrent period or the cost of relevant assets.

Supplementary retirement benefits

The liability recognised in the balance sheet in respect of defined benefit pension plans isthe present value of the defined benefit obligation at the end of the reporting period less thefair value of plan assets. The defined benefit obligation is calculated annually byindependent actuaries using the projected unit credit method at the interest rate of treasurybonds with similar obligation term and currency. The charges related to the supplementalretirement benefits (including current service costs, past-service costs and gains or losseson settlement) and net interest are recognised in the statement of profit or loss or includedin the cost of an asset, and the changes of remeasurement in net liabilities or net assetsarising from the benefit plan are charged or credited to equity in other comprehensiveincome.

(c) Termination benefits

The Group provides compensation for terminating the employment relationship withemployees before the end of the employment contracts or as an offer to encourageemployees to accept voluntary redundancy before the end of the employment contracts.The Group recognises a liability arising from compensation for termination of theemployment relationship with employees, with a corresponding charge to profit or loss forthe current period at the earlier of the following dates: 1) when the Group cannot unilaterallywithdraw an employment termination plan or a curtailment proposal; 2) when the Grouprecognises costs or expenses related to the restructuring that involves the payment oftermination benefits.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(20) Employee benefits (Cont’d)

(c) Termination benefits (Cont’d)

Early retirement benefits

The Group offers early retirement benefits to those employees who accept early retirementarrangements. The early retirement benefits refer to the salaries and social securitycontributions to be paid to and for the employees who accept voluntary retirement beforethe normal retirement date prescribed by the State, as approved by the management. TheGroup pays early retirement benefits to those early retired employees from the earlyretirement date until the normal retirement date. The Group accounts for the early retirementbenefits in accordance with the treatment for termination benefits, in which the salaries andsocial security contributions to be paid to and for the early retired employees from the off-duty date to the normal retirement date are recognised as liabilities with a correspondingcharge to the profit or loss for the current period. The differences arising from the changesin the respective actuarial assumptions of the early retirement benefits and the adjustmentsof benefit standards are recognised in profit or loss in the period in which they occur.

The termination benefits expected to be settled within one year since the balance sheet dateare classified as current liabilities.

(21) General risk reserve

General risk reserve is the reserve appropriated from undistributed profits to cover part ofunidentified potential losses, on the basis of the estimated potential risk value of risk assetsassessed by the standardised approach, which is deducted from recognised provision forimpairment losses on loans. Risk assets include loans and advances, long-term equityinvestments, deposits with banks and other financial institutions and other receivables ofsubsidiary engaged in financial business.

(22) Dividend distribution

Cash dividend is recognised as a liability for the period in which the dividend is approved bythe shareholders’ meeting.

(23) Provisions

Provisions for product warranties, onerous contracts, etc. are recognised when the Grouphas a present obligation, it is probable that an outflow of economic benefits will be requiredto settle the obligation, and the amount of the obligation can be measured reliably.

A provision is initially measured at the best estimate of the expenditure required to settle therelated present obligation. Factors surrounding a contingency, such as the risks,uncertainties and the time value of money, are taken into account as a whole in reachingthe best estimate of a provision. Where the effect of the time value of money is material, thebest estimate is determined by discounting the related future cash outflows. The increase inthe discounted amount of the provision arising from passage of time is recognised asinterest expenses.

The carrying amount of provisions is reviewed at each balance sheet date and adjusted toreflect the current best estimate.

The provisions expected to be settled within one year since the balance sheet date areclassified as current liabilities.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(24) Share-based payment

(a) Type of share-based payment

Share-based payment is a transaction in which the entity acquires services from employeesas consideration for equity instruments of the entity or by incurring liabilities for amountsbased on the equity instruments. Equity instruments include equity instruments of theCompany, its parent company or other accounting entities of the Group. Share-basedpayments are divided into equity-settled and cash-settled payments. The Group’s share-based payments are equity-settled payments.

Equity-settled share-based payment

The Group’s equity-settled share-based payment contains share option incentive plan,restricted share plan and employee stock ownership plan. These plans are measured at thefair value of the equity instruments at grant date and the equity instruments are tradable orexercisable when services in vesting period are completed or specified performanceconditions are met. In the vesting period, the services obtained in the current period areincluded in relevant cost and expenses at the fair value of the equity instruments at grantdate based on the best estimate of the number of tradable or exercisable equity instruments,and capital surplus is increased accordingly. If the subsequent information indicates thenumber of tradable or exercisable equity instruments differs from the previous estimate, anadjustment is made and, on the exercise date, the estimate is revised to equal to the numberof actual vested equity instruments.

(b) Determination of fair value of equity instruments

The Group determines the fair value of share options using option pricing model, which isBlack - Scholes option pricing model.

The fair value of other equity instruments are based on the share prices, which excludedthe price that incentive objects pay, and the number of the shares on the grant date, takinginto account the effects of clause of the Group’s relevant plans.

(c) Basis for determining best estimate of tradable or exercisable equity instruments

As at each balance sheet date in the vesting period, the Group would make best estimatein accordance with the newly acquired information such as changes in the number ofemployees entitled with exercisable or tradable equity instruments, and amend theestimated number of exercisable or tradable equity instruments. On the exercise ordesterilisation date, the final number of estimated exercisable or tradable equity instrumentsis consistent with the actual number of exercised or tradable equity instruments.

(25) Treasury stock

The Group’s treasury stock mainly comes from the repurchase of equity instruments andthe issuance of restricted shares and so on.

Consideration and transaction costs paid by the Group for repurchasing equity instrumentsare deducted from equity and not recognised as financial assets. The considerations paidby the Group for repurchasing equity instruments are presented as treasury stock, and therelated transaction costs are recognised in owners' equity.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(25) Treasury stock (Cont’d)

On the deregistration day of shares, relevant share capital and treasury stock are reversedwith the difference included in capital surplus (share premium) based on actualderegistration results.

On the grant day of restricted shares, the Group recognise bank deposits when receivingsubscription from the employees and measures the repurchase obligation as liability. On theday of release of restricted shares, relevant treasury stocks, liabilities and capital surplusrecognised in the vesting period are reversed based on the actual vesting results.

(26) Revenue

The Group recognises revenue at the amount of the consideration which the Group isexpected to receive when the customer obtains control over relevant goods or services.Revenue is stated net of discounts, rebates and returns.

When any of the following conditions is met, the Group is subject to performance obligationswithin a period of time; otherwise, at a point in time.

(1) Customers obtain and consume economic benefits coming from the Group's

performance of contract while the Group performs the contract.

(2) Customers can control goods under construction during the Group's performance of

contract.

(3) Goods produced during the Group's performance of contract are irreplaceable. During

the whole contract period, the Group is entitled to collect payments for those which havebeen accumulated up to now.

For a contract obligation within a period of time, the Group shall recognise the revenuebased on the progress of the obligation fulfilment within that period of time, except wherethe progress of the obligation fulfilment cannot be determined reasonably.

Where the status of completion cannot be reasonably determined, revenue shall berecognised at the amount of cost incurred if it is predicted that the cost can be compensatedtill the progress of the obligation fulfilment can be reasonably determined.

For a contract obligation at a point in time, the Group shall recognise the revenue when acustomer is in control of the underlying goods.

(a) Sales of products

The Group are principally engaged in the manufacturing and sales of heating & ventilation,as well as air-conditioner (hereinafter referred to as “HVAC”) (mainly comprises residentialair conditioner, central air-conditioner, heating and ventilation systems, etc.) and consumerappliances (mainly comprises kitchen appliances, refrigerators, washing machines andvarious small appliances, etc.), and robotics and automation system.

Revenue from domestic sales of HVAC and consumer appliances is recognised when theGroup has delivered products to the location specified in the sales contract and the buyerhas confirmed the acceptance of the products, and the delivery order is signed by bothparties. Upon confirming the acceptance, the buyer has the right to sell the products at itsdiscretion and takes the risks of any price fluctuations and obsolescence and loss of theproducts.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020

(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(26) Revenue (Cont’d)

(a) Sales of products (Cont’d)

Revenue from overseas sales of HVAC and consumer appliances is recognised when thegoods have been declared to the customs and shipped out of the port in accordance withthe sales contract.

Revenue from sales of robotics and automation system is recognised when the Group hasdelivered products to the location specified in the sales contract and the buyer has confirmedthe acceptance of the products, and the delivery order is signed by both parties.

The credit period granted to distributors by the Group is determined based on their creditrisk characteristics, which is consistent with industry practice, and there is no significantfinancing component. Generally, the retail customers of the Group are entitled to return theproducts within 7 days after the confirmation of receipt.

The Group provides distributors with sales discount, and the relevant revenue is recognisedat contract consideration net of the discount amount estimated.

The periods and terms of product quality warranty are provided in accordance with the lawsand regulations related to the products. The Group has not provided any additional servicesor product quality warranty, so the product quality warranty does not constitute a separateperformance obligation.

(b) Rendering of services

The Group provides robotics and automation system construction service, intelligentlogistics integration solution, storage services, delivery services, installation services andtransportation service, which are recognised in a certain period of time based on the stageof completion. On the balance sheet date, the Group re-estimates the stage of completionto reflect the actual status of contract performance.

