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格力电器:2016年年度报告(英文版) 查看PDF原文

公告日期:2017年11月15日
GREEELECTRICAPPLIANCES,INC.OFZHUHAI Annual Report 2016 April2017 00 SectionIImportantNotice,TableofContentsandParaphrase TheBoardofDirectors,BoardofSupervisors,alldirectors,supervisors and Senior Management Personnel of the Company hereby guarantee thatthecontentsareauthentic,accurateandcomplete,andthereareno falserecords, misleading representations or materialomissions in the Annual Report, and shall take all the joint and several legal responsibilities.Dong Mingzhu, the Company's responsible person, Wang Jingdong,responsible person in charge of accountingwork and Liao Jianxiong,in-chargepersonofaccountinginstitution(accounting superintendent)hereby declare and warrant that the financial report in the Report isauthentic,accurateandcomplete.All the directors attended the meeting of the Board of Directors inrespectofdeliberationoftheReport.TheCompany'sprofitdistributionproposalpassedupondeliberationatthemeetingoftheBoardofDirectorsissetoutasbelow:Basedonthetotal stock capital of 6,015,730,878 of the Company, alldirectors weredistributedacashdividendofRMB18(taxincluded)per10stocksandgiven0bonusshare(taxincluded).Publicreservefundswerenotusedforcapitalization. TableofContents SectionIImportantNotice,TableofContentsandParaphrase......1 SectionIICompanyProfileandMainFinancialIndices......4 SectionIIICorporateBusinessOverview......9 SectionIVDiscussionandAnalysisofBusinessOperation......16 SectionVImportantEvents......48 SectionVIChangesinStockCapital&InformationofShareholders......57 SectionVIIRelatedInformationofPreferredStock......63 SectionVIIIDirectors,Supervisors,SeniorManagementPersonnelandEmployees......64 SectionIXCorporateGovernance......85 SectionXFinancialReport......91 SectionXIIndexofDocuments......234 Paraphrase Items Means Contents Company,theCompany,theenterprise, Means GREEELECTRICAPPLIANCES,INC.OFZHUHAI GREEELECTRICAPPLIANCESorGREE GREEGROUP Means ZhuhaiGreeGroupCo.,Ltd. FinanceCompany Means ZhuhaiGreeGroupFinanceCompanyLimited JinghaiGuaranteed Means HebeiJinghaiGuaranteedInvestmentCo.,Ltd. CSRC Means ChinaSecuritiesRegulatoryCommission GuangdongSecuritiesRegulatoryBureau Means GuangdongRegulatoryBureauofCSRC ReportPeriod Means theperiodfrom1January2016to31December2016 SectionIICompanyProfileandMainFinancialIndices I.Companyinformation StockAbbreviation GREEELECTRICAPPLIANCES StockCode 000651 StockExchange ShenzhenStockExchange NameinChinese 珠海格力电器股份有限公司 NameAbbreviationin 格力电器 Chinese NameinForeignLanguage GREEELECTRICAPPLIANCES,INC.OFZHUHAI (ifany) NameAbbreviationinforeignGREE language(ifany) LegalRepresentative DongMingzhu RegisteredAddress JinjiWestRoad,Qianshan,ZhuhaiCity,GuangdongProvince PostCodeofRegistered 519070 Address OfficeAddress JinjiWestRoad,Qianshan,ZhuhaiCity,GuangdongProvince PostCodeofOfficeAddress 519070 Website http://www.gree.com.cn Email gree@gree.com.cn II.Contactsandcontactinformation BoardSecretary SecuritiesAffairsRepresentative Name WangJingdong Address JinjiWestRoad,Qianshan,Zhuhai City,GuangdongProvince Tel 0756-8669232 Fax 0756-8622581 Email gree0651@cn.gree.com III.Informationdisclosureandplaceofthereport MediadesignatedbytheCompanyforinformationdisclosure ChinaSecuritiesJournal,SecuritiesTimes, ShanghaiSecuritiesNewsandSecuritiesDaily WebsitespecifiedbyCSRCforreleaseoftheAnnualReport http://www.cninfo.com.cn PlacewheretheAnnualReportisavailableforinspection SecuritiesLegalAffairsDepartmentoftheCompany IV.Alterationofregistration Organizationcode 91440400192548256N Changes(ifany)inthemainbusinesssincelistingoftheCompany Nochange Changes(ifany)inthecontrollingshareholders Nochange V.Otherrelatedinformation AccountingfirmengagedbytheCompany NameoftheAccountingFirm UnionPowerCertifiedPublicAccountants(SpecialGeneralPartnership) OfficeAddress No.169DonghuRoad,WuchangDistrict,WuhanCity NamesofAccountantsasSignatories WangBing,HeLi SponsorengagedbytheCompanytoperformcontinuoussupervisionduringtheReportPeriod □Applicable√Notapplicable FinancialadviserengagedbytheCompanytoperformcontinuoussupervisionduringtheReportPeriod □Applicable√Notapplicable VI.Mainaccountingdataandfinancialindices WhethertheCompanywillretroactivelyadjustandrestatetheaccountingdataofpreviousyearsbecauseofchangeson theaccountingpolicyandcorrectionofaccountingerrors,etc. □Yes√No Increase/ 2016 2015 Decreaseover 2014 theprevious year OperatingRevenue(Yuan) 108,302,565,293.70 97,745,137,194.16 10.80% 137,750,358,395.70 Netprofitattributableto shareholdersoflistedCompany 15,420,964,990.94 12,532,442,817.66 23.05% 14,155,167,229.36 (Yuan) Netprofitattributableto shareholdersoflistedCompany 15,600,520,445.21 12,313,582,570.49 26.69% 14,144,950,462.04 lessnon-recurringgainsand losses(Yuan) Netcashflowgeneratedfrom 14,859,952,106.92 44,378,381,827.68 -66.52% 18,939,165,507.73 operatingactivities(Yuan) Basicearningspershare 2.56 2.08 23.08% 2.35 (YuanperShare) Dilutedearningspershare 2.56 2.08 23.08% 2.35 (YuanperShare) Weightedaveragereturnonnet 30.41% 27.31% 3.10% 35.23% assets Increase/ Attheendof2016 Attheendof2015 Decreaseover Attheendof2014 theprevious year Totalasset(Yuan) 182,369,705,049.35 161,698,016,315.06 12.78% 156,230,948,479.88 Netassetattributableto shareholdersoflistedCompany 53,863,951,278.13 47,521,376,091.77 13.35% 44,152,654,824.68 (Yuan) VII. Accounting Data Differences under Domestic and Foreign Accounting Standards 1.Differencesinnetprofitandnetassetsinthefinancialreportdisclosedunderinternational accountingstandardsandthatdisclosedunderdomesticaccountingstandards □Applicable√Notapplicable Therewasnodifferenceinnetprofitandnetassetsinthefinancialreportdisclosedunderinternationalaccounting standardsandthatdisclosedunderdomesticaccountingstandardsduringtheReportPeriod. 2.Differencesin netprofit andnetassetsin thefinancialreport disclosedunder overseas accountingstandardsandthatdisclosedunderdomesticaccountingstandards □Applicable√Notapplicable Therewasnodifferenceinnet profitandnet assetsinthefinancialreportdisclosedunderoverseasaccounting standardsandthatdisclosedunderdomesticaccountingstandardsduringtheReportPeriod. VIII.Quarter-basedMainFinancialIndicators Unit:Yuan Quarter1 Quarter2 Quarter3 Quarter4 Operatingincomes 24,640,675,696.66 24,542,144,380.03 33,245,891,313.38 25,873,853,903.63 Netprofitattributableto 3,159,816,132.99 3,242,653,852.65 4,826,589,275.21 4,191,905,730.09 shareholdersoflistedcompany Netprofitattributableto shareholdersoflisted 3,133,470,823.80 3,920,819,811.65 4,700,144,150.16 3,846,085,659.60 companiesafterdeductionof non-recurringprofitandloss Netcashflowsfromoperating 6,117,619,903.98 5,337,251,013.81 2,707,392,718.78 697,688,470.35 activities Whethermajordifferencesexistbetweentheabovefinancialindicatorsortheirsumandthoseinthedisclosedquarterly reportandsemi-annualreport □Yes √No IX.Non-recurringProfitandLossItemsandAmounts √Applicable□Notapplicable Unit:Yuan Item Amountin2016 Amountin2015 Amountin2014 Description Gainsandlossesfromdisposalofnon-current Profitandloss assets(includingtheprovisionforasset -12,245,120.40 -8,078,976.10 -13,604,321.23fromdisposalof impairmentwrite-offpart) fixed/intangible assets Financial Governmentalsubsidiesrecordedintothe rewards, currentgainsandlosses(excludingthe technological governmentalsubsidiescloselyrelatingtothe 960,287,886.56 1,160,736,574.04 681,875,856.67innovation businessoftheenterpriseandenjoyedbya subsidiesand fixedquotaorafixedamountinaccordance development withthestatepolicies) projectgrants, etc. Gainsandlossesofthefairvaluechangeof thetradingfinancialassetandliabilityheldby Investment theCompany,investmentincomefromthe income,gains disposalofthetradingfinancialassetand -1,136,058,635.86 -916,913,668.52 -653,382,850.98andlossesfrom liabilityandavailable-for-salefinancialasset, changesinfair exceptfortheeffectivehedgingbusinessin value relationtothenormaloperationofCompany Reversalofimpairmentprovisionforthe accountsreceivableforwhichanindependent 5,556,302.40 impairmenttestisconducted Non-operatingincomesandexpenditures 28,307,584.72 37,595,046.55 -5,068,130.68 otherthantheaboveitems Less:Influenceamountofincometax 17,078,192.05 44,984,019.01 -4,880,796.83 Item Amountin2016 Amountin2015 Amountin2014 Description Influenceamountofminorityequity(aftertax) 8,325,279.64 9,494,709.79 4,484,583.29 Total -179,555,454.27 218,860,247.17 10,216,767.32 -- Explanationshouldbegivenfornon-recurringprofitandlossitemsdefinedbytheCompanyaccordingtoExplanatory AnnouncementNo.1onInformationDisclosureforCompaniesOfferingTheirSecuritiestothePublic--Non-recurring ProfitandLossandfornon-recurringprofitandlossitemswhicharelistedinExplanatoryAnnouncementNo.1on InformationDisclosureforCompaniesOfferingTheirSecuritiestothePublic--Non-recurringProfitandLossanddefined asrecurringprofitandlossitems. □Applicable√Notapplicable Nonon-recurringprofitandlossitemswhicharedefinedorlistedinExplanatoryAnnouncementNo.1onInformation DisclosureforCompaniesOfferingTheirSecuritiestothePublic--Non-recurringProfitandLossweredefinedbythe CompanyasrecurringprofitandlossitemsduringtheReportPeriod. SectionIIICorporateBusinessOverview I.MajorBusinessesEngagedinduringtheReportPeriod 1.Majorbusinessesandpositioninindustry Currently,GreerunstwomajorbrandsofGREEandTOSOT,coveringawiderangeof products such asresidential air conditioners, centralair conditioners, air source water heaters,homeappliances,industrialproductsandmobilephones.Greehasanumberof subsidiaries including Landa Compressor, Gree Electrical, Kaibang Motor, Xinyuan Electronics,IntelligentEquipment,PrecisionMould,andRenewableResources,covering the whole industry chain from upstream production of components to downstream recyclingofwasteproducts. Greehasdevelopedproductscovering20majorcategories,400seriesandover12,700 varieties,whichhavebeensoldtoover300millionusersinover160countriesandregions. Here,theproductionandsalesvolumeofGreeresidentialairconditionershasbeenNo.1 intheairconditionerindustryofChinafor22consecutiveyearssince1995,andtakenthe leadintheworldfor12yearssince2005. AccordingtothestatisticsofChinaIOL.com,thedomesticmarketshareofGreeresidential airconditionersreached42.73%in2016.Accordingtothestatisticsofnews.ehvacr.com, the domestic market share of Gree commercial air conditioners reached 16.2% and maintainedthefirstplaceforfiveconsecutiveyears. 2.IndustryOverview AccordingtothestatisticsofChinaIOL.com,duetothedownwardpressureontheoverall economyinChina,thecumulative domesticsalesvolumeofresidentialair conditioners was 60,485,600 setsin 2016, indicatinga year-on-year drop of 3.64%. Thanks to the improved economic conditions abroad, the export volume increased by 9.74% as comparedto2015,and47,927,400setsofair conditionershavebeenexportedin total. Amongresidentialairconditioners,inadditiontotheintelligentcharacteristicofresidential airconditionersthatbecomesmoreandmoresignificant,productenergyefficiency,energy savingandenvironmentalprotectionalsoturnto beimportantconditionsfor abrandto haveafootholdinthemarket. According to the statistics of aircon.com.cn, the overall capacity of China's central air conditionermarketin2016wasaboutRMB70billion,indicatinganincreaseof10%over 2015,andatrendofrecoveryonthemarket.TheVRFunitsandunitaryunitswerestillthe productsthat drovethemarket growthin 2016. "Coal-to-electricity" becameoneof the mostnoteworthyeventsintheHVACindustryin2016.Thesignificanceoftheair-source heat pumpwater heater,the majorproduct of "coal-to-electricity",isself-evident to the wholeHVACindustry.Especiallyunderthesituationthatthecentralairconditioningproject marketisrelativelysluggish,itseemsthat"coal-to-electricity"bringsanotherpossibilityfor thedevelopmentofcentralairconditionermanufacturingenterprises. In terms of brand concentration, as the industry brand concentration was further enhanced,thebrandsofdomestichomeapplianceseriesandthoseofdomesticchillers werecombinedintonationalbrandstocompetewithAmericanandEuropeanbrandsand JapaneseandKoreanbrands,creatingasituationoftripartiteconfrontation.Theoverall marketshareofninemajornationalbrandsincludingGreehasreachedabout40%,far higherthanthatoftheothertwocamps,whereinGreerankedfirstwiththemarketshare of16.2%. II.SignificantChangesinMajorAssets 1.Significantchangesinmajorassets Majorassets Significantchanges Equityassets None Fixedassets None Intangibleassets None Constructioninprogress Year-on-yeardecreaseof71%,causedbyconversiontofixedassetsfromthe constructioninprogressthathasreachedtheintendedusablecondition 2.Majoroverseasassets □Applicable√Notapplicable III.CoreCompetenceAnalysis 1.Brandadvantageofworldwidereputationandfirmchanneldiscoursepower Greeisthelargeststate-controlledlistedcompanyintegratingR&D,production,salesand serviceintheworld.TheproductionandsalesvolumeofGree'sresidentialairconditioners hasrankedNo.1in theair conditionerindustryofChinafor22 consecutiveyearssince 1995,andtaken theleadintheworldfor12consecutiveyears since2005,securing its leadingpositionintheindustry. In2016,Greeshoulderedtheresponsibilityofthestate,regardedre-energizing"Madein China"asitsresponsibilityandimplementedbrandpromotionandmarketingbycentering on"ThePillarsofaGreatPower".Boththebrandpromotioneffectandactivityrankedin theforefrontoftheindustry:Greewon the"ChinaBrand InnovationAward" grantedby People'sDaily,"IndustryNo.1ofChineseBrandIntegrityEnterprises"conferredbytheMS WeeklyperiodicalofficeofPeople'sDailyandtheeditorialboardofchinappzw.com,and thetitleof"TenMajorInfluentialEvents of2016China BusinessLeaderFestival-Gree DirectMarketingStormonNovember11"awardedbytheSouthernMetropolisDaily. Accordingtothe"2016China BrandValueEvaluation InformationSession"heldbythe ChinaCouncilfor BrandDevelopmentandother organizationsjointly,Greegotthefirst placeinthelightindustry groupwiththebrandstrength of967andthebrandvalueof RMB54.9billion.The"GREE"brandhasbeendeeplyrootedintheheartsofpeopleand enjoysaworldwidereputation.Ithasestablishedagoodreputationamongdistributorsand consumers.Gree'sairconditionershaverankedNo.1intermsofcustomersatisfactionfor fiveconsecutiveyears.Inthe2015airconditioningproductsatisfactionevaluationresults issuedbytheChinaAssociationforQualityandNationalConsumerCommittee,Gree'sair conditionersgotthehighestscoreof84.4pointsincustomersatisfactionofairconditioning brands, and ranked first in the industry in the sub-dimensions such as customer satisfaction,loyalty,overallbrandimageandperceivedqualityofindustry. Greeowns27regionalsalescompaniesand25,000exclusivestoresinChina.Itschannel buildingideasareuniqueinthehomeapplianceindustryanditschannelmodeiscalled"a novelmarketingmodeintheeconomicsphereofthe21stcentury"intheacademiccircle. While,themarketingmodeofits"self-builtchannel"enables"integrity"oftheenterpriseto bemanifested throughoutall phasesfromproduction tosales, thusensuringthat Gree standsfirminthefiercecompetitionofchannelsandfirmlygraspsthediscoursepowerand initiativeofchannels.Atthesametime,thecompanyshowstheadvantageofsolidonline andofflinebusinesslayout. Itmaintainsagoodstrategic partnershipofflinewithGome, Suning and other large home appliance chain stores, and closely cooperates with Jingdong,Tmallandotheronlineshoppingplatforms. 2.World'slargestproductionscaleandafullrangeofproductlines Greeboasts10majorproductionbasesintheworld,includingZhuhai,Chongqing,Hefei, Zhengzhou,Wuhan,Shijiazhuang,Wuhu,Changsha,Brazil,andPakistan,withtheannual capacityofresidentialairconditionersexceeding60millionsetsandthatofcommercialair conditionersexceeding5.5millionsets,andtheproductionscaleranksfirstintheworld. Meanwhile,ithastheperfectsupportingcapacityandthemostcompleteindustrychainin thefield,effectivelyensuringindependentproductionandsupplyofkeycomponentsforair conditioners. Greeprovidesconsumerswith awiderangeofproductssuch aswater purifiers,water heaters,airconditionners,boilers,andhouseholdappliances,andhasdevelopedproducts in20majorcategories,400seriesandover12,700specificationsincludingresidentialair conditionersandcommercialairconditioners,andtheperfectandcompleteproductlines can meet thegeneral and personalized needsof customers at different levels. Gree's products(includingindependentbrandsandOEMproducts)havebeenexportedtomore than210regionsandcountriesworldwide.Airconditionersofself-ownedbrand"GREE" havebeenexportedtomorethan160regionsandcountriesaroundtheworld. 3.Openinguptheupstreamanddownstreamindustrysupplychainsandboasting powerfulsupplychaincontrol Inadditiontotheworld'smaximumproductionscaleandfullrangeofproductionlines,the company further opened up the upstream and downstream industry supply chains including compressors, motors, capacitors, and enameled wireproducts, whichgreatly enhanced the capability of the company in controlling the upstream and downstream supplychains,andguaranteestheproductionefficiency. Exportofindustrialproductsis promotedvigorouslyastheinternaldemandsaresatisfied. Intheaspectofcompressorindustry,the"three-cylindertwo-stagecompressorofvariable volumeratio"independentlydevelopedbyGreewasidentifiedastheworldleadinglevel; Gree'sscroll compressorswith classleading performancehave pioneered theindustry, dismantlingthemonopolisticdominationofforeignscrollcompressortechnologies;Gree overcamethecontroltechnologyofhybridmagneticbearingandthecontroltechnologyof highpowerandhighspeedmotor,andrealizedindependentR&Dofhighpowerandhigh speedmotors. In terms ofmotor industry, Gree developed 52 models of motorsin 5series of servo motors,andsuccessfullyusedthemforinjectionmolding andsheet metalmanipulators and 608 robots; it also developed a type of washing machine motor and put it into production.Intermsofcapacitorindustry,trialassemblyofsampleswascompletedforthe newenergyautomobilecapacitor;andthe20Asmartpowermodulesamplehasbeenput intothereliabilitytest. Intheaspectofenameledwireproducts,Greefocusedondevelopmentofnewproducts for new energy automobile such as corona resistant enameled wires and aluminum enameledwires,andgraspedthekeyproductiontechnologyandprocessrequirementsto meetthemarketdemandsinmorefields. 4.PerfectindependentinnovationsystemandstrongtechnologyR&Dstrength Adheringtothephilosophyof"Scienceandtechnologychangelife;scienceandtechnology createlife"andinsistingon"Independentresearchanddevelopmentofcoretechnologies", Greeisdedicatedtoconstructionoftheindependentinnovationsystem,andpromotesthe enterprise to realize strategic transformation from "scale driven performance growth" to "innovationdrivensustainabledevelopment"byfocusingon"creatinganinnovativeculture ofselftranscendence,buildingahighlyintegrated R&Dsystem,possessingoriginalcore technologies,andconstructingafullrangeofproductseries". AsthelargestairconditionerR&Dcenterintheworld,Greecurrentlyhasmorethan8,000 scientificresearchers, 2state-leveltechnology research centers,1state-level industrial design center, and 1 provincial-level keylaboratory of enterprise; it has established 7 academies, 52 institutes and 632 laboratories; Gree has applied for over 27,000 technologypatentsintotal,includingmorethan10,000inventionpatents. GreeistheonlyenterpriseinthehomeapplianceindustryofChinathatdoesnotsetthe upperlimitforscientificresearchinput,andtheinputdependsontheneed.Inrecentyears, its investment in scientific research exceeded RMB4 billion. Gree regards the national standardsandinternationalstandardsasthresholdsandconsumerdemandsasthehighest standards,pursuesperfectioninR&D,andaccumulatesexperiencesteadily.Now,itboasts 15worldleadingcoretechnologies.Particularly,thepioneeringPVairconditionerhasmade agreatcontributiontothehumanlifeandtheniceenvironment.Greeundertook29major nationalscienceandtechnologyprojects,andwon2secondprizesofnationalscienceand technologyprogress,1secondprizeofnationaltechnicalinvention,2goldawardsofChina appearancedesignand10Chinapatentexcellenceawards. 5.Powerfulcostcontrolcapabilityandfinancialstrength Gree sets quality technical standards for internal control that are far above national standardstoensurehighreliabilityofproducts,andneverdeliversimmatureorunqualified products to consumers. Gree establishes unique screening plants in the industry for implementingcomprehensivecheckonallpurchasedparts;issuesbansofthepresident andpromotesthe"EightProhibitions"policy; andimplements strictquality controlin all phasesincludingtrialpreparationofnewproducts,incominginspectionofcomponentsand parts,productmanufacturing, transportationand installationsoasto feasiblyguarantee product quality. It also established and implemented “Gree‘s Comprehensive Quality Control Mode– T9 Management System” oriented by customer demands and social responsibilities to implement overall control on product quality. This also made Gree famousforitsexcellentproductquality. Gree procures raw materials in a centralized manner to give full play to the scale advantagesofthegroup,improvethebargainingpowerofprocurement,andeffectively control the procurement cost; it carries out regular or irregular special analysis on importantraw materialconsumptiondifferences topromotecostcontrolofkeymaterials andimprovethematerialutilizationefficiencyofbranchplants;itadoptspositivemeasures such as the domestic first settlement mode of "quota-based material requisition and settlement", increasing the equipment utilization (including storage equipment), and reducingofficecoststolowerthemanufacturingandroutineofficecostscontinuously. Nowadays,whencorporateloansprevailinChinaandmanyhouseholdelectricappliance enterprisesare trappedin hardship,Greestillmaintains anabundantcashflow, andits powerfulfinancialadvantageisobvious. 6.Managementinnovation,talentinnovationandculturalinnovation Greefollows themanagement policyof"Be Fair,BeOpen,Be Dedicated".The company strengthensmanagementby relyingoninstitutionalbuilding,cultural constructionandstaff training,witha viewto enhancingtheinternal corecompetitiveness. Atthe sametime, it attachesimportance to system establishment andkeeps strictlythe rulesfor rewardand punishmenttoguaranteebenefitsandqualitythroughsystemconstruction.Managementof Greealsofocusesondetailssuchasapieceofpaperandadropofwater,andstrictand standardizedmanagementhasenabledGreetogainamomentumforrapiddevelopment. Greehas acomplete talent training system of "selection, cultivation,appointment and retention" to promote competent employees and degrade incapable ones, providing a career path for allkinds of talents. It has established an effective incentive system to inspireemployees'senseofhonorandenthusiasm.Forexample,thecadreperformance management systemhas operated for years,and the performance oriented evaluation mechanismhasbecomeaself-exerciseandgrowthplatformformiddle-levelcadresofthe company. The increasingly perfect talent management mechanism has laid a solid foundationforsustainabledevelopmentofthecompany. ThecorporatecultureofGreeregards"truth,faith,honesty,noveltyandcourtesy"asthe core sense of worth, "loyalty, friendship, hardworking and aggressiveness" as the enterprise spirit and "less empty talk and more real work" as the working attitude. Meanwhile,Greeiscommitted topeople-centeredprinciplestopersistininnovationand striveforexcellence,andmakecontributionstoqualityimprovementofthehumanlifeand socialprogress. Duetoimplementationof corporatemanagement andpersonnelandculturalinnovation initiatives,Greeincreaseditsoverallproductionefficiencyby10.5%in2016.Thenumber ofworkers needed was reduced by4,294, whichis equivalentto 2,244persons when workinghoursaretakenintoaccount. SectionIVDiscussionandAnalysisofBusinessOperation I.Overview (I)Generaldescription Theyearof2016isthefirstyearofChina'sThirteenthFive-yearPlan,aswellasthefirst yearofsupply-sidereformandacrucialyearforthehomeapplianceindustry. ThisyearisalsothefirstyearforGreetostarttransformation.Byvirtueofitscourageand wisdomof reform, Gree regarded "transformation, breakthrough and innovation" as its guiding ideology of annual operations, objectively analyzed the economic situation at homeandabroad,activelyadapteditselftochangesofthetimes,andspedupindustrial transformationinthefieldssuchasintelligentequipment,smarthomeandmouldonthe preconditionofconsolidatingtheexistingairconditionermarketshare.Thecompany'snet profitattributabletoshareholdersofthelistedcompanyintheyearincreasedby23.05% overlastyearwhentheoverallincomewaskeptbasicallystable. ThisyearGreealsobecameoneofthefirstenterprisesintheresponsibilityextensionpilot listofelectricapplianceandelectronicproductmanufacturersreleasedbytheMinistryof IndustryandInformationTechnology.ThisgreatlyaffirmedtheperformanceofGreeinthe sustainable development and recycling field of waste electronic products and electric appliances, and played an important role in development of the renewable resource industryin the entirehome appliance industry and greentransformationof theelectric applianceandelectronicproductindustry. Greedidhardworkintheyear,andadoptedenvironment-friendlypracticestodesignand produce healthy, energy-saving and greenproducts. Its three independentlydeveloped technologies or products, namely, efficient permanent magnet synchronous inverter centrifugal ice coolstorage unit ofdualoperating conditions, cooling technologyat the ambienttemperature of-40°C and thethree-cylinder two-stagecompressor of variable volumeratio,wereidentifiedanddeemedtoreachtheworldleadinglevel.Greeseizedthe opportunity of "coal-to-electricity" policy, and developed innovative heat pump heating productsforalltypesofbuildings.Moreover,itwonthebidfor"coal-to-electricity"projects inBeijing,ShanxiandTianjinmany times,givingfullplaytothescaleeffectofindustry giantsand winning themarket opportunities and agood reputation amongusers. The accumulative quantity of authorized patents of the company reached 15,862 as of December31,2016,andthetotalquantityofauthorizedinventionpatentsreached911in thewholeyearof2016.GreerankedNo.7inthenationalinventionpatentlistandNo.1in thehomeapplianceindustryin2016. This year Gree increased the installation fee by RMB100 for installation workers and increasedthewageof eachemployee byRMB1,000.From shareholdersto installation workersandtoemployees,Gree'sbenefitsweredistributedtoallthestakeholderssothat they shared the development achievements and the social responsibility was further highlighted. Greestoodoutfromnumerous Asianfamous brands,and wasappraisedas"themost trustedbrandinAsia"bytheinternationalbrandconsultinggroupofAmericain2016.In addition, in the "2016 China Brand Value Evaluation Information Session"held by the ChinaCouncilfor BrandDevelopmentandother organizationsjointly,Greegotthefirst placeinthelightindustrygroupbyrelyingonitsbrandstrengthof967andbrandvalueof RMB54.9billion.Gree'sairconditionerswerealsostationedinallkindsofOlympicvenues inRioofBrazil,andcreated"threeuniquenesses"ofChineseairconditionerbrandinthe RioOlympicGamesproject."DirectMarketingStormonNovember11"conductedbyGree was awardedthe titleof "TenMajor Influential Eventsof2016 China BusinessLeader Festival"bytheSouthernMetropolisDaily. In 2016, the company regarded "transformation, breakthrough and innovation" as its guiding ideology of annual operations, objectively analyzed the economic situation at home and abroad, and actively adapted itself to changes of the times. In the macroenvironment of industrial destocking and upgrading of air conditioning products, Gree made great efforts continuously to make innovation and strive for excellence, achieved a breakthrough in perspectives of informatization, intelligence, diversity and multiplechannelsbycarryingouttheinnovationdrivenstrategy,promotingthediversified industrydevelopmentandstrengtheningthestrategicdecisionssuchasdeepintegration of informatization with the manufacturing process, and made a lot of innovation achievementsinthefouraspectsofplatform,standard,managementandtalent. Theyearof2016wasalsothecriticalyearduringwhichthecompanystartedadjustment andtransformation. Onthepremiseof consolidatingthe existingair conditionermarket share,thecompanyacceleratedindustrytransformationintheintelligentequipment,mould andotherfields.ThecompanyachievedthegrossrevenueofRMB110.1billionfortheyear, indicatinganincreaseof9.5%overlastyear;itachievedthenetprofitofRMB15.4billion attributabletoshareholdersofthelistedcompany,indicatinganincreaseof23.05%over lastyear. In 2016, the high-efficiency permanent-magnet synchronous inverter centrifugal ice- storagechillerdevelopedindependentlybyGreewasidentifiedanddeemedtoreachthe worldleadinglevelbytheDepartmentofScienceandTechnologyofGuangdongProvince; thecoolingtechnologyattheambienttemperatureof-40°Cwasidentifiedanddeemedto reachtheworldleadinglevel;andtheresearchandapplicationofthethree-cylindertwo- stagecompressorofvariablevolumeratiowas recognizedasinternationalinitiativeand deemedtoreachtheworldleadinglevel.TheUnderwritersLaboratories(UL)issuedthe firstULcertificateofheatpumpwaterheatertoGree,andGree'sPVcentrifugalchillerand low-temperatureheatingVRFwereawardedtheAHRIcertificateoftheUnitedStates. Besides,thecompanywonthe"ChinaBrandInnovationAward"grantedbyPeople'sDaily for thebrand building field; the "Industry No.1 of Chinese Brand IntegrityEnterprises" conferredbytheMSWeeklyperiodicalofficeofPeople'sDailyandtheeditorialboardof chinappzw.com;thetitleof"TenMajorInfluentialEventsof2016ChinaBusinessLeader Festival-Gree Direct Marketing Storm on November 11" awarded by the Southern MetropolisDaily. Dueto its courage of representing"Made in China"and initiative of fulfilling corporate responsibilities,thecompanywonthe"AnnualEnterpriseAwardoftheEleventhPeople's CorporateSocialResponsibilityAward"issuedbypeople.cn.Greehasalwaysmaintained theleadingpositionintheairconditionerindustryathomeandabroad,andwonthetitleof "2016 Meritorious Manufacturing Enterprise in Guangdong" awarded by Guangdong Manufacturers Association and Guangdong Association for the Promotion of Industrial Development; the title of "Top 50 Manufacturing Enterprises in Guangdong Province" awarded by GuangdongManufacturers Association, Guangdong Research Institute for Industry Development and the Enterprise Competitiveness Research Center of GuangdongAcademyofSocialSciences;and thehonorssuch as"2016Ten MajorAir ConditionerExportEnterprisesin China"and"2016Ten SmartHome ApplianceExport Enterprises in China" issued by China Chamber of Commerce for Machinery and ElectronicProductsImportandExport. (II)Transformation,InnovationandBreakthroughin2016 1.Fourmajortransformations:informatization, intelligence,diversity and multiple channels (1)Informatizationtransformation:Promotingin-depthintegrationofinformatization andindustrializationforenhanceddevelopment In 2016, the company laid out the informatization strategy by centering on the main directionofdeeplyintegratinginformatizationwithindustrialization,andputanemphasis onconstructionofafullyintegratedinformationplatformforreal-timesharing.Horizontally, theupstream and downstream were extended and gotthrough using theprocurement collaborationplatformandsalescollaborationplatformtosupportefficientcollaborationin the supply chain and maintain competitiveness of the company on the whole chain. Vertically,theMESwasusedtoconnectthroughthefieldoperatorsandthemanagement, supportfinemanagementandmaintainhighefficiencyoffieldoperation. The companyhas completed the implementation of ERP, MES and WMS systems in Changshaandothernewbases,providingauniformcoreinformationplatformforthenew bases. In2016,Gree'sintelligentmanufacturingprojectobtainedapprovaltobecomethenational intelligent manufacturing special project and Guangdong intelligent manufacturing demonstrationprojectof2016.Seveninternalmanagementsystemswerebuiltupinthe company's manufacturing system, including the HR system, synergistic system, cost system,equipmentsystem,informationsystem,productioncentralizedcontrolsystem,and operationperformancesystem.Currently,allthedepartmentshaveformedtheoperating modelfocusingonself-managementandsupplementedbyfunctionalsupervision,further enhancing themanagement levelof productionsystem and theprevention andcontrol capabilities. Besides, the manufacturing system centering on "double benefit" was established to operate the management system, and the overall productivity of the company was increasedby10.5%in2016.Thenumberofworkersneededwasreducedby4,294,which isequivalentto2,244personswhenworkinghoursaretakenintoaccount;thetotalcost amountoftheyearwasreducedbyaboutRMB387millionbyimplementingtheprojects such as new process development and utilization, quality inspection procedure optimizationandproductionlinearrangementoptimization. (2)Intelligenttransformation:Implementingsupply-sidereformto taketheleadin theairconditionerindustry The upgrading of consumption and development of Internet and Internet of things acceleratedtheprocessofproductintelligence.Productintelligencenotonlychangesthe productfunctions ofthe enterprise,butalso promotesindustry changes,bringinggreat opportunitiesforenterprisetransformationandupgrading.In2016,Greekeptupwiththe times,implementedthesupply-sidereform,andseizedtheopportunitytotransformand upgradetoproductintelligence. IntermsoftheinvertertechnologyandproductR&D,10majorseriesand15mainmodels (including 40 sub-models) of Gree's air conditioners were all selected as "Energy EfficiencyLeader"airconditioningproductsof2016publicizedbytheMinistryofIndustry andInformationTechnology.Greecompleteddesignanddevelopmentofmultiplenewand intelligent energy-saving inverter air conditioners such as Rose Ⅱ, I-Cool, T-Fresh, Goldshellfloorstandingunit,inverterairconditionerEnjoy,BPJG,whichweresignificantly improvedinaspectsofspacesavingandintelligence.Moreover,thecompanymastered the three core technologies, including carrying the photosensitive sensor, the global originalself-cleaningtechnologyofevaporator,andtheintelligentvoicecontroltechnology. Greeindependentlydevelopedthehigh-endinverterwashingmachineseriesproductsin thenewfieldandthepureelectricvehicleairconditionerwithahighlyefficientandreliable