When the Group recognises revenue based on the stage of completion, the amount withunconditional collection right obtained by the Group is recognised as accounts receivable,and the rest is recognised as contract assets. Meanwhile, loss provision for accountsreceivable and contract assets are recognised on the basis of ECL (Note 2(9)). If the contractprice received or receivable exceeds the amount for the completed service, the excessportion will be recognised as contract liabilities. Contract assets and contract liabilities underthe same contract are presented on a net basis.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(26) Revenue (Cont'd)

(b) Rendering of services (Cont’d)

Contract costs include contract performance costs and contract acquisition costs. The costsincurred by the Group for the provision of services are recognised as contract performancecosts. The recognised revenue is carried forward to the cost of sales from main operationsbased on the stage of completion. Incremental costs incurred by the Group for theacquisition of contract are recognised as the costs to obtain a contract. For the costs toobtain a contract with the amortisation period within one year, the costs are charged to profitor loss when incurred. For the costs to obtain a contract with the amortisation period beyondone year, the costs are charged in the current profit or loss on the same basis as aforesaidrevenue of rendering of services recognised under the relevant contract. If the carryingamount of the contract costs is higher than the remaining consideration expected to beobtained by rendering of the service net of the estimated cost to be incurred, the Groupmakes provision for impairment on the excess portion and recognises it as asset impairmentlosses. As at the balance sheet date, based on whether the amortisation period of the coststo fulfil a contract is more than one year when initially recognised, the amount of the Group'scosts to fulfil a contract net of related provision for asset impairment is presented asinventories or other non-current assets. For costs to obtain a contract with amortisationperiod beyond one year at the initial recognition, the amount net of related provision forasset impairment is presented as other non-current assets.

(c) Interest income

Interest income from financial instruments is calculated by effective interest method andrecognised in profit or loss for the current period. Interest income comprises premiums ordiscounts, or the amortisation based on effective rates of other difference between the initialcarrying amount and the due amount of interest-earning assets.

The effective interest method is a method of calculating the amortised cost of a financialasset or liability and the interest income or interest costs based on effective rates. Theeffective interest rate is the rate at which the estimated future cash flows during the periodof expected duration of the financial instruments or applicable shorter period are discountedto the current carrying amount of the financial instruments. When calculating the effectiveinterest rate, the Group estimates cash flows by considering all contractual terms of thefinancial instrument (e.g. early repayment options, similar options, etc.), but withoutconsidering future credit losses. The calculation includes all fees and interest paid orreceived that are an integral part of the effective interest rate, transaction costs, and all otherpremiums or discounts.

Interest income from impaired financial assets is calculated at the interest rate that is usedfor discounting estimated future cash flow when measuring the impairment loss.

(d) Dividend income

Dividend income is recognised when the right to receive dividend payment is established.

(e) Rental income

Rental income from investment prosperities is recognised in the income statement on astraight-line basis over the lease period.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020

(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(26) Revenue (Cont'd)

(f) Fee and commission income

Fee and commission income is recognised in profit or loss for the current period when theservice is provided. The Group defers the initial charge income or commitment fee incomearising from the forming or acquisition of financial assets as the adjustment to effectiveinterest rate. If the loans are not lent when the loan commitment period is expired, relatedcharges are recognised as fee and commission income.

(27) Government grants

Government grants are transfers of monetary or non-monetary assets from the governmentto the Group at nil consideration, including refund of taxes and financial subsidies, etc.

A government grant is recognised when the conditions attached to it can be complied withand the government grant can be received. For a government grant in the form of transferof monetary assets, the grant is measured at the amount received or receivable For agovernment grant in the form of transfer of non-monetary assets, it is measured at fair value;if the fair value is not reliably determinable, the grant is measured at nominal amount.

Government grants related to assets are grants that are acquired by the Group and usedfor acquisition, construction or forming long-term assets in other ways. Government grantsrelated to income are government grants other than government grants related to assets

Government grants related to assets are recorded as deferred income reasonably andsystematically amortised to profit or loss over the useful life of the related asset.

For government grants related to income, where the grant is a compensation for relatedexpenses or losses to be incurred by the Group in the subsequent periods, the grant isrecognised as deferred income, and included in profit or loss over the periods in which therelated costs are recognised; where the grant is a compensation for related expenses orlosses already incurred by the Group, the grant is recognised immediately in profit or lossfor the current period.

The same kind of government grants are presented with the same method.

Those related to ordinary activities are recorded into operating profit while the other in non-operating income and expenses.

Loans to the Group at political preferential rate are recorded at the actual amount received,and the related loan expenses are calculated based on the principal and the politicalpreferential rate. Finance discounts directly received offset related loans expenses.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020

(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(28) Deferred tax assets and deferred tax liabilities

Deferred tax assets and deferred tax liabilities are calculated and recognised based on thedifferences arising between the tax bases of assets and liabilities and their carrying amounts(temporary differences). Deferred income tax asset is recognised for the tax losses that canbe carried forward to subsequent years for deduction of the taxable profit in accordance withthe tax laws. No deferred tax liability is recognised for a temporary difference arising fromthe initial recognition of goodwill. No deferred tax asset or deferred tax liability is recognisedfor the temporary differences resulting from the initial recognition of assets or liabilities dueto a transaction other than a business combination, which affects neither accounting profitnor taxable profit (or deductible loss). At the balance sheet date, deferred tax assets anddeferred tax liabilities are measured at the tax rates that are expected to apply to the periodwhen the asset is realised or the liability is settled.

Deferred tax assets are only recognised for deductible temporary differences, deductible taxlosses and tax credits to the extent that it is probable that taxable profit will be available inthe future against which the deductible temporary differences, deductible tax losses and taxcredits can be utilised.

Deferred tax liabilities are recognised for temporary differences arising from investments insubsidiaries, associates and joint ventures, except where the Group is able to control thetiming of reversal of the temporary difference, and it is probable that the temporary differencewill not reverse in the foreseeable future. When it is probable that the temporary differencesarising from investments in subsidiaries, associates and joint ventures will be reversed inthe foreseeable future and that the taxable profit will be available in the future against whichthe temporary differences can be utilised, the corresponding deferred tax assets arerecognised.

Deferred tax assets and liabilities are offset when:

? the deferred tax assets and liabilities are related to the same tax payer within the Group

and the same taxation authority; and? that tax payer within the Group has a legally enforceable right to offset current taxassets against current tax liabilities.

(29) Leases

(a) Operating leases

Rental expenses for assets held under operating leases are recognised as the cost ofrelevant assets or expenses on a straight-line basis over the lease period. Contingentrentals are recognised as profit and loss for the current period when incurred.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(29) Leases (Cont'd)

(a) Operating leases (Cont’d)

Fixed assets leased out under operating leases, other than investment prosperities (Note2(13), are depreciated in accordance with the depreciation policy stated in Note 2(14(b) andprovided for impairment loss in accordance with the policy stated in Note 2(19). Rentalincome from operating leases is recognised as revenue on a straight-line basis over thelease period. Initial direct costs in large amount arising from assets leased out underoperating leases are capitalised when incurred and recognised as profit and loss for thecurrent period over the lease period on a same basis with revenue recognition; initial directcosts in small amount are directly recognised as profit and loss for the current period.Contingent rentals are recognised as profit and loss for the current period when incurred.

For the rental waivers as a result of COVID-19 and for the period ended 30 June 2021 only,the Group applies the practical expedient and records the waivers in profit or loss in thewaiving period.

(b) Finance leases

The leased asset is recognised at the lower of the fair value of the leased asset and thepresent value of the minimum lease payments. The difference between the recorded amountof the leased asset and the minimum lease payments is accounted for as unrecognisedfinance charge and is amortised using the effective interest method over the period of thelease. A long-term payable is recorded at the amount equal to the minimum lease paymentsless the unrecognised finance charge.

(30) Segment information

The Group identifies operating segments based on the internal organisation structure,management requirements and internal reporting system, and discloses segmentinformation of reportable segments which is determined on the basis of operating segments.

An operating segment is a component of the Group that satisfies all of the followingconditions: (1) the component is able to earn revenue and incur expenses from its ordinaryactivities; (2) whose operating results are regularly reviewed by the Group’s managementto make decisions about resources to be allocated to the segment and to assess itsperformance, and (3) for which the information on financial position, operating results andcash flows is available to the Group. Two or more operating segments that have similareconomic characteristics and satisfy certain conditions can be aggregated into one singleoperating segment.

(31) Critical accounting estimates and judgements

The Group continually evaluates the critical accounting estimates and key judgementsapplied based on historical experience and other factors, including expectations of futureevents that are believed to be reasonable.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(31) Critical accounting estimates and judgements (Cont’d)

Critical accounting estimates and key assumptions

The critical accounting estimates and key assumptions that have a significant risk of causinga material adjustment to the carrying amounts of assets and liabilities within the nextaccounting year are outlined below:

(i) Provision for impairment of goodwill

The Group tests annually whether goodwill has suffered any impairment. The recoverableamount of the asset group and asset groups that contain the apportioned goodwill isdetermined by the higher value between the use value and the net value that is calculatedby the fair value less the disposal costs. Accounting estimate is required for the calculationof the recoverable amount. The impairment testing is performed by assessing therecoverable amount of the asset group and asset groups containing the relevant goodwill,based on the present value of cash flows forecasts. Key assumptions adopted in theimpairment testing of goodwill included expected revenue growth rates, EBITDA margins,perpetual annual growth rates, discount rates, etc. which involved critical accountingestimates and judgement.