heatpump. Togainmarketshare,Greeadjustedtheproductsalesstructurein2016,andsuccessively launchedavarietyoffirst-classenergyefficiencyinverterairconditioners,amongwhich thehigh-endresidentialairconditionersrepresentedbythe"EnergyEfficiencyLeader-Run Series" received a very positive response from the market; the company constantly strengthenedpromotion andpublicity of intelligentairconditioning products, e.g.,Enjoy andJunyueequippedwiththeWi-Fifunction,in anefforttoprovideconsumerswiththe mostconsiderateproducts. IntermsofR&Dofintelligentproducts,Gree,onthebasisofcompletinglocalandremote control of a single machine, integrated the residential air conditioner, commercial air conditioner,household appliance andintelligentroutingtoworkoutan integratedsmart homesolutionforlinkageinductioncontrol;itdevelopedhouseholdGoldshelllocalvoice andApp voicecontrol, subsequentlydeveloped thefunctionssuch asvoicedialog and facialrecognitionatthesametime,andsuccessfullyusedthemforGreemedium/high-end airconditioners; itaddedintelligentWi-Fi functionstowater purifier,kitchen three-piece suit, electricfan and some special air conditioners, and studiedthe functions such as intelligentmode,intelligentnetworkdistribution,anddatareporting. IntheaspectofR&Dofcommercialairconditioningproducts,Greedevelopedproductsby focusing on the concept of energy saving, environmental protection and intelligent interconnection,and created Gree intelligent residentialcentral air conditioningsystem integratingmultiple functions such asair conditioning, floor heating,hotwater, lighting, temperature control and intelligent control; it developed GMV Shurui multi-function residentialVRFunittomeettheairconditioningrequirementsofkitchen,bathroom,living roomanddiningroomatthesametime;itwonthebiddingfortheMS01nuclearpower centrifugalchillerprojectandMS02nuclear powerair-cooledscrewunitprojecttoenter thenuclearpowermarket;itdevelopedtheultra-lowtemperaturewall-mountedheatpump floorheatingresidentialcentralairconditionersuccessfullyandplaceditonthenorthern partofthecountry. (3) Diversified transformation: Maintaining the leading position in the air- conditioningsectorandexploitingemergingareas OnJuly23,2016,Greeofficiallyannounceditsentryintotheeraofdiversificationatthe Second China Manufacturing Summit Forum. Gree extended from the air conditioner manufacturingtechnologybycenteringonthetwosectorsofsmarthomeappliancesand intelligent manufacturing, brought into play the synergistic effect from products to equipment,andachievedthedevelopmentobjectiveofadvancinginlineonanumberof tracks, namely, heading for depth in the traditional fields such as home appliance manufacturing and constantly exploiting the boundary in the emerging fields such as intelligentequipmentmanufacturing. ① Developing household appliances towards fine quality, diversification and intelligence In2016,thecompanycompleted346householdappliancedevelopmentprojectsintotal, amongwhichIHricecookerswerepromotedamongmediaoutletsnationwidethroughthe National People'sCongress, and thuscovering the high-, and mid-to-low end markets comprehensively; the wastewater challenges was resolved for water purifiers, and the realizedwastewater/cleanwaterratioof1:1keptthewaterpurificationtechnologyofGree stableat theforefront ofthe industry; the2nd-generation apple-shape rice cookerhas gainedpopularityforitsdesignaestheticsanduniquecreativeness. ② StrengtheningR&Dofcommunicationtechnologiesbytakingsmarthomeasthe entrypoints Withtheproductdiversificationandsmarthome astheentrypoints, Greeexploredthe way forward for household consumer electronics,communication and industrialcontrol chips,anddevelopedthechipswithindependentintellectualpropertyrights.In2016,Gree focused on R&D of intelligent interaction, intelligent connection and intelligent cloud platform,connecteditsproductstothesmarthomesystem,andprovidedaccessforthird party manufacturersthrough thewireless module, "Gree+" App and open interfaceof cloudplatform,formulatinga smarthome ecosystemof Gree.Wireless connectionhas been achieved on all the key products of Gree such as Painting Era air conditioner, Goldshellairconditioner,Roseairconditioner,dehumidifier,ricecooker,airpurifier,water purifier, intelligent range hood, disinfection cabinetplug-in, and washing machine, and remote control, fault alarm and maintenance services can be implemented through "Gree+"Appforalltheproducts. Greeputthe2Gmobilephonesintomassproductionin2016,andthe2Gmobilephone witha5.5-inchscreenand3Gmobilephonewitha6-inchscreenareintheR&Dstage. Gree also established the complete and professional development processes and standardsformobilephonesoftware,hardware,structureandtest,andgatheredacertain R&Dstrengthinthemobilephonebusiness. ③ Transforming and upgrading to the intelligent equipmentindustry and mould manufacturingindustrytocultivatenewprofitgrowthpoints In 2016, Gree gradually occupied the international and domestic high-end equipment marketwhilecompletingtransformationandupgradingofitsownmanufacturingsystem. Thisyear,Greemainlycompleteddevelopmentofproductssuchasthe750Wservodriver basedontheEthernetbustype,three-axisandfive-axismanipulatorcontrolsystems,bus typemotioncontroller,andcompressorautomaticon-line. For the mould industry, Gree put an emphasis on research and application of new technologiesandnewmaterialssuchasspray-freeinjectionmoldingofmetal effect,in- mouldhotcuttingtechnology,PT-25spool,integratedforwardinclinedcentrifugalfanblade mould, and 3D printing technology to implement green manufacturing of moulds. Meanwhile, Gree improved the automation and information level of mould making to realizeintelligentmanufacturingofmoulds. ④ AchievingintermediateresultsinPVproducts,PVsystemsandindustrialtouch screensbyrelyingonPVairconditioners ThetransitionofPVairconditionersindicatesthedevelopmentofmultiplemodelsbased ontheexistingPVcentrifugalchillerandPVVRFunit,includingthePVVRFforAllPower SupplyApplication,single-phaseside airoutlet PVVRF unit,andairborneconverter of 560KWPVcentrifuge,soastosatisfydifferentoccasionsandneeds.GreePVsystems havebeensoldinmanyregionsathomeandabroad. Theself-made1G12-inchindustrialtouchscreenwasbeenputintomassproductionand allthecentrifugalunitswereswitcheduniformlyinAugust,andallthemachinesoperated properly;Greemadeabreakthroughintechnologiesforthe7-inchindustrialtouchscreen andhigh-end23.8-inchindustrialPC,andmasteredthecoretechnologies. ⑤ Sticking to the strategicdirection of "Saving, green,environmental protection andresourceregeneration"forsustainabledevelopmenttoformulateaclosedloop industrial chain of resource regeneration and adhering to green ecological manufacturingTheself-builtchannel,costreductionprojectandmanagementsystemconstructionprojectwere completed in the renewable resource sector, and the four bases (Changsha,Zhengzhou,Wuhu,andShijiazhuang)passedthethree-in-onesystem(18000,14000and9000 systems) review conducted by the certification body SGS and received thecorrespondingcertificateinJune.(4) Channel transformation: Building a platform to strengthen cooperation andmakinggreateffortsthroughonlineandofflinelinkageGreeowns 27 regional sales companies in China and nearly30,000 exclusive storesthroughouttheworld.Greeobservestherulethatthemarketemergesbeforefactories,anditsuniquechannelconstructionideawasdistinguishedinthehomeapplianceindustry.In2016,Greesetupan innovativemanagementmodelofsalescompanybasedontheoriginalofflinechannel,andestablished Greeimagestoresandflagshipstoresin urbancities,highlightingthebrandimageofGreeexclusivestoresandenhancingtheexperienceofconsumers.Inaddition,Greeestablished20newTOSOThomeappliancestoresinall regionsthroughoutthecountry.Greealsopaidmoreattentiontoentryintoofflinestoresin 2016.BasedontheoriginalsituationthatallthesalescompaniescooperatedwithGome stores,GreesignedagreementswithSuningandenteredmorethan740Suningstores. With the rapid scale expansion of China's online shopping industry, the necessity of acceleratinginterconnectionbetween thetraditionalmanufacturingindustrywith Internet hasbecomeaconsensusoftheindustry.Inthissituation,Greecarriedoutthestrategic planning for online sales of Gree brand, and made huge investment to build its own comprehensivee-commercesalesplatform"GREEMall".Itfocusedonlayoutonthemost influentialthirdpartye-commerceplatformsinChinasuchasJingdongmall,Tmall,Gome andSuning.com,ensuredcustomerresourcesharingwith domestickeyaccounts(KAs), andachievedbrilliant salesperformance ingreat promotionactivities suchasJune 18, June28,November11andDecember12,whereinairconditionerstoppedthesaleslistof similarproductsinthe homeapplianceindustry on JDcomplatform,and thetwomajor brands KINGHOME and TOSOT were also outstanding in the e-commerce home appliancecategory. In2016,theonlinee-commercesalesvolumeofthecompanyreachedRMB4,580million (excludingthesalesvolumeonTaobao),increasedby91.14%overlastyear,whereinthe year-on-yearincreaseonJDcomwas93.15%andthatonTmallwas84.42%;theyear-on- yearincreaseofGreeairconditionersonJDcomreached145.5%intherefrigerationyear of2017(AugusttoDecember2016),thesalesvolumeofGreeairconditionersonJDcom in the "June 18" ShoppingFestival of 2016 exceeded RMB380million, and thesales volumeofGreeairconditionersexceededRMB310millioninthe"November11"Shopping Festival, topping the list of the air conditioner industry. According to statistics, the cumulativeonlineandofflinesalesvolumeofGreeexceededRMB3.4billionduring the "November11"periodof2016,nearlydoubledoverthesameperiodlastyear. 2.Fourmajorinnovationsandbreakthroughs:Platform,standard,managementand talent (1) Platform innovation: Building an innovation foundation platform to achieve technicalbreakthroughs In 2016, Gree further improved the science and technology innovation system of the enterprisebycenteringonconstructionofthesixmajorinnovationfoundationplatforms: national public scientific research platform, intellectual property strategy management platform, standard strategy management platform, integrated R&D design platform, infrastructuretestingplatform,andinformationtechnologysupportplatform. Theestablishment andoperation ofthe nationalpublic scientific researchplatform has becomethecorepowerforGreetomakeinnovations.Basedonthetwonationaltechnical researchcenters,namely,theexistingnationalengineeringresearchcenterandnational enterprise technology center, the company added the two national scientific research platforms(thekeystatelaboratoryandstate-levelindustrialdesigncenter)tofurtherbuild theinnovationchainfocusingon"basicresearch-industrialdesign-engineering-production- automation". Inconstructionof theintellectualproperty strategymanagement platform, thecompany establishedthespecialintellectualpropertyofficein2016,andusedintellectualproperty rightsinthethreeaspectsofinnovationdriving,freeuse,andlegalmonopolytohelpthe companytoexpand themarketshare, enhance theadded valueofproduct intellectual propertyrightsandincreasethebrandvalue.Thecompanyappliedfor5,976patentsinthe whole year, including 3,662 invention patents and 871 authorized invention patents, increasedby100%ascomparedtothepreviousyear. Intermsofconstructionofthestandardstrategymanagementplatform,Greecompleted platform planning for 38 categories of products such as residential air conditioners, commercialairconditioners,andhouseholdappliances,combinedtheproductplatformto completeuseplanningfor504categoriesofkeymaterials,andcreatedmateriallibraries for allkinds of product platforms. Gree workedoutregulations on all kinds ofproduct platforms andmaterial use,and sorted outdevelopment processesof thecompanyto improvethe documenttemplate and the reviewand signing process, makingsure the product platform and material planning are strictly implemented in the product developmentprocess. In theaspect ofbuilding theintegrated R&D design platform, thecompany performed orderlydevelopmentfortheplanningprojectofeachproductundertheoverallplanningof projectmanagementin2016.Itcompleted2,427productprojects,401technicalresearch projects,280processresearchprojects,and165managementinnovationprojectsinthe wholeyear. Regardingconstructionoftheinfrastructuretestingplatform,thecompanyestablished a strategiccooperationpartnershipwithaninternationalauthoritativecertificationandtesting institutionin2016,andreceived thecomprehensivestrategic partnercertificate ofsmart homeproductevaluation,testingandcertificationissuedbySGS.Greesuccessivelybuilt the household appliance energy efficiency laboratory, automobile air conditioning laboratory, air purifier energy efficiency laboratory, and the inverter master process monitoringsystem,andconstantlyimprovedthetestingfunctionoftheexistinglaboratory toprovideuserswithmorereliable,safe,comfortableandenergy-savingproducts. In terms of construction of the information technology support platform, the company vigorouslypromotedintegratedapplicationofmultipleinformationsystems,e.g.,tousebig data toestablish amultidimensional analysis basis and implement flexible combination andqueryanalysisbasedonanalysisdimensions;tointegratethePLMsystemoftheHQ withthatofeachsubsidiarycompanytosharethedesignandR&Dbusiness resources; andtorealizethestandardizationofdesignandcoordinationbetweendesignandprocess to build an integrated closed loop change management system of digital design and manufacturing.(2)Standardinnovation:Customer-oriented,strictqualitycontrol ①Usingthemoststrictstandardsandmeanstodevelopandmanufactureproducts ByrelyingontheComprehensiveQualityControlMode–T9ManagementSystemthatis responsivetotheneedsofcustomerdemandsandsocialresponsibilities,Greestudiedthe quality standard of residential air conditioner products, and delivered the full set of corresponding scientificresearch achievementsfrom parts to overall units; studied key pointsofair conditionersfornuclearpowerprojectsandother corequalityprojects, and used key management points in the nuclear power quality system as reference to promotedtheirapplicationinotherairconditionerproducts;comprehensivelyimplemented thestrict qualitymanagement mode to deliver the special control requirements of key materials,andtostrengthentheinspectioncontrolrequirements,experimentalverification controlrequirementsandtheapprovalandreleaserequirementsofdepartmenthead. ②Carryingoutreliabilityresearchwithaviewtoimprovingthequality In2016,the companyorganizedthe structure,system, electricalcomponent,controller, andprocessworkingteamstostarttheten-yearliferesearch,andcarriedout113projects intotalintheyearaccordingtothedetailedanalysisonafter-salesfailures,coveringthe coreafter-salesissues relatedto keycomponentssuchascompressor, four-wayvalve, motor,motionmechanism,andcontroller.Theresearchfindings ofalltheprojectshave been included in the design specifications, inspection specifications and process documentstostartcontrolandimprovethequalityofproductsandpartsat (3) Management innovation: Strengthening institutional building to promote sustainabledevelopmentofenterprise In 2016, the company promulgated the Supervision and Management Measures to constantlyimprovethesupervisionandreportingmechanism.Morethan60complaintsof alltypeswereacceptedthroughchannelssuchaspresidentmailbox,e-mail,letter, and call. The supervision unit carried out careful investigation for all the complaints, and punishedtheresponsiblepersonseriously oncethefactwas verified,creatingan open andtransparentatmosphere.Thecompanycarriedauditprojectsfromtheaspectssuchas thecompany's procurement, materialconsumption, expenditure, subsidiarycontrol and infrastructuralprojectsettlementbyaimingtosoundinternalcontrol,improvedoperating managementandincreasedeconomicbenefit. In2016,Greefullyimplementedthesafetysubjectmanagementresponsibilitysystemof "one position with two responsibilities" for safe production, steadily promoted the investigationandrectificationofhiddendangers,andcarriedoutspecialsupervisionand inspection work. It improved the lighting environment of workshop operation, and completedthespecial rectificationwork ofharmfulpositions,annualmonitoring planfor occupational health, on-site harmful substance detection of position operation, and occupationaldiseaseprotectionpre-evaluationofnewprojects,ensuringtheoccupational health of employees. There were no major safety accidents, occupational disease accidents,andenvironmentalpollutionaccidentsinthecompanyin2016. (4) Talent innovation: Reinforcing talent training to meet the diversified talent demands ①Recruitmentandtrainingofskilledworkers Greeadoptedthestrategyofgoingoutandintroducingtalents,throughschool-enterprise cooperationforinstance,tointroducemore skilledworkers.Itcarriedouttheskillgrade evaluation for the second batch of skilled workers, performed position skill grade evaluationfor408personsin16worktypes,andgrantedskillallowancetoskilledworkers accordingtotheallowancestandardforskillsatdifferentlevelsandtheactualworkdays. ②Creatingatalentpoolanddeepeningpersonneltraining Greeorganizedtoimplementthe2016collegestudentcultivationworkcalled"Dreaming Gree",specialtrainingcampofexcellentsupervisors,andthepilotschoolofteamleaders, helpedthefront-linemanagersto reservebasicmanagementknowledge andskills and improvethecapabilityoffindingandsolvingproblems,workedouttheannuallearningplan for all members by combining business innovation, performance breakthrough and capabilityimprovement, andirregularlyorganized aseries oflectures ofexperts at the technologyfrontierinnumerousfieldstobroadenthehorizonoftechnologyR&Dtalents. ③Perfecting thepersonnel assignment mechanismof the group to promotethe utilizationofhumanresourceswithinthegroup Thecompanyfurtherimprovedthepersonnelassignmentmechanism basedonchange adjustment of the sales and production plan, specified the assignment principle and divisionoflabor,andsmoothlyfixedthestaffshortageandsurpluscontradictionbetween differentcompaniesthroughpersonnelassignmentinthegroup. ④Strengtheningtheshiftofthinkingandenhancingthequalityofcadres The company strengthened the publicity and education work of conduct and clean government,organizedallthepartymembersofthecompanytocarryoutthelearningand educational activity called "Two Studies, One Action", and completed activities of the disciplineeducationandlearningmonthof2016. All the cadres are required to be enterprising with the spirit of challenge, dare to emancipatethemindandbreakawayfromconventions,andacquiretheregulatingability, decisionmakingabilityandcopingability.Greeorganizedthemanagementcadrereading association,sortedoutandrecommendedthereadinglistofonetermeverytwomonths, andhelpedwidemanagementcadrestoconstructacompoundknowledgestructureand widentheworkingfieldofview. II.Analysisonprincipalbusinesses 1.Overview Seethedescriptionin"Overview"of"DiscussionandAnalysisofBusinessOperation". 2.Revenueandcost (1)Compositionofoperatingincome Unit:Yuan 2016 2015 Increase/ Decreaseover Amount Proportionin Amount Proportionin theprevious OperatingIncome OperatingIncome year Totaloperating 108,302,565,293.70 100% 97,745,137,194.16 100% 10.80% income Categorizedbyindustry Household appliances 93,187,780,602.40 86.04% 87,930,981,568.34 89.96% 5.98% manufacturing Otherbusinesses 15,114,784,691.30 13.96% 9,814,155,625.82 10.04% 54.01% Categorizedbyproduct AirConditioner 88,085,431,144.00 81.33% 83,717,936,071.67 85.65% 5.22% Household 1,717,749,799.40 1.59% 1,522,676,680.86 1.56% 12.81% Appliances Othermain 3,384,599,659.00 3.13% 2,690,368,815.81 2.75% 25.80% business Otherbusinesses 15,114,784,691.30 13.96% 9,814,155,625.82 10.04% 54.01% Categorizedbyregion Domestic-main 76,937,875,361.69 71.04% 74,596,089,512.78 76.32% 3.14% business Overseas-main 16,249,905,240.71 15.00% 13,334,892,055.56 13.64% 21.86% business Otherbusinesses 15,114,784,691.30 13.96% 9,814,155,625.82 10.04% 54.01% (2)Industry, product,orregion accountingfor morethan 10%of theCompany's operating incomeoroperatingprofit Unit:Yuan Increaseor Increaseor Increaseor Gross Decreaseof Decreaseof Decreaseof Operatingincomes OperatingCost Profit Operating Operating GrossProfit Margin Incomeover Costover Marginover LastYear LastYear LastYear Categorizedbyindustry Household appliances 93,187,780,602.40 58,696,494,773.92 37.01% 5.98% 2.26% 2.29% manufacturing Categorizedbyproduct AirConditioner 88,085,431,144.00 54,139,594,914.83 38.54% 5.22% 1.04% 2.54% Categorizedbyregion Domestic 76,937,875,361.69 45,233,448,281.99 41.21% 3.14% -2.26% 3.25% Overseas 16,249,905,240.71 13,463,046,491.93 17.15% 21.86% 21.09% 0.53% Incaseofadjustmentofstatisticalcaliber fortheCompany'smainbusinessdataduringtheReportPeriod,main businessdataafterstatisticalcaliberadjustmentattheendoftheReportPeriodintherecentyear □Applicable√Notapplicable (3)Physicalitemincomeishigherthanserviceincome √Yes□No (4)FulfillmentofmajorsalescontractssignedbytheCompanybytheendoftheReportPeriod □Applicable√Notapplicable (5)Compositionofoperatingcost Unit:Yuan 2016 2015 Increase/ Industry Item Proportionto Proportionto Decreaseover Category Amount Operating Amount Operating theprevious Cost Cost year Rawmaterial 50,686,746,372.66 86.35% 49,475,367,352.33 86.20% 0.15% Household Laborwage 3,045,769,786.11 5.19% 2,857,770,151.94 4.98% 0.21% appliances manufacturing Depreciation 888,033,503.41 1.51% 718,107,626.91 1.25% 0.26% Energy 570,886,040.26 0.97% 530,054,999.43 0.92% 0.05% (6)ChangesintheconsolidationscopeoccurredduringtheReportPeriod √Yes□No ① Establishmentofsubsidiaries Amountof Amountof subscribed paid-in Netassetsof Netprofitofthe Company Equity Timepoint capital capital Ratioof theendofthe period Name acquisition ofequity contribution contribution contribution period (tenthousand mode acquisition (ten (ten (%) (tenthousand Yuan) thousand thousand Yuan) Yuan) Yuan) GreePrecision January Mold(Wuhan) Establishment 2016 8,000.00 8,000.00 100.00 9,250.70 1,250.70 Co.,Ltd. ZhuhaiGree January PrecisionMold Establishment 2016 10,000.00 10,000.00 100.00 10,729.95 729.95 Co.,Ltd. ZhuhaiGree NewMaterial Establishment March2016 3,000.00 3,000.00 100.00 3,003.19 3.19 Co.,Ltd. ZhuhaiGree Energy Environment Establishment May2016 20,000.00 20,000.00 100.00 19,693.35 -306.65 Technology Co.,Ltd. GreeElectric Appliances Establishment April2016 30,000.00 30,000.00 100.00 29,983.76 -16.24 (Hangzhou) Co.,Ltd. ② Disposalofsubsidiaries TheCompanywasnotinvolvedindisposalofsubsidiariesinthecurrentperiod. ③ Changesintheconsolidationscopearisingfromothercauses TheCompanywasnotinvolvedinchangesintheconsolidationscopearisingfromothercausesinthe currentperiod. (7)Majorchangesoradjustmentofbusinesses,productsorservicesduringtheReportPeriod □Applicable√Notapplicable (8)MajorsalescustomersandsuppliersoftheCompany Majorsalescustomers Totalsalesamountof5topcustomers(RMB) 23,226,504,349.02 Proportionoftotalsalesamountof5topcustomerstotheannualsalesvolume 21.09% Informationof5topcustomers SerialNumber CustomerName SalesVolume(Yuan) ProportiontoAnnualSalesVolume 1 First 5,228,133,544.67 4.75% 2 Second 5,155,193,209.64 4.68% 3 Third 4,515,539,732.88 4.10% 4 Fourth 4,318,366,377.22 3.92% 5 Fifth 4,009,271,484.61 3.64% Total -- 23,226,504,349.02 21.09% Otherdescriptionofmajorcustomers □Applicable√Notapplicable MajorsuppliersoftheCompany Totalamountofpurchaseoftop5suppliers(RMB) 11,099,378,125.82 Percentagetothetotalamountofannualpurchase 20.34% Informationabouttop5suppliersoftheCompany Serial Nameofsupplier Amountofpurchase(yuan) Percentagetothetotalamountof Number annualpurchase 1 First 4,461,559,823.86 8.17% 2 Second 3,046,563,469.67 5.58% 3 Third 1,330,117,211.46 2.44% 4 Fourth 1,274,772,351.17 2.34% 5 Fifth 986,365,269.66 1.81% Total -- 11,099,378,125.82 20.34% Otherinformationaboutthemajorsuppliers □Applicable√Notapplicable 3.Expenses Unit:Yuan Increase/ 2016 2015 Decreaseover Descriptionofthematerialchange thepreviousyear Salesexpense 16,477,265,963.04 15,506,341,694.21 6.26% OverheadExpense 5,488,955,551.20 5,048,746,635.48 8.72% Financialexpense -4,845,546,598.04 -1,928,797,250.18 151.22%Mainlyattributabletotheincreaseof exchangegains 4.Investmentinresearchanddevelopment □Applicable√Notapplicable 5.Cashflows Unit:Yuan Increase/ Description Item 2016 2015 Decreaseover theprevious year Sub-totalofcashinflowsfrom 75,515,435,932.31 118,796,508,123.64 -36.43% operatingactivities Sub-totalofcashoutflowsfrom 60,655,483,825.39 74,418,126,295.96 -18.49% operatingactivities Mainlyattributableto Netcashflowsfromoperating 14,859,952,106.92 44,378,381,827.68 -66.52%thedecreaseofcash activities receivedfromsalesof commodities Sub-totalofcashinflowsfrom 3,440,714,420.01 1,179,307,976.84 191.76% investingactivities Sub-totalofcashoutflowsfrom 22,687,267,114.11 5,892,462,841.32 285.02% investingactivities Mainlyattributableto reclassificationofthe NetCashFlowfrom timedepositsofmore InvestmentActivities -19,246,552,694.10 -4,713,154,864.48 308.36%thanoneyeartoother cashpayments relatingtoinvesting activities Increase/ Description Item 2016 2015 Decreaseover theprevious year Sub-totalofcashinflowsfrom 14,492,936,150.59 11,354,411,980.55 27.64% financingactivities Sub-totalofcashoutflowsfrom 20,244,496,336.04 19,037,433,985.61 6.34% financingactivities NetCashFlowfromFinancing -5,751,560,185.45 -7,683,022,005.06 -25.14% Activities Netincreaseincashandcash -6,043,656,822.39 33,858,545,732.13 -117.85% equivalents Majorfactorsthatresultinmajorchangesinrelevantdata √Applicable□Notapplicable III.Non-corebusinessanalysis □Applicable√Notapplicable IV.Assetsandliabilities 1.Majorchangesinassetscomposition Unit:Yuan Attheendof2016 Attheendof2015 Changeof Amount Proportiontototal Amount Proportiontototal proportion assets assets Monetarycapital 95,613,130,731.47 52.43% 88,819,798,560.53 54.93% -2.50% Accountsreceivable 2,960,534,651.37 1.62% 2,879,212,111.93 1.78% -0.16% Inventories 9,024,905,239.41 4.95% 9,473,942,712.51 5.86% -0.91% Investmentrealestate 597,736,633.95 0.33% 491,540,849.66 0.30% 0.03% Long-termequity 103,913,171.51 0.06% 95,459,187.55 0.06% 0.00% investment Fixedassets 17,681,655,478.06 9.70% 15,431,813,077.20 9.54% 0.16% Constructionin 581,543,756.84 0.32% 2,044,837,830.02 1.26% -0.94% Progress Short-termborrowing 10,701,081,645.32 5.87% 6,276,660,136.03 3.88% 1.99% 2.Assetsandliabilitiesmeasuredbyfairvalue Unit:Yuan Gainsand Accumulated Depreciation Amountof Amountof Amountat lossesfrom fairvalue reserves buyingin sellingout Amountat Item thebeginning changesinfair changes withdrawn duringthe duringthe theendof oftheperiod value recognizedin duringthe period period theperiod equity period Financialassets 1.Financial assetsmeasured byfairvalueand theirchanges recognizedinthe 0.00 0.00 0.00 0.00 0.00 0.00 0.00 gainsandlosses duringthecurrent period(Excluding derivative financialassets) 2.Derivative 0.00250,848,418.63 250,848,418. financialassets 63 3.Financial 2,614,719,17 - - 1,235,305,71,312,303,56 assetsavailable 7.56117,730,422.98 257,463,774. 99.23 0.40 forsale 59 2,614,719,17 - 1,235,305,71,563,151,97 Subtotal 7.56133,117,995.65 257,463,774. 0.00 0.00 99.23 9.03 59 2,614,719,17 - 1,235,305,71,563,151,97 Total 7.56133,117,995.65 257,463,774. 0.00 0.00 99.23 9.03 59 Financialliabilities 1,189,028,36794,264,876.04 394,763,490. 6.37 33 WhethertherearesignificantchangesinthemainassetmeasurementattributeoftheCompanyduringtheReportPeriod. □Yes√No V.Investments 1.Overallreview □Applicable√Notapplicable 2.MajorequityinvestmentsobtainedduringtheReportPeriod □Applicable√Notapplicable 3.Majornon-equityinvestmentsduringtheReportPeriod □Applicable√Notapplicable 4.Financialassetinvestment (1)Securitiesinvestment Unit:Yuan AccumulatedAmount Carrying Gainsand Amountof Profitand Carrying Initial Accounting fairvalue ofbuying Accounting Capital Typeof Security Abbreviationof amountatthe lossesfrom sellingout lossduring amountat investment measurement changes induring calculationSourceof securities code securityname beginningof changesin duringthe theReport theendof cost method recognized the items Investment theperiod fairvalue period Period theperiod inequity period Stockslisted Available- ondomestic WANDA 1,235,305,7Measureat 1,224,378,6389,659,496.0 1,235,305,7120,851,956. for-sale andoverseas3699 0.00 Private COMM-HSHS 99.23fairvalues 9.47 8 99.23 07 financial stock assets exchanges Stockslisted Available- ondomestic RS - - - 617,323,352Measureat 463,502,488. 417,612,710for-sale andoverseas1528 MACALLINE- 74,149,015.8282,610,139. 0.00 49,087,059.8 Private .86fairvalues 09 .40financial stock HSHS 7 12 3 assets exchanges - 1,852,629,1 1,687,881,1215,510,480.2 1,235,305,771,764,896.2417,612,710 Total -- 282,610,139. 0.00 -- -- 52.09 7.56 1 99.23 4 .40 12 2)Investmentinderivatives Unit:RMB10,000 Proportionof Withdrawing theending Profitsand Operation Whetheror Amountof Amountof Typeof Initialamount Beginning depreciation Ending contract losses nameof Incidence not buyingin sellingout investmentinofinvestmentStartdateExpirydate investment reserve investmentamounttonet duringthe investment relation transaction duringthe duringthe derivatives inderivatives amount amount(If amount assetsatthe report inderivative wasrelated period period any) endofthe period reportperiod Jinrui Futures Non-related January December Futuresco., No Hedging -4,344.29 -4,344.29 930.31 0.02% -3,695.41 party 1,2016 31,2016 LTD Contract Forward Financing Non-related Foreign January December No -9,757.11 -9,107.11 21,863.04 0.41%-160,328.22 Institution party Exchange 1,2016 31,2016 Contract (Buyingin) Forward Foreign Financing Non-related January December No Exchange -109,795.73 -109,795.73 -36,254.55 -0.67% -77,838.77 Institution party 1,2016 31,2016 Contract (Sellingout) Total -123,897.13 -- -- -123,247.13 0 0 -13,461.2 -0.24% -241,862.4 CapitalSourceofInvestmentinDerivatives Private Lawsuits(ifapply) None DisclosureDateofAnnouncementonApprovalof 29April,2016 InvestmentinDerivativesbyBoardofDirectors(ifany) DisclosureDateofAnnouncementonApprovalof InvestmentinDerivativesbyBoardofShareholders(if May20,2016 any) Inordertoevadeanyriskinthecostofpurchaseofrawmaterialsbythecompanywhichmightarisefromwidefluctuationsofthepriceof bulkrawmaterials,theCompanycarriedonthehedgingbusinessforpartoftherawmaterialsanddulylockedthecostofrawmaterials accordingtothefuturesmarketsituationtoreduceanyuncertaintyriskfromfluctuationsofthemarketpriceofthespotgoods;meanwhile, theCompanycarriedoutforeignexchangetransactionsbybank'sfinancialinstrumentstoevadeanyriskinthefluctuationsofexchange rateandinterestrate,reduceforeignexchangeliabilitiesandconductthecostlocking,andrealizethemaintenanceandincreaseofthe valueofforeignexchangeassets.TheCompanylaiddowntheRulesforHedgingManagementofFuturesand"InternalControlSystemof ForwardForeignExchangeTransactionstoexecutethefullappraisalandcontroloftheinvestmentinderivativesandrisksinopeninterest, andthedetaileddescriptionisprovidedbelow:1.Legalandregulatoryrisk;WhiletheCompanycarriedonhedgingandforeignexchange transactions,itwasrequiredtofollowthelawsandregulationsandspecificallystipulatetherightsandobligationswiththeagency.Control Riskanalysisofopeninterestofderivativesandcontrol measures:TheCompanyassignedtheresponsibledepartmenttostrictlyexecutethecontractreview,clarifytherightsandobligations, measuresduringtheReportPeriod(includingbutnot strengthencompliancecheckandensuretheCompany'sinvestmentinderivativesandoperationofopeninterestinaccordancewithany limitedtomarketrisk,liquidityrisk,creditrisk,operation lawsandregulationsandinternalcontrolsystemoftheCompany.2.Operationrisk:itmeansanyriskinoperationarisingoutofimperfect riskandlegalrisk) internalprocess,operationofemployeesandsystem.Controlmeasures:TheCompanyestablishedthecorrespondingmanagement system,clarifiedthedivisionofresponsibilitiesandexamination&approvalproceduresofthehedgingandforeignexchangetransactions, builtmoreperfectsupervisionmechanismandeffectivelyreducedanyoperationriskthroughbusiness,decisionandtransaction processes.3.Marketrisk:Thepricechangeofbulkgoodsanduncertaintyoffluctuationsofexchangerateofforeignexchangemarket bringagreatermarketrisktothefuturesbusinessandforeignexchangetransactions.Controlmeasures:Theprincipleofprudentand moderateoperationisupheldinthefutureshedgingandforeignexchangetransactionsoftheCompany,inwhichanyspeculative transactionisnotpermitted.Astothehedgingbusiness,theCompanystrictlyrestrictedthenumberofhedgingnottoexceedthenumber ofactualspottransactionandtheopeninterestofthefuturesnottoexceedthenumberofhedgedspotgoodsandimplementedthe mechanismtostoploss.Inrespectoftheforeignexchangetransactions,theCompanyeffectivelypreventedthemarketriskbyjudgingthe trendofforeignexchangerateandutilizingacontracttolockthesettlementofexchangerate. Thedetailedusageandrelatedhypothesisand parametersettingshouldbedisclosedintermsofthe ThelossunderthefutureshedgingcontractduringtheReportPeriodwasRMB-36.9541million;thelossundertheforwardforeign marketpriceoftheinvestedderivativesorchangesinfair exchangecontractduringtheReportPeriodwasRMB-1288.3377million valueoftheproductsduringtheReportPeriodand analysisonthefairvalueofthederivatives. Descriptionsaboutwhetherthereweremajorchangesin theaccountingpoliciesanddetailedaccountingprinciple Nochange oftheCompany'sderivativesduringtheReportPeriodas comparedtothelastreportperiod. IntheopinionoftheCompany'sindependentdirectors,theCompanyimproveditsmanagementlevelbystrengtheninginternalcontroland Specialopinionsofindependentdirectorsregardingthe carryingouttheriskpreventionmeasuresaswellasstabilizingpricefluctuationsthroughfutureshedging.Italsoenhanceditsforeign investmentinderivativesandriskcontroloftheCompanyexchangeriskcontrollevelthroughforeignexchangetransactions.Theaboveinvestmentinderivativeshelpstogiveplaytocompetitive advantagesoftheCompany,soitisfeasiblefortheCompanytocarryontheinvestmentinderivativesundercontrollablerisk. 