(ii) Income tax and deferred income tax

The Group is subject to enterprise income tax in numerous jurisdictions. There are manytransactions and events for which the ultimate tax determination is uncertain during theordinary course of business. Significant judgement is required from the Group in determiningthe provision for income taxes in each of these jurisdictions. Where the final tax outcome ofthese matters is different from the amounts that were initially recorded, such differences willimpact the income tax and deferred tax provisions in the period in which such determinationis made.

As stated in Note 3(1), some subsidiaries of the Group are high-tech enterprises. The “High-Tech Enterprise Certificate” is effective for three years. Upon expiration, application for high-tech enterprise assessment should be submitted again to the relevant governmentauthorities. Based on the past experience of reassessment for high-tech enterprise uponexpiration and the actual condition of the subsidiaries, the Group considers that thesubsidiaries are able to obtain the qualification for high-tech enterprises in future years, andtherefore a preferential tax rate of 15% is used to calculate the corresponding deferredincome tax. If some subsidiaries cannot obtain the qualification for high-tech enterprise uponexpiration, then the subsidiaries are subject to a statutory tax rate of 25% for the calculationof the income tax, which further influences the recognised deferred tax assets, deferred taxliabilities and income tax expenses.

Deferred tax assets are recognised for the deductible tax losses that can be carried forwardto subsequent years to the extent that it is probable that taxable profit will be available in thefuture against which the deductible tax losses can be utilised. Taxable profit that will beavailable in the future includes the taxable profit that will be realised through normaloperations and the taxable profit that will be increased upon the reversal of taxabletemporary differences incurred in prior periods. Judgements and estimates are required todetermine the time and amounts of taxable profit in the future. Any difference between thereality and the estimate may result in adjustment to the carrying amount of deferred taxassets.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2Summary of significant accounting policies and accounting estimates (Cont’d)
(32)Significant changes in accounting policies
The Ministry of Finance released the revised Accounting Standard for Business Enterprises No. 14

- Revenue (“new revenue standard”) in 2017 and the

-19 (

Cai Kuai [2020] No. 10) and the Questions and Answers on the Implementation of Accounting Standards for Business Enterprises

(issued on 11 December 2020) in 2020. The financial statements for the yearended 31 December 2020 are prepared in accordance with the above standard and circular,and impacts on the Group’s and the Company’s financial statements are as follows:

(a)

(a)Revenue
(a-1)In accordance with relevant provisions of the new revenue standard, the Group and the

Company recognised the

cumulative effect of initially applying the standard as anadjustment to the relevant line items in the financial statements for the year ended 31December 2020. The comparatives for the year ended 31 December 2019 were notrestated.

The nature and the

reasons of the

The line items

changes in accounting policiesaffectedThe amounts affected
1 January 2020
ConsolidatedCompany
Due to the implementation of new

revenue standard, the amount ofrevenue recognised in relation torendering of services based onprogress of the obligation fulfilmentin excess of the settled price isreclassified from inventories tocontract assets.

Contract assetsIncrease by 4,009,176-
InventoriesDecrease by 4,009,176-
Due to the implementation of the new

revenue standard, advances from

as other current liabilities arisingfrom provision of installation

services are reclassified to contract liabilities.Advances from customersDecrease by 16,231,854-
Contract liabilitiesIncrease by 18,436,559-
Other current liabilitiesDecrease by 2,204,705-

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

2Summary of significant accounting policies and accounting estimates (Cont’d)
(32)Significant changes in accounting policies (Cont’d)
(a)Revenue (Cont’d)
(a-2)Compared with the original revenue standard, the impact of the implementation of the new revenue standard on main items of the

balance sheets as at

31 December 2020 is as follows:
Balance sheet items affectedThe amounts affected
31 December 2020
ConsolidatedCompany
Contract assetsIncrease by 3,236,848-
InventoriesDecrease by 3,236,848-
Advances from customersDecrease by 14,942,068-
Contract liabilitiesIncrease by 18,400,922-
Other current liabilitiesDecrease by 3,458,854-
The impact of the implementation of the new revenue standard on main items of the consolidated income statement is

that approximately RMB 8,928,186,000 of selling and

distribution expenses is reclassified to the cost of sales and operating revenue.(b)

(b)Accounting treatment of rental waivers against COVID-19
For the rental waivers as a result of COVID-19 and agreed with lessees and lessors respectively for the period ended 30 June 2021 only, the Group and the Company have applied the above circular for the preparation of the financial statements for the year ended 31 December 2020; and the circular exerts no signific

ant impacts on the Group’

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020

(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

3 Taxation

(1) Main tax category and rate

CategoryTax baseTax rate
Enterprise income taxLevied based on taxable incomeNote (a)
Value-added tax

(“VAT”)

calculated using the taxable sales amountmultiplied by the applicable tax rate less

deductible input VAT of the current period)Note (b)
City maintenance and construction taxThe amount of VAT paid1% or 5% or 7%
Educational surchargeThe amount of VAT paid3% or 5%
Local educational surchargeThe amount of VAT paid2%
Property taxPrice-based property is subject to a 1.2% tax rate

after a 30% cut in the original price of property;rental-based property is subject to a 12% tax

rate for the rental income.1.2% or 12%

(a) Notes to the enterprise income tax rate of the principal tax payers with different tax rates

15% in 2020 as they qualified as high-tech enterprises and obtained the High-

tech Enterprise Certificate:
Name of taxpayerNo. of the High-tech Enterprise CertificateDates of issuanceTerm of validity
Jiangsu Midea Cleaning Appliances Co., Ltd.GR2020320121312 December 20203 years
GD Midea Environment Appliances Mfg. Co., Ltd.GR2019440004302 December 20193 years
Guangdong Midea Kitchen Appliances Manufacturing Co., Ltd.GR20184400025028 November 20183 years
Guangdong Witol Vacuum Electronic Manufacture Co., Ltd.GR2020440019861 December 20203 years
Foshan Shunde Midea Washing Appliances Manufacturing Co., Ltd.GR2020440035579 December 20203 years
Foshan Shunde Midea Electrical Heating Appliances Manufacturing Co., Ltd.GR20184401037328 November 20183 years
Guangdong Midea Precision Molding Technology Co., Ltd.GR2019440047802 December 20193 years
Foshan Shunde Midea Electric Science and Technology Co., Ltd.GR2019440003172 December 20193 years
GD Midea Heating & Ventilating Equipment Co., Ltd.GR20184400821928 November 20183 years
Hefei Midea Heating & Ventilating Equipment Co., Ltd.GR2019340011639 September 20193 years
Anhui Meizhi Precision Manufacturing Co., Ltd.GR20183400089024 July 20183 years
Guangzhou Midea Hualing Refrigerator Co., Ltd.GR2019440092382 December 20193 years
Guangdong Welling Motor Manufacturing Co., Ltd.GR2020440060879 December 20203 years
Foshan Welling Washer Motor Manufacturing Co., Ltd.GR2020440054259 December 20203 years
Huaian Welling Motor Manufacturing Co., Ltd.GR2019320100336 December 20193 years
Annto Logistics Technology Co., Ltd.GR20183400130624 July 20183 years
Wuxi Filin Electronics Co., Ltd.GR20183200105324 October 20183 years
Wuxi Little Swan General Appliance Co., Ltd.GR20183200110024 October 20183 years
GD Midea Air-Conditioning Equipment Co., Ltd.GR2020440030591 December 20203 years
Handan Midea Air-Conditioning Equipment Co., Ltd.GR20201300019127 September 20203 years

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB’000 Yuan unless otherwise stated)[English translation for reference only]

3 Taxation (Cont’d)

(1) Main tax category and rate (Cont'd)

(a) Notes to the enterprise income tax rate of the principal tax payers with different tax rates

(Cont'd)

15% in 2020 as they qualified as high-tech enterprises and obtained the High-

tech Enterprise Certificate (Cont’d):
Name of taxpayerNo. of the High-tech Enterprise CertificateDates of issuanceTerm of validity
Midea Group Wuhan Refrigeration Equipment Co., Ltd.GR2020420006841 December 20203 years
Guangzhou Hualing Refrigerating Equipment Co., Ltd.GR2020440019531 December 20203 years
Wuhu Maty Air-Conditioning Equipment Co., Ltd.GR20203400138317 August 20203 years
Chongqing Midea General Refrigeration Equipment Co., Ltd.GR2020511003479 October 20203 years
Guangdong Meizhi Compressor LimitedGR2020440042709 December 20203 years
Hubei Midea Refrigerator Co., Ltd.GR2020420007451 December 20203 years
Guangdong Midea Consumer Electric Manufacturing Co., Ltd.GR20204400723211 December 20203 years
Anhui Meizhi Compressor Co., Ltd.GR2019340000469 September 20193 years
Foshan Shunde Midea Water Dispenser Manufacturing Co., Ltd.GR2020440040989 December 20203 years
Midea Welling Motor Technology (Shanghai) Co., Ltd.GR20203100130412 November 20203 years
Welling (Wuhu) Motor Manufacturing Co., Ltd.GR20183400114424 July 20183 years
Hefei Midea Laundry Appliance Co., Ltd.GR20183400088224 July 20183 years
Hefei Hualing Co., Ltd.GR20183400055224 July 20183 years
Foshan Midea Chungho Water Purification Equipment. Co., Ltd.GR20184400708928 November 20183 years
Toshiba HA Manufacturing (Nanhai) Co., Ltd.GR20184400710728 November 20183 years
Guangdong Meizhi Precision- Manufacturing Co., Ltd.GR20184400618128 November 20183 years
Wuhu Midea Kitchen & Bath Appliances Mfg. Co., Ltd.GR20183400081824 July 20183 years
Guangdong Midea Intelligent Technologies Co., Ltd.GR20184400394128 November 20183 years
WINONE ELEVATOR COMPANY LIMITEDGR20184400015228 November 20183 years
Hiconics Eco-energy Technology Co., Ltd.GR20181100236110 September 20183 years
Beijing Hiconics Eco-energy Frequency Conversion Technology Co., Ltd.GR20201100336521 October 20203 years
Hiconics Drive Technology (Wuhan) Co., Ltd.GR20184200003615 November 20183 years
Wuhan Hiconics Electric Drive Technology Co., Ltd.GR2020420014281 December 20203 years
Wuhan Hiconics Power Technology Co., Ltd.GR20194200145915 November 20193 years
Wuhan Hiconics Intelligent Electric Co., Ltd.GR2020420015121 December 20203 years
Changsha Sunye Electric Co., Ltd.GR20184300043217 October 20183 years
Beijing Huatairunda Energy Saving Co., Ltd.GF20181100312810 September 20183 years
Dorna Technology Co., Ltd.GR2020330067171 December 20203 years
Wuxi Little Swan Company LimitedGR2020320067592 December 20203 years
KUKA Robotics Manufacturing China Co., Ltd.GR20193100160228 October 20193 years
KUKA Robotics Guangdong Co., Ltd.GR2020440038419 December 20203 years
Midea Intelligent Lighting & Controls Technology Co., LtdGR20203600093514 September 20203 years