5.Usageofraisedfunds □Applicable√Notapplicable TheCompanywasnotinvolvedinanyusageofraisedfundsduringtheReportPeriod. VI.Salesofmajorassetsandequities 1.Salesofmajorassets □Applicable√Notapplicable TheCompanywasnotinvolvedinsalesofmajorassetsduringtheReportPeriod 2.Saleofmajorequities □Applicable√Notapplicable VII.Analysisonmajorcontrollingshareholderandjointstockcompanies Informationregardingmajor subsidiariesandjoint stockcompanies thatcontributeover10%ofnetprofits tothe Company Unit:Yuan Company Company Mainbusiness Registered Totalassets Netassets Operating Operating Netprofits Name type capital incomes profit ZhuhaiGree Group Financial 1,500,000, 47,281,381,3,991,395,51,806,178,7 755,239,78565,683,875 Finance Subsidiary Services 000 537.98 96.38 86.46 7.64 .70 Company Limited GreeElectric Appliances Subsidiary AirConditioner230,000,00 4,151,182,5 1,603,925,66,003,558,2 572,243,77495,242,297 (Chongqing) Manufacturing 0 79.30 96.90 90.41 5.07 .87 Co.,Ltd. ZhuhaiGree VarnishedWire169,315,58 4,389,384,0 558,318,605,271,208,5 89,283,939.105,118,540 Electrical Subsidiary Manufacturing 6 73.36 0.96 19.11 10 .38 Co.,Ltd. Zhuhai Kaibang Motor 2,192,560,5 1,148,288,82,547,696,5 342,640,96307,394,086 Motor Subsidiary Manufacturing 82,000,000 64.73 56.44 69.08 2.51 .95 Manufacture Co.,Ltd. GreeElectricSubsidiary AirConditioner150,000,00 13,536,010,8,556,512,412,853,036, 848,317,97781,659,370 Company Company Mainbusiness Registered Totalassets Netassets Operating Operating Netprofits Name type capital incomes profit Appliances Manufacturing 0 085.42 57.41 912.52 1.10 .16 (Hefei)Co., Ltd. GREE (Zhongshan) SmallHome 593,451,749 267,745,43 742,546,7824,768,806. 14,430,119. SmallHome Subsidiary Appliances 30,000,000 .77 5.72 8.99 33 96 Appliances Manufacturing Co. Zhuhai Landa Subsidiary Compressor 93,030,000 12,048,122,7,099,158,79,289,864,9 1,144,188,1 1,024,334,8 Compressor Manufacturing 098.67 45.39 23.44 26.31 18.93 Co.,Ltd. GreeElectric Appliances Subsidiary AirConditioner20,000,000 5,498,716,4 3,130,074,85,754,348,5 508,354,65497,797,529 (Zhengzhou) Manufacturing 88.60 61.48 38.31 6.08 .83 Co.,Ltd. GreeElectric Appliances Subsidiary AirConditioner10,000,000 4,581,385,2 1,271,070,57,885,098,0511,666,390446,778,556 (Wuhan)Co., Manufacturing 24.78 74.07 48.92 .87 .34 Ltd. GreeElectric Appliances Subsidiary AirConditioner20,000,000 4,038,327,6 1,481,356,95,283,788,0 324,880,05344,595,105 (Wuhu)Co., Manufacturing 22.59 91.42 52.62 3.06 .70 Ltd. GreeElectric Appliances Subsidiary AirConditioner100,000,00 3,709,208,4 685,659,244,068,579,7 230,704,50351,737,311 (Shijiazhuan Manufacturing 0 21.97 7.38 28.71 9.93 .35 g)Co.,Ltd. InformationaboutacquisitionanddisposalofsubsidiariesduringtheReportPeriod √Applicable□Notapplicable Unit:RMB10,000 CompanyName Methodsofacquisitionanddisposalof Impactonoverallproductionand subsidiariesduringtheReportPeriod operationandfinancialresults GreePrecisionMold(Wuhan)Co.,Ltd. Establishment 1,250.70 ZhuhaiGreePrecisionMoldCo.,Ltd. Establishment 729.95 ZhuhaiGreeNewMaterialCo.,Ltd. Establishment 3.19 ZhuhaiGreeEnergyEnvironment Establishment -306.65 TechnologyCo.,Ltd. GreeElectricAppliances(Hangzhou) Establishment -16.24 Co.,Ltd. VIII.InformationaboutbusinessescontrolledbytheCompany □Applicable√Notapplicable IX.ProspectsoftheCompany'sfuturedevelopment In 2017, ElectricAppliancesregarded"challengingoneselfandcontrollingthefuture" astheguiding ideologyoftheenterprise'sannualmanagementworktolayoutthediversificationstrategy, and constantly extend to the intelligent manufacturing, smart home and new energy industries asconsolidating anddeveloping theair conditioning industry. Itadherestothe managementpolicyofbeingfairandimpartial,openandtransparent, andscrupulousinseparating public fromprivate interests, scrupulouslyabidesby theconduct codeof telling thetruth, doingpracticalthings,attachingimportancetoprinciplesandthespiritofdedication,and doinggooddeedsandgreat things, andsteadfastlyfocuses on independentinnovation andintelligentmanufacturingtoachievegoodresultsinbothefficiencyandbenefit. (I)Vigorouslyimplementingthe innovationdriven developmentstrategytorealize technicalbreakthroughsofkeyproducts 1. Complete technical upgrading and innovative strategic planning based on classification.Usereversedthinkingtoconsidertechnologicalprogress,keepclosetothe market and users in product planning, and create demands as meeting consumer demands. 2. Improvethenewproductdevelopmentefficiency.Continuetointensifytheproject managementandproductinnovationR&Dmanagement,popularizebigdataapplications, andconstantlysummarizesharingandtechnicalexchanges,andimprovetheefficiencyof newproductdevelopment;improvetheprojectteamresponsibilitysystem andintegrate theleandesignmethodintothenewproductR&Dprocessbycenteringontheproject. 3. Carry out the product platform design comprehensively and improve the standardization level. Using software to manage the product family tree, and realize automatic control of the product platform and key material planning; promote generalizationofkeymaterialsfromthedesignsource, reducetheproductioncost,and enhancethedevelopmentandproductionefficiency;make surethattheproductdesign ideaisinnovativeandattachimportancetoskillstoreducetheresourcewasteduringthe design. 4. Pay attention to the new development trend of the industry. Strengthen the research and development of artificial intelligence in the home appliance field, and promotethedevelopmentofsmarthometechnologies;keepconcernedabout thehaze problem,makecontributionstothe"coaltoelectricity"marketofthecountry,andimprove theproductperformanceasreducingcosts. 5. Continuetoreinforcetheresearchintonewtechnologiesandoriginaltechnologies. Continue to reinforce the research into the magnetic suspension bearing and control technologies,smallsize,lightweightandhighefficiencyofcompressor,newfieldmotor products,ultra-lowtemperatureairsourceheatpumpheatingproducts,technologiesand productsinthecommunicationfield,andwashingmachines,andkeeptheleadingposition inindustrytechnologies. (II)Consolidating the air conditioner market share and expanding the diversified newindustrylayout 1. Consolidatethedomesticmarketshareofresidentialairconditioners,optimizethe salesstructure ofcommercial air conditionerproducts, andsteadily expandthe market shareofsuperiorproducts. 2. Sticktothestrategicdeploymentofmaintaininggrowth,adjustingthestructureand establishinganinternationalbrandinoverseassalesandvigorouslydevelopindependent brands. 3. Focusonthedevelopmentdirectionof"highend,intelligenceandhigh-quality"to enrichtheproductlinesofhouseholdappliances,andenhancetheperformancepriceratio ofproductstoprovideconsumerswithhealthproducts. 4. Speedupthemarketdevelopmentoftheintelligentequipmentandmouldindustry, carry out intensive study by focusing on the two major fields of robots and precision machine tools,and provide independently developed high-endequipment for "Made in China2025"ascompletingtransformationandupgradingofthecompany'sindependent manufacturingsystem. 5. Reinforce promotion of all the industrialproduct brands. Take into account the domesticandoverseasmarketstobuildthebrandimageof"highquality,excellentservice andstronglineup"ofindustrialproducts;activelyseekcooperationopportunitieswiththe e-commerceplatform,andopenupanewbattlefieldofInternetmarketing. 6. Cooperatewith Yinlong tobroaden therelated industrychain. Firmlygrasp the opportunitiesandchallengesbroughtbycooperationwithYinlong,andcreatenewprofit growthpointsinmould,motor,automotiveairconditioning,intelligentequipmentandother fields. 7. Acceleratetheindustriallayoutandtechnologicalbreakthroughsofthenewenergy industrysector,andlaunchindependentandinnovativenewenergyproducts;expandthe market share of photovoltaic air conditioning products and achieve the technical breakthroughofopticalstorageintegration;tackletheenergycontrolprotocolandstrategy toachievedevelopmentofthedistributedcontrolsystemsanddistributedenergysystems atthehomelevel,buildinglevelandurbanlevel. 8. Makethemobilephoneindustrybigandstrong,andformallystartofflinechannel salesofmobilephones. 9. Adheretothesustainable developmentstrategydirection of"saving,greenness, environmentalprotectionandresourceregeneration",formtheclosedloopindustrialchain ofresourceregeneration,andinsistongreenecologicalmanufacturing. (III) Vigorously promoting standardization and informatization to enhance the enterprisemanagementlevel 1. IntensifytheeffortstoimplementstandardizationinallthephasesofproductR&D totransitfromdesignofgoodproductstodesignofgoodproductsofmeetingtheneedsof automationproduction. 2. Establish an information center, timely grasp the market, industry and related dynamics,andcomprehensivelyanalyzetheinter-systeminformationintheenterpriseto ensuresmoothimplementationofthesupplysidereform. 3. Setupabigdatacenter,andpromotetheanalysisandapplicationofbigdatain eachoperation link of thecompany to effectively increase theenterprise management level. 4. Guaranteequalitymanagementfromthesource,adopttheforcedmechanismto enhance the management level, and make sure that everyone controls quality during routineproduction,process,managementanddesign. (IV)Promotingthetransformationofintelligentmanufacturingtoimprovepercapita efficiency 1. Implementtheautonomousmanagementmodetofurtherclarifythedouble-effect subjectmanagementresponsibilityof"efficiencyandbenefit". 2. Strengthen reform and innovation of the valuechain, deepen lean production, improvesupply chainlogistics, promote theJIT mode, realize direct distribution of the supplier,andfurthereliminatetransitstockandtransportwaste. 3. Build a "sales centered" internal service system and improve the flexibility of productionandprocurementsupply. 4. Comprehensively introduce the efficiency oriented contract wage system and automaticaccountingsystemofproductionefficiencytopromoteefficiencyguaranteeand increase. (V)Tighteningcostcontroltoimproveeconomicbenefits 1. Implementcostcontrolfromthedesignsourceandoptimizeproductpricingideas. 2. Strengthen the audit supervision, especially reinforce the audit management aimingtomanagementprocesscontrol. 3. Reinforceriskcontrol, includingexternalrisk,internalmanagementriskandnew businessrisk. (VI) Strengthening personnel training to scientifically and efficiently meet the diversifiedtalentdemandofthecompany 1. SpeedupconstructionofGREECollege.Promotetechniciantrainingtomeetthe company's demand for transformation and upgrading of skilled workers; energetically cultivateexperttalents,includingmanagementexperts,technicalexpertsandskillexperts, sothatthecompanycantrulybecomeatalenttrainingbase. 2. Establishasoundanddynamicgrouppersonnelplanningandcontrolmechanism, effectively control fluctuation of the personnel scale, and further strengthen the managementworkofpostdeterminationandorganizationalstructuredelimiting. 3. Continue to broaden the recruitment channels, enhance the independent recruitmentability,andscientificallyandefficientlymeettheneedofdiversifiedtalents. 4. Providetheplatform,direction andgoalto youngpeople sothattheyhave the abilitytoundertakeandcontrolthefuturedevelopmentofthecompany. (VII)Strengtheningthethinkingtransformationandqualityimprovementofcadres 1. Increaseefforts to establish thecadre appointmentand removalmechanism of promotingcapableonesanddemotinguntalentedonesCultivateacapableandthoughtful team;createacorporateculturewiththespiritofdedicationandperseverance,andthe atmospherein whichallmembersare unitedand companionateandwillingtohelpand learnfromeachother,andbuildthecorecompetitivenessofenterprise. 2. Strengthenthesystemconstruction,reinforceworkstyleconstruction,andcreatea workingatmosphereofmutualhelptopromotesustainabledevelopmentoftheenterprise. 3. Buildandupdatethecadrereservebanktofindexcellenttalents. X.Receptionofactivitiesincludingresearches,communicationandinterviews 1. Registration form for reception of activities including researches, communication and interviews √Applicable□Notapplicable Timeofreception Methodof Typeofreception Basicsituationindexofresearch reception object Fordetails,seetheRecordTableforInvestorRelations January22,2016 Others Institution ActivitiesdisclosedbytheCompanyonwww.cninfo.com.cn from5January,2016to22January,2016 August23,2016 Others Others Fordetails,seetheannouncementdisclosedbythe Companyonwww.cninfo.com.cnon25August,2016 Fordetails,seetheRecordTableforInvestorRelations September2,2016 FieldResearch Institution ActivitiesdisclosedbytheCompanyonwww.cninfo.com.cn from24August,2016to2September,2016 Fordetails,seetheRecordTableforInvestorRelations September27,2016Others Institution ActivitiesdisclosedbytheCompanyonwww.cninfo.com.cn from13September,2016to27September,2016 Fordetails,seetheRecordTableforInvestorRelations November21,2016 Others Institution ActivitiesdisclosedbytheCompanyonwww.cninfo.com.cn from2November,2016to21November,2016 Timesofreception 89 Numberofreceivedinstitutions 895 Numberofreceivedindividuals 0 Numberofotherreceivedobjects 36 Whetherundisclosedmaterial informationisrevealed,disclosedor No divulged SectionVImportantEvents I.Informationaboutcommonstockprofitdistributionandcapitalizationfromcapital reservefunds Thecommonstockprofitdistributionpolicyinthereportperiod,especiallypreparation,executionoradjustmentofthe cashdividendpolicy√Applicable□Notapplicable TheDividendprogramfortheyearof2015wasimplementedonJuly7,2016:Calculated bythetotalstockcapitaloftheCompanyequivalentto6,015,730,878stocks,alldirectors willbedistributedacashofRMB15.00(taxincluded)per10stocks,withthetotalamount ofcashestobedistributedinsuchawayuptoRMB9,023,596,317andthebalancetobe carriedforwardtothenextyear. Specialdescriptionofthecashdividendpolicy IncompliancewithprovisionsoftheArticlesofAssociationorrequirementsofthe Yes resolutionofthegeneralmeetingofshareholders: Thedividendstandardandratioaredefiniteandclear: Yes Therelateddecisionproceduresandmechanismsarecomplete: Yes Independentdirectorsperformtheirdutiesresponsiblyandplaytheirdueroles: Yes Minorityshareholdershavetheopportunitytofullyexpresstheiropinionsanddemands Yes andtheirlegitimaterightsandinterestsarefullyprotected: Theconditionsandproceduresaretransparentandcomplywithregulationsifthecash Yes dividendpolicyisadjustedorchanged: Thecommonstockdividenddistributionplan(preplan)andthecapitalizationplan(preplan)fromcapitalreservefundsin recentthreeyears(includingtheReportPeriod) 1.Profitdistributionpreplanfortheyearof2016 Calculatedbythetotalstockcapitalequivalentto6,015,730,878stocks,alldirectorswillbe distributedacash ofRMB18.00 (taxincluded)per 10 stocks,with thetotalamountof cashestobedistributedinsuchawayuptoRMB10,828,315,580.40andthebalanceto becarriedforwardtothenextyear. Thisdistributionplanstillneedstobeapprovedbythegeneralmeetingofshareholdersfor theyearof2016. 2.Profitdistributionplanfortheyearof2015 CalculatedbythetotalstockcapitaloftheCompanyequivalentto6,015,730,878stocks, alldirectorswillbedistributedacashofRMB15.00(taxincluded)per10stocks,withthe totalamountofcashestobedistributedinsuchawayuptoRMB9,023,596,317andthe balancetobecarriedforwardtothenextyear. 3.Profitdistributionplanfortheyearof2014 CalculatedbythetotalstockcapitaloftheCompanyequivalentto3,007,865,439stocks, alldirectorswillbedistributedacashofRMB30.00(taxincluded)per10stocks,withthe totalamountofcashestobedistributedinsuchawayuptoRMB9,023,596,317andthe balance to be carried forward to the next year; capital reserve funds are used for capitalization,and10stockswillbeaddedper10stocksforalldirectorsbasedonthetotal stockcapitaloftheCompanyequivalentto3,007,865,439stocks. Table for common stock cash dividends of the Company in the recent three years (includingtheReportPeriod) Unit:Yuan Netprofitattributable Proportiontonet tocommon profitattributableto Proportionof Amountofcash shareholdersoflisted common Amountofcash cashdividends Year dividend companyinannual shareholdersof dividendsbased basedonother (taxincluded) consolidatedfinancial listedcompanyin onotherways ways statements consolidated financialstatements 2016 10,828,315,580.40 15,420,964,990.94 70.22% 0.00 0.00% 2015 9,023,596,317.00 12,532,442,817.66 72.00% 0.00 0.00% 2014 9,023,596,317.00 14,155,167,229.36 63.75% 0.00 0.00% Theprofits of theCompanyintheReport Period and theparentcompany’sprofits distributable to commonshareholdersarepositive,butthecommonstockcashdividenddistributionpreplanhasnot beenputforward. □Applicable√Notapplicable II.Preplanforprofitdistributionandcapitalizationfrompublicreservefundsinthe ReportPeriod √Applicable□Notapplicable Cashdividendsofthisdistribution IfprofitsaredistributedwhentheCompany'sdevelopmentstagehasenteredthematureperiodandsignificantcapital expenditurehasbeenarranged,theminimumproportionofcashdividendstotheprofitstobedistributedthistimeshould be40%. Detaileddescriptionofthepreplanforprofitdistributionorcapitalizationfrompublicreservefunds III.Fulfillmentofcommitments 1.CommitmentsoftheCompany'sactualcontrollers,shareholdersandacquirers,theCompany andother relatedparties of commitmentsthat havebeen fulfilled completely inthe Report PeriodorhavenotbeenfulfilledcompletelyasoftheendoftheReportPeriod □Applicable√Notapplicable 1.TheCompanydidnothaveanycommitmentsoftheCompany,shareholders,actualcontrollers,acquirers,directors, supervisors,seniormanagementpersonnelorotherrelatedpartiesthathavebeenfulfilledcompletelyintheReport PeriodorhavenotbeenfulfilledcompletelyasoftheendoftheReportPeriodintheReportPeriod. 2.TheCompany’sassetsorprojectsinvolveearningsforecastandtheReportPeriodisstillin theearningsforecastperiodandtheCompanyexplainstheassetsorprojectsthatachievethe originalearningsforecastandtherelevantreasons □Applicable√Notapplicable IV. The listed company’ non-operating funds occupied by the controlling shareholdersandtheirrelatedparties □Applicable√Notapplicable Nocontrollingshareholderoritsrelatedpartyoccupiednon-operatingfundsofthelistedcompanyintheReportPeriodof theCompany. V.Descriptionaboutthe“Non-standardAuditReport”oftheaccountingfirminthe ReportPeriod by the Boardof Directors, Board of Supervisors and independent director(ifany) □Applicable√Notapplicable VI.Descriptionaboutchangesintheaccountingpolicies,accountingestimatesand accountingmethodsincomparisontothefinancialreportoflastyear □Applicable√Notapplicable TheCompany didn’t involveanychangeintheaccountingpolicies,accountingestimatesandaccountingmethodsintheReportPeriod. VII. Description about the retrospective restatement required for correction of significantaccountingerrorsthatoccurredintheReportPeriod □Applicable√Notapplicable TheCompany didn’t involveany correctionof significant accountingerrors in theReport Period that requires retrospectiverestatement. VIII.Descriptionaboutchangesintheconsolidatedstatementscopeincomparison withthefinancialreportoflastyear √Applicable□Notapplicable ① Establishmentofsubsidiaries Amountof subscribed Amountof NetassetsofNetprofitof Equity Timepoint capital paid-incapital Ratioof theendofthetheperiod CompanyName acquisition ofequity contribution contribution contribution period (ten mode acquisition (ten (tenthousand (%) (tenthousand thousand thousand Yuan) Yuan) Yuan) Yuan) GreePrecisionMold Establishment January 8,000.00 8,000.00 100.00 9,250.70 1,250.70 (Wuhan)Co.,Ltd. 2016 ZhuhaiGreePrecision Establishment January 10,000.00 10,000.00 100.00 10,729.95 729.95 MoldCo.,Ltd. 2016 ZhuhaiGreeNew Establishment March2016 3,000.00 3,000.00 100.00 3,003.19 3.19 MaterialCo.,Ltd. ZhuhaiGreeEnergy Environment Establishment May2016 20,000.00 20,000.00 100.00 19,693.35 -306.65 TechnologyCo.,Ltd. GreeElectric Appliances Establishment April2016 30,000.00 30,000.00 100.00 29,983.76 -16.24 (Hangzhou)Co.,Ltd. ② Disposalofsubsidiaries TheCompanywasnotinvolvedindisposalofsubsidiariesinthecurrentperiod. ③ Changesintheconsolidationscopearisingfromothercauses TheCompanywasnotinvolvedinchangesintheconsolidationscopearisingfromothercausesinthe currentperiod. IX.Engagementanddisengagementofaccountingfirms Currentlyengagedaccountingfirms Nameofdomesticaccountingfirm UnionPowerCertifiedPublicAccountants (SpecialGeneralPartnership) Remunerationforthedomesticaccountingfirm(RMB10,000) 396 Consecutiveyearsforthedomesticaccountingfirmtorenderauditservice 2 Namesofcertifiedpublicaccountantsofthedomesticaccountingfirm WangBingandHeLi Anewaccountingfirmwasengagedinthecurrentperiod □Yes √No Engagementofanaccountingfirmforinternalcontrolauditing,financialadviserorsponsor □Applicable √Notapplicable X. Suspensionof listing and termination of listing afterdisclosure of the annual report □Applicable √Notapplicable XIMattersrelatedtobankruptcyreorganization □Applicable √Notapplicable TheCompanywasnotinvolvedinanymatterrelatedtobankruptcyreorganizationintheReportPeriod. XII.Majorlegalactionorarbitration □Applicable √Notapplicable TheCompanywasnotinvolvedinanymajorlegalactionorarbitrationduringtheReportPeriod. XIII.Punishmentandrectification □Applicable √Notapplicable TheCompanywasnotinvolvedinanypunishmentorrectificationduringtheReportPeriod. XIV.Integrity status of theCompany and its controllingshareholders and actual controllers □Applicable √Notapplicable XV. Implementation of the Company’s equity incentive plan, employee stock ownershipplanorotheremployeemotivationmeasures □Applicable √Notapplicable TheCompany wasnotinvolvedinanyequityincentiveplan, employeestockownershipplanorotheremployee motivationmeasuresortheirimplementationduringtheReportPeriod. XVI.Significantrelatedtransactions 1.Relatedtransactionsassociatedwithday-to-dayoperation □Applicable√Notapplicable Amountof Approved Related Proportion Exceeding Available Typeof Contentsof Pricesof related transaction Settlement Incidence transaction toamount the marketprice Dateof Disclosure Relatedparties related related related transactions amount(ten ofrelated relation pricing ofsimilar approved ofsimilar disclosure index transactionstransactions transactions(tenthousand thousand transactions principle transaction quota transactions Yuan) Yuan) The companyin Hebei whichthe Shengshi Payment Company's Salesof Sales 29April, www.cninfo. XinxingGree MarketpriceMarketprice 242,627.79 2.75% 500,000No before Marketprice director commoditiesrevenue 2016 com.cn TradingCo., delivery servesas Ltd. general manager The companyin Zhejiang whichthe Shengshi Payment Company's Salesof Sales 29April, www.cninfo. XinxingGree MarketpriceMarketprice 431,836.64 4.90% 800,000No before Marketprice director commoditiesrevenue 2016 com.cn TradingCo., delivery servesas Ltd. general manager The companyin Henan whichthe Shengshi Payment Company's Salesof Sales 29April, www.cninfo. XinxingGree MarketpriceMarketprice 522,813.35 5.94% 1,000,000No before Marketprice supervisor commoditiesrevenue 2016 com.cn TradingCo., delivery servesas Ltd. general manager Total -- -- 1,197,277.78 -- 2,300,000 -- -- -- -- -- Detailsofhuge-amountsalesreturn Notapplicable Actualfulfillment(ifany)intheReportPeriodwhenthe totalamountisestimatedbycategoryforthedailyrelatedNotapplicable transactiontotakeplaceinthecurrentperiod Cause(ifapplicable)ofthelargedifferencebetweenthe Notapplicable transactionpriceandmarketreferenceprice 2.Relatedtransactionsofacquisitionorsalesofassetsorequity □Applicable√Notapplicable TheCompanywasnotinvolvedinanyrelatedtransactionofacquisitionorsalesofassetsorequityintheReportPeriod. 3.Relatedtransactionsofcommonforeigninvestment □Applicable√Notapplicable TheCompanywasnotinvolvedinanyrelatedtransactionofcommonforeigninvestmentduringtheReportPeriod. 4.Associatedcreditsandliabilities □Applicable√Notapplicable TheCompanywasnotinvolvedinanyassociatedcreditorliabilityintheReportPeriod. 5.Othersignificantrelatedtransactions □Applicable√Notapplicable TheCompanywasnotinvolvedinanyothersignificantrelatedtransactionduringtheReportPeriod. XVII.Majorcontractsandtheirfulfillment 1.Informationabouttrusteeship,contractingandlease (1)Trusteeship □Applicable√Notapplicable TheCompanywasnotinvolvedinanytrusteeshipduringtheReportPeriod. (2)Contracting □Applicable√Notapplicable TheCompanywasnotinvolvedinanycontractingmatterduringtheReportPeriod. (3)Lease □Applicable√Notapplicable TheCompanywasnotinvolvedinanyleaseduringtheReportPeriod. 2.Majorguarantee □Applicable√Notapplicable TheCompanywasnotinvolvedinanymajorguaranteeduringtheReportPeriod. 3.Entrustingotherstoexecuteanycashassetmanagement (1)Entrustedfinancing □Applicable√Notapplicable TheCompanywasnotinvolvedinanyentrustedfinancingduringtheReportPeriod. (2)Entrustedloan □Applicable√Notapplicable TheCompanywasnotinvolvedinanyentrustedloanduringtheReportPeriod. 4.Othermajorcontracts □Applicable√Notapplicable TheCompanydidnothaveanyothermajorcontractduringtheReportPeriod. XVIII.Socialresponsibilities 1.Fulfillingthesocialresponsibilitiesoftakingtargetedmeasuresinpovertyalleviation (1)Summaryoftakingtargetedmeasuresinpovertyalleviationintheyear Electric Appliances owns a salvage guarantee system for assisting employees in difficultiesatmultiplelevels,includingthesocialinsuranceofemployees,sunshinemutual fundreliefofcriticaldiseases,andone-timetemporarydifficultyrelief.Therescuedgroup canbasically coverthemedical expense reimbursementand povertyrelief arisingfrom sudden major diseases of employees, poverty caused byunexpected accidents in the family,laterexpensesofchronicdiseasesandcriticalillnessesofemployees,andsudden diseasesoffamilymembers,soastoaccuratelysolvepracticaldifficultiesofemployees withagreatercapitalexpenditurepressure,ensureactiveconcernandactivesupportin therealsense,andcarryforwardthecollectivespiritofmutualaid. In 2016,theCompany rescued 238 employees, involving an amount of RMB1.687 million, making Gree employeesindifficultiesgrateful,andinjectinginfiniteforcetothecorporatedevelopment. (2)Subsequenttargetedpovertyalleviationplan Tohelprelatedemployeestosettledifficultiesandshakeoffpoverty,highlighttheguiding demonstrationeffectofassistance,bringintofullplaytheCompany'sconcernandcareof employeesindifficulties,earnestlysolvedifficultiesfortheseemployees,andstrengthen thetenetconsciousnessandmassconcept,theCompanyplannedtocarryoutthelong- termpartnerassistanceplanforemployeesindifficultiestoassisttheminthe"one-on-one" mannerin2017. 2.Fulfillingothersocialresponsibilities Greeactivelyandvoluntarilyperformeditssocialresponsibilities,effectivelyprotectedthe lawfulrightsandinterestsofallstakeholders,wonwithitsstrengththerecognitionofthe enterprise,brandandproductsfromcapital marketandconsumermarketandpromoted thelow-carbongreengrowthintheindustrythroughvariousactivities.(Pleaserefertothe SocialResponsibilitiesReportfortheYear2016onwww.cninfo.com.cn) Ifthelistedcompanyanditssubsidiariesarekeypollutantdischargeunitspublishedbytheenvironmentalprotection department No Ifanysocialresponsibilitiesreportispublished √Yes□No Socialresponsibilitiesreportofenterprise Ifenvironmental Ifsocial Ifcorporate Reportdisclosurestandard Enterprisenature informationis informationis governance contained contained informationis Domesticstandard Foreignstandard contained State-owned Yes Yes Yes CASSCSR1.0 Others enterprise Specificcircumstances 1.IftheCompanypassedtheenvironmentalmanagement Yes systemcertification(ISO14001) 2.TheCompany'sannualexpenditureonenvironmental 284 protectioninvestment(tenthousandYuan) 3.TheCompany'semissionreductionperformanceof Noenvironmentalpollutionaccident wastegas,wastewaterandwasteresidue XIX.Descriptionofothersignificantmatters □Applicable√Notapplicable TheCompanydidnothaveanyothersignificantmattertobedescribedintheReportPeriod. XX.SignificantmattersoftheCompany’ssubsidiaries □Applicable√Notapplicable SectionVIChangesinStockCapital&Informationof Shareholders I.Changesinstockcapital 1.Changesinstockcapital Unit:Share Beforethechange Increase/Decrease(+,-) Afterthechange Stock Qty Percentage New BonusConverted Others Subtotal Qty Percentage Issue Issue from Reserve I.Stockswith trading 43,613,644 0.72% 1,514,855 1,514,85545,128,499 0.75% restriction conditions 3.Stocksheld byother 43,613,644 0.72% 1,514,855 1,514,85545,128,499 0.75% domesticcapital Stocksheldby thedomestic 43,613,644 0.72% 1,514,855 1,514,85545,128,499 0.75% naturalperson II.Tradable Stockswithout - 5,970,602, trading 5,972,117,234 99.28% 1,514,855-1,514,855 379 99.25% restriction conditions 1.RMBordinary 5,972,117,234 99.28% --1,514,855 5,970,602, 99.25% stocks 1,514,855 379 III.Totalof 6,015,730,878 100.00% 6,015,730, 100.00% stocks 878 Causesofchangesinstockcapital √Applicable□Notapplicable Ms.DongMingzhu,Chairperson&PresidentoftheCompany,cumulativelyincreasedtheholdshares by 498,000,Mr.XuZifa,Director,cumulativelyincreasedtheholdsharesby 1,403,300,Mr.WangJingdong,Vice President,FinanceChiefandBoardSecretary, cumulativelyincreasedtheholdsharesby155,800. 2.Changesinrestrictedshares □Applicable√Notapplicable II.Issuanceandlistingofsecurities 1.Issuanceofsecurities(excludingthepreferredstock)intheReportPeriod □ Applicable √ Notapplicable 2. Description about changes in the Company’s total number of stocks and shareholder structure,andassetsandliabilitystructure □ Applicable √ Notapplicable 3.Existinginternalemployeestock □ Applicable √ Notapplicable III.Informationabouttheshareholdersandactualcontrollers 1.Totalnumberofshareholdersandtheirshareholdingstatus Unit:Share Totalnumberof Totalnumberof Totalnumberof common Totalnumberof preferredshareholders common shareholdersat preferredshareholders (ifany)whosevoting shareholdersat 396,962theendoflast 338,129(ifany)whosevoting 0rightswererestoredat 0 theendofthe monthbeforethe rightswererestoredat theendoflastmonth ReportPeriod disclosuredateof theendofReportPeriod beforethedisclosure theannualreport (SeeNote8) dateoftheannual report(SeeNote8) Shareholdingoftheshareholdersholdingmorethan5%oftotalstocksorshareholdingofthetop10shareholders Totalnumber Increase/ Numberof Numberof Pledgeorfreezing Nameof Natureof Shareholding ofthestocks Decrease thetrading thetrading shareholder shareholder proportion heldattheend inthe restricted unrestricted Stock oftheReport Report status Qty Period Period stocksheld stocksheld ZhuhaiGree State-owned 18.22% 1,096,255,624 1,096,255,62Frozen 50,625,0 GroupCo.,Ltd. legalperson 4 00 HebeiJinghai Domestic Guaranteed non-state- 8.91% 535,762,033 535,762,033 InvestmentCo., ownedlegal Ltd. person QianHaiLife Domestic InsuranceCo., non-state- 4.12% 247,905,586 247,905,586 Ltd. – HaiLiNianownedlegal Nian person HongKong Securities Foreign 2.38% 143,055,489 143,055,489 Clearing legalperson CompanyLtd. ChinaSecurities State-owned 2.08% 125,224,256 125,224,256 FinanceCo.,Ltd.legalperson CentralHuijin Asset State-owned 1.40% 84,483,000 84,483,000 Management legalperson Co.,Ltd. UBSAG Foreign 1.28% 77,157,409 77,157,409 legalperson HillhouseCapital Foreign Management – legalperson 0.84% 50,457,100 50,457,100 HCMChinaFund NationalSocial Domestic SecurityFund non-state- 0.83% 49,855,164 49,855,164 108portfolio ownedlegal personDomesticDongMingzhu natural 0.74% 44,318,492 44,318,492personSituation(ifany)whereastrategicinvestororgenerallegalpersonbecomes Noneoneoftop10shareholdersduetoplacementofnewshares(seeNote3)Descriptionforaffiliatedrelationshiporconcertedactionoftheabove Noneshareholders Shareholdingofthetop10shareholderswithouttradingrestrictionconditions Numberofthetradingunrestrictedstocksheldat Typeofstocks Nameofshareholder theendoftheReportPeriod Typeofstocks Qty ZhuhaiGreeGroupCo.,Ltd. 1,096,255,624RMBordinary 1,096,255,624 stocks HebeiJinghaiGuaranteed 535,762,033RMBordinary 535,762,033 InvestmentCo.,Ltd. stocks QianHaiLifeInsuranceCo.,Ltd. – 247,905,586RMBordinary 247,905,586 HaiLiNianNian stocks HongKongSecuritiesClearing 143,055,489RMBordinary 143,055,489 CompanyLtd. stocks ChinaSecuritiesFinanceCo.,Ltd. 125,224,256RMBordinary 125,224,256 stocks CentralHuijinAssetManagement 84,483,000RMBordinary 84,483,000 Co.,Ltd. stocks UBSAG 77,157,409RMBordinary 77,157,409 stocks HillhouseCapitalManagement – 50,457,100RMBordinary 50,457,100 HCMChinaFund stocks NationalSocialSecurityFund108 49,855,164RMBordinary 49,855,164 portfolio stocks DongMingzhu 44,318,492RMBordinary 44,318,492 stocks Descriptionforaffiliatedrelationshiporconcertedactionamongthetop10shareholdersholdingtradablestocks withouttradingrestrictionconditionsandbetweenthetop10shareholdersholdingtradablestockswithouttrading None restrictionconditionsandthetop10shareholders Descriptionoftheparticipationinmargintradingbusinessofthetop None 10commonshareholders(ifany)(seeNote4) 2.InformationofthecontrollingshareholdersoftheCompany Natureofthecontrollingshareholder:Localstate-ownedholding Typeofthecontrollingshareholder:Legalperson Legal Nameoftheof representative/ Dateof Organizationcode Principalbusiness controllingshareholder Personin establishment charge Investmentandassetmanagement; ZhuhaiGreeGroupCo., December15, enterprisemanagementservice, Ltd. ZhouLewei 1990 914404001925371865enterpriseplanning;other commercialservices(excludingany licensedbusinessitems) Informationregardingholdingequityinterestsofotherdomesticand oversealistedcompaniesbycontrollingshareholdersduringthe None ReportPeriod 3.InformationoftheactualcontrollersoftheCompany Natureoftheactualcontroller:Localstate-ownedassetsmanagementinstitutionTypeoftheactualcontroller:Legal person Legal Dateof Nameoftheactualcontrollerrepresentative/P establishment Organizationcode Principalbusiness ersonincharge State-ownedAssets Supervisionand November30, Fulfillresponsibilitiesofthe AdministrationCommission WuAicun 2004 71924557-8 state-ownedassetsinvestor ofZhuhaiMunicipalPeople's Government Informationregardingequity ofotherdomesticand AttheendoftheReportPeriod,theState-ownedAssetsSupervisionandAdministration oversealistedcompanies CommissionofZhuhaiMunicipalPeople'sGovernmentalsocontrolledZhuhaiLeague controlledbytheactual StockCo.,Ltd.,ZhuhaiHuafaIndustrialCo.,Ltd.,ZhuhaiPortCo.,Ltd.,GreeRealEstate controllerduringtheReport Co.,Ltd.,ZhuhaiHoldingsInvestmentGroupLimitedandiOneHoldingsLimited. Period ChangeintheactualcontrollerintheReportPeriod □Applicable√Notapplicable TheactualcontrolleroftheCompanydidnotchangeintheReportPeriod. BlockdiagramofpropertyrightandcontrolrelationshipsbetweentheCompanyandactualcontroller