(a-2) The application on exemption and reduction of enterprise income tax for the Development

of Western China raised by Chongqing Midea Air-Conditioning Equipment Co., Ltd., theCompany’s subsidiary, was approved by the State Administration of Taxation of ChongqingEconomical and Technological Development Zone on 3 June 2014. And according to theAnnouncement on Continuing the Enterprise Income Tax Policies for the Development ofWestern China jointly issued by the Ministry of Finance, the State Taxation Administrationand the National Development and Reform Commission on 23 April 2020, the company wassubject to enterprise income tax at a rate of 15% in 2020.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020

(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

3 Taxation (Cont'd)

(1) Main tax category and rate (Cont'd)

(a) Notes to the enterprise income tax rate of the principal tax payers with different tax rates

(Cont'd)

(a-3) On 24 March 2016, Luanping Huitong Photovoltaic Power Co., Ltd., a subsidiary of the

Company, obtained the Record Form for Enterprise Income Tax Preference issued by theLuanping County Office of the State Taxation Administration. According to Announcementof the State Taxation Administration on the Income Tax Preference Policies for New PowerGrid Projects of Power Grid Enterprises (State Taxation Administration Announcement in2013, No.26), Phase I Project of the Company was subject to the preferential policy ofenterprise income tax exemption from 2016 to 2018, and is subject to the preferential policyof enterprise income tax reduction of 50% from 2019 to 2021. On 28 November 2017,Luanping Huitong Photovoltaic Power Co., Ltd., a subsidiary of the Company, obtained theRecord Form for Enterprise Income Tax Preference issued by the Luanping County Officeof the State Taxation Administration. According to Item 2 of Article 27 in the EnterpriseIncome Tax Law of the People’s Republic of China, Order of the President of the People’sRepublic of China (No. 63), Phase II Project of the Company was subject to the preferentialpolicy of enterprise income tax exemption from 2017 to 2019, and is subject to thepreferential policy of enterprise income tax reduction of 50% from 2020 to 2022.

(a-4) The Company's subsidiaries in Mainland China other than those mentioned in (a-1) and (a-

3) are subject to enterprise income tax at the rate of 25%.

(a-5) In August 2008, Midea Electric Trading (Singapore) Co., Pte Ltd., the Company's subsidiary,

was awarded with the Certificate of Honour for Development and Expansion (No. 587) bythe Singapore Economic Development Board and subject to the applicable preferentialincome tax rate of 5.5% for 2020. Midea Singapore Trading Co., Pte Ltd. and Little SwanInternational (Singapore) Co., Pte Ltd., the Company's subsidiaries, are subject toenterprise income tax at the rate of 17%.

(a-6) The Company's subsidiaries in Hong Kong are subject to Hong Kong profits tax at the rate

of 16.5%. Such subsidiaries include Midea International Trading Company Limited, MideaInternational Corporation Company Limited, Midea Home Appliances Investments (HongKong) Co., Limited, Century Carrier Residential Air-conditioning Equipment Co., Limited,Midea Refrigeration (Hong Kong) Limited, Welling Holding Limited, Welling InternationalHong Kong Ltd., and Midea Investment (Asia) Company Limited.

(a-7) The Company's subsidiaries in BVI and Cayman Islands are exempted from enterprise

income tax. Such subsidiaries include Mecca International (BVI) Limited, Titoni InvestmentsDevelopment Ltd., Midea Investment Holding (BVI) Limited, Midea Electric Investment (BVI)Limited, Welling Holding (BVI) Ltd., Midea Holding (Cayman Islands) Limited and MideaInvestment Development Company Limited.

(a-8) Springer Carrier Ltda., the Company's subsidiary in Brazil, is subject to Brazil enterprise

income tax at the rate of 34%.

(a-9) TLSC, the Company's subsidiary in Japan, and its subsidiaries (“TLSC Group”), are subject

to Japan enterprise income tax at the rate of 34.01%.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

3 Taxation (Cont'd)

(1) Main tax category and rate (Cont'd)

(a) Notes to the enterprise income tax rate of the principal tax payers with different tax rates

(Cont'd)

(a-10) Clivet S.P.A (“Clivet”), the Company's subsidiaries in Italy, are subject to Italy enterprise

income tax at the rate between 20% and 31.4%.

(a-11) KUKA Group, the Company's subsidiary in Germany, is subject to Germany enterprise

income tax at the rate of 32%.

(a-12) Servotronix Motion Control Ltd. (“SMC”), the Company's subsidiary in Israel, is subject to

Israel enterprise income tax at the rate of 23%.

(a-13) Misr Refrigeration and Air Conditioning Manufacturing Company, S.A.E., the Company's

subsidiary in Egypt, is subject to Egyptian enterprise income tax at the rate of 22.5%.

(b) Notes to the VAT rate of the principal tax payers with different tax rates

(b-1) Pursuant to the Announcement on Relevant Policies for Deepening Value-Added Tax

Reform (Announcement [2019] No. 39) jointly issued by the Ministry of Finance, the StateTaxation Administration and the General Administration of Customs and relevantregulations, the applicable tax rate of revenue arising from sales of goods and rendering ofrepairing and replacement services of the Company’s certain subsidiaries is 13% from 1April 2019, while it was 16% before then.

(b-2) Pursuant to the Announcement on Relevant Policies for Deepening Value-Added Tax

Reform (Announcement [2019] No. 39) jointly issued by the Ministry of Finance, the StateTaxation Administration and the General Administration of Customs and relevantregulations, the applicable tax rate of revenue arising from rendering of real estate leasingand transportation services of the Company’s certain subsidiaries is 9% from 1 April 2019,while it was 10% before then.

(b-3) Financial services, consulting services and storage services provided by the Company and

certain subsidiaries are subject to VAT at the rate of 6%.

(b-4) Rental revenue ofthe Company’s certain subsidiaries is subject to easy levy of VAT at therate of 5%.

(b-5) Pursuant to the Announcement on Relevant Policies for Deepening the Value-Added Tax

Reform (Announcement [2019] No. 39) issued by the Ministry of Finance, the State TaxationAdministration and the General Administration of Customs, certain subsidiaries of theCompany engaged in the production service sector, are eligible for a 10% additional VATdeduction based on deductible input VAT in the current period from 1 April 2019 to 31December 2021.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020

(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements

(1) Cash at bank and on hand

31 December 202031 December 2019
Cash on hand2,5383,128
Cash at bank (a)51,253,13249,012,677
Other cash balances (b)688,481153,022
Statutory reserve deposits with the Central Bank (c)1,707,645433,149
Surplus reserve with the Central Bank344,860355,471
Deposits with banks and other financial institutions (d)26,515,27620,562,160
Accrued interest698,550397,234
81,210,48270,916,841
Including: Total amounts deposited with

banks overseas (includingHong Kong, China,

China, Singapore, Japan,

Italy, Brazil, Germany, etc.)7,014,6205,270,085

(a) As at 31 December 2020, cash at bank included fixed deposits with the term of over 3

months, amounting to RMB 37,067,298,000 (31 December 2019: RMB 39,491,676,000).

(b) Other cash balances mainly include letters of guarantee, bank acceptance notes and letters

of credit.

(c) Statutory reserve with the Central Bank represents the statutory reserve deposited in

People’s Bank of China by the financial enterprise in accordance with relevant regulations,which are calculated at 6% and 5% for eligible RMB deposits and foreign currency deposits,respectively, and are not available for use in the Group’s daily operations.

(d) As at 31 December 2020, deposits with banks and other financial institutions included fixed

deposits with the term of over 3 months, amounting to RMB 17,500,000,000 (31 December2019: Nil).

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(2) Financial assets held for trading

31 December 202031 December 2019
Structural deposits (a)25,626,631-
Investments in equity instrument held for trading (b)2,314,9651,087,351
Others298,005-
28,239,6011,087,351

(a) As at 31 December 2020, structural deposits were deposits with financial institutions due

within 1 year, which were measured at fair value through profit or loss.

(b) As at 31 December 2020, investments in equity instrument held for trading referred to equity

investments in listed companies, which were measured at fair value through profit or loss.

(3) Notes receivable

31 December 202031 December 2019
Bank acceptance notes5,086,7494,768,520
Trade acceptance notes218,108-
Less: Provision for bad debts(347)-
5,304,5104,768,520

(a) Provision for bad debts

For notes receivable of the Group arising from sales of goods or rendering of services in theordinary course of business, the Group measures bad debts based on the lifetime ECLregardless of whether there exists a significant financing component. As at 31 December2020, the Company considered that there was no significant credit risk associated with itsbank acceptance notes and did not expect that there would be any significant losses fromnon-performance by these banks.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(4) Accounts receivable

31 December 202031 December 2019
Accounts receivable23,854,93619,631,644
Less: Provision for bad debts(876,573)(967,825)
22,978,36318,663,819

(a) The ageing of accounts receivable is analysed as follows:

31 December 202031 December 2019
Within 1 year23,015,28019,168,694
1 to 2 years580,644301,554
2 to 3 years159,427101,643
3 to 5 years87,93842,106
Over 5 years11,64717,647
23,854,93619,631,644

As at 31 December 2020, the Group had no significant overdue accounts receivable.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(4) Accounts receivable (Cont’d)

(b) Under the new financial instruments standards, the Group measures the loss provision for

accounts receivable according to the lifetime ECL.

As at 31 December 2020, accounts receivable for which the related provision for bad debtswas provided on the individual basis were analysed as follows:

Book balanceLifetime ECL rateProvision for bad debtsReason
Domestic customers14,288100.00%(14,288)The debtor

encounteredfinancial

distress, etc.Overseas customers

Overseas customers1,000100.00%(1,000)
15,288(15,288)

As at 31 December 2019, accounts receivable for which the related provision for bad debtswas provided on the individual basis were analysed as follows:

Book balanceLifetime ECL rateProvision for bad debtsReason
Domestic customers2,998100.00%(2,998)The debtor

encounteredfinancial

distress, etc.Overseas customers

Overseas customers4,767100.00%(4,767)
7,765(7,765)

As at 31 December 2020, accounts receivable for which the related provision for bad debtswas provided on the grouping basis were analysed as follows:

31 December 2020
Book balanceProvision for bad debts
AmountLifetime ECL rateAmount
Domestic business grouping11,521,0323.71%(427,912)
Overseas business grouping12,318,6163.52%(433,373)
23,839,648(861,285)

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(4) Accounts receivable (Cont’d)

(b) Under the new financial instruments standards, the Group measures the loss provision for

accounts receivable according to the lifetime ECL. (Cont’d)

As at 31 December 2019, accounts receivable for which the related provision for bad debtswas provided on the grouping basis were analysed as follows:

31 December 2019
Book balanceProvision for bad debts
AmountLifetime ECL rateAmount
Domestic business grouping7,908,8315.53%(437,578)
Overseas business grouping11,715,0484.46%(522,482)
19,623,879(960,060)

(c) The provision for bad debts in the current year amounted to RMB 168,438,000 (2019: RMB

215,902,000). The provision for bad debts reversed in the current year amounted to RMB81,179,000 (2019: RMB 145,990,000). The provision for bad debts written off in the currentyear amounted to RMB 114,893,000 (2019: RMB 97,348,000).

(d) As at 31 December 2020, the five largest accounts receivable aggregated by debtor were

summarised and analysed as follows:

AmountProvision for bad debts% of total balance
Total amount of the five largest accounts receivable3,493,123(64,023)14.64%

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(5) Other receivables

31 December 202031 December 2019
Other receivables3,026,9702,766,098
Less: Provision for bad debts(53,025)(53,124)
2,973,9452,712,974

(a) Other receivables mainly include deposits, receivables related to share options, current

accounts and petty cash to staff.

The ageing of other receivables is analysed as follows:

31 December 202031 December 2019
Within 1 year2,708,7302,643,584
1 to 2 years222,78569,490
2 to 3 years50,45716,555
3 to 5 years30,86725,773
Over 5 years14,13110,696
3,026,9702,766,098

(b) Provision for bad debts and changes in book balance statement

Stage 1Stage 3
12-month ECL (Grouping)12-month ECL (Individual)Lifetime ECL (Credit impaired)Sub-total

Book

balanceProvision

for bad

Book

debtsbalanceProvision

for bad

Book

debtsbalanceProvision

for bad

debtsProvision

for bad

debts
31 December 20192,701,63849,76761,103-3,3573,35753,124
Transfer to Stage 3(5,991)(2,396)--5,9912,396-
Net increase/(decrease) in the current year288,006613(23,362)-(3,772)(107)506
Including: Write-off in

the current

year----(3,772)(3,772)(3,772)
Derecognition-------
Differences on

translation of foreigncurrency financial

statements-(535)---(70)(605)
31 December 20202,983,65347,44937,741-5,5765,57653,025

As at 31 December 2020 and 31 December 2019, the Group had no other receivables atStage 2.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(5) Other receivables (Cont’d)

(c) As at 31 December 2020 and 31 December 2019, other receivables of the Group at Stage

1 and Stage 3 were analysed as follows:

(i) As at 31 December 2020, other receivables for which the related provision for bad debts

was provided on the individual basis were analysed as follows:

Book

balanceECL rate in the following 12 monthsProvision for bad debtsReason
Stage 137,7410%-Relatively low bad debt risks

Book

balanceECL rate in the following 12 monthsProvision for bad debtsReason
Stage 35,576100.00%(5,576)The debtor

encounteredfinancial distress,

As at 31 December 2019, other receivables for which the related provision for bad debtswas provided on the individual basis were analysed as follows:

etc.

Book

balanceECL rate in the following 12 monthsProvision for bad debtsReason
Stage 161,1030%-Relatively low bad debt risks

Book

balanceECL rate in the following 12 monthsProvision for bad debtsReason
Stage 33,357100.00%(3,357)The debtor

encounteredfinancial distress,

(ii) As at 31 December 2020 and 31 December 2019, other receivables of which provision for

bad debts was provided on the grouping basis were all at Stage 1, which were analysed asfollows:

etc.

31 December 202031 December 2019
Book balanceProvision for bad debtsBook balanceProvision for bad debts
AmountAmountProvision ratioAmountAmountProvision ratio
Security deposit/guarantee

payables

grouping2,983,653(47,449)1.59%2,701,638(49,767)1.84%

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(5) Other receivables (Cont'd)

(c) As at 31 December 2020 and 31 December 2019, other receivables of the Group at Stage

1 and Stage 3 were analysed as follows: (Cont'd)

(iii) The provision for bad debts in the current year amounted to RMB 19,151,000 (2019: RMB

19,276,000). The provision for bad debts reversed in the current year amounted to RMB14,873,000 (2019: RMB 8,481,000). The provision for bad debts written off in the currentyear amounted to RMB 3,772,000 (2019: RMB 475,000).

(d) As at 31 December 2020, the five largest other receivables aggregated by debtor were

summarised and analysed as follows:

AmountProvision for bad debts% of total balance
Total amount of the five largest other receivables189,911(3,559)6.27%

(e) As at 31 December 2020, the Group had no significant government grants recognised at

amounts receivable.

(6) Receivables financing

31 December 202031 December 2019
Receivables financing13,901,8567,565,776
The Group’s receivables financing were mainly accounts receivable and bank acceptance notes transferred, discounted and endorsed for the purpose of daily treasury management and were qualified for derecognition.
No provision for bank acceptance notes was individually provided. As at 31 December 2020 and 31 December 2019, the Group measured provision for bad debts based on the lifetime ECL and expected that there was no significant credit risk associated with its bank acceptance notes and did not

expect that there would be any significant losses from non-

performance by these banks.

As at 31 December 2020, the Group's notes receivable and accounts receivable transferred, endorsed or discounted but not matured presented in receivables

financing

were as follows:
DerecognisedNot derecognised
Receivables financing13,318,7313,728,875

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(7) Advances to suppliers

31 December 202031 December 2019
Prepayments for raw materials and others2,763,7102,246,177

(a) The ageing of advances to suppliers is analysed below:

31 December 202031 December 2019
Amount% of total balanceAmount% of total balance
Within 1 year2,562,90492.73%2,176,11096.88%
1 to 2 years163,7655.93%26,9251.20%
2 to 3 years17,5790.64%22,8951.02%
Over 3 years19,4620.70%20,2470.90%
2,763,710100.00%2,246,177100.00%

As at 31 December 2020, advances to suppliers over 1 year with a carrying amount of RMB200,806,000 (31 December 2019: RMB 70,067,000) were mainly unsettled prepayments forraw materials.