ZhuhaiMunicipalState-ownedAssetsSupervisionandAdministrationCommission 100% ZhuhaiGreeGroupCo.,Ltd. 18.22% GREEELECTRICAPPLIANCES,INC.OFZHUHAI TheactualcontrollercontrolledtheCompanythroughtrustorotherassetmanagementmodes □ Applicable √ Notapplicable 4.Othercorporateshareholdersholdingmorethan10%ofshares □ Applicable √ Notapplicable 5.Restrictedsharereductionofcontrollingshareholdersandactualcontrollers,restructuring partyandothercommitmentsubjects □ Applicable √ Notapplicable SectionVIIRelatedInformationofPreferredStock □Applicable√Notapplicable TheCompanydidnothaveanypreferredstockintheReportPeriod. SectionVIIIDirectors,Supervisors,SeniorManagement PersonnelandEmployees I. Shareholding changes of directors, supervisors and senior management personnel Number Number ofheld ofheld Stocksheld Other Stocks stocks stocks Commencem Termination atthe increase/ heldatthe Tenure increased reduced Name Title GenderAgeentoftermof oftermof beginningof decrease endofthe status inthe inthe office office thePeriod changes Period current current (shares) (shares) (shares) period period (shares) (shares) Dong Chairman& Incumbent F 62May25,2012May31,2018 43,820,492 498,000 44,318,492 Mingzhu President YeZhixiongDirector Incumbent M 59June1,2015May31,2018 Director& HuangHui ExecutiveViceIncumbent M 52May25,2012May31,2018 7,375,000 7,375,000 PresidentZhang Director Incumbent M 56May25,2012May31,2018 Jundu XuZifa Director Incumbent M 62June1,2015May31,2018 200,0001,403,300 1,603,300 Wang Independent Incumbent M 52May20,2014May31,2018 Ruzhu Director IndependentLuXin Incumbent F 53June1,2015May31,2018Director IndependentGuoYang Incumbent F 58June1,2015May31,2018Director Chairmanof September XuChuzhenBoardof Incumbent M 58 May31,2018 24,2013 SupervisorsGuo Supervisor Incumbent M 60May25,2012May31,2018 Shuzhan Staff October15, WangLiqin Incumbent F 40 May31,2018 Supervisor 2014 ZhuangPeiVicePresidentIncumbent M 51May25,2012May31,2018 5,955,202 5,955,202 Number Number ofheld ofheld Stocksheld Other Stocks stocks stocks Commencem Termination atthe increase/ heldatthe Tenure increased reduced Name Title GenderAgeentoftermof oftermof beginningof decrease endofthe status inthe inthe office office thePeriod changes Period current current (shares) (shares) (shares) period period (shares) (shares) VicePresident, Wang FinanceChief, Incumbent M 46May25,2012May31,2018 728,874 155,800 884,674 Jingdong Board SecretaryChen September3, VicePresidentIncumbent M 44 May31,2018Weicai 2013 August31,LiuJun VicePresidentIncumbent M 40 May31,2018 12,000 12,0002015 Meng November Director Resigned M 55May20,2013 17,000 17,000 Xiangkai 22,2016 Total -- -- -- -- -- -- 58,108,5682,057,100 0 60,165,668 II.Changesinthedirectors,supervisorsandseniormanagementpersonnel √Applicable□Notapplicable Name Title Type Date MengXiangkai Director Resigned November22,2016 III.Positionsofdirectors,supervisorsandseniormanagementpersonnel Professionalbackground,majorworkexperienceandcurrent mainresponsibilitiesinthe Companyofthecurrent directors,supervisorsandseniormanagementpersonnelofthe Company DongMingzhu,female,amaster,incumbentChairperson&PresidentoftheCompany Sinceshe joinedtheCompanyin1990,shehasservedassalesmanager,vicedirector anddirectorofSalesDepartment,manager,vicegeneralmanager,generalmanagerand vicechairpersonofsalescompany;shehas servedasPresidentoftheCompanysince April2001,andChairpersonoftheCompanysinceMay2012.Atpresent,sheconcurrently servesaschairpersonofGreeHefei,GreeWuhan,andGreeZhengzhou.SinceAugust 2012,shehasservedasnon-executivedirectorofKingdeeInternationalSoftwareGroup CompanyLimited;Sheconsecutivelyservedasdeputytothetenth,eleventhandtwelfth National People's Congresses and concurrently serves as a member of the Central CommitteeofChinaDemocraticNationalConstructionAssociationandthetenthExecutive Committee of the All-China Women's Federation, UNDP’s "messenger of sustainable urbandevelopment",directorofBoardofDirectorsofChinaSocialEconomicInvestigation Research Center, member of ExecutiveCommittee of Guangdong Provincial Women's Federation, vice chairperson of Guangdong Province Association of Women Entrepreneurs,chairpersonofZhuhaiMunicipalAssociationofWomenEntrepreneursand honorarypresidentofZhuhaiRedCrossSociety. ShewassuccessivelyengagedbyNorthwestUniversity,CollegeofManagementofSun Yat-senUniversityandShandongUniversityasapart-timeprofessor,engagedbySchool of Management, Nanjing University of Technology as "MBA off-campus tutor", and engagedbySchoolof Management,UniversityofScienceandTechnologyofChina as MBA"CourseProfessor".ShewasengagedbyBeijingNormalUniversityZhuhaiCampus andUniversity ofInternational Businessand Economicsas visitingprofessor,part-time professorofZhongnanUniversityofEconomicsandLawandmemberofMBAEducation AdvisoryCommittee.ShewasinvitedtobeaninstructorofSummerDavosForum2014, engagedbytheSchoolofEntrepreneurship&Innovation,SJTUasamemberofAdvisory Committee of Strategic Experts, engaged by the National Development and Reform CommissionasamemberofExpertCommitteeforthethirteenthfive-yeardevelopment planning,engagedbyGuangdongProvincialGovernmentasanentrepreneursconsultant and member of the government decision-making advisorycommittee and engaged by Hefeimunicipalgovernmentasaconsultantof(householdelectricappliances) industrial development,etc.In2016,shewasawardedafoundingmemberofAdvisoryCommitteeof the United Nations Development Programme by the UN General Administration and includedinthelistofworld'smostinfluentialbusinesswomenofFortunefor10consecutive years. YeZhixiong,male,amaster,incumbentdirectoroftheCompany Mr.YeZhixiongservedasamemberofZhuhaiMunicipalCommitteeoftheCPC,andthe chairman,secretaryofthePartycommitteeandlegalrepresentativeofZhuhaiGreeGroup Co.,Ltd.fromMay2004toAugust2006;amemberofZhuhaiMunicipalCommitteeofthe CPC,and thechairman,general manager andlegal representative of Municipal Urban AssetManagementandOperationCorporationfromAugust2006toJune2009,andthe secretary of theParty committee in September2006; the chairman,general manager, legalrepresentativeandsecretaryofthePartycommitteeofZhuhaiUrbanConstruction GroupCo.,Ltd.fromJune2009toJanuary2013;andthechairman,legalrepresentative andsecretaryofthePartycommitteeofZhuhaiUrbanConstructionGroupCo.,Ltd.from January2013todate.SinceJune2015,hehasservedasadirectoroftheCompany. Mr.HuangHui,male,amaster,incumbentDirector,ExecutiveVicePresidentandChief EngineeroftheCompany. SinceAugust2000toMay2014,hehasservedasvicepresidentoftheCompany;since 2014,hehasservedasexecutivevicepresidentoftheCompany;sinceMay2007,hehas servedaschiefengineeroftheCompany;sinceMay2012,hehasservedasdirectorof the Company, and concurrently as chairman of Zhuhai Gree Dakin Device Co., Ltd., director of Chinese National Engineering Research Center of Green Refrigeration Equipment,part-timeinstructorofSchoolofEnergyandPowerEngineeringofHuazhong Universityof Science and Technology, member of Commission B2 of theInternational InstituteofRefrigeration,vicepresidentofChineseAssociationofRefrigeration,member oftheninthcouncilofChinaQualityAssociation,memberofNationalTechnicalCommittee for Standardization of Household Appliances, vice chairman of Industry Household Appliance Branch of China Electrical Equipment Industrial Association, expert of Guangdong Province Science and Technology Consultant Experts, vice president of Guangdong Provincial Institute of Refrigeration, vice chairman of Guangdong Light IndustryAssociation,memberofTechnicalCommitteeofGuangdongProvincialInstituteof Standardization,memberofZhuhaiMunicipalMayorQualityAwardEvaluationCommittee, memberofZhuhaimunicipalMayorQualityAwardEvaluationCommittee,deputydirector oftheeditorialboardofElectricalAppliances,andeditorialboardmemberofJournalof Refrigeration. ZhangJundu,male,withacollegedegree,incumbentDirectoroftheCompany. SinceSeptember1999,hehasservedaschairmanofZhejiangTongchengGreeElectric AppliancesCo.,Ltd.SinceAugust2012,hehasconcurrentlyservedasgeneralmanager ofZhejiangShengshiXinxingGreeTradingCo.,Ltd.SinceMay2012,hehasservedas directoroftheCompany. XuZifa,male,withabachelordegree,incumbentDirectoroftheCompany. HeworkedasthegeneralmanagerofHebeiXinxingGreeElectricApplianceSalesCo., Ltd.fromJuly1999toJune2011;thegeneralmanagerofHebeiShengshiXinxingGree TradingCo.,Ltd.fromJuly 2011todate,andthedirectorofHebei JinghaiGuaranteed InvestmentCo.,Ltd.from2006todate.SinceJune2015,hehasservedasadirectorof theCompany. WangRuzhu,male,doctor,incumbentIndependentDirectoroftheCompany SinceDecember1994,Mr.WangRuzhuhasservedasaprofessorofShanghaiJiaoTong UniversityanddirectoroftheInstituteofRefrigerationandCryogenicEngineering.Since 2008, he has served as thedirector of the Solar Power Generation and Refrigeration ProjectResearchCenterunderMinistryofEducation.Since2012,hehasworkedasthe vicepresidentofChineseAssociationofRefrigeration.SinceMay2014,hehasservedas anindependentdirectoroftheCompany. GuoYang,female,doctor,incumbentIndependentDirectoroftheCompany Ms. Guo Yang served as the general counsel of Chinese law at Hong Kong Pengli InsuranceCo.,Ltd.andchiefrepresentativeatitsrepresentativeofficeinBeijingfrom1995 to1998;theassistantvicepresidentofPacificCenturyInsuranceHoldingsLtd.andchief representativeattherepresentativeofficeofPacificCenturyInsuranceHoldingsLtd.from 1999 to 2008; the chief representative at the representative office of Holland Ageas InsuranceInternationalInc.from2008to2009;anassociateprofessorattheCollegeof Finance,CapitalUniversityofEconomicsandBusinessfrom2010to2012;adirectorof theCompanysinceJune2015todate. LuXin,female,doctor,incumbentIndependentDirectoroftheCompany Ms. Lu Xin has served Jinan University since January 2004. Now, she works as a professorattheDepartmentofAccountingoftheSchoolofManagement,JinanUniversity anddeputydirectorattheManagementAccountingResearchCenterofJinanUniversity. Concurrently, she isa deputy of the12th National People’s Congress,member of the Central Committee at Taiwan Democratic Self-Government League, vice chairman of GuangdongProvincialPartyCommitteeatTaiwanDemocraticSelf-GovernmentLeague, special auditorof Guangdong Audit Office, as wellas an independent directorof TCL CorporationandKingfaSci.&Tech.Co.,Ltd.Shehasservedasanindependentdirector oftheCompanysinceJune2015. Xu Chuzhen, male, with abachelor degree,Chairman of Boardof Supervisors of the Company. FromMay1999toMay2011,Mr.XuChuzhenservedasthemanagingdirectorofLeague StockCo.,Ltd.From2002toMay2011,heconcurrentlyservedasthemanagingdirector andvicechairmanofZhuhaiLeagueEnvironmentalProtectionCo.,Ltd.;fromAugust2009 toMay2011,heconcurrentlyservedasthechairmanofZhuhaiLeagueInvestmentCo., Ltd.FromMay2011toMay2012,heservedasavicechief engineerofZhuhaiWater GroupCo.,Ltd.Duringthisperiod,healsoservedasadirectorofLeagueStockCo.,Ltd. Duringthisperiod,healsoservedasadirectorofLeagueStockCo.,Ltd.SinceMay2012, hehasservedasafull-timedirectorandsupervisorofZhuhaiSASAC.Duringthisperiod, healsoservedasthechairmanoftheboardofsupervisorsofZhuhaiPortHoldingsCo., Ltd, chairman of the board of supervisors of Zhuhai Port Co., Ltd, director of Zhuhai League Stock Co., Ltd, chairman of the board of supervisors of Zhuhai Investment HoldingsCo.,Ltd, anddirector ofZhuhaiDuty FreeEnterprisesGroup Co.,Ltd.Since September2013,hehasconcurrentlyservedasthechairmanoftheboardofsupervisors oftheCompany. GuoShuzhan,male,withacollegedegree,incumbentSupervisoroftheCompany SinceAugust2006,hehasservedaschairmanofHebeiJinghaiGuaranteedInvestment Co., Ltd. Since August 2012, he has served as general manager of Henan Shengshi XinxingGreeTradingCo.,Ltd.FromMay2012uptonow,hehasservedassupervisorof theCompany. WangLiqin,female,withabachelordegree,incumbentStaffRepresentativeSupervisor. From April 2004 to July 2010, Ms. Wang Liqin served as the HR supervisor of HR Departmentof GREE Electric Appliances Inc. of Zhuhai. Since August 2010, she has servedastheheadofHRDepartmentofGREEElectricAppliancesInc.ofZhuhai.Since October2014,shehasservedasthestaffrepresentativesupervisor. ZhuangPei,male,withabachelordegree,incumbentVicePresidentoftheCompany. From2002toApril2003,he servedasassistantpresident oftheCompany.FromApril 2003uptonow,hehasservedasvicepresidentoftheCompany. Wang Jingdong, male, a master, incumbent Vice President, Finance Chief, Board Secretary. FromNovember2002toApril2006,heservedasheadoffinancialdepartment,headof purchasedepartmentandchiefofAuditDepartment.FromApril2006toSeptember2009, he served as assistant president of the Company. From January2008 up to now, he servedasfinancechiefoftheCompany.FromJuly2009uptonow,heservedasboard secretaryoftheCompany.FromOctober2009uptonow,hehasservedasvicepresident, financechiefandboardsecretaryoftheCompany. ChenWeicai,male,amaster,incumbentVicePresidentoftheCompany. FromJuly 1993to April2008, he served asclerk, staff member,senior staff member, deputydirectoranddirectorofHualePoliceStationinDongshanDistrict(YuexiuDistrict)of Bureauof PublicSecurity in Guangzhou. FromJuly 2005 toApril 2008, he served as deputy secretary (concurrent) of Huale Street Party Committee in Dongshan District (YuexiuDistrict)inGuangzhou.FromApril2008toJuly2013,heservedasdeputydirector anddirectorofpersonneldepartmentof BureauofPublicSecurity inGuangzhou.From October2008toFebruary2012,heserved asdirection ofofficeofGuangzhouPolice’s Foundation(concurrent).SinceSeptember2013,hehasservedasvice-presidentofthe Company. LiuJun,male,withabachelordegree,incumbentVicePresidentoftheCompany. Mr. Liu Jun was an employee of the Company from July 1998 to October 2001. He successivelyservedastheassistantdirectorandfactorydeputydirectorofthecontroller factory of the Company, factory deputy director and factory director of the Incoming MaterialsInspectionFactory, andthedeputyheadand headoftheSupplyDepartment fromOctober2001toAugust2006;theassistantpresidentoftheCompany,directorofthe MaterialsPurchasingCenteranddirectoroftheLogisticsDistributionCenterfromAugust 2006toJuly2015.HehasservedasavicepresidentoftheCompanysinceAugust2015. Informationofpositionsinshareholders √Applicable□Notapplicable Remuneration Nameof Nameofshareholder Positionatthe Commencementof andallowance incumbent shareholder termofoffice receivedfrom theshareholder GuoShuzhanHebeiJinghaiGuaranteedInvestment Chairmanandlegal August1,2006 Yes Co.,Ltd. representative XuZifa HebeiJinghaiGuaranteedInvestment Director August1,2006 Yes Co.,Ltd. State-ownedAssetsSupervisionand Full-timedirectorand XuChuzhen AdministrationCommissionofZhuhai full-timesupervisor May1,2012 Yes MunicipalPeople'sGovernment Informationofpositionsinothercompanies √Applicable□Notapplicable Remuneration Nameof Namesofothercompanies Positionatother Commencementof andallowance incumbent companies termofoffice receivedfrom othercompanies Chairman,legal YeZhixiong ZhuhaiUrbanConstructionGroupCo., representativeand January1,2013 Yes Ltd. secretaryoftheParty committee ZhangJundu ZhejiangTongchengGreeElectric Chairperson September1,1999 Yes Remuneration Nameof Namesofothercompanies Positionatother Commencementof andallowance incumbent companies termofoffice receivedfrom othercompanies AppliancesCo.,Ltd. ZhangJundu ZhejiangShengshiXinxingGree GeneralManager August1,2012 Yes TradingCo.,Ltd. XuZifa HebeiShengshiXinxingGreeTrading GeneralManager July1,2011 Yes Co.,Ltd. LuXin TCLCorporation IndependentDirector September1,2014 No LuXin KingfaSci.&Tech.Co.,Ltd. IndependentDirector May21,2014 No GuoShuzhan HenanShengshiXinxingGreeTrading GeneralManager August1,2012 Yes Co.,Ltd. XuChuzhen ZhuhaiLeagueStockCo.,Ltd. Director May20,2014 Yes DongMingzhuZhuhaiLandaCompressorCo.,Ltd. Chairmanandlegal May10,1985 No representative DongMingzhuHefeiLandaCompressorCo.,Ltd. Chairmanandlegal December7,2009 No representative DongMingzhuZhengzhouLandaCompressorCo.,Ltd.Chairmanandlegal March2,2011 No representative DongMingzhuChongqingLandaCompressorCo.,Ltd.Chairmanandlegal May23,2011 No representative DongMingzhuWuhanLandaCompressorCo.,Ltd. Chairmanandlegal May17,2011 No representative DongMingzhuZhuhaiKaibangMotorManufactureCo.,Chairmanandlegal April18,2003 No Ltd. representative DongMingzhuHefeiKaibangMotorManufactureCo., Chairmanandlegal December9,2009 No Ltd. representative DongMingzhuHenanKaibangMotorManufactureCo., Chairmanandlegal August4,2011 No Ltd. representative DongMingzhuChongqingKaibangMotorManufacture Chairmanandlegal August31,2011 No Co.,Ltd. representative DongMingzhuHongKongGreeElectricAppliances Chairperson June21,2005 No SalesCo.,Ltd. DongMingzhuGREE(Zhongshan)SmallHome Chairmanandlegal April3,2009 No AppliancesCo. representative DongMingzhuGreeElectricAppliances(Zhengzhou) Chairmanandlegal August26,2010 No Co.,Ltd. representative Remuneration Nameof Namesofothercompanies Positionatother Commencementof andallowance incumbent companies termofoffice receivedfrom othercompanies DongMingzhuGreeElectricAppliances(Wuhan)Co., Chairmanandlegal August30,2010 No Ltd. representative DongMingzhuShijiazhuangGreenResources Chairmanandlegal December1,2011 No RecyclingCo.,Ltd. representative ZhengzhouGreeGreenResources Chairperson,legal DongMingzhuRecyclingCo.,Ltd representativeand August26,2010 No generalmanager DongMingzhuTianjinGreenEnergyResource Chairmanandlegal March13,2013 No RecyclingCo.,Ltd. representative DongMingzhuHunanGreenResourcesRecyclingCo.,Chairmanandlegal November2,2010 No Ltd representative DongMingzhuGreeElectricAppliances(Chongqing) Chairmanandlegal July19,2001 No Co.,Ltd. representative DongMingzhuGree(Shijiazhuang)SmallHome Chairmanandlegal March21,2011 No AppliancesCo.,Ltd. representative DongMingzhuGreeElectricAppliances(Wuhu)Co., Chairmanandlegal March29,2011 No Ltd. representative DongMingzhuWuhuGreenResourcesRecyclingCo., Executivedirectorand March29,2011 No Ltd. legalrepresentative DongMingzhuZhuhaiGreeGroupFinanceCompany Chairmanandlegal May29,1995 No Limited representative DongMingzhuGreeElectricAppliances(Shijiazhuang) Chairmanandlegal May23,2011 No Co.,Ltd. representative DongMingzhuZhuhaiLigaoPrecisionManufacturing Chairmanandlegal October14,2013 No Co.,Ltd. representative DongMingzhuZhuhaiGreeTOSOTLifeElectric Chairmanandlegal April12,2013 No AppliancesCo.,Lid. representative DongMingzhuChangshaGreeHVACEquipmentCo., Executivedirectorand April14,2014 No Ltd. legalrepresentative DongMingzhuZhuhaiHVACEquipmentCo.,Ltd. Chairmanandlegal March6,2013 No representative DongMingzhuWuhuPrecisionManufacturingCo.,Ltd.Chairmanandlegal November20,2014 No representative DongMingzhuGreeTOSOT(Suqian)Home Chairmanandlegal September29,2014No AppliancesCo.,Ltd. representative Remuneration Nameof Namesofothercompanies Positionatother Commencementof andallowance incumbent companies termofoffice receivedfrom othercompanies GreeElectricAppliances(Hefei)Co., Executivedirector,legal DongMingzhuLtd. representativeand December19,2006 No generalmanager DongMingzhuZhuhaiGREEIntelligentEquipmentCo.,Chairmanandlegal September15,2015No Ltd. representative DongMingzhuZhuhaiGREEIntelligentEquipment Chairmanandlegal December29,2015 No TechnologyResearchInstituteCo.,Ltd. representative DongMingzhuGreeHVACEquipment(Wuhan)Co., Chairmanandlegal December30,2015 No Ltd. representative DongMingzhuGREEIntelligentEquipment(Wuhan) Chairmanandlegal December30,2015 No Co.,Ltd. representative DongMingzhuZhuhaiHengqinGREEbusiness Chairmanandlegal December28,2015 No factoringCo.,Ltd. representative DongMingzhuZhuhaiGreeElectricalCo.,Ltd. Chairmanandlegal July13,1992 No representative DongMingzhuZhuhaiGreeXinyuanElectronicsCo., Chairmanandlegal May30,2016 No Ltd. representative DongMingzhuZhuhaiGreePrecisionMoldCo.,Ltd. Chairperson January23,2016 No DongMingzhuZhuhaiGreeNewMaterialCo.,Ltd. Chairperson March17,2016 No DongMingzhuZhuhaiGreeEnergyEnvironment Chairperson May11,2016 No TechnologyCo.,Ltd. DongMingzhuGreePrecisionMold(Wuhan)Co.,Ltd. Chairperson January26,2016 No DongMingzhuGreeElectricAppliances(Hangzhou) Chairperson April15,2016 No Co.,Ltd. GreeGreenRefrigerationTechnology Executivedirector,legal HuangHui CenterCo.,Ltd.OfZhuhai representativeand December28,2009 No generalmanager HuangHui ZhuhaiGreeDakinDeviceCo.,Ltd. Chairmanandlegal March10,2009 No representative HuangHui ZhuhaiIVPInformationTechnologyCo., Chairmanandlegal April29,2014 No Ltd. representative HuangHui ZhuhaiLandaCompressorCo.,Ltd. Director May10,1985 No HuangHui HefeiLandaCompressorCo.,Ltd. Director December7,2009 No HuangHui ZhengzhouLandaCompressorCo.,Ltd.Director March2,2011 No Remuneration Nameof Namesofothercompanies Positionatother Commencementof andallowance incumbent companies termofoffice receivedfrom othercompanies HuangHui ChongqingLandaCompressorCo.,Ltd.Director May23,2011 No HuangHui WuhanLandaCompressorCo.,Ltd. Director May17,2011 No HuangHui HefeiKaibangMotorManufactureCo., Director December9,2009 No Ltd.HuangHui HenanKaibangMotorManufactureCo., Director August4,2011 NoLtd.HuangHui ChongqingKaibangMotorManufacture Director August31,2011 No Co.,Ltd.HuangHui GreeElectricAppliances(Zhengzhou) Director August26,2010 No Co.,Ltd.HuangHui GreeElectricAppliances(Wuhan)Co., Director August30,2010 NoLtd.HuangHui ShijiazhuangGreenResources Director December1,2011 No RecyclingCo.,Ltd.HuangHui ZhengzhouGreeGreenResources Director August26,2010 No RecyclingCo.,LtdHuangHui Gree(Shijiazhuang)SmallHome Director March21,2011 No AppliancesCo.,Ltd.HuangHui GreeElectricAppliances(Wuhu)Co., Director March29,2011 NoLtd.HuangHui ZhuhaiGREEIntelligentEquipmentCo.,Director September15,2015NoLtd.HuangHui ZhuhaiGREEIntelligentEquipment Director December29,2015 No TechnologyResearchInstituteCo.,Ltd.HuangHui GREEIntelligentEquipment(Wuhan) Director December30,2015 No Co.,Ltd.HuangHui GreeHVACEquipment(Wuhan)Co., Director December30,2015 NoLtd.HuangHui GreePrecisionMold(Wuhan)Co.,Ltd. Director January26,2016 NoHuangHui ZhuhaiGreePrecisionMoldCo.,Ltd. Director January23,2016 NoHuangHui GreeElectricAppliances(Hangzhou) Director April15,2016 No Co.,Ltd.ZhuangPei HefeiLandaCompressorCo.,Ltd. Director December7,2009 NoZhuangPei ZhengzhouLandaCompressorCo.,Ltd.Director March2,2011 No Remuneration Nameof Namesofothercompanies Positionatother Commencementof andallowance incumbent companies termofoffice receivedfrom othercompanies ZhuangPei ChongqingLandaCompressorCo.,Ltd.Director May23,2011 No ZhuangPei WuhanLandaCompressorCo.,Ltd. Director May17,2011 No ZhuangPei ZhuhaiKaibangMotorManufactureCo.,Director April18,2003 No Ltd.ZhuangPei HenanKaibangMotorManufactureCo., Director August4,2011 NoLtd.ZhuangPei ChongqingKaibangMotorManufacture Director August31,2011 No Co.,Ltd.ZhuangPei GreeElectricAppliances(Zhengzhou) Director August26,2010 No Co.,Ltd.ZhuangPei GreeElectricAppliances(Wuhan)Co., Director August30,2010 NoLtd.ZhuangPei ShijiazhuangGreenResources Director December1,2011 No RecyclingCo.,Ltd.ZhuangPei ZhengzhouGreeGreenResources Director August26,2010 No RecyclingCo.,LtdZhuangPei TianjinGreenEnergyResource Director March13,2013 No RecyclingCo.,Ltd.ZhuangPei HunanGreenResourcesRecyclingCo.,Director November2,2010 NoLtd ZhuangPei GreeElectricAppliances(Chongqing) Director July19,2001 No Co.,Ltd. ZhuangPei Gree(Shijiazhuang)SmallHome Director March21,2011 No AppliancesCo.,Ltd. ZhuangPei GreeElectricAppliances(Wuhu)Co., Director March29,2011 No Ltd.ZhuangPei WuhuGreenResourcesRecyclingCo., Director March29,2011 NoLtd.ZhuangPei GreeElectricAppliances(Shijiazhuang) Director May23,2011 No Co.,Ltd.Wang ZhuhaiGreeElectricAppliancesSales Executivedirectorand September17,2008NoJingdong Co.,Ltd. legalrepresentativeWang HefeiLandaCompressorCo.,Ltd. Director December7,2009 NoJingdong Remuneration Nameof Namesofothercompanies Positionatother Commencementof andallowance incumbent companies termofoffice receivedfrom othercompanies Wang ZhengzhouLandaCompressorCo.,Ltd.Director March2,2011 No Jingdong Wang ChongqingLandaCompressorCo.,Ltd.Director May23,2011 No Jingdong Wang WuhanLandaCompressorCo.,Ltd. Director May17,2011 No Jingdong Wang HefeiKaibangMotorManufactureCo., Director December9,2009 No Jingdong Ltd. Wang HenanKaibangMotorManufactureCo., Director August4,2011 No Jingdong Ltd. Wang ChongqingKaibangMotorManufacture Director August31,2011 No Jingdong Co.,Ltd. Wang TianjinGreenEnergyResource Director March13,2013 No Jingdong RecyclingCo.,Ltd. Wang HunanGreenResourcesRecyclingCo.,Director November2,2010 No Jingdong Ltd Wang ZhuhaiGreeDaikinPrecisionMoldCo., Director March10,2009 No Jingdong Ltd. Wang ZhuhaiGreeDakinDeviceCo.,Ltd. Director March10,2009 No Jingdong Wang WuhuGreenResourcesRecyclingCo., Director March29,2011 No Jingdong Ltd. Wang ZhuhaiGreeGroupFinanceCompany Director May29,1995 No Jingdong Limited Wang GreeElectricAppliances(Shijiazhuang) Director May23,2011 No Jingdong Co.,Ltd. Wang ZhuhaiGreeTOSOTLifeElectric Director April12,2013 No Jingdong AppliancesCo.,Lid. Wang ZhuhaiHVACEquipmentCo.,Ltd. Director March6,2013 No Jingdong Wang GreeTOSOT(Suqian)Home Director September29,2014No Jingdong AppliancesCo.,Ltd. Wang ZhuhaiHengqinGREEbusiness Director December28,2015 No Jingdong factoringCo.,Ltd. Wang ZhuhaiLandaCompressorCo.,Ltd. Supervisor May10,1985 No Remuneration Nameof Namesofothercompanies Positionatother Commencementof andallowance incumbent companies termofoffice receivedfrom othercompanies Jingdong Wang ZhuhaiMeilingdaRefrigeration Supervisor July2,2002 No Jingdong TechnologyCo.,Ltd. Wang ZhuhaiMeilingGeneralMotorsCo.,Ltd.Supervisor June27,2002 No Jingdong Wang ZhuhaiGreeElectricalCo.,Ltd. Supervisor July13,1992 No Jingdong Wang ZhuhaiKaibangMotorManufactureCo.,Supervisor April18,2003 No Jingdong Ltd. Wang GreeElectricAppliances(Zhengzhou) Supervisor August26,2010 No Jingdong Co.,Ltd. Wang GreeElectricAppliances(Wuhan)Co., Supervisor August30,2010 No Jingdong Ltd. Wang ShijiazhuangGreenResources Supervisor December1,2011 No Jingdong RecyclingCo.,Ltd. Wang ZhengzhouGreeGreenResources Supervisor August26,2010 No Jingdong RecyclingCo.,Ltd Wang GreeElectricAppliances(Chongqing) Supervisor July19,2001 No Jingdong Co.,Ltd. Wang Gree(Shijiazhuang)SmallHome Supervisor March21,2011 No Jingdong AppliancesCo.,Ltd. Wang GreeElectricAppliances(Wuhu)Co., Supervisor March29,2011 No Jingdong Ltd. Wang ZhuhaiGreeXinyuanElectronicsCo., Supervisor April25,1988 No Jingdong Ltd. LiuJun ZhuhaiGREEIntelligentEquipmentCo.,Director September15,2015No Ltd.LiuJun ZhuhaiGREEIntelligentEquipment Director December29,2015 No TechnologyResearchInstituteCo.,Ltd.LiuJun ZhuhaiHengqinGREEbusiness Director December28,2015 No factoringCo.,Ltd.LiuJun GREEIntelligentEquipment(Wuhan) Director December30,2015 No Co.,Ltd.LiuJun GreeHVACEquipment(Wuhan)Co., Director December30,2015 NoLtd. Remuneration Nameof Namesofothercompanies Positionatother Commencementof andallowance incumbent companies termofoffice receivedfrom othercompanies LiuJun ZhuhaiGreePrecisionMoldCo.,Ltd. Director January23,2016 No LiuJun GreePrecisionMold(Wuhan)Co.,Ltd. Director January26,2016 No LiuJun GreeElectricAppliances(Hangzhou) Director April15,2016 No Co.,Ltd. Punishments given by the securities regulatory institution to the incumbent directors, supervisors and senior managementpersonnelorthosewhoresignedintheReportPeriodintherecentthreeyears □Applicable√Notapplicable IV.Remunerationsofthedirectors,supervisorsandseniormanagementpersonnel Decisionmakingprocedures,determinationbasis,andactualpaymentregardingtheremunerationsof directors,supervisorsandseniormanagementpersonnel Within the Report Period, the Board of Directors of the Company conducted the performance review of the achievements and performance of duties of the senior managementpersonnelandimplementedtheassignmentassessmentsystemregarding the working results in ethic, competence, diligence and achievement. The Company adhered to the principle of rationality, fairness and justice and laid emphasis on combinationofmaterialincentiveandspiritualincentive.Asforthematerialincentive,the Companypaidattentiontoreasonablycontrollingrewardgradeandproperlyopeningthe reward gap and emphasized the time and frequency of reward. As for the spiritual incentive,theCompanypaidattentiontocombiningthecorporateobjectiveswiththespirit of dedication, sense of social responsibility and career achievement of the senior managementpersonnel. Remunerationsofthedirectors,supervisorsandseniormanagementpersonnelintheReportPeriod Unit:RMB10,000 Totalamountof Remuneration Tenure pre-tax receivedfroma Name Title Gender Age status remuneration relatedpartyof receivedfrom theCompany theCompany DongMingzhu Chairman&President F 62Incumbent 619.83No YeZhixiong Director M 59Incumbent 0No HuangHui Director&ExecutiveVicePresident M 52Incumbent 433.88No ZhangJundu Director M 56Incumbent 0No XuZifa Director M 62Incumbent 0No WangRuzhu IndependentDirector M 52Incumbent 12No GuoYang IndependentDirector F 58Incumbent 12No LuXin IndependentDirector F 53Incumbent 12No XuChuzhen Supervisor M 58Incumbent 0No GuoShuzhan Supervisor M 60Incumbent 0No WangLiqin StaffSupervisor F 40Incumbent 75.15No ZhuangPei VicePresident M 51Incumbent 216.94No WangJingdong VicePresident,FinanceChief,BoardM 46Incumbent 297.52No SecretaryChenWeicai VicePresident M 44Incumbent 133.26NoLiuJun VicePresident M 40Incumbent 247.93NoMengXiangkai Director M 55Resigned NoTotal -- -- -- -- 2,060.51 --EquityincentivesgrantedtothedirectorsandseniormanagementpersonnelintheReportPeriod□Applicable√NotapplicableV.EmployeesoftheCompany1.NumberofemployeesandtheirspecialtiesandeducationlevelNumber(person)ofon-the-jobemployeesoftheparent 26,505company Number(person)ofon-the-jobemployeesofthemain 45,105 subsidiaries Totalnumber(person)ofon-the-jobemployees 71,610 Totalnumber(person)ofemployeesreceivingsalariesin 71,610 thecurrentperiod Number(person)ofretiredemployeesforwhomtheparent 290 companyandmainsubsidiariesneedtobearexpenses FormationofSpecialties Categoryofformationofspecialties Number(person)ofemployeesintheformation ManufacturingPersonnel 58,323 SalesPersonnel 1,749 Technicians 7,729 FinancialPersonnel 473 AdministrativePersonnel 3,336 Total 71,610 EducationLevel Educationlevelcategory Number(person)ofemployees BachelorDegreeorabove 9,814 CollegeDegree 9,186 TechnicalSecondarySchoolEducationandbelow 52,610 Total 71,610 2.Remunerationpolicy TheCompanyprovidesemployeeswithcompetitivesalarylevelintheindustryandregion according to the macroeconomic environment and its business benefits. Besides, the Company established standardized and systematized salary management system in accordancewiththenationallawsandregulationsandactualconditionsoftheenterprise toprovideaguaranteeforobtaininglegalandduelaborremunerationbyemployees.To sharetheinnovativeachievementsoftheCompanywithgeneralemployeesandimprove employee well-being, the Company decided to add RMB1000 to the salary of each employee per month in November 2016, which played an important role in talent introduction andtalent motivation. Meanwhile, torealize rapidand standardtraining of talentsand givefull scopeto thetalentsand appointcompetent employeesin relevant positions, the Company comprehensively consolidated and promoted thework of skill grade evaluation by focusing on skilled positions, made great efforts to promote the professional technical grade evaluation mechanism for technical positions, offered the skilledandtechnicaltalentswhoarecompetentandhavegoodperformancemulti-ways occupational development path and comprehensively built the employing mechanism attracting,retainingandinspiringtalentsin2016. 