As at 31 December 2020, the five largest advances to suppliers aggregated by debtor weresummarised and analysed as follows:

Amount% of total balance
Total amount of the five largest advances to suppliers708,56425.64%

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(8) Contract assets

31 December 20201 January 202031 December 2019
Contract assets3,289,7834,009,176——
Less: Provision for impairment of contract assets(52,935)-——
Total3,236,8484,009,176——
For contract assets, the Group measures the loss provision based on the lifetime ECL regardless of whether there exists a significant financing component. As at 31 December 2020, the Group

’s contract assets were not overdue, and the provision for impairment was

made on the grouping basis.
Book balanceLifetime ECL rateProvision for impairment
Domestic business grouping749,5215.23%(39,218)
Overseas business grouping2,540,2620.54%(13,717)
3,289,783(52,935)

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020

(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(9) Loans and advances

(a) By individual and corporation:

31 December 202031 December 2019
Loans and advances measured at amortised cost
Loans and advances to individuals2,235,2751,110,127
Loans and advances to corporations15,660,14910,708,289
Including: Loans10,133,4479,558,953
Discounted bills5,526,7021,149,336
17,895,42411,818,416
Less: Provision for bad debts(312,854)(158,919)
17,582,57011,659,497

As at 31 December 2020, loans and advances over 1 year amounted to RMB 1,113,501,000(31 December 2019: RMB 790,101,000).

(b) By type of collateral held

31 December 202031 December 2019
Unsecured loans1,645,2821,075,217
Guaranteed loans885,6591,476,273
Pledged loans15,364,4839,266,926
17,895,42411,818,416
Less: Provision for bad debts(312,854)(158,919)
17,582,57011,659,497

(c) The provision for bad debts in the current year amounted to RMB 169,043,000 (2019: RMB

68,617,000), the provision for bad debts written off in the current year amounted to RMB1,786,000 (2019: RMB 10,826,000) and the provision for bad debts reversed in the currentyear amounted to RMB 13,322,000 (2019: RMB 52,878,000) (Note 4(23)).

(d) As at 31 December 2020, the Group’s loans and advances for which the provision for bad

debts was provided on the individual basis amounted to RMB 5,347,295,000, of which theprovision for bad debts amounted to RMB 123,882,000.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(10) Inventories

(a) Inventories are summarised by category as follows:

31 December 20201 January 202031 December 2019

Book

balanceProvision for

decline in thevalue of

inventories

Carrying

amount

Book

balanceProvision for

decline in the

value of

inventories

Carrying

amount

Book

balanceProvision for

decline in thevalue of

inventories

Carrying

amount
Finished goods21,718,749(372,474)21,346,27522,046,730(407,598)21,639,13222,046,730(407,598)21,639,132
Raw materials7,402,034(70,221)7,331,8135,009,197(67,875)4,941,3225,009,197(67,875)4,941,322
Work in progress1,875,881-1,875,8811,596,042-1,596,0421,596,042-1,596,042
Consigned processing materials, etc.522,560-522,560257,727-257,727257,727-257,727
Projects completed but unsettled————————————4,009,176-4,009,176
31,519,224(442,695)31,076,52928,909,696(475,473)28,434,22332,918,872(475,473)32,443,399

(b) Analysis of provision for decline in the value of inventories is as follows:

31 December 2019Changes in accounting policies1 January 2020Increase in the current yearDecrease in the current yearDifference on translation of foreign currency financial statements31 December 2020
ProvisionReversal or write-off
Finished goods407,598-407,598301,876(315,860)(21,140)372,474
Raw materials67,875-67,87569,089(65,860)(883)70,221
475,473-475,473370,965(381,720)(22,023)442,695

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(10) Inventories (Cont’d)

(c) Provision for decline in the value of inventories is as follows:

Specific basis for determining

net realisable valueReason for reversal or write-off of

provision for decline in the value of

inventories
Finished goodsStated at the lower of cost and net realisable valueSales
Raw materials, etc.Stated at the lower of cost and net realisable valueRequisition for production

(11) Other current assets

31 December 202031 December 2019
Structural deposits (a)-60,038,855
Monetary investment products (b)25,542,595-
Input VAT to be deducted4,336,2603,159,794
Prepaid expenses786,140875,451
Others2,414,923936,927
33,079,91865,011,027

(a) As at 31 December 2019, structural deposits were deposits with financial institutions due

within 1 year, which were mainly measured at fair value through profit or loss.

(b) As at 31 December 2020, monetary investment products were fixed income products with

financial institutions due within 1 year, which were mainly measured at amortised cost.

(12) Other debt investments

31 December 202031 December 2019
Fair value through other comprehensive income
- Transferable certificate of deposit21,456,155-
As at 31 December 2020, the cost of the Group’s transferable certificate of deposit approximated its fair value.
As at 31 December 2020, the Group expected that there has no significant increase in credit risk of

transferable certificate of deposit since initial recognition and made provision for loss

-

month ECL. The Group considered that there was no significant credit risk associated with transferable certificate of deposit and did not expect that ther

e would be

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020

(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(13) Long-term receivables

31 December 202031 December 2019
Long-term receivables981,6231,208,079
Less: Provision for bad debts--
981,6231,208,079

The Group’s long-term receivables are presented in net amount of finance lease receivablesafter offsetting the unrealised financing income.

(14) Long-term equity investments

Long-term equity investments are classified as follows:

31 December 202031 December 2019
Investments in associates (a)2,901,3372,790,806
Less: Provision for impairment of

long-term equity

investments--
2,901,3372,790,806

(a) Investments in associates mainly refer to the investments in Guangdong Shunde Rural

Commercial Bank Co., Ltd. and Hefei Royalstar Motor Co., Ltd. and other companies by theGroup.

(15) Other non-current financial assets

31 December 202031 December 2019
Measured at fair value
- Equity of unlisted companies, etc.3,360,8491,750,107
Less: Provision for impairment of

other non-current financial

assets--
3,360,8491,750,107

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(16) Fixed assets

BuildingsOverseas land

Machinery and

equipmentMotor vehicles

Electronic

equipment and othersTotal
Cost
31 December 201917,900,6031,296,49319,702,128707,7034,510,73844,117,665
Increase in the current year
Purchase160,770109,9501,530,40822,849780,5752,604,552
Transfer from construction in progress509,876-84,8652,57733,389630,707
Increase by business combinations547,527-485,357153,79713,8351,200,516
Others55,728----55,728
Decrease in the current year
Disposal and retirement(55,749)(2,214)(762,320)(54,391)(319,979)(1,194,953)
Others(49,106)-(26,625)(18,748)(172)(94,651)
Differences on translation of

foreign currency financial

statements(57,387)(9,790)(121,971)(1,036)(15,000)(205,184)
31 December 202019,012,2621,394,43920,891,842812,7515,003,38647,114,680
Accumulated depreciation
31 December 20197,362,635-11,405,514509,4733,135,87422,413,496
Increase in the current year
Provision909,579-1,640,339104,194755,4093,409,521
Others15,506----15,506
Decrease in the current year
Disposal and retirement(37,184)-(527,487)(52,022)(292,352)(909,045)
Others(38,542)-(832)(937)(9)(40,320)
Differences on translation of

foreign currency financial

statements(32,913)-(55,169)(574)(13,809)(102,465)
31 December 20208,179,081-12,462,365560,1343,585,11324,786,693
Provision for impairment
31 December 20196,7465,90717,7132108,91139,487
Increase in the current year
Provision620-20,42532,965-54,010
Decrease in the current year
Disposal and retirement--(4,513)-(45)(4,558)
Differences on translation of

foreign currency financial

statements(35)(15)(24)(4)(88)(166)
31 December 20207,3315,89233,60133,1718,77888,773
Carrying amount
31 December 202010,825,8501,388,5478,395,876219,4461,409,49522,239,214
31 December 201910,531,2221,290,5868,278,901198,0201,365,95321,664,682

(a) In 2020, the depreciation of fixed assets amounted to RMB 3,409,521,000 (2019: RMB

3,355,820,000) and was included in the income statement.

(b) As at 31 December 2020, the Company was still in the course of obtaining the ownership

certificate for the fixed asset with a carrying amount of RMB 123,789,000 (31 December2019: RMB 219,475,000).

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(17) Construction in progress

31 December 202031 December 2019
Book balanceProvision for impairmentCarrying amountBook balanceProvision for impairmentCarrying amount
Indian Science Park364,554-364,554274,429-274,429
Midea Headquarters A04 Land Parcel Project197,540-197,54085,493-85,493
Other projects964,524(49,316)915,208834,728-834,728
1,526,618(49,316)1,477,3021,194,650-1,194,650

(a) Movements of significant projects of construction in progress

Increase inthe current

year

Transfer tofixed assets

in the

current yearSource of funds

31 December

2019Difference

ontranslationof foreigncurrencyfinancial

statements

31 December

2020
Book balanceOther decreasesBook balance
Indian Science Park274,429263,096(142,977)-(29,994)364,554Self-financing
Midea Headquarters A04 Land Parcel Project85,493112,047---197,540Self-financing
Other projects(a)834,728703,597(487,730)(79,856)(6,215)964,524Loan/Self-financing
1,194,6501,078,740(630,707)(79,856)(36,209)1,526,618

(a) In 2020, Accumulative amount of capitalised borrowing costs was RMB 155,000, and the capitalisation rate of borrowing costs in the current

year was 6.08%

(b) As at 31 December 2020, the cost of construction in progress matched the budget amount, and the projects were carried out on schedule.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(18) Intangible assets

Land use

rightsPatents and

non-patent

technologies

Trademark

rights

Trademark

use rightsOthersTotal
Cost
31 December 20194,655,2732,088,7924,993,3932,689,0875,021,17819,447,723
Increase in the current year
Purchase21,54027,320--313,132361,992
Increase by business combinations208,259105,087150,300-223,986687,632
Others11,8876,29123-149,720167,921
Decrease in the current year
Disposal(55,756)(43,458)(1,733)-(281,740)(382,687)
Other decreases(7,901)----(7,901)
Differences on

translation of foreigncurrency financial

statements(5,461)7,147117,133(42,280)55,345131,884
31 December 20204,827,8412,191,1795,259,1162,646,8075,481,62120,406,564
Accumulated amortisation
31 December 2019912,013578,738108,928238,7142,112,5083,950,901
Increase in the current year
Provision94,467228,5934,50792,218663,8991,083,684
Others1,778----1,778
Decrease in the current year
Disposal(6,131)(25,881)--(229,728)(261,740)
Others(1,482)----(1,482)
Differences on

translation of foreigncurrency financial

statements(134)(6,023)(169)(940)24,76817,502
31 December 20201,000,511775,427113,266329,9922,571,4474,790,643
Provision for impairment
31 December 2019-11,412--1,23112,643
Increase in the current year
Provision-120,819--76,557197,376
Decrease in the current year
Disposal-(11,719)---(11,719)
Differences on

translation of foreigncurrency financial

statements-(5,903)--1,131(4,772)
31 December 2020-114,609--78,919193,528
Carrying amount
31 December 20203,827,3301,301,1435,145,8502,316,8152,831,25515,422,393
31 December 20193,743,2601,498,6424,884,4652,450,3732,907,43915,484,179

(a) In 2020, the amortisation of intangible assets amounted to RMB 1,083,684,000 (2019: RMB

1,243,970,000) and was included in the income statement in full amount.

(b) As at 31 December 2020, the Group had no certificates of land use rights that were still in

process.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(19) Goodwill

The Group’s goodwill had been allocated to the asset group and asset groups at theacquisition date, without any change of goodwill allocation in 2020, and the allocation is asfollows:

31 December 202031 December 2019
Goodwill -
KUKA Group22,836,29422,240,132
TLSC Group2,944,4862,984,110
Little Swan1,361,3061,361,306
Others2,931,6542,173,765
30,073,74028,759,313
Less: Provision for impairment(516,522)(552,248)
29,557,21828,207,065

When making an impairment testing of goodwill for assets, the Group compares the carryingamounts of related asset group and asset groups (including goodwill) with their recoverableamounts. If the recoverable amount is lower than the carrying amount, the difference shallbe included in profit or loss for the current period. The Group’s goodwill allocation wasunchanged in 2020.

As at 31 December 2020, the recoverable amount of asset group and asset groups withgoodwill is calculated using discounted future cash flows determined according to thebudget approved by management (the budget period is 5 to 6 years). The future cash flowsbeyond the budget period are calculated based on the estimated perpetual annual growthrates. The perpetual annual growth rates (mainly 1%-2%) applied by management areconsistent with the estimates of the industry, and do not exceed the long-term averagegrowth rates of each product. Management determines expected revenue growth rates(mainly 2.00%-15.87%) and EBITDA margins (mainly 3.05%-11.47%) based on pastexperience and forecast on future market development. The discount rates (mainly 9.48%-

14.49%) used by management are the pre-tax rates that are able to reflect the risks specific

to the related asset group and asset groups. Management analyses the recoverable amountof each asset group and asset groups based on these assumptions and considers that nofurther provision for impairment is necessary for the goodwill.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(20) Long-term prepaid expenses

Long-term prepaid expenses mainly include expenses prepaid for software and projectreconstruction.

(21) Deferred tax assets and deferred tax liabilities

(a) Deferred tax assets before offsetting

31 December 202031 December 2019
Deductible

temporarydifferences anddeductible

lossesDeductible

temporarydifferences and

deductible

losses

Deferred tax

Deferred tax

assetsassets
Deductible losses2,825,364693,0981,457,853416,248
Provision for asset impairment2,023,621409,5761,489,044291,763
Employee benefits payable1,821,805426,8451,394,921337,172
Other current liabilities29,914,7875,305,00924,574,2374,767,558
Others6,615,6461,700,3116,408,0561,484,817
43,201,2238,534,83935,324,1117,297,558
Including:
Expected to be

recovered within 1

year (inclusive)6,415,7576,073,311
Expected to be recovered after 1 year2,119,0821,224,247
8,534,8397,297,558

(b) Deferred tax liabilities before offsetting

31 December 202031 December 2019
Taxable

temporary

differencesTaxable

temporary

differences
Deferred tax liabilitiesDeferred tax liabilities
Changes in fair value1,495,449205,628827,153162,129
Business combination

involving enterprisenot under common

control11,673,6273,415,47011,785,5553,474,098
Others11,296,7072,929,0609,644,6662,448,340
24,465,7836,550,15822,257,3746,084,567
Including:
Expected to be

recovered within 1

year (inclusive)1,026,8061,145,971
Expected to be recovered after 1 year5,523,3524,938,596
6,550,1586,084,567

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(21) Deferred tax assets and deferred tax liabilities (Cont’d)

(c) The net balances of deferred tax assets and deferred tax liabilities after offsetting are as

follows:

31 December 202031 December 2019
Balance after offsettingBalance after offsetting
Deferred tax assets7,208,6355,768,993
Deferred tax liabilities5,223,9544,556,002

(22) Other non-current assets

31 December 202031 December 2019
Structural deposits (a)-4,355,799
Monetary investment products (b)10,128,172-
Others1,127,707591,804
11,255,8794,947,603

(a) As at 31 December 2019, structural deposits were deposits with financial institutions due

over 1 year, which were mainly measured at fair value through profit or loss.

(b) As at 31 December 2020, monetary investment products were fixed income products with

financial institutions due over 1 year, which were mainly measured at amortised cost.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(23) Asset impairment and provision for loss

31 December

2019Changes in accounting policies1 January 2020

Increase inthe current

year

Decrease in the current

yearDifference

ontranslation

of foreigncurrencyfinancial

statements

31 December

2020
ReversalCharge-off/ Written-off
Provision for bad debts1,179,868——1,179,868356,979(109,374)(120,451)(64,223)1,242,799
Including: Provision for bad debts of accounts receivable967,825——967,825168,438(81,179)(114,893)(63,618)876,573
Provision for bad debts of loans and advances158,919——158,919169,043(13,322)(1,786)-312,854
Provision for bad debts of notes receivable-——-347---347
Provision for bad debts of other receivables53,124——53,12419,151(14,873)(3,772)(605)53,025
Provision for decline in the value of inventories475,473——475,473370,965(15,270)(366,450)(22,023)442,695
Provision for impairment of fixed assets39,487——39,48754,010-(4,558)(166)88,773
Provision for impairment of intangible assets12,643——12,643197,376-(11,719)(4,772)193,528
Provision for impairment of contract assets——--52,153--78252,935
Provision for impairment of investment properties12,576——12,576----12,576
Provision for impairment of construction in progress-——-45,975--3,34149,316
Provision for impairment of goodwill552,248——552,248---(35,726)516,522
2,272,295-2,272,2951,077,458(124,644)(503,178)(122,787)2,599,144

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(24) Assets with use rights restricted

As at 31 December 2020, assets with use rights restricted were as follows:

31 December 202031 December 2019
Cash at bank and on hand
Including: Cash at bank (Note 4(1))37,067,29839,491,676
Other cash balances (Note 4(1))688,481153,022
Legal reserves with the Central Bank (Note 4(1))1,707,645433,149
Deposits with banks and

other financial

institutions (Note 4(1))17,500,000-
56,963,42440,077,847

(25) Short-term borrowings

31 December 202031 December 2019
Unsecured borrowings2,281,5095,665,756
Guaranteed borrowings7,402,26036,082
Pledged borrowings192,569-
Mortgage borrowings67,591-
9,943,9295,701,838

As at 31 December 2020, the annual interest rate range of short-term borrowings was 0.90%to 9.40% (31 December 2019: 0.57% to 9.40%).

(26) Notes payable

31 December 202031 December 2019
Bank acceptance notes28,233,81823,891,600
Trade acceptance notes16,121-
28,249,93923,891,600

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(27) Accounts payable

31 December 202031 December 2019
Materials cost payable49,451,07639,528,815
Others4,479,1853,006,962
53,930,26142,535,777

As at 31 December 2020, accounts payable over 1 year with a carrying amount of RMB985,248,000 (31 December 2019: RMB 886,355,000) were mainly unsettled accountspayable for materials.

(28) Advances from customers

31 December 20201 January 202031 December 2019
Advances on sales--14,054,839
Settled but not completed--2,177,015
--16,231,854

(29) Contract liabilities

31 December 20201 January 202031 December 2019
Advances on sales and services16,511,43516,259,544——
Advances for construction projects1,889,4872,177,015——
18,400,92218,436,559——
More than 90% of contract liabilities included in the carrying amount as at 1 January 2020 were transferred to revenue in 2020.
As mentioned in Note 5(1), due to business combinations involving enterprises not under common control in the current year, the amount of contract liabilities increased by

RMB

(30) Employee benefits payable

491,780,000.