3.Trainingplan The transformation breakthrough of manufacturing inevitably requires upgrading and developmentofthetalentteam.In2016,thetalenttrainingandcultivationworkofGree followed the core thoughts of "whole staff learning, transformation support; intelligent manufacturing inheritance, development assistance" to promote the development and innovationofvariousbusinesses. ①Puttingadifferentemphasisoneachlevelandcarryingoutthewholestafflearning(four levels)developmentplan In 2016, the Company promoted the whole staff learning plan of "accelerated learning·transformationbreakthrough"toforgeandconsolidatethefourlevellearningplan system consisting of the companylevel, department level, section leveland individual learning plan, and the plan system with complementary layers specified different responsibilitiesand key requirementsof the learningsubject at each levelto fulfill the learning and development goals of "connecting to the strategy in the upstream and connectingtotheperformanceinthedownstream".Thecompanyimplementedthewhole stafflearningdevelopmentplantomobilizethelearningenthusiasmofallstaff,attracted 60000 employees to participate in the series of platforms of promoting learning by competition such as the labor skill competition called "Build Dreams with Originality", product creative design competition and the contest called "Intelligent Manufacturing InheritanceGreeExcellentLecturers" organizedbytheCompany,anddug thelearning benchmarksandpostelitessuchas"GreeTop500SkilledWorkers","Top50inProduct Innovation"and"GreeTop30GoodLecturers". Atthesame time, theCompanysupported andsupervised alltheunits insetting up a completetalent trainingmechanismbyfacingallthebasesandsalescompaniesofthe grouptoachieve talenttraining supportofthewhole industrychain. In2016,thesales companies organized level-2 and level-3 after-sales technical training for 80000 employees. To achieve effective coverage of whole staff learning, the Company independentlydeveloped a"PDA" mobile learning platformto send theafter-sales and terminallearningmaterialstothefrontlinedirectlysoastomeetthequickandefficient learningrequirementsofthefrontlinepersonnel.Therewere300,000registeredusersfor "PDA",andmorethan40000personsdownloadedlearningmaterialseachmonth. ②Focusingon strategyto supporttraining and cultivation ofnew businessesand key groups According to itsdiversified development layout, theCompany putan emphasis on the talenttransformationsupportandcultivation topicinthenewbusinessesandnew fields suchasintelligentequipment,mouldsandmobilephones,andirregularlyorganizedand implementedmorethan30lecturesoftechnologyfrontierexpertswith3000attendantsin thefieldssuchascommunicationtechnology,informationtechnology,qualitytechnology, andinnovativetechnologyin2016. According to the Company's automation development plan, the transformation and upgradingcultivationworkofskilledworkerswasorganizedandcarriedwithinthegroupto cultivate1000specialtalentsofautomationskillworkersinrobotintegratedapplicationfor theCompanyinthewholeyearof2016. TheCompanycarriedout12termsofspecialtrainingcampsforthekeygroupssuchas middlelevelcadres,supervisorsandteamleadersintheyear,andtotally500cadresat themiddlelevelandbasiclevelparticipatedinthecamps.Comprehensivemeanssuchas pre-trainingassessment, special training,management salon, actionpractice, andjoint performanceofgrowthwereadoptedforthetrainingcampsaccordingtocharacteristicsof differentmanagementpositionsindifferentstagesofdevelopmenttosystematicallyboost theactualmanagementcapabilitiesofthemanagementatthebasicandmediumlevels. ③ Helpingthe frontline sales and service personnel to boosting levels in the market- orientedmanner Tofurtherenhancetheterminalsalescapacity,theCompanyfurtherpromotedconstruction of the sales company terminal training system in 2016. The Company organized and implemented the "Pearl Blooming" shopping guide development plan to provide developmentplatform andresourcesupporttoterminalshoppingguides,andorganized the "Pearl" guide training camp activities to boost the sales level of shopping guide comprehensively.In2016,Greecomprehensivelystrengthenedtheprofessionalconstructionofgrassrootsafter-sales team, and startedthe after-sales skill training camp of 2016 "Travel of topqualityproductsandprofessionalconstructionofthefuture"forhouseholdandcommercialproducts. The training camp adopted the modes such as nationwide tour and HQassemblefortrainingtoenhancethepersonnelskillsandservicelevelcomprehensivelyandhastrained45000personsintotal.Toenhancethesalesabilityofoverseasmarket,Greestrengthenedoverseascustomerproducttrainingandtechnicalsupportinanall-roundway,andconductedspecialactivitiessuchas"GlobalGreeCentralizedTrainingandGlobalTour"throughouttheyear,withthetrainingactivitiescoveringnearly1200customersfrom30countriesinthefourcontinents,inthehopeofpassingthevoiceofGreetotheworldandmakingtheworldloveproductsmadeinChina.4.Laboroutsourcing□Applicable√Notapplicable SectionIXCorporateGovernance I.Basicconditionsofcorporategovernance InstrictaccordancewiththeCompanyLaw,SecuritiesLawandotherrelevantnational lawsandregulationsandInstructionsonStandardizedOperationofCompaniesListed ontheMainBoardofShenzhenStockExchange,theCompany establishesnormative corporate governance structure and rules of procedure for the General Meeting of Shareholders,BoardofDirectorsandBoardofSupervisors,clarifiestheresponsibilities andauthoritiesindecision-making,performanceandsupervision,formseffectivedivision ofresponsibilitiesand balancemechanism,continuouslypromotesthelevelof normal operationandsafeguardstheinterestsofinvestorsandtheCompany. ThecorporategovernanceconformstotheCompanyLawandrequirementsofCSRCfor governanceoflistedcompanies. Great differencesexist betweentheactualcorporategovernance andthenormativedocumentrelated tolisted companygovernancepublishedbytheCSRC □Yes √No II. Independence of the Companyrelative to the controlling shareholder in the aspectssuchasbusinessoperation,personnel,assets,organizationandfinance TheCompanyhas asoundcorporategovernancestructureandcompletely separates fromGreeGroupasthecontrollingshareholderinbusinessoperation,personnel,assets, organization and finance,and theCompany has independent and completebusiness operationandindependentmanagementcapability. III.Horizontalcompetition □Applicable√Notapplicable IV.Conveningoftheannualgeneralmeetingofshareholdersandinterimgeneral meetingofshareholdersduringtheReportPeriod 1.GeneralmeetingsofshareholdersduringtheReportPeriod Proportionof Sessionofmeeting Typeofmeeting participating Dateofmeeting Dateofdisclosure Disclosureindex investors Announcementon Resolutionsofthe Annualgeneral GeneralMeetingof 2015annualgeneral meetingof 0.21%May19,2016 May20,2016 Shareholdersfor meetingofshareholders shareholders theYear2015 publishedon www.cninfo.com.cn, etc. Announcementon Resolutionsof ConveningtheFirst Thefirstinterimgeneral Interimgeneral InterimGeneral meetingofshareholdersformeetingof 1.55%October28, October31,2016 Meetingof theyearof2016 shareholders 2016 Shareholdersfor theYear2016 publishedon www.cninfo.com.cn, etc. 2. Convening of an interim general meeting of shareholders requested by the preferred shareholderswhosevotingrightshavebeenrestored □Applicable√Notapplicable V.PerformanceofdutiesbyindependentdirectorsduringtheReportPeriod 1.Attendanceofindependent directorsatmeetings oftheBoardofDirectorsandgeneral meetingsofshareholders AttendanceofindependentdirectorsatmeetingsoftheBoardofDirectors Numberof meetingsofthe Failedto Nameof Boardof Timesof Timesof Timesof personally independent Directors attendanceon attendancein attendanceby Timesof attendthe director requiring site thewayof proxy absence meetingfortwo attendancein communication consecutive theReport times Period WangRuzhu 6 2 4 0 0No GuoYang 6 2 4 0 0No LuXin 6 1 5 0 0No Numberofattendanceof independentdirectorsatthegeneral 2 meetingsofShareholders DescriptionaboutthefailuretopersonallyattendthemeetingoftheBoardofDirectorsfortwoconsecutivetimes None 2.ObjectionraisedbyindependentdirectorstorelevantissuesoftheCompany IndependentdirectorsraisedobjectiontorelevantissuesoftheCompany □Yes √No Theindependentdirectors didn’t raiseanyobjectiontorelevantissuesoftheCompany. 3.Otherdescriptionsforperformanceofdutiesbyindependentdirectors WhethertherelevantsuggestionsontheCompanybyindependentdirectorswereadopted √Yes□No DescriptionabouttherelevantsuggestionsontheCompanybyindependentdirectorsthatwereadoptedornot adopted WithintheReportPeriod,theindependentdirectorsoftheCompanywereabletoactin thebestinterestoftheCompanyanditsshareholders,faithfullyperformtheirownduties inaccordancewiththerelevantprovisions,attendthemeetingsoftheBoardofDirectors, review and discuss various proposals carefully, fully express their suggestions and opinions for the operation and management of the Company, play an active role in making correct decisions, improving management level and standardizing business operationsbytheBoardofDirectorsoftheCompany,andpracticallysafeguarding the interestsofminoritystockholders. VI. Performance of duties by special committees under the Board of Directors duringtheReportPeriod 1.PerformanceofdutiesbyauditcommitteeundertheBoardofDirectors AccordingtotheRulesofProcedureofAuditCommittee,theauditcommitteewasmainly responsibleforcommunication,supervisionandcheckforinternalandexternalaudits: (1) The audit committee carried out full communications with the accounting firm responsiblefortheannualauditoftheCompanyin respectofauditplan,engagement letterandriskandcontrol,etc. (2)Beforetheannualauditcertifiedpublicaccountantsaccessedtothesite,theaudit committeereviewedthepreliminarilypreparedfinancialstatementsoftheCompanyand heldthatthesestatementsreflectedthepresentfinancialpositionoftheCompanyinall majoraspects. (3)Aftertheannualauditcertifiedpublicaccountantsissuedpreliminaryopinions,the auditcommitteereviewedfinancialstatementsoftheCompany,communicatedwiththe accountingfirm inrespect ofmaterialparticularsand significantaccounting estimates, audit adjustments and significant accounting policies which might have potential influence on the financial statements and held that the financial statements of the Companygaveatrue,accurateandcompleteviewofthewholepositionoftheCompany andagreedtopreparetheannualreportfortheyear2016onthebasisofthesefinancial statements. (4)Theauditcommitteereviewedthefinancialstatementsfortheyear2016whichhad beenauditedbytheauditorsandheldthatthesefinancialstatementsgaveafairviewof thefinancialpositionoftheCompany ended31December 2016andoperatingresults andcashflowsfortheyear2016inallmajoraspectsandagreedtosubmitthemtothe BoardofDirectorsfordeliberation. (5)Theauditcommitteesummarizedandevaluatedtheauditworkforthisyearasdone byUnionPowerCPAsCo.,Ltd.andheldthattheannualauditcertifiedpublicaccountants performedtheirauditworkinstrictaccordancewiththeIndependentAuditingStandardsfor ChineseCertifiedPublicAccountantsandsuggestedtheCompanyre-engageUnionPower CPAsCo.,Ltd.astheauditinstitutionfortheyear2017. 2.PerformanceofdutiesbytheremunerationandappraisalcommitteeundertheBoard ofDirectors TheremunerationandappraisalcommitteeundertheBoardofDirectorscarriedoutthe work in accordance with theRules ofProcedure of theRemuneration and Appraisal Committee,reviewedtheannualremunerationsdisclosedbythedirectors,supervisors andseniormanagementpersonneloftheCompanyaccordingtotheTrialMeasuresfor AnnualSalarySystemofManagers,anduponreviewheldthattheannualremunerations disclosed by the directors, supervisors and senior management personnel of the CompanywereconsistentwiththosereceivedactuallybythemfromtheCompany.The remunerationsof the directors, supervisors andsenior management personnelof the CompanywerepaidaccordingtotheprovisionsforwagesmanagementoftheCompany. 3.Nominationcommittee The nomination committee under the Board of Directors carried out the work in accordancewiththeRulesofProcedureoftheNominationCommittee,duringtheReport Period, it deliberated the proposals on appointment of directors and checked the qualificationsofrelatedpersons. VII.WorkoftheBoardofSupervisors TheBoardofSupervisorsfoundwhethertherearerisksinthesupervisionduringtheReportPeriod. □Yes√No TheBoardofSupervisorshadnoobjectiontothesupervisionduringtheReportPeriod. VIII.Appraisalandincentiveforseniormanagementpersonnel Within the Report Period, the Board of Directors of the Company conducted the performance review of the achievements and performance of duties of the senior managementpersonnelandimplementedtheassignmentassessmentsystemregarding the working results in ethic, competence, diligence and achievement. The Company adhered to the principle of rationality, fairness and justice and laid emphasis on combinationofmaterialincentiveandspiritualincentive.Asforthematerialincentive,the Companypaidattentiontoreasonablycontrollingrewardgradeandproperlyopeningthe reward gap and emphasized the time and frequency of reward. As for the spiritual incentive,the Company paid attention tocombining thecorporate objectives with the spiritofdedication,senseofsocialresponsibilityandcareerachievementofthesenior managementpersonnel. IX.Internalcontrol 1.DetailsaboutmajordefectsfoundininternalcontrolintheReportPeriod □Yes √No 2.Internalcontrolself-evaluationreport Fulldisclosuredateoftheinternalcontrolevaluationreport April27,2017 Fulldisclosureindexoftheinternalcontrolevaluationreport www.cninfo.com.cn Proportionofthetotalamountofunitassetsincludedinthe evaluationscopetothetotalamountofassetsintheconsolidated 99.00% financialstatementsoftheCompany Proportionoftheunitoperatingincomeincludedintheevaluation 99.00% scopetotheunitoperatingincomeintheconsolidatedfinancial statementsoftheCompany Defectidentificationstandard Category Financialreport Non-financialreport Fordetails,seetheInternalControlSelf- Fordetails,seetheInternalControl evaluationReportofGreeElectric Self-evaluationReportofGree Qualitativestandard Appliances,Inc.ofZhuhaifortheYear ElectricAppliances,Inc.ofZhuhaifor 2016disclosedonwww.cninfo.com.cnbytheYear2016disclosedon theCompanyon27April. www.cninfo.com.cnbytheCompany on27April. Fordetails,seetheInternalControlSelf- Fordetails,seetheInternalControl evaluationReportofGreeElectric Self-evaluationReportofGree Quantitativestandard Appliances,Inc.ofZhuhaifortheYear ElectricAppliances,Inc.ofZhuhaifor 2016disclosedonwww.cninfo.com.cnbytheYear2016disclosedon theCompanyon27April. www.cninfo.com.cnbytheCompany on27April. Numberofmajordefectsinthefinancial 0 report Numberofmajordefectsinthenon- 0 financialreport Numberofimportantdefectsinthe 0 financialreport Numberofimportantdefectsinthenon- 0 financialreport X.Internalcontrolauditreport Deliberationopinionsectionintheinternalcontrolauditreport WeholdthatGreeElectricAppliances,Inc.ofZhuhaihasmaintainedeffectiveinternalcontroloffinancialreportsin accordancewiththeBasicRulesforInternalControlofEnterprisesandrelevantregulations. Disclosureofinternalcontrolauditreport Disclosed Fulldisclosuredateoftheinternalcontrol April27,2017 auditreport Fulldisclosureindexoftheinternalcontrolwww.cninfo.com.cn auditreport Typeofinternalcontrolauditreport Standardwithoutreservedopinion opinions Majordefectsfoundinthenon-financial No report Theaccountingfirmissuedtheinternalcontrolauditreportofnon-standardopinions □Yes√No Theinternalcontrolauditreportissuedbytheaccountingfirmisconsistentwiththeself-evaluationreportopinionofthe BoardofDirectors √Yes□No SectionXFinancialReport I.Auditreport Auditopiniontype Standardwithoutreservedopinion Signingdateoftheauditreport April26,2017 Nameoftheauditinstitution UnionPowerCertifiedPublicAccountants(SpecialGeneral Partnership) AuditReportDocNo. UnionPowerAuditNo.(2017)No.050018 Nameofthecertifiedpublicaccountant WangBingandHeLi Auditreport UnionPowerAuditNo.(2017)No.050018 AllshareholdersofGREEELECTRICAPPLIANCES,INC.OFZHUHAI: We have audited the accompanying financial statements of GREE ELECTRIC APPLIANCES,INC.OFZHUHAI(hereinafterreferredtoas"yourcompany"),including theconsolidated andparentcompany'sbalancesheets ended31December2016and consolidated and parent company's income statements, consolidated and parent company'scashflowstatementsandconsolidatedandparentcompany'sstatementsof changesinowners'equityandnotestofinancialstatementsfortheyear2016. 1.Responsibilityofmanagementforfinancialstatements Preparingandfairlypresentingthesefinancialstatementsaretheresponsibilitiesofthe management of your company. These responsibilities include: (1) Preparing these financial Statements in accordance with the Accounting Standards for Business Enterprisesandenabling themtoachieveafairreflection;(2)designing,implementing andmaintainingthenecessaryinternalcontroltomakethesefinancialstatementsfreeof anymaterialmisstatementresultingfromcheating. 2.Responsibilityofcertifiedpublicaccountants Ourresponsibilityistoexpressanopiniononauditofthesefinancialstatementsonthe basisofimplementationofauditwork.Wehaveconductedourauditworkaccordingto theprovisionsofAuditStandardsforCertifiedPublicAccountantsof China.TheAudit StandardsforCertifiedPublicAccountantsofChinarequireustoobservethecodeof professionalethicsforChinesecertifiedpublicaccountantsandplanandimplementaudit worksoastoreasonablyassurethefinancialstatementsfreeofmaterialmisstatement. Ourauditworkinvolvesimplementationofauditprocedurestoobtaintheauditevidences relating to amount and disclosure of financial statements. The selection of audit proceduresdependsonjudgmentofcertifiedpublicaccountants,includingtheappraisal ofmaterialmisstatementriskofthefinancialstatementsresultingfromcheatingorerrors. Duringtheexecutionofriskappraisal,thecertifiedpublicaccountantshaveconsidered theinternalcontrolrelatingtopreparationandfairpresentationoffinancialstatementsto design properaudit procedures. Theauditwork also includesappraising whether the management applied proper accounting policy and made reasonable accounting estimateandappraisingtheoverallpresentationofthesefinancialstatements. We believe the audit evidences obtained by us are sufficient and proper and shall providethebasisforexpressingourauditopinion. 3.Auditopinion Inour opinion,these financialstatementsofyour companyhave beenprepared inall materialaspectsinaccordancewiththeAccountingStandardsforBusinessEnterprises and fairly reflected the consolidated and parent company's financial position of your companyended 31December2016andconsolidatedandparentcompany'soperating resultsandcashflowsfortheyear2016. UnionPowerCertifiedPublic ChineseCPA:WangBing Accountants(SpecialGeneral Partnership) ChineseCPA:HeLi Wuhan,China 26April2017 ConsolidatedBalanceSheet December31,2016 Preparedby:GREEELECTRICAPPLIANCES,INC.OFZHUHAI Unit:RMBYuan Assets Note Balanceattheendofthe BeginningBalance period Currentassets: Monetarycapital 7(1) 95,613,130,731.47 88,819,798,560.53 SettlementReserves Lendingfunds Financialassetsmeasuredattheirfairvaluesandofwhichthechanges arerecordedintothecurrentprofitsandlosses Derivativefinancialassets 7(2) 250,848,418.63 Billsreceivable 7(3) 29,963,355,478.45 14,879,805,537.96 Accountsreceivable 7(4) 2,960,534,651.37 2,879,212,111.93 Prepayment 7(5) 1,814,945,790.78 847,929,149.71 Premiumsreceivable Reinsuranceaccountsreceivable Reinsurancecontractreserve Interestsreceivable 7(6) 1,045,542,563.43 1,109,776,449.77 Dividendsreceivable Otherreceivables 7(7) 244,984,154.67 254,016,643.00 Buyingbackthesaleoffinancialassets 7(8) 1,000,000,000.00 Inventories 7(9) 9,024,905,239.41 9,473,942,712.51 Assetsclassifiedasheldforsale Non-currentassetsduewithinoneyear Othercurrentassets 7(10) 1,992,536,503.43 1,684,833,479.54 Totalcurrentassets 142,910,783,531.64 120,949,314,644.95 Non-currentassets: Disbursementofloansandadvances 7(11) 4,737,184,235.79 7,872,619,001.46 Available-for-salefinancialassets 7(12) 1,384,303,560.40 2,704,719,177.56 Held-to-maturityinvestment Long-termreceivables Long-termequityinvestment 7(13) 103,913,171.51 95,459,187.55 Investmentrealestate 7(14) 597,736,633.95 491,540,849.66 Fixedassets 7(15) 17,681,655,478.06 15,431,813,077.20 ConstructioninProgress 7(16) 581,543,756.84 2,044,837,830.02 Projectgoodsandmaterials Fixedassetsinliquidation 36,949,646.14 22,010,122.57 Productivebiologicalassets Oilandgasassets Intangibleassets 7(17) 3,355,276,284.72 2,656,143,811.74 Developmentexpenditures Businessreputation Long-termdeferredexpenses 1,051,286.89 8,182,375.95 Deferredincometaxassets 7(18) 9,667,717,152.15 8,764,376,136.27 Othernon-currentassets 7(19) 1,311,590,311.26 657,000,100.13 Totalnon-currentassets 39,458,921,517.71 40,748,701,670.11 Totalassets 182,369,705,049.35 161,698,016,315.06 Legalrepresentative: Responsiblepersoninchargeofaccountingwork: In-chargepersonofaccountinginstitution: ConsolidatedBalanceSheet(Continued) December31,2016 Preparedby:GREEELECTRICAPPLIANCES,INC.OFZHUHAI Unit:RMBYuan LiabilitiesandOwners'(orShareholders')Equity Note EndingBalance BeginningBalance Currentliabilities: Short-termborrowing 7(20) 10,701,081,645.32 6,276,660,136.03 Borrowingsfromthecentralbank 7(21) 4,274,000.00 8,000,000.00 Depositsfromcustomersandinterbank 7(22) 145,241,859.45 566,612,235.82 Loansfromotherbanks Financialliabilitiesmeasuredattheirfairvaluesandofwhichthe changesarerecordedintothecurrentprofitsandlosses Derivativefinancialliabilities 7(23) 394,763,490.33 1,189,028,366.37 Billspayable 7(24) 9,127,336,849.68 7,427,635,753.74 Accountspayable 7(25) 29,541,466,861.10 24,794,268,372.47 Advancesfromcustomers 7(26) 10,021,885,515.93 7,619,598,042.86 Financialassetssoldforrepurchase Handlingchargesandcommissionspayable Payrollpayable 7(27) 1,702,949,427.06 1,697,282,605.51 Taxespayable 7(28) 3,126,302,754.29 2,977,801,480.55 Interestspayable 7(29) 41,781,977.25 48,386,709.75 Dividendspayable 7(30) 87,732,811.56 707,913.60 Otherpayables 7(31) 2,222,613,974.82 2,607,601,936.21 Reinsuranceaccountspayable Insurancecontractreserves Customerbrokeragedeposits Securitiesunderwritingbrokeragedeposits Liabilitiesclassifiedasheldforsale Non-currentliabilitiesduewithinoneyear 7(32) 2,403,745,557.37 Othercurrentliabilities 7(33) 59,758,848,571.94 55,007,851,867.48 Totalcurrentliabilities 126,876,279,738.73 112,625,180,977.76 Non-currentliabilities: Long-termborrowing Bondspayable Including:Preferredstock Perpetualbond Long-termpayables Long-termpayrollpayable 7(34) 117,732,064.00 127,518,492.00 Specialpayables Accruedliabilities Deferredincome 7(35) 172,081,044.75 134,571,708.03 Deferredincometaxliabilities 7(18) 280,009,411.36 244,136,559.35 Othernon-currentliabilities Totalnon-currentliabilities 569,822,520.11 506,226,759.38 Totalliabilities 127,446,102,258.84 113,131,407,737.14 Owners'equity(orShareholders'equity): Paid-upcapital(orstockcapital) 7(36) 6,015,730,878.00 6,015,730,878.00 Otherequityinstruments Including:Preferredstock Perpetualbond Capitalreserves 7(37) 183,400,626.71 185,950,626.71 Less:Treasurystock Othercomprehensiveincome 7(38) -177,172,013.61 -124,928,526.03 Specialreserves Surplusreserve 7(39) 3,499,671,556.59 3,499,671,556.59 Generalriskprovisions 7(40) 267,370,640.37 207,764,066.72 Undistributedprofit 7(41) 44,074,949,590.07 37,737,187,489.78 Totalowners'equityattributabletoparentcompany 53,863,951,278.13 47,521,376,091.77 Minorityequity 1,059,651,512.38 1,045,232,486.15 Totalowners'equity 54,923,602,790.51 48,566,608,577.92 Totalliabilitiesandowners'equity 182,369,705,049.35 161,698,016,315.06 Legalrepresentative: Responsiblepersoninchargeofaccountingwork: In-chargepersonofaccountinginstitution: BalanceSheetofParentCompany December31,2016 Preparedby:GREEELECTRICAPPLIANCES,INC.OFZHUHAI Unit:RMBYuan Assets Note EndingBalance BeginningBalance Currentassets: Monetarycapital 94,358,894,092.06 88,680,099,321.27 Financialassetsmeasuredattheirfairvaluesandofwhichthechanges arerecordedintothecurrentprofitsandlosses Derivativefinancialassets 250,848,418.63 Billsreceivable 28,681,394,851.75 13,754,447,428.79 Accountsreceivable 18(1) 1,029,622,972.59 3,416,105,149.73 Prepayment 7,336,373,722.28 3,634,956,003.75 Interestsreceivable 1,289,154,900.73 1,477,241,737.32 Dividendsreceivable Otherreceivables 18(2) 848,175,367.89 574,622,000.79 Inventories 7,847,311,118.65 8,670,596,377.12 Assetsclassifiedasheldforsale Non-currentassetsduewithinoneyear Othercurrentassets 101,558,124.83 43,205,378.75 Totalcurrentassets 141,743,333,569.41 120,251,273,397.52 Non-currentassets: Available-for-salefinancialassets Held-to-maturityinvestment Long-termreceivables Long-termequityinvestment 18(3) 7,713,333,058.50 6,854,879,074.54 Investmentrealestate 30,324,919.33 31,569,857.77 Fixedassets 3,482,273,291.47 3,986,232,943.74 ConstructioninProgress 92,157,312.16 45,748,249.58 Projectgoodsandmaterials Fixedassetsinliquidation 28,267,150.92 8,704,526.44 Productivebiologicalassets Oilandgasassets Intangibleassets 526,591,622.40 223,794,602.31 Developmentexpenditures Businessreputation Long-termdeferredexpenses Deferredincometaxassets 9,063,947,017.39 8,077,471,456.41 Othernon-currentassets 243,648,986.71 363,632,959.20 Totalnon-currentassets 21,180,543,358.88 19,592,033,669.99 Totalassets 162,923,876,928.29 139,843,307,067.51 Legalrepresentative: Responsiblepersoninchargeofaccountingwork: In-chargepersonofaccountinginstitution: BalanceSheetofParentCompany(Continued) December31,2016 Preparedby:GREEELECTRICAPPLIANCES,INC.OFZHUHAI Unit:RMBYuan LiabilitiesandOwners'(orShareholders')Equity Note EndingBalance BeginningBalance Currentliabilities: Short-termborrowing 7,136,785,600.00 2,675,363,200.00 Financialliabilitiesmeasuredattheirfairvaluesandofwhichthe changesarerecordedintothecurrentprofitsandlosses Derivativefinancialliabilities 32,218,000.00 91,071,099.06 Billspayable 10,045,470,518.12 7,237,386,266.55 Accountspayable 41,793,337,033.46 40,616,067,475.26 Advancesfromcustomers 14,791,379,086.59 7,427,598,204.97 Payrollpayable 733,818,959.96 875,567,613.73 Taxespayable 1,875,319,977.49 2,507,553,404.63 Interestspayable 43,053,052.94 8,418,174.57 Dividendspayable 602,881.87 602,881.87 Otherpayables 560,376,207.04 610,537,718.98 Liabilitiesclassifiedasheldforsale Non-currentliabilitiesduewithinoneyear 2,403,745,557.37 Othercurrentliabilities 60,107,149,647.50 55,170,845,529.23 Totalcurrentliabilities 137,119,510,964.97 119,624,757,126.22 Non-currentliabilities: Long-termborrowing Bondspayable Including:Preferredstock Perpetualbond Long-termpayables Long-termpayrollpayable 117,732,064.00 127,518,492.00 Specialpayables Accruedliabilities Deferredincome 130,349,609.28 113,796,827.32 Deferredincometaxliabilities 232,395,962.90 221,586,260.60 Othernon-currentliabilities Totalnon-currentliabilities 480,477,636.18 462,901,579.92 Totalliabilities 137,599,988,601.15 120,087,658,706.14 Owners'equity(orShareholders'equity) Paid-upcapital(orstockcapital) 6,015,730,878.00 6,015,730,878.00 Otherequityinstruments Including:Preferredstock Perpetualbond Capitalreserves 190,973,495.25 190,973,495.25 Less:Treasurystock Othercomprehensiveincome -18,336,753.00 -54,758,221.50 Specialreserves Surplusreserve 3,497,114,024.31 3,497,114,024.31 Undistributedprofit 15,638,406,682.58 10,106,588,185.31 Totalowners'equity(orshareholders'equity) 25,323,888,327.14 19,755,648,361.37 Totalliabilitiesandowners'equity(orshareholders'equity) 162,923,876,928.29 139,843,307,067.51 Legalrepresentative: Responsiblepersoninchargeofaccountingwork: In-chargepersonofaccountinginstitution: ConsolidatedIncomeStatement FortheYear2016 Preparedby:GREEELECTRICAPPLIANCES,INC.OFZHUHAI Unit:RMBYuan Item Note Amountforthecurrent Amountfortheprevious period period 1.Totaloperatingrevenues 110,113,101,850.23 100,564,453,646.56 Including:OperatingRevenue 7(42) 108,302,565,293.70 97,745,137,194.16 Interestrevenue 7(43) 1,809,581,651.68 2,816,215,388.45 Earnedpremium Feeandcommissionincome 954,904.85 3,101,063.95 2.Totaloperatingcosts 91,529,379,824.61 86,134,609,086.80 Including:OperatingCost 7(42) 72,885,641,217.00 66,017,353,745.09 Interestexpense 7(43) 93,317,462.31 652,352,307.92 Handlingchargesandcommissionexpenses 333,542.60 399,791.57 Refundedpremiums Netpaymentsforinsuranceclaims Netprovisionforinsurancecontracts Expendituresdividendpolicy Amortizedreinsuranceexpenditures Taxesandsurcharges 7(44) 1,430,404,246.95 751,894,199.95 Salesexpense 7(45) 16,477,265,963.04 15,506,341,694.21 OverheadExpense 7(46) 5,488,955,551.20 5,048,746,635.48 Financialexpense 7(47) -4,845,546,598.04 -1,928,797,250.18 Assetimpairmentloss 7(48) -991,560.45 86,317,962.76 Add:Profitsorlossesonthechangesinfairvalue(lossesexpressedwith"-") 7(49) 1,093,332,134.65 -1,010,322,499.17 Incomefrominvestments(lossesexpressedwith"-") 7(50) -2,221,356,324.55 96,654,919.95 Including:Investmentincomesfromjointventureandpartnership 8,034,445.96 3,246,089.30 3.Operatingprofit(lossesexpressedwith"-") 17,455,697,835.72 13,516,176,980.54 Add:Non-operatingrevenues 7(51) 1,096,234,774.23 1,404,291,659.85 Including:Gainsfromdisposalofnon-currentassets 7(51) 2,838,642.05 1,039,883.33 Less:Non-operatingexpenses 7(52) 20,742,533.35 11,049,178.36 Including:Lossesfromdisposalofnon-currentassets 7(52) 15,083,762.45 9,118,859.43 4.Totalprofit(totallossesexpressedwith"-") 18,531,190,076.60 14,909,419,462.03 Less:Incometaxexpenses 7(53) 3,006,555,172.73 2,285,686,841.81 5.Netprofit(netlossexpressedwith"-") 15,524,634,903.87 12,623,732,620.22 Netprofitattributabletoownersofparentcompany 15,420,964,990.94 12,532,442,817.66 Minorityinterestincome 103,669,912.93 91,289,802.56 6.Netoftaxofothercomprehensiveincome -54,469,476.32 -139,722,316.44 Netoftaxofothercomprehensiveincomeattributabletoownersofparent -52,243,487.58 -142,675,233.57 company (1)othercomprehensiveincomenottobereclassifiedtoprofitorlossin -8,412,589.00 -17,952,049.00 subsequentperiods 1.Changesduetoremeasuringandredefiningnetliabilitiesornetassetsofthe -8,412,589.00 -17,952,049.00 benefitplan 2.Sharesenjoyedinothercomprehensiveincomenottobereclassifiedtoprofitor lossintheinvestedentityundertheequitymethod (2)Othercomprehensiveincometobereclassifiedtoprofitorlossinsubsequent -43,830,898.58 -124,723,184.57 periods 1.Sharesenjoyedinothercomprehensiveincometobereclassifiedtoprofitor lossintheinvestedentityundertheequitymethod 2.Gainsandlossesfromchangesinfairvalueoffinancialassetsavailableforsale -67,430,700.38 -230,765,894.39 3.Gainsandlossesfromheld-to-maturityinvestmentsreclassifiedasfinancial assetsavailableforsale 4.Effectivepartofcashflowhedginggainsandlosses 44,834,057.50 5,565,251.27 5.Differencearisingfromtranslationoffinancialstatementsinforeigncurrency -21,234,255.70 100,477,458.55 6.Others Netoftaxofothercomprehensiveincomeattributabletominorityshareholders -2,225,988.74 2,952,917.13 7.Totalcomprehensiveincome 15,470,165,427.55 12,484,010,303.78 Totalcomprehensiveincomeattributabletoownersofparentcompany 15,368,721,503.36 12,389,767,584.09 Totalcomprehensiveincomeattributabletominorityshareholders 101,443,924.19 94,242,719.69 8.Earningspershare: (1)Basicearningspershare 19(2) 2.56 2.08 (2)Dilutedearningspershare 19(2) 2.56 2.08 Legalrepresentative: Responsiblepersoninchargeofaccountingwork: In-chargepersonofaccountinginstitution: IncomeStatementofParentCompany FortheYear2016 Preparedby:GREEELECTRICAPPLIANCES,INC.OFZHUHAI Unit:RMBYuan Item Note Amountforthecurrent Amountfortheprevious period period 1.Operatingrevenues 18(4) 100,196,022,986.24 93,603,741,139.75 Less:OperatingCost 18(4) 74,157,492,256.23 72,014,671,656.89 Taxesandsurcharges 775,947,515.17 432,775,315.43 Salesexpense 15,982,757,141.77 16,128,392,011.95 OverheadExpense 2,018,741,946.11 2,132,369,143.60 Financialexpense -5,474,190,948.12 -3,317,674,713.24 Assetimpairmentloss 99,779.73 -3,691,215.17 Add:Profitsorlossesonthechangesinfairvalue(lossesexpressedwith"-") 316,201,517.69 -175,248,617.29 Incomefrominvestments(lossesexpressedwith"-") 18(5) 3,133,375,724.41 171,438,245.76 Including:Investmentincomesfromjointventureandpartnership 8,034,445.96 3,246,089.30 2.Operatingprofit(lossesexpressedwith"-") 16,184,752,537.45 6,213,088,568.76 Add:Non-operatingrevenues 96,856,023.21 136,619,359.37 Including:Gainsfromdisposalofnon-currentassets 496,921.55 85,349.79 Less:Non-operatingexpenses 681,502.47 399,008.88 Including:Lossesfromdisposalofnon-currentassets 150,495.17 370,704.12 3.Totalprofit(totallossesexpressedwith"-") 16,280,927,058.19 6,349,308,919.25 Less:Incometaxexpenses 1,725,512,243.92 933,478,997.61 4.Netprofit(netlossexpressedwith"-") 14,555,414,814.27 5,415,829,921.64 5.Netoftaxofothercomprehensiveincome 36,421,468.50 -12,386,797.73 (1)othercomprehensiveincomenottobereclassifiedtoprofitorlossin -8,412,589.00 -17,952,049.00 subsequentperiods 1.Changesduetoremeasuringandredefiningnetliabilitiesornetassetsofthe -8,412,589.00 -17,952,049.00 benefitplan 2.Sharesenjoyedinothercomprehensiveincomenottobereclassifiedtoprofit orlossintheinvestedentityundertheequitymethod (2)Othercomprehensiveincometobereclassifiedtoprofitorlossinsubsequent 44,834,057.50 5,565,251.27 periods 1.Sharesenjoyedinothercomprehensiveincometobereclassifiedtoprofitor lossintheinvestedentityundertheequitymethod 2.Gainsandlossesfromchangesinfairvalueoffinancialassetsavailablefor sale 3.Gainsandlossesfromheld-to-maturityinvestmentsreclassifiedasfinancial assetsavailableforsale 4.Effectivepartofcashflowhedginggainsandlosses 44,834,057.50 5,565,251.27 5.Differencearisingfromtranslationoffinancialstatementsinforeigncurrency 6.Others 6.Totalcomprehensiveincome 14,591,836,282.77 5,403,443,123.91 Legalrepresentative: Responsiblepersoninchargeofaccountingwork: In-chargepersonofaccountinginstitution: ConsolidatedCashFlowStatement FortheYear2016 Preparedby:GREEELECTRICAPPLIANCES,INC.OFZHUHAI Unit:RMBYuan Item Note Amountforthecurrent Amountfortheprevious period period 1.Cashflowsfromoperatingactivities: Cashreceivedfromsaleofgoodsorrenderingofservices 69,896,621,293.21 110,918,320,884.07 Netincreaseindepositsandduefrombanks -421,370,376.37 -239,900,888.66 Netincreaseinborrowingsfromcentralbank -3,726,000.00 -9,457,000.00 Netincreaseinplacementsfromotherfinancialinstitutions Cashreceivedfromoriginalinsurancecontracts Netincreasereceivedfromreinsurancebusiness Netincreaseindepositsfromtheinsuredandinvestment Netincreasefordisposaloffinancialassetsmeasuredattheirfairvaluesandof whichthechangesarerecordedintothecurrentprofitsandlosses Cashreceivedfrominterests,feesandcommissions 1,965,747,102.22 2,793,577,944.23 Netincreaseinplacementsfromotherfinancialinstitutions Netincreaseinrepurchasebusinesscapital -586,000,000.00 Refundoftaxandlevies 1,139,337,699.60 1,237,326,987.91 Othercashreceivedrelatingtooperatingactivities 7(54) 2,938,826,213.65 4,682,640,196.09 Sub-totalofcashinflowsfromoperatingactivities 75,515,435,932.31 118,796,508,123.64 Cashpaymentsforgoodsacquiredandservicesreceived 40,478,783,811.27 42,541,255,260.22 Netincreaseinloansandadvancestocustomers -4,216,183,377.63 2,465,300,268.21 Netincreaseindepositswithcentralbankandotherfinancialinstitutions -1,064,180,189.98 -1,050,510,263.03 Cashpaidforindemnityoforiginalinsurancecontract Cashpaidforinterests,feesandcommissions 94,593,790.43 662,494,322.97 Cashpaidforpolicydividends Cashpaidtoandonbehalfofemployees 5,657,046,182.44 5,590,514,442.03 Paymentsofalltypesoftaxes 11,333,898,757.72 13,773,887,181.66 Othercashpaidrelatingtooperatingactivities 7(54) 8,371,524,851.14 10,435,185,083.90 Sub-totalofcashoutflowsfromoperatingactivities 60,655,483,825.39 74,418,126,295.96 Netcashflowsfromoperatingactivities 14,859,952,106.92 44,378,381,827.68 2.Cashflowsfrominvestingactivities: Cashreceivedfromrecoveryofinvestments 3,142,289,553.35 950,000,000.00 Cashreceivedfromreturnofinvestments 264,728,491.86 84,643,291.79 Netcashreceivedfromdisposaloffixedassets,intangibleassetsandotherlong- 27,196,374.80 1,228,803.43 termassets Netcashreceivedfromdisposalofsubsidiariesandotherbusinessunits Othercashreceivedrelatingtoinvestingactivities 7(54) 6,500,000.00 143,435,881.62 Sub-totalofcashinflowsfrominvestingactivities 3,440,714,420.01 1,179,307,976.84 Cashpaidforpurchaseandconstructionoffixedassets,intangibleassetsandother. 3,276,936,026.68 2,884,513,074.71 long-termassets Cashpaidforinvestments 1,496,403,698.86 2,832,663,335.62 Netincreaseinpledgeloans Netcashpaidforacquisitionofsubsidiariesandotherbusinessunits Othercashpaidrelatingtoinvestingactivities 7(54) 17,913,927,388.57 175,286,430.99 Sub-totalofcashoutflowsfrominvestingactivities 22,687,267,114.11 5,892,462,841.32 NetCashFlowfromInvestmentActivities -19,246,552,694.10 -4,713,154,864.48 3.Cashflowsfromfinancingactivities: Cashreceivedfromabsorbinginvestment Including:Cashreceivedfromminorityshareholderinvestmentbysubsidiary Cashreceivedfromborrowings 12,382,413,204.61 10,096,926,967.84 Cashreceivedfrombondissue Othercashreceivedrelatingtofinancingactivities 7(54) 2,110,522,945.98 1,257,485,012.71 Sub-totalofcashinflowsfromfinancingactivities 14,492,936,150.59 11,354,411,980.55 Cashrepaymentsofamountsborrowed 11,054,156,840.31 9,512,423,538.15 Cashpaidfordividendandprofitdistributionorinterestpayment 9,180,067,571.71 9,525,010,447.46 Including:Dividendsandprofitspaidtominorityshareholdersbysubsidiaries Othercashpaidrelatingtofinancingactivities 10,271,924.02 Sub-totalofcashoutflowsfromfinancingactivities 20,244,496,336.04 19,037,433,985.61 NetCashFlowfromFinancingActivities -5,751,560,185.45 -7,683,022,005.06 4.Effectofforeignexchangeratechangesoncashandcashequivalents 4,094,503,950.24 1,876,340,773.99 5.Netincreaseincashandcashequivalents -6,043,656,822.39 33,858,545,732.13 Add:Beginningbalanceofcashandcashequivalents 77,365,016,845.22 43,506,471,113.09 6.Endingbalanceofcashandcashequivalents 71,321,360,022.83 77,365,016,845.22 Legalrepresentative: Responsiblepersoninchargeofaccountingwork: In-chargepersonofaccountinginstitution: CashFlowStatementsofParentCompany FortheYear2016 Preparedby:GREEELECTRICAPPLIANCES,INC.OFZHUHAI Unit:RMBYuan Item Note Amountforthecurrent Amountfortheprevious period period 1.Cashflowsfromoperatingactivities: Cashreceivedfromsaleofgoodsorrenderingofservices 73,772,247,201.55 100,825,366,279.54 Refundoftaxandlevies 892,479,335.10 1,159,795,819.86 Othercashreceivedrelatingtooperatingactivities 2,776,455,975.16 3,402,282,409.75 Sub-totalofcashinflowsfromoperatingactivities 77,441,182,511.81 105,387,444,509.15 Cashpaymentsforgoodsacquiredandservicesreceived 47,666,643,016.88 48,637,706,510.04 Cashpaidtoandonbehalfofemployees 2,461,753,957.31 2,254,402,964.71 Paymentsofalltypesoftaxes 7,790,647,525.17 9,328,346,895.14 Othercashpaidrelatingtooperatingactivities 7,822,012,647.53 8,274,660,258.70 Sub-totalofcashoutflowsfromoperatingactivities 65,741,057,146.89 68,495,116,628.59 Netcashflowsfromoperatingactivities 11,700,125,364.92 36,892,327,880.56 2.Cashflowsfrominvestingactivities: Cashreceivedfromrecoveryofinvestments Cashreceivedfromreturnofinvestments 28,941,374.91 Netcashreceivedfromdisposaloffixedassets,intangibleassetsandother 2,817,038.00 154,720.00 long-termassets Netcashreceivedfromdisposalofsubsidiariesandotherbusinessunits Othercashreceivedrelatingtoinvestingactivities 6,500,000.00 143,435,881.62 Sub-totalofcashinflowsfrominvestingactivities 9,317,038.00 172,531,976.53 Cashpaidforpurchaseandconstructionoffixedassets,intangibleassets 487,437,576.81 1,005,797,949.58 andother.long-termassets Cashpaidforinvestments 850,419,538.00 220,000,000.00 Netcashpaidforacquisitionofsubsidiariesandotherbusinessunits Othercashpaidrelatingtoinvestingactivities 24,401,261,166.04 Sub-totalofcashoutflowsfrominvestingactivities 25,739,118,280.85 1,225,797,949.58 NetCashFlowfromInvestmentActivities -25,729,801,242.85 -1,053,265,973.05 3.Cashflowsfromfinancingactivities: Cashreceivedfromabsorbinginvestment Cashreceivedfromborrowings 8,351,424,680.00 8,361,061,000.00 Othercashreceivedrelatingtofinancingactivities 2,110,522,945.98 1,257,485,012.71 Sub-totalofcashinflowsfromfinancingactivities 10,461,947,625.98 9,618,546,012.71 Cashrepaymentsofamountsborrowed 6,765,973,061.39 7,098,162,324.08 Cashpaidfordividendandprofitdistributionorinterestpayment 9,108,489,378.90 9,444,887,252.27 Othercashpaidrelatingtofinancingactivities 10,271,924.02 Sub-totalofcashoutflowsfromfinancingactivities 15,884,734,364.31 16,543,049,576.35 NetCashFlowfromFinancingActivities -5,422,786,738.33 -6,924,503,563.64 4.Effectofforeignexchangeratechangesoncashandcashequivalents 4,034,988,007.34 1,733,758,931.75 5.Netincreaseincashandcashequivalents -15,417,474,608.92 30,648,317,275.62 Add:Beginningbalanceofcashandcashequivalents 81,020,140,360.98 50,371,823,085.36 6.Endingbalanceofcashandcashequivalents 65,602,665,752.06 81,020,140,360.98 Legalrepresentative: Responsiblepersoninchargeofaccountingwork: In-chargepersonofaccounting institution: ConsolidatedStatementofChangesInOwners'Equity FortheYear2016 Preparedby:GREEELECTRICAPPLIANCES,INC.OFZHUHAI Unit:RMBYuan Amountforthecurrentperiod Shareholders'equityattributabletotheparentcompany Item Paid-upcapital Otherequityinstruments Less: Other Special Generalrisk Minorityequity Totalowners'equity (orstockcapital) Preferred PerpetualOthersCapitalreservesTreasury comprehensive reserves Surplusreserve provisions Undistributedprofit stock bond stock income 1.Endingbalancefor 6,015,730,878.00 185,950,626.71 -124,928,526.03 207,764,066.72 37,737,187,489.781,045,232,486.15 48,566,608,577.92 thepreviousyear 3,499,671,556.59 Add:Changesin accountingpolicies Earlyerrorcorrection Businesscombination involvingenterprises undercommoncontrol Others 2.Beginningbalance 6,015,730,878.00 185,950,626.71 -124,928,526.03 207,764,066.72 37,737,187,489.78 48,566,608,577.92 forthecurrentyear 3,499,671,556.59 1,045,232,486.15 3.Increaseor decreaseinthe currentyear -2,550,000.00 -52,243,487.58 59,606,573.65 6,337,762,100.29 14,419,026.23 6,356,994,212.59 (decreaseexpressed with“-”) (1)Total -52,243,487.58 15,420,964,990.94 101,443,924.19 15,470,165,427.55 comprehensiveincome (2)Capitalinvestedby ownersandcapital decrease 1.Ordinarystocks investedby shareholders 2.Capitalinvestedby holdersofotherequity instruments 3.Amountsofshare- basedpayments recognizedinto owner'sequity 4.Others (3)Profitdistribution 59,606,573.65 -9,083,202,890.65 -87,024,897.96 -9,110,621,214.96 1.Appropriationto surplusreserves 2.Appropriationof 59,606,573.65 -59,606,573.65 generalriskprovisions 3.Allocationtoowners -9,023,596,317.00 -87,024,897.96 -9,110,621,214.96 (orshareholders) 4.Others (4)Internalcarry-over ofowner'sequity 1.Transferofcapital reservesintocapital (orstockcapital) 2.Transferofsurplus reservesintocapital (orstockcapital) 3.Surplusreservesfor makinguplosses 4.Others (5)Appropriative reserve 1.Amountwithdrawn fortheperiod 2.Amountusedforthe period (6)Others -2,550,000.00 -2,550,000.00 4.Endingbalancefor 6,015,730,878.00 183,400,626.71 -177,172,013.61 3,499,671,556.59267,370,640.37 44,074,949,590.071,059,651,512.38 54,923,602,790.51 thecurrentperiod Legalrepresentative: Responsiblepersoninchargeofaccountingwork: In-chargepersonofaccountinginstitution: ConsolidatedStatementofChangesInOwners'Equity FortheYear2016 Preparedby:GREEELECTRICAPPLIANCES,INC.OFZHUHAI Unit:RMBYuan Amountforthecurrentperiod Shareholders'equityattributabletotheparentcompany Item Paid-upcapital Otherequityinstruments Less: Other Special Generalrisk Minorityequity Totalowners' (orstockcapital) Preferred PerpetualOthers Capitalreserves Treasurycomprehensive reserves Surplusreserve provisions Undistributedprofit equity stock bond stock income 1.Endingbalancefor 3,007,865,439.00 3,191,266,065.71 17,746,707.54 2,958,088,564.43136,364,066.7234,841,323,981.28978,796,185.5045,131,451,010.18 thepreviousyear Add:Changesin accountingpolicies Earlyerrorcorrection Businesscombination involvingenterprises undercommoncontrol Others 2.Beginningbalance 3,007,865,439.00 3,191,266,065.71 17,746,707.54 2,958,088,564.43136,364,066.7234,841,323,981.28978,796,185.5045,131,451,010.18 forthecurrentyear 3.Increaseor decreaseinthe currentyear 3,007,865,439.00 -3,005,315,439.00 -142,675,233.57 541,582,992.16 71,400,000.00 2,895,863,508.50 66,436,300.65 3,435,157,567.74 (decreaseexpressed with“-”) (1)Total comprehensive -142,675,233.57 12,532,442,817.66 94,242,719.6912,484,010,303.78 income (2)Capitalinvestedby ownersandcapital decrease 1.Ordinarystocks investedby shareholders 2.Capitalinvestedby holdersofotherequity instruments 3.Amountsofshare- basedpayments recognizedinto owner'sequity 4.Others (3)Profitdistribution 541,582,992.16 71,400,000.00-9,636,579,309.16 -27,806,419.04-9,051,402,736.04 1.Appropriationto 541,582,992.16 -541,582,992.16 surplusreserves 2.Appropriationof 71,400,000.00 -71,400,000.00 generalriskprovisions 3.Allocationtoowners -9,023,596,317.00 -27,806,419.04-9,051,402,736.04 (orshareholders) 4.Others (4)Internalcarry-over 3,007,865,439.00 -3,007,865,439.00 ofowner'sequity 1.Transferofcapital reservesintocapital 3,007,865,439.00 -3,007,865,439.00 (orstockcapital) 2.Transferofsurplus reservesintocapital (orstockcapital) 3.Surplusreservesfor makinguplosses 4.Others (5)Appropriative reserve 1.Amountwithdrawn fortheperiod 2.Amountusedforthe period (6)Others 2,550,000.00 2,550,000.00 4.Endingbalancefor 6,015,730,878.00 185,950,626.71 -124,928,526.03 3,499,671,556.59207,764,066.7237,737,187,489.781,045,232,486.1548,566,608,577.92 thecurrentperiod Legalrepresentative: Responsiblepersoninchargeofaccountingwork: In-chargepersonofaccountinginstitution: StatementofChangesInOwners'EquityofParentCompany FortheYear2016 Preparedby:GREEELECTRICAPPLIANCES,INC.OFZHUHAI Unit:RMBYuan Amountforthecurrentperiod Otherequityinstruments Less: Other Item Paid-upcapital CapitalreservesTreasury comprehensive Special Surplusreserve Generalrisk Undistributedprofit Totalowners'equity (orstockcapital)PreferredPerpetualOthers stock income reserves provisions stock bond 1.Endingbalanceforthepreviousyear 6,015,730,878.00 190,973,495.25 -54,758,221.50 3,497,114,024.31 10,106,588,185.31 19,755,648,361.37 Add:Changesinaccountingpolicies Earlyerrorcorrection Others 2.Beginningbalanceforthecurrent 6,015,730,878.00 -54,758,221.50 3,497,114,024.31 10,106,588,185.31 19,755,648,361.37 year 190,973,495.25 3.Increaseordecreaseinthecurrent 36,421,468.50 5,531,818,497.27 5,568,239,965.77 year(decreaseexpressedwith“-”) (1)Totalcomprehensiveincome 36,421,468.50 14,555,414,814.27 14,591,836,282.77 (2)Capitalinvestedbyownersandcapital decrease 1.Ordinarystocksinvestedby shareholders 2.Capitalinvestedbyholdersofother equityinstruments 3.Amountsofshare-basedpayments recognizedintoowner'sequity 4.Others (3)Profitdistribution -9,023,596,317.00 -9,023,596,317.00 1.Appropriationtosurplusreserves 2.Allocationtoowners(orshareholders) -9,023,596,317.00 -9,023,596,317.00 3.Others (4)Internalcarry-overofowner'sequity 1.Transferofcapitalreservesintocapital (orstockcapital) 2.Transferofsurplusreservesintocapital (orstockcapital) 3.Surplusreservesformakinguplosses 4.Others (5)Appropriativereserve 1.Amountwithdrawnfortheperiod 2.Amountusedfortheperiod (6)Others 4.Endingbalanceforthecurrentperiod6,015,730,878.00 190,973,495.25 -18,336,753.00 3,497,114,024.31 15,638,406,682.58 25,323,888,327.14 Legalrepresentative: Responsiblepersoninchargeofaccountingwork: In-chargepersonofaccountinginstitution: StatementofChangesInOwners'EquityofParentCompany FortheYear2016 Preparedby:GREEELECTRICAPPLIANCES,INC.OFZHUHAI Unit:RMBYuan Amountforthepreviousperiod Otherequityinstruments Less: Other Item Paid-upcapital(or CapitalreservesTreasury comprehensive Special Surplusreserve Generalrisk Undistributedprofit Totalowners'equity stockcapital) PreferredPerpetualOthers stock income reserves provisions stock bond 1.Endingbalancefortheprevious 3,007,865,439.00 3,198,838,934.25 -42,371,423.77 2,955,531,032.15 14,255,937,572.83 23,375,801,554.46 year Add:Changesinaccountingpolicies Earlyerrorcorrection Others 2.Beginningbalanceforthecurrent 3,007,865,439.00 3,198,838,934.25 -42,371,423.77 2,955,531,032.15 14,255,937,572.83 23,375,801,554.46 year 3.Increaseordecreaseinthecurrent 3,007,865,439.00 - -12,386,797.73 541,582,992.16 -4,149,349,387.52 -3,620,153,193.09 year(decreaseexpressedwith“-”) 3,007,865,439.00 (1)Totalcomprehensiveincome -12,386,797.73 5,415,829,921.64 5,403,443,123.91 (2)Capitalinvestedbyownersand capitaldecrease 1.Ordinarystocksinvestedby shareholders 2.Capitalinvestedbyholdersofother equityinstruments 3.Amountsofshare-basedpayments recognizedintoshareholders'equity 4.Others (3)Profitdistribution 541,582,992.16 -9,565,179,309.16 -9,023,596,317.00 1.Appropriationtosurplusreserves 541,582,992.16 -541,582,992.16 2.Allocationtoowners(orshareholders) -9,023,596,317.00 -9,023,596,317.00 3.Others (4)Internalcarry-overofowner'sequity 3,007,865,439.00 - 3,007,865,439.00 1.Transferofcapitalreservesinto 3,007,865,439.00 - capital(orstockcapital) 3,007,865,439.00 2.Transferofsurplusreservesinto capital(orstockcapital) 3.Surplusreservesformakingup losses 4.Others (5)Appropriativereserve 1.Amountwithdrawnfortheperiod 2.Amountusedfortheperiod (6)Others 4.Endingbalanceforthecurrent 6,015,730,878.00 190,973,495.25 -54,758,221.50 3,497,114,024.31 10,106,588,185.31 19,755,648,361.37 period Legalrepresentative: Responsiblepersoninchargeofaccountingwork: In-chargepersonofaccountinginstitution: GREEELECTRICAPPLIANCES,INC.OFZHUHAI NotestoFinancialStatementsfortheYear2016 I.BasicinformationoftheCompany GREEELECTRICAPPLIANCES,INC.OFZHUHAI(hereinafterreferredtoas"the Company" or "Company") was formerly known as Haili Air-conditioning EngineeringCo.,Ltd.ofZhuhaiwhichwasestablishedin1989uponapprovalof ZhuhaiMunicipal Industrial Committeeand the people's Bank of China Zhuhai Branch and was renamed GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI (hereinafterreferredtoas"theCompany"or"Company")in1994uponapprovalof ZhuhaiCityCommissionforEconomicRestructuring,andtheCompanywaslisted on Shenzhen Stock Exchange dated 18 November 1996 upon receipt of the approval document Zheng Jian Fa Zi (1996) No. 321 from China Securities RegulatoryCommission,andithasobtainedtheunifiedsocialcreditidentifierNo. 91440400192548256NandhastheregisteredcapitalofRMB6,015,730,878.00as ofDecember31,2016. Legalrepresentative:DongMingzhu Businessscope: export andimport of goodsand technologies (excludingitems forbidden by laws and administrative regulations. Items restricted by laws and administrativeregulationsshallbeconductedwithspeciallicense);manufacturing anddistributionofpumps,valves,compressorsandsimilarmachines,fanmotors, packagingequipment andother general-purpose equipment, motors, equipment forpowertransmissionanddistributionandcontrolequipment,electricwiresand cables, optical cables and electrical equipment, and household electrical appliances; wholesale of mechanical equipment, hardware and electrical equipmentandelectronic products;retail ofhouseholdelectrical appliances and electronicproducts. MainproductsoftheCompany:TheCompanyisengagedinhouseholdelectrical appliancesbusinessmainlyincludingproductionandsalesofairconditionersand theiraccessories,andhouseholdappliancesandtheiraccessories. Companyaddress:JinjiWestRoad,Qianshan,ZhuhaiCity,GuangdongProvince TheparentcompanyoftheCompanyisZhuhaiGreeGroupCo.,Ltd.andthefinal controllerisZhuhaiMunicipalState-ownedAssetsSupervisionandAdministration Commission.ThisfinancialreportwassubmittedunderapprovaloftheBoardofDirectorsoftheCompanyasofApril26,2017.II.CoverageoftheconsolidatedstatementsTheCompanyincorporatedover50subsidiariessuchasGreeElectricAppliances(Chongqing) Co., Ltd. and Gree Electric Appliances (Hefei) Co., Ltd. in thecoverageofthefinancialstatementsconsolidatedinthecurrentperiod.Fordetails,see “Note 8 Change tothe Consolidation Scope” and“Note 9Equity in OtherSubjects”.III.Preparationbasisofthefinancialstatements1.PreparationbasisofthefinancialstatementsThefinancialstatementsoftheCompanyhavebeenpreparedinaccordancewiththe requirements of Accounting Standards for Business Enterprises– BasicStandards (issuedby Decree No.33 of theMinistry of Financeand revised byDecreeNo.76oftheMinistryofFinance)issuedbytheMinistryofFinanceon15February, 2006 and 41 Specific Accounting Standards, application guidelines,explanations and other relevant regulations of the accounting standardssubsequentlypromulgated(collectivelyreferredtoasthe“Accounting StandardsforBusinessEnterprises”),andthedisclosurerequirementsinaccordancewiththePreparationRulesforInformationDisclosurebyCompaniesOfferingSecuritiestothe Public No. 15- General Provisions on Financial Reports (2014 Revision)issuedbyChinaSecuritiesRegulatoryCommission.2.GoingconcernThis financial statement was presented on a going concern basis. ThemanagementcarefullyevaluatedfactorsoftheCompanyinthefuture12monthscommencing from December 31, 2016 such as the macropolicy risk, marketoperationrisk,current andlong-termprofitability andsolvencyoftheenterprise,financial flexibility, and the management’s intention of changing the operationspolicy,andheldthattherewasnoeventthatcangeneratesignificantinfluenceontheCompany’sabilitytocontinueasagoingconcern. IV. Statements regarding observance of the Accounting Standards for BusinessEnterprises ThefinancialstatementspreparedbytheCompanyconformtotherequirementsof theAccountingStandardsforBusinessEnterprisesandgiveatrueandcomplete viewof the financialposition of theCompany on December 31,2016, and the relatedinformation such as operatingresults and cash flows in the year 2016. Besides, the financial statements prepared by the Company, in all the major aspects,alsoconformtothedisclosurerequirementsoffinancialstatementsand their notes in the Preparation Rules for Information Disclosure by Companies OfferingSecuritiestothePublicNo.15-GeneralProvisionsonFinancialReports revisedbytheChinaSecuritiesRegulatoryCommissionin2014. V.Significantaccountingpoliciesandestimatesandpreviouserrors Specificaccountingpoliciesandaccountingestimatesuggestions: TheCompany andeach subsidiary are engagedin productionand sales ofair conditioners and their accessories, and household appliances and their accessories.TheCompany andeachsubsidiary havepreparedseveral specific accountingpoliciesandaccountingestimatesfortransactionsandeventssuchas revenuerecognitionbasedontheactualproductionmanagementcharacteristics and in accordance with provisions of the related Accounting Standards for BusinessEnterprises.Fordetails,see thedetaileddescriptioninNote 5herein. Forthedescriptionaboutmajoraccountingjudgmentsandestimatesmadebythe management,pleaseseeNote5(29)“Majoraccountingestimates”. (1)Accountingperiod Accounting period of the Company includes one year and interim periods. An interimperiodcoverssix-month, aquarterandamonth.Theaccountingyearof theCompanycommenceson1Januaryandendson31Decemberofeachyear. (2)Operatingcycle ThenormaloperatingcyclereferstotheperiodfromtheCompany’spurchaseof assetsusedforprocessingtoachievingofcashorcashequivalent.TheCompany regards12monthsasoneoperatingcycleandusesitastheliquidityclassification standardforassetsandliabilities. (3)Functionalcurrency RMBisthefunctionalcurrencyusedbytheCompany. (4) Accounting treatment of business combination involving enterprises undercommoncontrolandbusinesscombinationnotinvolvingenterprises undercommoncontrol Businesscombinationreferstothetransactionoreventofcombiningtwoormore independent enterprises to form a reporting entity. Business combination is classifiedinto businesscombinationinvolvingenterprises undercommoncontrol andbusinesscombinationnotinvolvingenterprisesundercommoncontrol. 1.Businesscombinationinvolvingenterprisesundercommoncontrol Abusinesscombinationinvolvingenterprisesundercommoncontrolisabusiness combinationinwhichallofthecombiningenterprisesareultimatelycontrolledby thesamepartyorpartiesbothbeforeandafterthecombination,andthatcontrolis not transitory. For business combination involving enterprises under common control,thepartythatobtainstherighttocontrolotherenterprisesparticipatingin the combination on the combination date is the combining party, and other enterprises participating in the combination are the combined party. The combinationdatereferstothedateonwhichthecombiningpartyactuallyobtains therighttocontrolthecombinedparty. Where businesscombination involving enterprises under common control arises from one transaction orequities of invested entities under common control are obtainedstepbystepthroughmultipletransactionsandthesetransactionsbelongto apackagedeal,theCompanywillrecognizethecostofcombinationaccordingto theshareofcarryingamountofnetassetsobtainedforthecombinedpartyinthe ultimate controlling party’s consolidated financial statements on the combination date.Thedifferencebetweenthecarryingamountoftheconsiderationpaidforthe combination(ortotalparvalue oftheissuedstocks) andthecombinationcostis adjustedto capital reserve;if the capital reserve is not sufficient to absorb the difference,anyexcessisadjustedagainstretainedearnings. Costs incurred that are attributable to the business combination made by the Company,includingintermediarycostssuchastheauditfee,legalservicecharge andappraisalandconsultation costs,andother relatedoverheadexpensesare chargedtoprofitsorlossesintheperiodinwhichtheyareincurred;thetransaction expensesdirectlyattributabletotheconsiderationpaidforthecombinationthrough issuance of equity instruments are credited against the capital reserve; if the capitalreserveisnotsufficient,anyexcessisadjustedagainstretainedearnings; the transaction expenses directly attributable to the consideration paid for the combinationthroughissuance of debtinstruments are recorded intothe initially recognizedamount ofdebt instruments. Where the equities ofinvested entities undercommoncontrolareobtainedstepbystepthroughmultipletransactionsto achievebusinesscombinationbutthesetransactionsdonotbelongtoapackage deal,theCompanywillrecognizethecostofcombinationaccordingtotheshareof carrying amount of net assets to be enjoyed by the combined party after the combinationintheultimatecontrollingparty’sconsolidatedfinancialstatementson thecombinationdate.Thedifferencebetweenthecombinationcostandthesumof thecarryingamountoflong-termequityinvestmentspriortothecombinationplus the carrying amount of the consideration newly paid for further acquisition of sharesonthedateofcombinationisadjustedtocapitalreserve(capitalpremium or capital stock premium); if thecapital reserve is not sufficient to absorb the difference, any excess is adjusted against retained earnings. For the equity investment held before the date of combination, accounting treatment is not performedtemporarilyforothercomprehensiveincomesthatareaccountedusing the equity method or recognized using financial instruments and accounted accordingtothemeasurementstandardforrecognition.When thisinvestmentis disposedof,accountingtreatmentisconductedusingthebasisthesameasthat usedbytheinvestedentitytodirectlydisposeofrelevantassetsorliabilities.For other changes in owners’ equities other than the net profits/losses, other comprehensiveincomeandprofitdistributionin netassetsoftheinvestedentity thatarerecognizedbecause ofaccountingusingtheequitymethod,accounting treatmentisnotconductedtemporarily;theyshallbetransferredtotheprofitsand lossesofthecurrentperiodatthetimeofdisposingofthisinvestment. 2.Businesscombinationnotinvolvingenterprisesundercommoncontrol A business combination not involving enterprises under common control is a businesscombinationinwhichallofthecombiningenterprisesarenotultimately controlledbythesamepartyorpartiesbothbeforeandafterthecombination.For businesscombinationnotinvolvingenterprises undercommoncontrol,theparty thatobtainstherighttocontrolotherenterprisesparticipatinginthecombinationon thedateofcombinationistheacquiringparty,andotherenterprisesparticipatingin thecombinationaretheacquiredparty.Thedateofacquisitionreferstothedate onwhichtheacquiringpartyactuallyobtainstherighttocontroltheacquiredparty. Forthebusiness combinationimplementedthroughonetransaction,thecost of businesscombinationreferstothefairvalueofassetspaid,liabilitiesincurredor assumedandequitysecuritiesissuedbytheCompanyonthedateofacquisition forobtainingtherighttocontroltheacquiredparty.Onthedateofacquisition,the assets, liabilities and contingent liabilities obtained by the Company from the acquiredpartyarerecognizedatthefairvalue. Forabusinesscombinationrealizedbytwoormoretransactionsofexchange,the accountingtreatmentfor thecombinationcostsshallbe made bydistinguishing individualfinancialstatementsandconsolidatedfinancialstatements: Intheindividualfinancialstatements,wheretheheldstocksareaccountedusing theequitymethodpriortothedateofacquisition,thecostofcombinationofthe investmentistheaggregateofthecarryingamountoftheequityinvestmentofthe acquiredpartyheldbeforethedateofacquisitionandtheinvestmentcostnewly increased on the date of acquisition. Forother relatedcomprehensive income, accounting treatment isperformed during disposal of the investment using the basisthesameasthatusedbytheinvestedentitytodirectlydisposeofrelevant assetsorliabilities;theowner'sequitythatisrecognizedduetootherchangesin owners’ equities other than the netprofits/losses, other comprehensive income andprofitdistributionoftheinvestedentityisaccordinglytransferredtotheprofits andlossesofthecurrentperiodatthetimeofdisposingofthisinvestment.Where the equity investment held before the date of acquisition is recognized using financial instruments and undergoes accounting treatment according to the measurementstandard,thecostofcombinationoftheinvestmentistheaggregate ofthefairvalueoftheequityinvestmentrecognizedaccordingtothisstandardand thenewlyincreasedinvestmentcost.Thedifferencebetweenthefairvalueofthe originally heldstocksandthe carryingamountand allthecumulative fairvalue changesoriginally recorded intoother comprehensive incomearetransferred to theinvestmentincomeofthecurrentperiod. In the consolidated financial statements, the stocks of the acquired party held beforethedateofacquisitionshallberemeasuredbasedonthefairvalueofsuch stocksonthedateofacquisition,andthedifferencebetweentheirfairvalueand carryingamountshallbechargedtotheinvestmentincomeofthecurrentperiod; wherethestocksoftheacquiredpartyheldbeforethedateofacquisitioninvolve other comprehensive income underaccounting ofthe equity methodand other changesinowners’equitiesotherthanthenetprofits/losses,othercomprehensive incomeandprofitdistribution,othercomprehensiveincomeandotherchangesin owners’ equities concerned with them shall be transferred to the investment incomeintheperiodinwhichthedateofacquisitionisincluded(excludingother comprehensiveincomearisingfromchangesinthenetassetsornetliabilitiesof thebenefitplanremeasuredandredefinedbytheinvestedentity).Thesummation of the fair value of the stocks of the acquired party held before the date of acquisitiononthedateofacquisitionandnewlyincreasedinvestmentcostsonthe dateofacquisitionshallbethecombinationcostoftheinvestment. Costs incurred that are attributable to the business combination made by the Company,includingintermediarycostssuchastheauditfee,legalservicecharge, andappraisalandconsultation costs,andother relatedoverhead expensesare charged to profits or losses in the period in which they are incurred. The transaction expenses directly attributable to the consideration paid for the combination through issuance of equity instruments are credited against the capital reserve; if the capital reserve is not sufficient, any excess is adjusted against retained earnings; the transaction expenses directly attributable to the considerationpaid forthecombinationthroughissuanceofdebt instrumentsare recordedintotheinitiallyrecognizedamountofdebtinstruments. IntheCompany,thepositivebalancebetweenthebusinesscombinationcostand thefair valueof the identifiable netassetsobtained by theCompany from the acquired party shall be recognized as business reputation and subsequently measured after theaccumulated provision for impairment isdeducted from the cost; thenegative balancebetween thebusiness combination costand thefair valueoftheidentifiablenetassets obtainedbytheCompanyfrom theacquired partyshallbechargedtoprofitsorlossesofthecurrentperiodafterbeingchecked. 3.Principleofjudgingwhethermultipletransactionsare“apackagedeal” Whenthetermsandconditionsofmultipletransactionsandtheeconomicimpact thereofaccord withoneormore ofthefollowingcases,usually itindicatesthat these transactionsshallundergo accountingtreatmentas “apackage deal”:(1) thesetransactionsareconcludedatthesametimeorconcludedinconsideration of mutual influence; (2) only the whole of these transactions can achieve a complete business result; (3) occurrence of one transaction depends on occurrence of atleast one of theother transactions; (4)one transactionis not economicalwhenconsideredseparately,buteconomicalwhentakenintoaccount togetherwithothertransactions. (5)Preparationofconsolidatedfinancialstatements 1.Principleofdeterminingthescopeofconsolidatedfinancialstatements Theconsolidationscopeofconsolidatedfinancialstatementsshallbedetermined onthebasisofcontrol.ControlmeansthattheCompanyownsthepowertothe invested entity, enjoys variable return by participating relevant activities of the investedentity,andhasthecapacityofusingthepowertotheinvestedentityto affectitsreturnamount. 2.Preparationofconsolidatedfinancialstatements The consolidated financial statements of the Company are prepared by the Company based on individual financial statements of the Company and subsidiaries and according to other relevant data. During preparation of consolidatedfinancialstatements,theaccountingpolicyandaccountingperiodof theCompanyshallbeconsistentwiththoseofsubsidiaries,andtheinter-company majortransactionsandbalancesshallbeoffset. Forthesubsidiaryaddedduetobusinesscombinationinvolvingenterprisesunder common controlin the ReportPeriod, the Companyadjusts theamount at the beginning of the period in the consolidated balance sheet, incorporates the revenue,expenseandprofitofthissubsidiaryfromthebeginningoftheperiodfor consolidationtotheendofthereportperiodintotheconsolidatedprofitstatement, includes its cash flow into the consolidated cash flow statement, and adjusts relevant itemsin the comparative statements; for the subsidiary added due to business combination not involving enterprises under common control, the Company does not adjust the amount at the beginning of the period in the consolidatedbalancesheet,butonlyincorporatestherevenue,expenseandprofit ofthissubsidiaryfromthedateofacquisitiontotheendofreportperiodintothe consolidated profit statementand its cash flow into the consolidated cash flow statement.Theportionofshareholders'equityofthesubsidiariesthatisn’tattributabletotheCompanyshallbeseparatelypresentedastheminorityshareholders'equityundertheshareholders'equityintheconsolidatedbalancesheet.Theshareofnetprofitsorlossesofthesubsidiariesinthecurrentperiodthatisattributabletotheminorityshareholders'equityshallbepresented astheitemof“Minorityinterestincome”under the net profit in the consolidated profit statement. The share ofcomprehensiveincomeofthesubsidiariesinthecurrentperiodthatisattributableto the minority shareholders' equity shall be presented as the item of “Totalcomprehensive income attributable to minority shareholders” under the totalcomprehensiveincomeintheconsolidatedprofitstatement.Wherethelossesofasubsidiary undertaken by minority shareholders exceed the share enjoyed byminorityshareholdersintheowners’equitiesofthissubsidiaryatthebeginningoftheperiod,thebalanceshallbestill adjusted againsttheminorityshareholders'equity. Foracquisitionofthesubsidiary’sstocksownedbyminorityshareholdersthereof, in the consolidated financial statements, the difference between the long-term equityinvestmentnewlyobtainedbecauseofacquisitionofminorityshareholders’ stocks and the share of net assets of the subsidiary to be enjoyed and continuouslycalculatedaccordingtotheproportion ofnewlyaddedshares from the acquisition date or consolidation date is adjusted to capital reserve; if the capital reserveisnotsufficienttoabsorbthedifference,any excessisadjusted againstretainedearnings. Forthetransactionforwhichapartofequityinvestmentisdisposedofbuttheright tocontrolthissubsidiaryisnotlost,intheconsolidatedfinancialstatements,the differencebetweenthedisposalpriceandtheshareofnetassetsofthesubsidiary to be enjoyed accordingly for disposal of the long-term equity investment and continuouslycalculatedfromtheacquisitiondateorconsolidationdateisadjusted tocapitalreserve(capitalpremiumorcapitalstockpremium);ifthecapitalreserve isnotsufficienttoabsorbthedifference,anyexcessisadjustedagainstretained earnings.Wheretherighttocontroltheoriginalsubsidiaryislostduetodisposalofapartofequityinvestmentorotherreasons,theremainingstocksshallberemeasuredattheirfairvalueonthedateoflosingthecontrolright;theresultofthesumoftheconsideration obtainedfromtheequity disposalplusthefair valueof remainingstocks, minus theshare of netassetsof theoriginal subsidiarythat should beenjoyedandiscontinuouslycalculatedaccordingtotheoriginalproportionofheldsharesfromtheacquisitiondate,shallbechargedtotheinvestmentincomeintheperiodwhenthecontrolrightislost,andadjustedagainstthebusinessreputationatthesametime;othercomprehensiveincomerelatedtotheoriginalsubsidiary’sequity investment shall be transferred to the investment incomeof thecurrentperiodwhenthecontrolrightislost.Wheretheequityinvestmentforasubsidiaryisdisposedofstepbystepthroughmultipletransactionstillthecontrolrightislostandallthetransactionsbelongtoapackage deal, accounting treatmentshall be performed for thetransactions bydeemingallthetransactionsasoneitemfordisposingofthesubsidiaryandlosingthecontrolright;however,priortolossofthecontrolright,thedifferencebetweeneverydisposalpriceandtheshareofnetassetsofthissubsidiarytobeenjoyedaccordinglyforinvestmentdisposalshallbe recognizedasothercomprehensiveincome in the consolidated financial statements and, at the time of losing thecontrolright,bejointlytransferredtotheprofits orlossesintheperiodwhenthecontrolrightislost.Wheretheequityinvestmentforasubsidiaryisdisposedofstepbystepthroughmultipletransactionstillthecontrolrightislostandthetransactionsdonotbelongto a package deal, all the transactions before loss of the right to control thesubsidiaryshallbehandledaccordingtotheregulationsoftheCompanyonpartial disposal of the subsidiary’s long-term equity investment provided that the Companydoesnotlosetherighttocontrolthesubsidiary. This report period does not involve buying-in and selling-out of the same subsidiary’sstocks,orselling-outandbuying-ininturn. (6) Joint arrangement classification and accounting treatment of co- managementJoint arrangement refers to the arrangement for joint control by two or moreparticipants.1.JointarrangementclassificationJoint arrangement isclassified into co-managementand contractual enterprise.Co-managementreferstothejointarrangementwherethepartiestotheventureenjoyrelevantassetsofthisarrangementand assumerelevantliabilities ofthisarrangement. Contractual enterprise refers to the joint arrangement where thepartiestotheventureonlyenjoyrightstonetassetsofthisarrangement.2.Accountingtreatmentofco-management(1)TheCompanyrecognizesthefollowingitemsrelatedtoquantumofinterestinco-managementandperformsaccountingtreatmentinaccordancewithprovisionsofthecorrespondingAccountingStandardsforBusinessEnterprises:①Independentlyheldassets,aswellasthejointlyheldassetstoberecognizedaccordingtotheshareoftheCompany;②Independentlyundertakenliabilities,aswellasthejointlyundertakenliabilitiestoberecognizedaccordingtotheshareoftheCompany;③ Revenue generated by selling the output share of co-management that isenjoyedbytheCompany;④Revenue thatisgenerated byselling theoutput duringco-management andrecognizedaccordingtotheshareoftheCompany;⑤ Independently incurred expense, as well as the expense incurred by co-managementandrecognizedaccordingtotheshareoftheCompany.