31 December 202031 December 2019
Short-term employee benefits payable (a)6,666,8306,118,722
Others287,992317,387
6,954,8226,436,109

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(30) Employee benefits payable (Cont'd)

(a) Short-term employee benefits

31 December 2019Increase in the current yearDecrease in the current year31 December 2020
Wages and salaries, bonus,

allowances and

subsidies5,714,68423,936,384(23,469,332)6,181,736
Staff welfare255,9011,118,803(1,032,894)341,810
Social security contributions89,6032,037,550(2,053,335)73,818
Including: Medical insurance87,1731,958,163(1,973,697)71,639
Work injury insurance1,30314,743(14,990)1,056
Maternity insurance1,12764,644(64,648)1,123
Housing funds28,445463,190(468,098)23,537
Labour union funds and

employee education

funds20,361107,501(110,349)17,513
Other short-term employee benefits9,728509,454(490,766)28,416
6,118,72228,172,882(27,624,774)6,666,830

(31) Taxes payable

31 December 202031 December 2019
Enterprise income tax payable3,121,2362,985,670
Unpaid VAT1,013,378900,204
Others1,623,4441,210,393
5,758,0585,096,267

(32) Other payables

31 December 202031 December 2019
Other payables4,501,3913,800,568

(a) Other payables are mainly restricted share repurchase obligation, deposit and security

deposit payable, reimbursed logistics expense, manufacturing equipment expense, dividendpayable, etc.

(b) As at 31 December 2020, other payables with ageing over 1 year with a carrying amount of

RMB 1,392,059,000 (31 December 2019: RMB 765,092,000) were mainly those recognisedfor performing equity incentive plan and deposit and security deposit payable, which wereunsettled since related projects were uncompleted.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(33) Current portion of non-current liabilities

31 December 202031 December 2019
Current portion of long-term borrowings (Note 4(35))6,284,6431,230,966
Current portion of long-term payables25,53839,426
Current portion of equity purchase payables-189,725
6,310,1811,460,117

(34) Other current liabilities

31 December 20201 January 202031 December 2019
Accrued sale rebates31,192,65226,175,01426,175,014
Short-term financing bonds payable (a)3,030,785--
Others15,628,80210,695,05812,899,763
49,852,23936,870,07239,074,777

(a) As at 31 December 2020, short-term financing bonds payable represented super short-term

financing bonds with a total face value of RMB 3,000,000,000 issued by the Company, witha term of 240 days, and a coupon rate of 1.65%.

(35) Long-term borrowings

31 December 202031 December 2019
Mortgage borrowings (a)29,673,66128,892,783
Guaranteed borrowings (b)7,785,8986,569,414
Unsecured borrowings11,633,4347,067,146
Pledged borrowings18,937-
49,111,93042,529,343
Less: Current portion of mortgage borrowings (Note 4(33))(48,962)(39,078)
Current portion of guaranteed borrowings (Note 4(33))(2,174,775)-
Current portion of unsecured borrowings (Note 4(33))(4,054,593)(1,191,888)
Current portion of pledged borrowings (Note 4(33))(6,313)-
42,827,28741,298,377

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(35) Long-term borrowings (Cont'd)

(a) As at 31 December 2020, bank mortgage borrowings were mainly mortgage borrowings with

a cost of EUR 3,691,857,000, equivalent to RMB 29,627,150,000 (31 December 2019: acost of EUR 3,696,857,000, equivalent to RMB 28,892,783,000) and were pledged by

81.04% equity of KUKA Group, which was acquired by the subsidiary of the Company.

Interest is paid on a semi-annual basis, and the borrowings are due in August 2022.

(b) As at 31 December 2020, bank guaranteed borrowings mainly included: (i) guaranteed

borrowings with a cost of EUR 271,000,000, equivalent to RMB 2,174,775,000 (31December 2019: a cost of EUR 271,000,000, equivalent to RMB 2,118,000,000) guaranteedby the Company, with interest paid every 3 months, which will be due in April 2021; (ii)guaranteed borrowings with a cost of JPY 69,460,000,000, equivalent to RMB4,392,373,000 (31 December 2019: a cost of JPY 69,460,000,000, equivalent to RMB4,451,414,000) guaranteed by the Company, with interest paid on a monthly basis, whichwill be due in May 2024.

(c) As at 31 December 2020, the annual interest rate range of long-term borrowings was 0.49%

to 6.08% (31 December 2019: 0.5% to 5.5%).

(36) Long-term employee benefits payable

31 December 202031 December 2019
Supplementary retirement benefits (a)2,014,6512,267,015
Others145,024151,548
2,159,6752,418,563

(a) Supplementary retirement benefits

Supplementary retirement benefits obligation of the Group recognised on the balance sheetdate is calculated using the projected unit credit method, and reviewed by externalindependent actuary institution.

(i) The Group’s supplementary retirement benefits liabilities:

31 December 202031 December 2019
Defined benefit obligation3,850,4003,896,591
Less: Fair value of planned assets(1,835,749)(1,629,576)
Liabilities of defined benefit obligation2,014,6512,267,015

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(36) Long-term employee benefits payable (Cont'd)

(a) Supplementary retirement benefits (Cont'd)

(ii) The actuarial assumptions used to determine the present value of defined benefit obligation

31 December 2020
Discount rate0.00%-6.00%
Inflation rate1.00%
Salary growth rate0.00%-8.10%
Pension dynamics0.00%-3.65%
Retirement rate0.00%-12.57%
Changes in cost of medical services6.50%

(37) Other non-current liabilities

Other non-current liabilities are mainly equity purchase payables.

(38) Share capital

Movements in the current year

31 December

2019Share-based

paymentincentive plan

(a)Desterilisation

Additional

Repurchases

issuanceand write-offsSub-total

31 December

2020
RMB-denominated ordinary shares -
RMB-denominated

ordinary shares

subject to trading restriction165,40333,245(10,060)-(5,725)17,460182,863
RMB-denominated

ordinary sharesnot subject to

trading restriction6,806,49730,55610,060--40,6166,847,113
6,971,90063,801--(5,725)58,0767,029,976
Movements in the current year

31 December

2018Share-based

paymentincentive plan

(a)Desterilisation

Additional

Repurchases

issuanceand write-offsSub-total

31 December

2019
RMB-denominated ordinary shares -
RMB-denominated

ordinary sharessubject to trading

restriction147,17530,980(8,298)2,379(6,833)18,228165,403
RMB-denominated

ordinary sharesnot subject to

trading restriction6,515,85656,1708,298321,278(95,105)290,6416,806,497
6,663,03187,150-323,657(101,938)308,8696,971,900

(a) In 2020, the share-based payment incentive plan increased the share capital by 63,801,000

shares (2019: 87,150,000 shares).

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(39) Treasury stock

Increase in

the current

yearDecrease in

the current

year
31 December 201931 December 2020
Treasury stock used

for share-basedpayment incentive

plan3,759,7322,798,468(463,853)6,094,347
Increase in

the current

yearDecrease in

the current

year
31 December 201831 December 2019
Treasury stock used

for share-basedpayment incentive

plan918,1713,157,236(315,675)3,759,732
Repurchased shares

that have not yet

been written off4,000,256-(4,000,256)-
4,918,4273,157,236(4,315,931)3,759,732

In 2020, the Group’s repurchased treasury stock amounted to RMB 2,798,468,000, and therestricted shares and employee stock ownership plans granted in 2020 were approximatelyRMB 2,012,093,000. As at 31 December 2020, treasury stock mainly comprised treasurystock of RMB 2,185,356,000 used for share-based payment incentive plan and restrictedshares amounting to RMB 3,908,991,000 that have not met unlock condition, amounting toRMB 6,094,347,000 in total (31 December 2019: RMB 3,759,732,000).

(40) Capital surplus

Increase in

the current

yearDecrease in

the current

year
31 December 201931 December 2020
Share premium (a)15,683,4992,694,886(193,357)18,185,028
Share-based payment incentive plan (b)1,443,9421,022,236(1,051,336)1,414,842
Others (c)2,512,872513,951(138,588)2,888,235
19,640,3134,231,073(1,383,281)22,488,105
Increase in

the current

yearDecrease in

the current

year
31 December 201831 December 2019
Share premium14,478,2445,260,907(4,055,652)15,683,499
Share-based payment incentive plan1,299,655733,330(589,043)1,443,942
Others2,673,40810,806(171,342)2,512,872
18,451,3076,005,043(4,816,037)19,640,313

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(40) Capital surplus (Cont’d)

(a) The increase in share premium arose from the exercise of share options with the amount of

RMB 2,157,530,000, the unlocking of restricted shares with the amount of RMB537,356,000; the decrease in share premium arose from the repurchase of restricted shareswith the amount of RMB 193,357,000.

(b) The increase of share-based payment incentive plan arose from expenses attributable to

shareholders' equity of the parent company in the share-based payment incentive plan withthe amount of RMB 1,022,236,000, while the decrease arose from the transfer of RMB1,051,336,000 to share premium due to exercise of share-based payment incentive plan.

(c) Other increases in the capital surplus were mainly due to the Group's purchase of equity

held by the minority shareholders of subsidiaries, including Clivet, Annto Logistics, etc.

MIDEA GROUP CO., LTD.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2020(All amounts in RMB'000 Yuan unless otherwise stated)[English translation for reference only]

4 Notes to the consolidated financial statements (Cont’d)

(41) Other comprehensive income

Other comprehensive income in the balance sheetOther comprehensive income in the income statement for the year ended 31 December 2020

Attributable to theparent company

after tax

Amount arising

before income taxLess:

Reclassification of

othercomprehensiveincome to profit or

Less: Income tax

lossexpenses

Attributable to the

parent company

Attributable to

minorityshareholders after

after taxtax
31 December 201931 December 2020