(2) Where the Company puts assets into orsells assetsto theparties to co- management(exceptthattheassetsconstitutebusiness),beforethesaidassets are sold to a third party by the parties to co-management, the Company recognizesonlythepartintheprofitsorlossesarisingfromthistransactionthatis attributabletootherparticipantsintheco-management.Incasethattheputorsold assets involve the asset impairment loss complying with provisions in the AccountingStandardforBusinessEnterprisesNo.8-ImpairmentofAssets,the Companyshallrecognizethesaidlossinfull. (3)Where theCompany purchases assets from theparties to co-management (exceptthattheassetsconstitutebusiness),beforesaidassetsaresoldtoathird party,theCompanyrecognizesonlythepartintheprofitsorlossesarising from thistransactionthatisattributabletootherparticipantsintheco-management.In casethatthepurchasedassetsinvolvetheassetimpairmentlosscomplyingwith provisionsintheAccountingStandardforBusinessEnterprisesNo.8-Impairment ofAssets,theCompanyshallrecognizethispartoflossaccordingtotheshareto undertake.(7)Accountingmeasurementattribute1.MeasurementattributeTheCompanytakestheaccrualsystemasthebasisofaccountingandmeasurestheinitialvalueusinghistoricalcost.Thefinancialassetsandliabilitiesmeasuredattheirfairvalueandofwhichthevariationisrecordedintotheprofitsandlossesof the current period and the financial assets available for sale and derivativeinstrumentsshallbemeasuredattheirfairvalue;Theinventoriesandfixedassetsforwhichthepaymentisdelayedinexcessofnormalcredittermswhiletheyarepurchasedshallbemeasuredattheirpresentvalueoftheir purchaseprice;Theinventorieson which an impairmentloss occurs shallbe measured at their netrealizablevalue, andother assetsonwhichan impairmentloss occursshallbemeasured at their recoverable amount of their fair value and present value(whichever is higher); The asset inventory surplus and other assets shall bemeasuredattheirreplacementcost.2. Items in the financial statements with their measurement attribute changing duringtheperiod Therewasnochangeintheaccountingmeasurementattributeoftheitemsinthe financialstatementsduringtheReportPeriod. (8)Criteriaforcashandcashequivalents Thecash referstotheenterprise'smoneyon handanddepositsforpaymentat anytime.Cashequivalentsrefertoinvestmentsheldbytheenterprisewhichare shortinterm(generallyreferringtothoseexpiringwithinnotmorethan3months fromthedateofacquisition),highinliquidity,convertibletotheknownamountof cashandinsignificantinriskofchangeofvalue. (9)Foreigncurrencytransactions 1.Methodoftranslationforforeigncurrencytransactions AtthetimeofinitialrecognitionofaforeigncurrencytransactionoftheCompany, theamount inthe foreigncurrencyshallbe translatedinto theamount in RMB currencyatthespotexchangerateofthetransactiondate(generallyreferringto themedialrateofforeignexchangequotationpublishedbythePeople'sBankof Chinaatthedateoftransaction,thesamebelow). 2.Treatmentofmonetaryitemsofforeigncurrenciesandnon-monetaryitemsof foreigncurrenciesonthebalancesheetdate Forthemonetaryitemsofforeigncurrencies,thetranslationisdoneaccordingto spotrateofthebalancesheetdate.Theexchangedifferencegeneratedfromthe differenceof spotrateof thecurrent balance sheet date andthetime ofinitial recognitionofaforeigncurrencyorthepreviousbalancesheetdateischargedto the profit or loss of the current period except that the exchange difference generated from foreign currency borrowings relating to assets of which the acquisition or production satisfies the capitalization conditions is capitalized in accordance with the Accounting Standards for Business Enterprises No. 17– BorrowingCosts.Forthenon-monetaryitemsofforeigncurrenciesmeasuredby historicalcost, translationisdoneaccordingto spotrateofthetransactiondate without change in their amount in functional currency. Non-monetary items of foreign currencies such as stocks and funds measured at their fair value are translatedasperthespotrateonthedatewhentheirfairvalueisconfirmed.The differencesbetweenthetranslatedamountsinfunctionalcurrencyandtheoriginal amounts in functional currency are recorded into current profits and losses as fluctuationinfairvalue(includingfluctuationinexchangerates). 3.Translationofforeigncurrencyfinancialstatements TheCompany translatesthefinancial statementsexpressed inforeign currency intoonesexpressedinRMBcurrencyaccordingtothefollowingprovisions: Theassetand liabilityitemsinthebalancesheets shallbe translatedataspot exchangerateonthebalancesheetdate;amongtheowners'equityitems,except theonesas"undistributedprofits",othersshallbetranslatedatthespotexchange rateatthetimewhentheyare incurred.Theincomeandexpense itemsin the profitstatementsshallbetranslatedattheaverageexchangerate.Thebalance arisenfromthetranslationofforeigncurrencyfinancialstatementsincompliance withtheaforesaidmethodshallbepresentedseparatelyundertheowners'equity itemof thebalance sheets. Theforeigncurrency cash flow statement shallbe translatedattheaverage exchange rateonthe cashflow date.Theamount of influenceoftheexchangeratechangeon cashesshallbe presentedseparately undertheadjustediteminthecashflowstatement. (10)Financialinstruments 1.Basisforrecognitionoffinancialinstruments Theterm"financialinstruments"referstothecontractsunderwhichthefinancial assetsofanenterpriseareformedandthefinancialliabilityorrightinstrumentsof anyotherentityareformed.WhentheCompanybecomesapartytoafinancial instrumentcontract,itrecognizesafinancialassetorfinancialliability. Whereafinancialassetsatisfiesanyofthefollowingrequirements,therecognition ofitshallbeterminated:Wherethecontractualrightsforcollectingthecashflowof thesaidfinancialassetareterminated;orwherethesaidfinancialassethasbeen transferredandmeetstheconditions forrecognizing theterminationof financial assetsasprovidedforinAccountingStandardsforEnterprisesNo.23-Transferof FinancialAssets. Onlywhentheprevailingobligationsofafinancialliabilityarerelievedinallorin partmaytherecognitionofthefinancialliabilitybeterminatedinallorpartly. 2.Classificationoffinancialassetsandfinancialliabilities FinancialassetsattributabletotheCompanyareclassifiedintothefollowingfour categoriesaccordingtotheirinvestmentpurposeandeconomicessence:①The financialassetswhicharemeasuredattheirfairvaluesandthevariationofwhich isrecordedintotheprofitsandlossesofthecurrentperiod,includingtransactional financialassetsandthefinancialassetswhichare measuredattheirfairvalues andof whichthevariation isincluded inthe current profitsandlosses;②The investments which will be held to their maturity;③ Loans and the account receivables;and④Financialassetsavailableforsale. Financialliabilitiesshallbeclassifiedintothefollowingtwocategoriesaccordingto theireconomicessence:①Thefinancialliabilitieswhicharemeasuredattheirfair valuesand of whichthe variation is includedin the current profitsand losses, including transactional financial liabilities and the designated financial liabilities whicharemeasuredattheirfairvaluesandofwhichthevariationisincludedinthe currentprofitsandlosses;and②Otherfinancialliabilities. 3.Measurementoffinancialassetsandfinancialliabilities Thefinancial assetsandfinancial liabilities initiallyrecognized bytheCompany shall be measured at their fair values. For the financial assets and liabilities measuredattheirfairvaluesandofwhichthevariationisrecordedintotheprofits andlossesofthecurrentperiod,thetransactionexpensesthereofshallbedirectly recordedintotheprofitsandlossesofthecurrentperiod;forothercategories of financialassetsandfinancialliabilities,thetransactionexpensesthereofshallbe includedintotheinitiallyrecognizedamount. Subsequentmeasurementoffinancialassetsandfinancialliabilities: (1)Forthefinancialassetsandfinancialliabilitiesmeasuredattheirfairvaluesand ofwhichthevariationisrecordedintotheprofitsandlossesofthecurrentperiod, theyshallbe measuredattheir fairvalues,andthevariation oftheirfairvalues shallberecordedintotheprofitsandlossesofthecurrentperiod. (2) The investments held until their maturity and accounts receivable are measuredattheiramortizationcostbyactualinterestrate. (3) The profits and losses arising from the subsequent measurement of the financial assetsavailable for sale at their fairvalue and theprofits andlosses arisingfromthechangeintheirfairvalueshallbeincludeddirectlyintheowner’s equitywiththeexceptionofimpairmentlossesandtheexchangegainsorlosses arising from foreign exchange conversion of monetary financial assets in any foreigncurrency, andwhenthesaid financialassetisstopped fromrecognition andistransferredout,itshallberecordedintotheprofitsandlossesofthecurrent period. (4)Theequityinstrument investmentsforwhichthere isno quotedpricein the active market and whose fair value cannot be reliably measured, and the derivativefinancialassetswhichareconnectedwithsuchequityinstrumentsand are settledby deliveringthe saidequity instrumentsshallbe measured attheir costs. (5)TheCompanyshallmakesubsequentmeasurementonotherfinancialliabilities onthebasisofthepost-amortizationcosts,withtheexceptionofthoseunderthe followingcircumstances: ①Thederivativefinancial liabilitiesfor whichthereisno quotedpricein the activemarket,whichareconnectedwith theequityinstrumentswhosefair valuecannot be reliably measured and are settled bydelivering the said equityinstrumentsshallbemeasuredattheircosts. ②Forthefinancialguaranteecontractswhicharenotdesignatedasafinancial liabilitymeasuredatitsfairvalueandthevariationthereofisrecordedinto theprofitsandlossesofthecurrentperiod,andforthecommitmentstogrant loanswhich are not designatedto be measured at thefair value and of whichthe variation isrecorded into the profitsand losses of thecurrent periodandwhichwillenjoyaninterestratelowerthanthatofthemarket,a subsequentmeasurementshallbe madeaftertheyare initiallyrecognized accordingtothehigheroneofthefollowing: A. the amount as determined according to the Accounting Standards for EnterprisesNo.13-Contingencies;or B. the surplus of the initially recognized amount with the subtraction of accumulativeamortizationasdeterminedaccordingtotheprinciplesofthe AccountingStandardsforEnterprisesNo.14-Revenues. 4.Recognitionoffairvaluesoffinancialassetsandfinancialliabilities Thefairvaluereferstotheamountthatisagreeduponbythetwopartiestofair dealings who are familiar with the situation during assets exchange or performanceofdebt. (1)Financialinstrumentswiththeactivemarket The fair values of the financial assets and financial liabilities of financial instruments which have the active market shall be recognized at their quoted pricesin theactive market.Thequotedprices in theactivemarketrefer tothe pricesregularlyobtainedfromstockexchanges, brokers,tradeassociationsand pricing serviceinstitutions, andrepresent thepricesof markettransactions that actuallyoccurinfairdealings.Quotedpricesshallbedeterminedaccordingtothe followingprinciples: ①In the active market, thequoted prices of the Company for the financial assets it holds orthe financial liabilities it plans to assume shall be the presentactualoffer,whilethequotedpricesoftheCompanyforthefinancial assetsitplanstoacquireorthefinancialliabilitiesithasassumedshallbe theavailablecharge. ②Wherethereisnoavailableofferorchargeforafinancialassetorfinancial liability, the enterprise shall adopt the market quoted price of the latest transaction or adjusted market quoted price of the latest transaction to determinethefairvalueofthesaidfinancialassetorfinancialliability,unless theenterprisehasdefiniteevidencestoprovethatthemarketquotedprice ofthelatesttransactionisnotafairvalue. (2)Where thereisno activemarketforafinancialassetorfinancialliability,the Companyshalladoptvalueappraisaltechniquestodetermine itsfairvalue.The valueappraisal techniques include the prices adopted bythe parties, who are familiarwiththecondition,inthelatestmarkettransactionupontheirownfreewill, thecurrent fairvalue obtainedbyreferring toother financial instrumentsof the sameessentialnature,thecashflowcapitalizationmethodandtheoptionpricing model,etc. 5.Accrualmethodoftheprovisionforimpairmentoffinancialassets (1)Investmentshelduntiltheirmaturity Where an investment held until their maturity measured on thebasis of post- amortization costsisimpaired, thecarryingamountof thesaid investmentheld untiltheirmaturityshallbewrittendowntothepresentvalueofthepredictedfuture cashflow(excludingthelossoffuturecreditsnotyetoccurred)(thediscountrate adoptstheoriginalactualinterestrate),andtheamountaswrittendownshallbe recognizedaslossoftheimpairmentoftheassetandshallberecordedintothe profitsandlossesofthecurrentperiod.Whenanimpairmentprovisionismade,an impairment test shallbe made on the investment held until their maturity with significant single amounts. If any objective evidence shows that it has been impaired,theimpairment-relatedlossesshallberecognizedandshallberecorded intotheprofitsandlossesofthecurrentperiod.Where,uponindependenttest,the investmenthelduntiltheirmaturity(includingthosefinancialassetswithsignificant single amountsand those with insignificantamounts)has not beenimpaired, it shall be included in a combination of investment held until their maturity with similarriskfeaturessoastoconductanotherimpairmenttest.Theinvestmentheld until their maturity which has suffered from an impairment loss in any single amountshallnotbeincludedinanycombinationoffinancialassetswithsimilarrisk featuresfor anyimpairment test.Whereany investmenthelduntiltheir maturity measuredonthebasisofpost-amortizationcostsisrecognizedbytheCompany ashaving sufferedfrom anyimpairment loss,ifthere isany objectiveevidence proving thatthevalue ofthesaid investmenthelduntil their maturityhas been restored, anditisobjectivelyrelatedto theeventsthat occurafter suchloss is recognized, the impairment-related losses as originally recognized shall be reversed and be recorded into the profits and losses of the current period. However, the reversed carrying amount shall not be any more than the post- amortization costsofthesaid investmenthelduntiltheir maturityon theday of reverseundertheassumptionthatnoprovisionismadefortheimpairment. (2)Accountsreceivable SeetheNotes5(11)fortheimpairmenttestandaccrualmethodoftheprovision forimpairmentoftheaccountsreceivable. (3)Disbursementofloansandadvances Lossprovisionshallbereservedforloansandadvancesaccordingtothefivelevel classificationofcreditassetsrisksandloanprovisionratestandard: Risks are classified for the Company's credit assets according to relevant provisionsofthefinancialregulationagencies.Thestandardriskcoefficientsare asfollows: 1.5% for the normaltype, 3% for the concernedtype, 30% for the secondarytype,60%forthesuspicioustype,and100%forthelosstype.Besides, inthedocumentnamedAdministrativeMeasuresfortheLoanLossReservesof CommercialBanksissuedbytheChinaBankingRegulatoryCommissionthrough Order[2011]No.4,theChinaBankingRegulatoryCommissionclearlyputforward that the basic standard of loan provision rate is 2.5%, the basic standard of provisioncoverageratiois150%,andthehigheroneofthetwoshallprevail. (4)Financialassetsavailableforsale ①Available-for-salefinancialassetsmeasuredatthefairvalue Whenasignificantornon-transientdeclineinthefairvalueofequityinstrument investmentavailable forsaleisjudgedbycomprehensivelyconsidering relevant factors,adeclineintheequityinstrumentavailableforsalehasoccurred.Here, the“significantdecline”meansthatthecumulativedeclineoffairvalueexceeds 20%; the “non-transient decline” means that the fair value has declined continuouslyforover12months. When a decline in the financial assets available for sale has occurred, the cumulative loss generated from decline of fair value that had been recorded directlyintotheowners'equityshallberemovedfromtheowners'equityandshall be recordedinto theimpairment loss.Thesaid cumulative loss removedisthe balance obtained by deducting the recovered principal and amortized amount, currentfairvalueandtheimpairmentloss originallycharged toprofitsorlosses fromtheinitialacquisitioncostofthesaidassets. Fordebt instrumentinvestment availablefor saleforwhichtheimpairment loss hasbeenrecognized,therecognizedimpairmentlossshallbereturnedwhenthere isanincrease offairvalueinasubsequentperiod andtheincreaseobjectively relatesto events afterimpairment loss being recognized.When theimpairment lossreversaloftheequityinstrumentinvestmentavailableforsaleisrecognized as other comprehensive income, the impairment loss reversal of the debt instrumentinvestmentavailableforsaleshallbechargedtoprofitsorlossesofthe currentperiod. ②Available-for-salefinancialassetsmeasuredatcost Whereanequityinstrumentinvestmentforwhichthereisnoquotedpriceinthe activemarketandwhosefairvaluecannotbereliablymeasured,oraderivative financialassetwhichisconnectedwiththeequityinstrumentandwhichmustbe settledbydeliveringtheequityinstrument,suffersfromanyimpairment,thegap betweenthecarryingamountoftheequityinstrumentinvestmentorthederivative financialasset andthecurrent valueof thefuturecashflow of similarfinancial assetscapitalizedaccording tothereturnsratio ofthemarketat thesame time shallberecognizedasimpairment-relatedlossesandberecordedintotheprofits andlossesofthecurrentperiod,butcannotbereturned. 6.Transferoffinancialassets The term "transfer of financial assets" refers to a company's transferring or deliveringafinancialassettoaparty(thetransferee)otherthantheissuerofthe financialassets. WheretheCompanyhastransferrednearlyalloftherisksandrewardsrelatedto theownershipofthefinancialassettothetransferee,itshallstoprecognizingthe financialasset;Ifithasretainednearlyalloftherisksandrewardsrelatedtothe ownershipofthefinancialasset,itshallnotstoprecognizingthefinancialasset. WheretheCompanydoesnottransferorretainnearlyalloftherisksandrewards related to the ownership of a financial asset, it shall deal with it respectively according to the circumstances as follows: If it gives up its control over the financialasset,itshallstoprecognizingthefinancialassetandshallrecognizethe assetsandliabilitiesgeneratedtherefrom;Ifitdoesnotgiveupitscontroloverthe financialasset,itshall,accordingtotheextentofitscontinuousinvolvementinthe transferredfinancialasset,recognizetherelatedfinancialassetandrecognizethe relevantliabilityaccordingly. 7.Derivativeinstrumentsandembeddedderivativeinstruments Derivativeinstrumentsimplementinitialmeasurementatthefairvalueonthedate of signing the contract, and also perform subsequent measurement at the fair value.Changesinthefairvalueofderivativeinstrumentshallbechargedtoprofits orlossesofthecurrentperiod. For the hybrid instruments containing embedded derivative instruments, if the hybrid instruments are not specified as financial assets and financial liabilities measuredatthefairvalueandofwhichthechangesarerecordedintotheprofits orlossesofthecurrentperiodtheembeddedderivativeinstrumentsarenotclosely relatedtothismastercontractintermsofeconomiccharacteristicsandrisks,and individual instruments with conditions the same as those of the embedded derivative instruments accord with the derivative instrument definition, the embeddedderivative instrumentsshallbe removed fromthehybridinstruments andhandledasindependentderivativeinstruments.Wherederivativeinstruments cannot be separately measured at the time of acquisition or the subsequent balancesheetdate,thehybridinstrumentsshallbespecifiedasfinancialassets andfinancial liabilities measuredat thefairvalueas awhole andof whichthe changesshallberecordedintotheprofitsorlossesofthecurrentperiod. 8.Offsettingfinancialassetswithfinancialliabilities WhentheCompanyhasthestatutoryright tooffset therecognizedamount,this statutoryrightisexecutableatpresent,andtheCompanyalsoplanstoperform nettingsettlementorsimultaneouslyrealizethefinancialassetsandliquidatethe financialliabilities,thefinancialassetsandfinancialliabilitiesshallbelistedinthe balancesheet usingthenet amountaftermutual offsetting.In other cases,the financialassetsandfinancialliabilities arepresentedrespectively inthebalance sheetandnotmutuallyoffset. 9.Equityinstruments Equity instruments refer to contracts that can prove ownershipof theresidual equityinassetsoftheCompanyafterdeductionofalltheliabilities.Theowners’ equities are increased after the transaction expenses are deducted from the consideration received at issuance of the equity instruments. The Company completes all kinds of allocations (excluding stock dividends) for the equity instrumentholdingpartiestoreducetheowners’equities.TheCompanydoesnot recognizetheamountofchangeinthefairvalueofequityinstruments. (11)Receivables TheCompany'sreceivables(includingaccountsreceivableandotherreceivables) shalltakethecontractoragreementpriceastheirinitiallyrecordedamount.Dueto bankruptcyofthedebtor,collectionisstillnotpossibleaftersettlementaccording to legal settlement procedures; or due to the death of the debtor leaving no legaciestopayoffandnobodytoassumetheobligations,collectionisreallynot possible;orduetothefailureofthedebtortoperform itsrepaymentobligations withinthespecifiedtimelimit,thereceivablesshallbepresentedasalossonbad debt uponexamination and approvalaccording to legal procedures.As for the Company'stransfer,pledgeand discounttofinancialinstitutionslike bankswith receivable creditor’sright, according to the provisions of the relevantcontract, when the debtor fails to pay back the due debts, if the Company bears the paymentliabilitytothefinancialinstitutions,thereceivablecreditor’srightshallbe treatedaspledgedloan;IftheCompanybearsnopaymentliabilitytothefinancial institutions,thereceivablecreditor’sright shallbetreated asthetransferredone andtheprofitandlossoftransfershallberecognized. WhentheCompanyrecoversthereceivables,thedifferencebetweentheacquired priceandthecarryingamountofthereceivablesshallberecordedintotheprofits andlossesofthecurrentperiod. 1. Receivables with significant single amounts and single bad debt provision appropriated:Ifasingleamountaccountsfor5%(includingmorethan5%)oftotalamountofthereceivables,theCompanyshallrecognizethesaidreceivablesasthereceivableswithsignificantsingleamounts.Onthebalancesheet,theCompany shallcarryoutan independentimpairmenttestforthereceivableswithsignificantsingleamounts,where,uponindependenttest,thesaidreceivableshas beenimpaired,thenegativebalance betweenthepresentvalue ofthefuturecash flow of thesaidreceivablesand their carryingamountshallberecognizedaslossoftheimpairmentofthesaidreceivables,andaprovisionforbaddebtsshallbemadeaccordingly.Wherethereceivableshavenotbeenimpaireduponindependenttest,theseveralcombinationsbetweenthesaid receivables and thereceivables with insignificant single amounts shall bemadebasedonsimilarcreditriskfeatures,andthenthelossoftheimpairmentofthesaidreceivablesshallbecalculatedandrecognizedatacertainproportionofthecombinationsofthesereceivablesinthebalanceonthebalancesheetdate, andaprovisionforbaddebtsshallbemadeaccordingly. 2.Receivableswithaprovisionforbaddebtsbasedoncombinations: Basisforrecognitionofcombinations Agingcombination Dividedintogroupsbasedonagingofthereceivablesascreditrisk features Dividedintogroupsbasedonthereceivablesrelatedtoconsolidated Consolidationscopecombination financialstatementsandthereceivableswhichcanfullyobtain customer'screditinformation Accrualmethodofaprovisionforbaddebtsbasedoncombinations Agingcombination Makeaprovisionforbaddebtsbyaginganalysis Animpairmenttestiscarriedoutaccordingtothedebtor'scredit,and Consolidationscopecombination aprovisionforbaddebtsshallnotbemadeforthereceivablesofthe Companythatisclearlyguaranteed. Inthecombinations,thereceivableswithaprovisionforbaddebtsmadebyaginganalysis: Aging Percentageofprovisioning Percentageofprovisioningother accountsreceivable(%) receivables(%) Within1year 5.00 5.00 1to2years 20.00 20.00 2to3years 50.00 50.00 Over3years 100.00 100.00 3. Accounts receivable with insignificant single amounts but single bad debt provisionappropriated: As forthe receivableswith insignificant single amounts, ifthere are conclusive evidences to show that there is an obvious difference in their collectability, a provisionforbaddebtsshallbemadeasper thenegative balancebetween the presentvalueoftheirfuturecashflowandtheircarryingamount. (12)Inventories 1.Classificationofinventories Classificationof inventories: TheCompany’s inventories are classified into raw materials,goodsinprocess,andgoodsfinished. 2.Valuationfordeliveredinventories Valuation for delivered inventories: When various kinds of inventories of the Companyaredelivered,theyshallbevaluatedatplannedcosts,andtheplanned costsshallbe adjustedintoactualcostsbasedonthedifferenceofcostsofthe currentmonthattheendofthemonth. 3. Recognition of the net realizable value and measurement of provision for declineinvalueofinventories Atthebalancesheetdate,inventoriesaremeasuredatthelowerofcostandnet realizablevalue.ifthecostofinventoriesishigherthanthenetrealizablevalue,a provisionfordeclineinvalueofinventoriesshallbemadeandshallberecorded intotheprofitsandlossesofthecurrentperiod,whereaprovisionfordeclinein valueofinventorieshasbeenmade,ifthevalueofthesaidinventoriesisresumed later,thesaidvalueshallbereversedfromtheprovisionfordeclineinvalueofthe inventories. Net realizable value is the estimated selling price in the ordinary courseofbusinesslesstheestimatedcostsofcompletionandtheestimatedcosts necessarytomakethesaleandrelevanttaxes. 4.Stockcountsystemforinventories TheperpetualinventorysystemisadoptedforstockcountoftheCompany. 5.Amortizationmethodsoflow-valueconsumablesandpackagingmaterials Low-valueconsumablesandpackagingmaterialsarewrittenoffinfullwhenissued foruse. (13)Assetsheldforsale 1.Recognitionstandard The component (or non-current assets; the same below) of theCompany that matchesthefollowingconditionsatthesametimeshallberecognizedasassets heldforsale:thesaidcomponentcanbesoldimmediatelyinitscurrentstatusand only according to the usual terms on sales of this kind of components; the Company has adopted a resolution on disposal of this component (where shareholderapprovalisrequiredinaccordancewithrelevantregulations,approval shall be obtained from the general meeting of shareholders or corresponding organofauthority); theCompanyhas signed anirrevocabletransferagreement withthetransferee;suchtransferwillbecompletedwithinoneyear. 2.Accountingtreatment Forthefixedassetsheldforsale,theCompanyadjuststheexpectednetsalvage valueofthefixedassetssothattheexpectednetsalvagevalueofthefixedassets canreflecttheamountgotbyreducingthedisposalexpensesfromtheirfairvalue, butcannotexceedtheoriginalcarryingamountofthefixedassetswhenthefixed assetscomplywiththeconditionsforassetsheldforsale;thepositivedifferenceof theoriginalcarryingamountlesstheexpectednetsalvagevalueafteradjustment shallbechargedtoprofitsorlossesofthecurrentperiodasassetimpairmentloss. Incasethatanassetoradisposalgroupisincludedinthecategoryheldforsale butsubsequentlyfailstomeettherecognitionconditionsforfixedassetsheldfor sale,theCompanyshallstopincludingitinthecategoryheldforsaleandmeasure itaccordingtothelowerofthefollowingtwoamounts: (1)Thecarryingamountofthisassetordisposalgroupbeforeitisincludedinthe category held for sale, according to the amount after adjustment of the depreciation,amortizationorimpairment thatshould be recognizedoriginallyon theassumptionthat theassetordisposalgroupisnotincludedin thecategory heldforsale; (2)Re-recoveredamountonthedatewhenadecisionismadetostopsales. Othernon-currentassetssuchasintangibleassetscomplyingwiththeconditions forholdingforsaleshallbehandledinthelightoftheaboveprinciple. (14)Long-termequityinvestments Long-termequity investments mainlyinclude theequity investment heldby the Companythatisabletocontrol,isundercommoncontrolwithorhassignificant influencesontheinvestedentityandtheequityinvestmenttojointventures. 1.Judgmentstandardsofcontrolandsignificantinfluence Judgmentstandardsofcontrol:(1)TheCompanyownsthepowertotheinvested entity;(2)theCompanyenjoysvariablereturnbyparticipatingrelevantactivitiesof theinvestedentity;(3)theCompanyhas thecapacityofusingthepowertothe investedentitytoaffectitsreturnamount.TheCompanyacknowledgesthecontrol forcefortheinvestedentitythatmeetstheabovethreeconditions. Judgment standards of significant influence: The Company has the power to participate in decision making for the financial and operations policies of the investedentity,butcannotcontrolformulationofthese policiesindependentlyor togetherwithotherparties.WheretheCompanycanexertagreatinfluenceonthe investedentity,theinvestedentityisanassociatedenterpriseoftheCompany.The investedentityundercommoncontrolbytheCompanyandotherparticipantsisa contractual enterprise of the Company. Common control means that any participantcannotindependentlycontrolthisarrangement,andanyparticipantwith therighttocommoncontrolonthisarrangementcanpreventotherparticipantsor thecombinationofparticipantsfromindependentlycontrollingthisarrangement. 2.Investmentcostrecognitionoflong-termequityinvestment Thelong-termequityinvestmentoftheCompanyismeasuredattheinvestment costatthetimeofacquisition.Normallytheinvestmentcostreferstotheassets paid,liabilitiesincurredorundertaken,andthefairvalueofequitysecuritiesissued fortheacquisitionofthisinvestment,includingthecostsdirectlyattributabletothe acquisition. However, for the long-term equity investment formed by business combinationinvolvingenterprisesundercommon control,theinvestment costis theshareofcarryingamountofthecombinedparty’snetassetsacquiredonthe combination date in the ultimate controlling party’s consolidated financial statements.3.Subsequentmeasurement oflong-termequityinvestments andrecognitionofprofitsorlossesThe Company adopts the cost method for accounting for the long-term equityinvestmentbasedonwhichtheCompanyisabletocontroltheinvestedenterprise;theCompany adoptsthe equitymethod foraccounting for investmentsputintoassociatedenterprisesandcontractualenterprises.The price of a long-term equity investment accounted by employing the costmethod shall be included at its initial investment cost. If there are additionalinvestmentsordisinvestments,thecostofthelong-termequityinvestmentshallbeadjusted.Thecashdividendsorprofitsdeclaredtodistributebytheinvestedentityshallberecognizedasinvestmentincomeandchargedtoprofitsorlossesofthecurrentperiod.WhentheCompany employstheequitymethodforaccounting ofthelong-termequityinvestment,iftheinvestmentcostofalong-termequityinvestmentismorethan theinvestingenterprise’attributable shareofthe fairvalueoftheinvestedentity'sidentifiablenetassetsfortheinvestment,theinvestmentcostofthelong-termequityinvestmentmaynotbeadjusted;iftheinvestmentcostofalong-termequityinvestmentislessthantheinvestingenterprise’attributableshareofthefair valueoftheinvestedentity'sidentifiablenetassetsfortheinvestment,thecarrying amountofthelong-termequityinvestmentshallbeadjusted,andthedifference shallberecordedintotheprofitsorlossesofthecurrentperiod. WhentheCompany employstheequitymethodforaccounting ofthelong-term equity investment, theCompany first adjusts theinvestedentity’s netprofits or lossesandothercomprehensiveincomeintheaspectssuchasthefairvalueof theinvestedentity'sidentifiable netassetsatthetimeof investmentacquisition, accountingpolicyandaccountingperiod,andthenrecognizesthecurrent-period investment profitsorlosses and other comprehensive incomeaccording to the investing enterprise’ attributable orshareable share of theinvested entity's net profitsorlossesandothercomprehensiveincome.Forotherchangesinowners’ equities other than the netprofits or losses, other comprehensive income and profitdistribution,thecarryingamountofthelong-termequityinvestmentshallbe adjustedandrecordedintotheowners’equities. For the unrealized internal transaction profits/losses that arise between the Company and the associated enterprises and contractual enterprises, the part attributable to the Company shall be calculated according to the shareholding proportion,andtheinvestmentprofits/lossesshallberecognizedonthebasisof offsetting.Forthelong-termequityinvestmentsheldalreadypriortoJanuary1,2007fortheassociated enterprises and contractual enterprises, if there is any equityinvestment difference on the debit side, the investment profits/losses shall berecognizedafterdeductionoftheequity investmentdifferenceonthedebit sideamortizedbythestraight-linemethodaccordingtotheoriginalresidualmaturity.4.RecognitionofcommoncontrolandsignificantinfluencesontheinvestedentityCommon control isrecognized as the control which does notexist unless theinvestingpartiesunanimouslyagreeonsharingthecontrolpowerovertherelevantimportantfinancialandoperatingdecisionsoftheinvestedentityaccordingtotheprovisionsofthecontract.Significant influences will be recognized where thereis powerto participate inmakingdecisionsonthefinancialandoperatingpoliciesoftheinvestedentity,butnottocontrolordojointcontroltogetherwithotherpartiesovertheformulationof thesepolicies.WhentheCompanyholdsmorethan20%(included)butlessthan 50% of voting shares of the invested entity directly or indirectly through a subsidiary,significantinfluencesontheinvestedentityshallberecognized,unless there is clear evidence indicating that the Company cannot participate in productionandmanagementdecision-makingoftheinvestedentityinthissituation andtherefore cannotgenerate significantinfluences; if theCompanyholdsless than20%(excluded)ofvotingsharesoftheinvestedentity,usuallytheCompany isnotdeemedtohaveasignificantinfluenceontheinvestedentity,unlessthereis clear evidence indicating that the Company can participate in production and managementdecision-makingoftheinvestedentityinthissituationandtherefore cangeneratesignificantinfluences. 5.Conversionofthelong-termequityinvestmentaccountingmethod WheretheequityinvestmentoriginallyheldbytheCompany,whichisunableto control,isnotundercommoncontrolwithorhasnosignificantinfluencesonthe investedentity, is convertedinto an investment for an associated enterprise or contractual enterprise due to additional investment, the investment shall be accountedbytheequitymethodinstead,andtheCompanyshallusethefairvalue oftheoriginalequity investmentplusthe fairvalueoftheconsideration paidto acquirethenewlyaddedinvestmentastheinitialinvestmentcostaccountedbythe equitymethodinstead.Thedifferencebetweenthefairvalueandcarryingamount oftheoriginallyheldequityinvestmentpriortotheadditionalinvestment,andthe cumulativefairvaluechangesoriginallyrecordedintoothercomprehensiveincome shallbetransferredtothecurrent-periodprofitsorlossesaccountedbytheequity methodinstead. For the originally held investments for associated enterprises and contractual enterprises, if they are not able to be under common control with or have significant influences on the invested entity, if they are not able to be under commoncontrolwithorhavesignificant influencesontheinvestedentitydueto reason such as partial disposal, accounting treatment must be performed for remainingequity investments according to the recognization and measurement standardsforfinancialinstruments,andthedifferencebetweenthefairvalueand carryingamountonthedateonwhichthecommoncontrolorsignificantinfluence islostshallbechargedtoprofitsorlossesofthecurrentperiod.Whenaccounting basedontheequitymethodisterminatedforotherrelatedcomprehensiveincome originally subject to accounting of equity method, accounting treatment is performedusingthebasisthesameasthatusedbytheinvestedentitytodirectly disposeofrelevantassetsorliabilities;alltheowners'equitiesthatarerecognized duetootherchanges inowners’equities otherthan thenetprofits/losses,other comprehensive income and profit distribution of the invested entity shall be transferredtotheprofitsorlossesofthecurrentperiodwhenaccountingbasedon theequitymethodisterminated. Where the originally held investments for associated enterprises or contractual enterprises are converted to investments for subsidiaries due to additional investment,intheindividualfinancialstatements,thesumofthecarryingvalueof theacquiredparty’sequityinvestmentheldpriorto theacquisitiondate andthe investmentcostnewlyaddedontheacquisitiondate shallbeusedastheinitial investmentcostofsuchaninvestment;fortheequityinvestmentheldpriortothe acquisitiondate,othercomprehensiveincomerecognizedduetoaccountingofthe equitymethodshallundergo accountingtreatmentusingthebasisthesame as thatusedbytheinvestedentitytodirectlydisposeofrelevantassetsorliabilities whensuchaninvestmentisdisposedof. Whentheinfluencingcapabilityontheinvestedentityisconvertedfromcontrolto a significant influence or common control together with other investors due to investmentdisposal, thelong-termequityinvestment cost,for whichrecognition shallbeterminated,isfirstcarriedoveraccordingtotheproportionofinvestment disposal. On such a basis, the remaining long-term equity investment cost is compared with the share attributable to the Company in the fair value of the investedentity'sidentifiablenetassetsatthetimeoforiginalinvestment,whichis calculatedaccordingtotheremainingshareholdingproportion.Forthebusiness reputationparttobeembodiedintheinvestmentevaluation,thecarryingamount oflong-termequityinvestmentshallnotbeadjusted;wheretheinvestmentcostis lessthantheshareattributabletotheCompanyin thefairvalueoftheinvested entity'sidentifiablenetassetsatthetimeoforiginalinvestment,anyexcessshall beadjustedagainstretainedearningswhenthelong-termequityinvestmentcost isadjusted. For the share attributable to the Company in theinvested entity’s realized net profits/losses between acquisition of the original investment and conversion toaccounting of theequity method dueto investment disposal, the carryingamountofthelong-termequityinvestmentshallbeadjusted,meanwhile, anyexcessshallbeadjustedagainstretainedearningsfortheshareattributableto theCompanyintheinvestedentity’srealizednetprofits/losses(excludingthecash dividendsor profitsdistributed or declaredto distribute) from acquisitionof the original investment to the beginning of the period in which the investment is disposedof,andthecurrent-periodprofitsorlossesshallbeadjustedfortheshare attributabletotheCompanyintheinvestedentity’srealizednetprofits/lossesfrom the beginning of the period in which the investment is disposed of to the investmentdisposaldate;theshareattributabletotheCompany intheinvested entity’s changes in other comprehensive income shall be recorded into other comprehensive income when the carrying amount of the long-term equity investment is adjusted; the share attributable to the Company in the invested entity’sotherchangesinowners’equitiesarisingfromreasonsotherthanthenet profits or losses, other comprehensive income and profit distribution shall be recorded into “Capital reserves -- Other capital reserves” when the carrying amountofthelong-termequityinvestmentisadjusted.After thecostmethodis converted to theequity method for the long-termequity investment, the share attributable to the Company in the invested entity’s realized net profits/losses, other comprehensive income and other changes in owners’ equities shall be calculatedand recognizedaccording toprovisions ofthe standardin thefuture period. For the originally held long-term equity investment that is able to control the investedentity, if theshareholding proportion declines dueto reasons such as partialdisposalandtheinvestmentcannotbeabletocontrol,beundercommon control with or have significant influences on the invested entity, accounting treatmentmustbe performedforremainingequity investmentsaccording tothe recognitionandmeasurementstandards forfinancialinstruments. Thedifference betweenthefairvalueand carryingamounton thedate ofcontrollossshallbe recordedintotheinvestmentincomeofthecurrentperiod. Intheprocessofholdingthelong-termequityinvestment,iftheCompanydecides tosellallorpartofheldstocksoftheinvestedentityinconsiderationofallaspects, thecarryingamountofthelong-termequityinvestmentcorrespondingtothesold stocksshallbe carriedover accordingly,and thedifferencebetween theselling priceandthecarryingamountoflong-termequityinvestmentfordisposalshallbe recognizedasdisposalprofitorloss. IftheCompanydisposesofallthelong-termequityinvestmentsaccountedbythe equity method, whenaccounting based on theequity method isterminated for other related comprehensive income originally subject to accounting of equity method,accountingtreatmentisperformedusingthebasisthesameasthatused bytheinvested entitytodirectly dispose of relevantassetsorliabilities;all the owners' equities that are recognized due to changes in other owners’equities other than the net profits/losses, other comprehensive income and profit distributionoftheinvestedentityshallbetransferredtotheinvestmentincomeof thecurrentperiodwhenaccountingbasedontheequitymethodisterminated;ifa part of the long-term equity investment accounted by the equity method is disposedofandtheremainingstocksarestillaccountedusingtheequitymethod, other related comprehensive income originally subject to accounting of equity methodshallbehandledusingthebasisthesameasthatusedbytheinvested entityto directlydispose of relevantassetsorliabilities and be carriedover by proportion,andtheowners'equitiesthatarerecognizedduetootherchangesin owners’ equities other than the netprofits/losses, other comprehensive income andprofitdistributionoftheinvestedentityshallbecarriedovertotheinvestment incomeofthecurrentperiodaccordingtotheproportion. (15)Investmentrealestate TheCompany'sinvestmentrealestateincludesalanduserightthatisleasedout, alanduserightheldfortransferuponcapitalappreciation andabuildingthatis leasedout. TheCompany'sinvestmentrealestateismeasuredatitscost,andtheCompany usesthecostmodelforasubsequentmeasurementofitsinvestmentrealestate. Thedepreciationandamortizationoftheinvestmentrealestateshallbemadein accordancewiththeaccountingpoliciesoffixedassetsorintangibleassetsofthe Company.WhentheCompanychangesthepurposeoftheinvestmentrealestate,suchas forself-use,itshalltransfertherelevantinvestmentrealestatetootherassets. (16)Fixedassets 1.Recognitionstandardoffixedassets TheCompany'sfixedassetsrefertothetangibleassetsthatareheldforthesake of producing commodities, rendering labor service, renting or business managementandwhoseusefullife isinexcess ofonefiscalyear.Fixedassets cannotberecognizedunlesstheysimultaneouslymeettheconditionsasfollows: (1)Theeconomicbenefitspertinenttothefixedassetsare likelytoflowintothe enterprise;and (2)Thecostofthefixedassetscanbemeasuredreliably. 2.Measurementoffixedassets Themeasurementofafixedassetshallbemadeatitscost. (1)Thecostofapurchasedfixedassetconsistsofthepurchaseprice,therelevant taxes, freight, loading and unloading fees, professional service fees and other expensesthat bringthefixed assettotheexpectedconditionsfor useandthat mayberelegatedtothefixedasset. Ifthepaymentforafixedassetisdelayedbeyondthenormalcreditconditionsand itisoffinancingnature ineffect,thecostofthefixedassetshallberecognized basedon thepresent valueof thepurchase price. Thedifference between the actualpaymentandthepresentvalueofthepurchasepriceshallbeincludedin thecurrentprofitsandlosseswithinthecreditperiod,unlessitshallbecapitalized inaccordancewiththeAccountingStandardsNo.17-BorrowingCosts. (2)Thecostofaself-constructedfixedassetshallbe formedbythenecessary expensesincurredforbringingtheassettotheexpectedconditionsforuse. (3) The cost invested to a fixed asset by the investor shall be recognized in accordancewiththevalueasstipulatedintheinvestmentcontractoragreement, otherthanthoseofunfairvalueasstipulatedinthecontractoragreement. (4) Thecosts of fixed assets acquired through theexchange of non-monetary assets, recombination of liabilities, merger of enterprises, and financial leasing shallberespectivelyrecognizedinaccordancewiththeAccountingStandardsNo. 7-ExchangeofNon-monetaryAssets,AccountingStandardsforEnterprisesNo. 12-DebtRestructuring,AccountingStandardsforEnterprisesNo.20-Mergerof EnterprisesandAccountingStandardsforEnterprisesNo.21-Leases. 3.Classificationoffixedassets TheCompany'sfixedassetsareclassifiedintohousesandbuildings,machinery equipment,electronicequipmentandtransportationequipmentandotherwise. 4.Depreciationoffixedassets (1) Recognition of depreciation method and service life, expected net salvage valuerateandannualdepreciationrate: Thedepreciation offixedassetsshallbemadebythestraight-line method.The annual depreciation raterecognized accordingto the category, servicelife and expectednetsalvagevaluerateoffixedassetsisasfollows: Categoryoffixedassets Expectednetsalvage Expectedservicelife Annualdepreciation valuerate% rate% Housesandbuildings 5.00 20to30years 3.17-4.75 Machineryequipment 5.00 6-10years 9.50-15.83 Electronicequipment 5.00 2-5years 19.00-47.50 Transportationequipment 5.00 3to6years 15.83-31.67 Others 5.00 3-5years 19.00-31.67 Depreciationoffixedassetsofwhichaprovisionforimpairmenthasbeenmade: For a fixed asset of which a provision for impairment has been made, the depreciationofthefixedassetshallbemadebasedontheamountofdeductingits expectednet salvage value, depreciation amount and provision for impairment fromtheoriginalprice ofthefixed assetandremainingservice life ofthefixed asset. Forthefixedassetsthathavereachedintendedusableconditionbutnotprepared thefinalaccountforcompletion,theircostsshallberecognizedattheirestimated value,andtheir depreciationshallbe madeaccordingly;After completionofthe finalaccountforcompletion,theoriginalestimatedvalueofthefixedassetsshall beadjusted bytheiractualcosts, buttheoriginaldepreciation amountdoesnot requireadjusting. (2)Checkofservicelife,expectednetsalvagevalueanddepreciationmethodof fixedassets:TheCompanyshall,atleastattheendofeachyear,haveacheckon theservicelife,expectednetsalvagevalue,andthedepreciationmethodofthe fixed assets. If the Company finds that there is any difference between the expectedservicelifeandthepreviouslyestimatedservicelifeofafixedasset,the expectedservicelifeofthefixedassetshallbeadjusted;Ifthereisanydifference betweentheamountofexpectednetsalvagevalueandthepreviouslyestimated amountofthenetsalvagevalue,theexpectednetsalvagevalueshallbeadjusted; Ifanysignificant changeismadeontheformoftherealizationoftheexpected economicbenefitsconcerningafixedasset,themethodforthedepreciationofthe fixedassetshallbechanged.Ifanychangeismadetotheservicelife,expected netsalvagevalueorthedepreciationmethodofafixedasset,itshallberegarded asachangeoftheaccountingestimates. 5.Treatmentofsubsequentexpendituresforfixedassets Subsequent expenditures incurred on a fixed asset refer to repair expenses, renovation expenses, repair costs and decoration expenses and otherwise incurredinthecourseofuseofthefixedasset.Theiraccountingtreatmentisas follows: Where subsequent expenditures of a fixed asset such as renovation expenses meet the conditions of recognizing the fixed asset, they shall be recordedintothecostofthefixedasset,andthecarryingamountofthereplaced part of the subsequent expenditures shall be deducted; Where subsequent expendituresofafixedassetsuchasrepaircostsdonotmeettheconditionsof recognizingthefixedasset,theyshallberecordedintotheprofitsandlossesofthe current period inwhich theyare incurred;Where thedecorationexpenses of a fixed asset meet the conditions of recognizing the fixed asset, they shall be measuredinasingledetailaccountof"FixedAssets",andthedepreciationofthe fixedassetshallbemadeseparatelybythestraight-linemethodinashortertime oftheperiodoftwodecorationsandremainingusablelifeofthefixedasset. Theimprovementexpendituresincurredonafixedassetleasedbyoperatinglease shallbecapitalizedandreasonablyamortizedaslong-termprepaidexpenses. (17)Constructioninprogress Theterm"constructioninprogress"referstoallnecessaryexpendituresincurred before the acquired fixed assets enable the project to reach expected usable condition, including project direct materials, direct employee remunerations, installationcosts for equipment tobe installedand project construction, project managementfees,netprofitsandlossesofprojectcommissioningandapproved capitalizedborrowingcosts. 1.Valuationofconstructioninprogress The Company's construction in progress shall be measured individually by constructionprojectandshallbevaluatedatactualcost. 2.Timepointofcarryingoverconstructioninprogressintofixedasset When theconstructioninprogressreachestheexpectedusable condition, they shallbetransferred tofixed assetattheir actualcost. Forthefixed assetsthat havereached expected usable condition butnotprepared thefinal account for completion,theyshallbechargedtotheaccountattheirestimatedvalueandshall beadjustedaftertheiractualvalueisrecognized. (18)Capitalizationofborrowingcosts Borrowing costs are interests and other costs incurred by the Company in connection with the borrowing of thefunds, including interests, amortization of discountsorpremiumsrelatedtoborrowings,ancillarycostsincurredinconnection withthearrangementofborrowings,andexchangedifferencesarisingfromforeign currencyborrowings. 1.Recognitionofcapitalizationofborrowingcosts Theborrowingcoststhataredirectlyattributabletotheacquisition,constructionor production ofa qualifyingasset shallbe capitalized,and the amountsof other borrowingcostsincurredshallberecordedintotheprofitsandlossesoftheperiod. in which they are incurred. Qualifying assets are fixed assets, investment real estateandinventoriesandotherwisethatnecessarilytakeasubstantialperiodof timeforacquisition,constructionorproductiontogetreadyfortheirintendeduse orsale. 2.Periodofcapitalizationofborrowingcosts (1)Timepointofcapitalizationofborrowingcosts.Thecapitalizationofborrowing costscommencesonlywhenallofthefollowingconditionsaresatisfied: ①Expendituresfortheassethavebeenincurred; ②Borrowingcostshavebeenincurred;and ③Activitiesrelatingtotheacquisition,constructionorproductionoftheassetthat arenecessarytopreparetheassetforitsintendeduseorsalehavecommenced. (2) Time point of ceasing capitalization of borrowing costs: Capitalization of borrowing costs ceases when the qualifying asset acquired, constructed or producedbecomesreadyforitsintendeduseorsale.Thesubsequentborrowing costsshallberecordedintotheprofitsandlossesofthecurrentperiod. (3)Recognitionofsuspendingcapitalization ofborrowingcosts:Capitalizationof borrowing costs shall be suspended during periods in which the acquisition, constructionorproduction ofaqualifyingasset isinterrupted byactivitiesother thanthose necessarytopreparetheassetforitsintendeduseorsale, andthe interruptionisforacontinuousperiodofover3months.Borrowingcostsincurred duringtheperiodinwhichcapitalizationofborrowingcostsissuspendedshallbe recordedintotheprofitsandlossesofthecurrentperiod. 3.Calculationofcapitalizedamountsofborrowingcosts Duringthecapitalizationperiod,theamountofinterest(includingamortizationof discounts or premiums) to be capitalized for each accounting period shall be recognizedasfollows: (1) Where special funds are borrowed for the acquisition, construction or productionofaqualifyingasset,theamountofinteresttobecapitalizedshallbe theactualinterestexpenseincurredonthatborrowingfortheperiodlessanybank interestearnedfromdepositingtheborrowedfundsbeforebeingusedontheasset oranyinvestmentincomeonthetemporaryinvestmentofthosefunds. (2) Where general funds are borrowed for the acquisition, construction or productionofaqualifyingasset,theamountofinteresttobecapitalizedonsuch generalborrowingsshallbecalculatedandrecognizedbyapplyingacapitalization rateofsuchgeneralborrowingstotheweightedaverageoftheexcessamountsof accumulatedexpenditureson theassetoverand abovetheamountsofspecial borrowings. The capitalization rate shall be calculated and recognized by the weightedaverageinterestrateofgeneralborrowings. Wherethere isanydiscountorpremium, theamountofdiscountsorpremiums thatshallbeamortizedduringeachaccountingperiodshallberecognizedbythe real interest rate method, and an adjustment shall be made to theamount of interestsineachperiod.Duringtheperiodofcapitalization,theamountofinterest capitalizedduringeachaccountingperiodshallnotexceedtheamountofinterest actuallyincurredtotherelevantborrowingsinthecurrentperiod. Ancillarycostsinconnectionwithspecialborrowingsthatareincurredbeforethe qualifyingassetacquired,constructedorproducedbecomesreadyforitsintended useorsaleshallbecapitalizedonthebasisoftheincurredamountwhentheyare incurred, and they shall be recorded into the cost of qualifying asset; those incurred after thequalifying asset acquired, constructed or produced becomes readyforitsintendeduseorsaleshallberecognizedasexpensesonthebasisof theincurredamountwhentheyareincurred,andshallberecordedintotheprofits and losses of the current period. The ancillary costs arising from a general borrowingshallberecognizedasexpensesattheirincurredamountwhentheyare incurred,andshallberecordedintotheprofitsandlossesofthecurrentperiod. (19)Intangibleassets 1.Recognitionofintangibleassets An intangible asset is an identifiable non-monetary asset without physical substance owned or controlled by the Company. Intangible assets can be recognizedonlywhentheymeettheconditionssimultaneouslyasfollows: (1)Theyareconsistentwiththedefinitionofintangibleassets; (2)Theeconomic benefitsrelatedtointangible assetsare likelytoflowinto the enterprise;and (3)Thecostofintangibleassetscanbemeasuredreliably. 2.Measurementofintangibleassets Theintangibleassetsshallbe measuredaccording totheir costorfairvalue(if increasedthroughbusinesscombinationnotinvolvingenterprisesundercommon control). 3.Subsequentmeasurement TheCompanyshallanalyzeandjudgetheservicelifeofintangibleassetswhenit obtainsintangibleassets.IftheCompanyisunabletoforecasttheperiodwhenthe intangible asset can bring economic benefits to it, it shall be regarded as an intangibleassetwithuncertainservicelife. Withregardtoanintangibleassetwithlimitedservicelife,itsamortizationamount shallbeamortizedbyexpectedrealizationpatternofitseconomicbenefits,ifthe Company is unable to recognize the expected realization pattern reliably, intangibleassetsshallbeamortizedbythestraight-linemethod. TheCompanyshall,atleastattheendofeachyear,checktheservicelifeandthe amortizationmethodofintangible assetswithlimitedservicelife.Ifnecessary,it shalladjustthesaidservicelifeandamortizationmethod. With regard to an intangible asset with uncertain service life, its amortization amountshallnotbeamortized,buttheCompanyshallchecktheservicelifeofthe saidintangibleasseteveryyearandshallcarryoutanimpairmenttestforit. 4.Estimationofservicelife Asforintangibleassetswithlimitedservicelife,theestimationoftheirservicelife generallyconsidersthefollowingfactors: (1) General life cycle of products manufactured by using the assets and informationaboutservicelifeofsimilarassetsavailable; (2) Present situation of technologies and process and estimation for future developmenttrends; (3)Marketdemandofproductsmanufactured orservicesrenderedbyusingthe assets; (4)Expectedactionsofpresentorpotentialcompetitors; (5)Expectedmaintenanceexpenses foreconomiccapacityfromtheassetsand theCompany'sexpectedcapabilitytopayrelevantexpenses; (6)Lawsandregulationsorsimilarrestrictionsrelatingtothecontrolperiodofthe assets,suchasconcessionperiodandleaseperiod; (7)RelevancewithservicelifeofotherassetsheldbytheCompany,etc. 5. Divisionof researchexpendituresand developmentexpenditures includedin expendituresforinternalresearchanddevelopmentprojects (1)Researchexpendituresininternalresearchanddevelopmentprojectsshallbe recordedintotheprofitsandlossesofthecurrentperiodwhentheyareincurred. (2)Developmentexpendituresininternalresearchanddevelopmentprojectsshall berecognizedasintangibleassetswheretheysatisfyallofthefollowingconditions: ①Technical feasibility of completing the intangible asset so that it will be availableforuseorsale; ②Intentiontocompletetheintangibleassetanduseorsellit; ③How the intangible asset will generate economic benefits, including the ability to demonstrate the existence of a market for the output of the intangibleassetortheintangibleassetitselfor,ifitistobeusedinternally, theusefulnessoftheintangibleasset; ④Availabilityofadequatetechnical,financialandotherresourcestocomplete thedevelopmentandtouseorselltheintangibleasset; ⑤Ability to measure reliably the expenditure that is attributable to the intangibleassetduringitsdevelopment. (20)Long-termdeferredexpenses Long-termdeferredexpensesrefertotheexpensesincurredbytheCompanybut attributabletothecurrent andsubsequentaccountingperiodsof morethanone year(excludingoneyear),includingtheexpensesforimprovementoffixedassets leasedbyoperatinglease. Long-termdeferredexpenses shallberecorded intotheaccountbasedontheir actualamountofexpenditureandshallbeaveragelyamortizedbytheirbeneficial period, if long-term deferred expenses can not benefit subsequent accounting periods,theunamortizedvalueoftheprojectshallbealltransferredtotheprofits andlossesofthecurrentperiod. (21)ImpairmentofAssets Onthebalancesheet date,ifthere isanysignshowing possibleimpairment of assets(referringtotheassetsotherthaninventories,equityinstrumentsthathave noquotedpriceandreliablefairvaluemeasurementinactivemarket,investment realestatemeasured byfairvaluemodel,consumablebiological assets,assets formedunderconstructioncontract,deferredincometaxassets,residualvaluenot guaranteed by the renter in the financing lease and financial assets), their recoverableamountshallbeestimatedonthebasisofsingleitemassets;Whereit is difficult to estimate the recoverable amount of the single item assets, the recoverableamountoftheassetsshallberecognizedonthebasisoftheirasset grouporcombinationofassetgroups. Therecoverableamountshallberecognizedinlightofthehigheroneofthenet amountofthefairvalueofthesingleitemassets,assetgrouporcombinationof assetgroupsless thedisposalexpenses andthepresentvalueoftheexpected futurecash flowof thesingle itemassets,assetgrouporcombinationof asset groups. Where the recoverable amount of the single item assets is lower than their carryingamount,aprovisionfortheassetimpairmentshallbemadeaccordingly on the basis ofthe difference between the carryingamount of the single item assetsandtheirrecoverableamount.Wheretherecoverableamountofanasset grouporacombinationofassetgroupsislowerthanitscarryingamount,itshall be recognized as the corresponding impairment loss. The amount of the impairment loss shall first charge against the carrying amount of business reputationwhichisapportionedtotheassetgrouporcombinationofassetgroups, then chargeit againstthe carryingamountof other assetsin proportion to the weightofotherassetsintheassetgrouporcombinationofassetgroupswiththe business reputation excluded. Thecharges against thecarrying amount of the assetsaboveshallbe treated astheimpairment loss of thesingle itemassets (includingthebusiness reputation),andaprovisionforimpairment ofthesingle itemassetsshallbemadeaccordingly. Oncetheabovelossofassetimpairmentisrecognized,it shallnotbeswitched backinfutureaccountingperiods. (22)Estimatedliabilities 1.Recognitionofestimatedliabilities When the businesses related to contingencies such as external guarantee, pending action or arbitration, product quality assurance, plan for layoffs, loss contract,restructuringobligationsandfixedassetdisposalobligationsmeetallof thefollowingconditions,theyshallberecognizedasliabilities: (1)TheliabilitiesarepresentliabilitiesassumedbytheCompany; (2)Thefulfillmentoftheliabilitiesmightcauseoutflowofeconomicbenefitsfrom theenterprise. (3)Theamountoftheliabilitiescanbereliablymeasured. 2.Measurementofestimatedliabilities Theestimatedliabilitiesshallbemeasuredinaccordancewiththebestestimateof thenecessaryexpensesfortheperformanceofthecurrentobligation.Ifthereisa sequent rangefor thenecessary expenses and if all the outcomes within this range are equally likely to occur, the best estimate shall be recognized in accordancewith themiddle estimate withinthe range.In other cases,thebest estimate shall be recognized in accordance with the following methods, respectively:(1)Ifthecontingenciesconcernasingleitem,itshallberecognizedinthelightofthemostlikelyoutcome.(2)If thecontingencies concerntwo ormore items, thebest estimate shallbecalculated and recognized in accordance with all possible outcomes and therelevantprobabilities.When all or some of the expenses necessary for the liquidation of estimatedliabilitiesofthecompanyisexpectedtobecompensatedbyathirdpartyorotherparties,thecompensationshallbeseparatelyrecognizedasanassetonlywhenitisvirtuallycertainthatthereimbursementwillbeobtained.Theamountrecognizedfor thereimbursement shall notexceed thecarrying amount ofthe recognizedestimatedliabilities.(23)Employees’wagesandsalaries1.Theterm“employees’wagesandsalaries”referstoallkindsofremunerationsorcompensationsgivenbytheenterprisesinexchangeoftheemployees’servicesor for cancellation of labor relationships. The employees’ wages and salariesinclude theshort-termwages andsalaries, separationbenefits, dismiss welfareandother long-termemployeebenefits, aswellasthebenefitsprovided bytheenterprises to employees’ spouses, children and dependants, deceased employees’survivorsandotherbeneficiaries. 2. In addition to all theemployees who have signed alabor contract with the enterprise,thescopeofemployeesalsocoversmemberswhohavenotsigneda labor contract with the enterprise but have been formally appointed by the enterprise,andthosewhoprovideservicestotheenterprisewhichhassignedan employmentcontractwithalaborserviceagent. 3. In the accounting period during which employees provide services to the Company,the Company recognizes theshort-term wagesand salaries actually incurredasliabilitiesandchargesthemtothecurrent-periodprofitsandlossesor relevantassetcosts. 4.Separationbenefitsareclassifiedintothedefinedcontributionplananddefined benefitplan. (1) In the accounting period during which employees provide services to the Company, the Company recognizes the amount to be deposited (calculated according to the defined contribution plan) as liabilities and charges it to the current-periodprofitsandlossesorrelevantassetcosts. (2) Usually accounting treatment for the defined benefit plan consists of the followingsteps: ①According to the projected unit credit method, adopt the unbiased and mutually consistent actuarial assumption to estimate the demographic variables and financial variables, measure obligations generated by the definedbenefitplan,anddeterminetheperiodtowhichrelevantobligations belong;②Incasethatthedefinedbenefitplaninvolvesassets,recognizethedeficitor surplusformed byreducingthefairvalueofassetsof thedefined benefit planfromthepresentobligationvalueofthedefinedbenefitplanasonenet liabilityornetassetofthedefinedbenefitplan.Ifthedefinedbenefitplanhas anysurplus,usethelowerofthedefinedbenefitplansurplusandtheupper assetlimit tomeasure netassets of thedefined benefitplan. The upper assetlimitreferstothepresentvalueoftheeconomicinterestthatcanbe obtained by the Company from refund of the defined benefit plan or by reducingthefundtobedepositedforthedefinedbenefitplaninthefuture; ③At the end of the period, recognize the costs of employees’ wages and salaries arising from the defined benefit plan as the service costs, net interests of net liabilities or net assets of the defined benefit plan, and changesarising fromremeasurement ofnetliabilities ornetassetsofthe defined benefit plan, wherein the service costs and net interests of net liabilities or net assets of the defined benefit plan are recorded into the current-periodprofits/losses orrelevantasset costs, changes arisingfrom remeasurementofnetliabilitiesornetassetsofthedefinedbenefitplanare recorded into other comprehensive income and cannot be reversed to profits/losses in the subsequent accounting period, but such amount recognized in other comprehensive incomecan be transferred within the equityscope; ④Recognizeasettlementgainorlossduringsettlementofthedefinedbenefit plan.5. If the Company provides employees with dismiss welfare, the liability ofemployees’ wages and salaries that arises from the dismiss welfare shall berecognized on the earlier one of the following two dates and charged to thecurrent-periodprofits/losses:①whentheCompanycannotunilaterallycancelthedismiss welfare provided for the labor relationship cancellation plan or staffreduction suggestion;② when the Company recognizes the cost or expenserelatedtoreconstructioninvolvingdismisswelfarepayment.6.Ifotherlong-termbenefitsofferedbytheCompanytoemployeescomplywithconditions of the defined contribution plan, accounting treatment is conductedaccordingtothedefinedcontributionplan;thelong-termbenefitsotherthantheseshallundergoaccountingtreatmentaccordingtothedefinedbenefitplan,butthechangesarising fromremeasurement ofthenetliabilitiesornetassetsofotherlong-term benefits for employees shall be recorded into the current-periodprofits/lossesorrelevantassetcosts.(24)Recognitionofrevenues Revenuesshallberecognizedwheretherelevanteconomicbenefitsarelikelyto flowintotheCompany,therelevantamountofrevenuecanbereliablymeasured andthefollowingconditionsaremetsimultaneously: 1.Revenuefromsellinggoods WheretheCompanyhastransferredsignificantrisksandrewardsofownershipof thegoodstothebuyer,anditneitherretainscontinuousmanagementright that usuallykeepsrelationwiththeownershipnorimplementseffectivecontroloverthe sold goods; and the relevant costs incurred or to be incurred can be reliably measured,therevenuefromsellinggoodsshallberecognized. 2.Revenuefromrenderinglaborservices IftheCompanycan,onthebalancesheetdate,reliablyestimatethescheduleof completionandoutcomeofatransactionconcerningthelaborservices,andthe costsrelatedtothetransactionincurredortobeincurredcanbereliablymeasured, theCompanyshallrecognizetherevenuefromrenderinglaborservicesadopting the percentage-of-completion method and shall ascertain the schedule of completion under the transaction concerning the rendering of labor services accordingtotheproportionofthecostsincurredagainsttheestimatedtotalcosts. Where theCompany can not, on the balancesheet date,reliably estimate the outcomeofatransactionconcerningthelaborservices,ifitexpectsthatthecostof laborservicesincurredcanbemadeup,theCompanyshallrecognizetherevenue fromrenderinglaborservicesbasedontheamountofthecostoflaborservices incurredandshallcarryforwardthecostoflaborservicesinaccordancewiththe sameamount;Ifitisexpectedthatthecostoflaborservicesincurredcannotbe madeup,thecostoflaborservicesincurredshallberecordedintotheprofitsand lossesofthecurrentperiod,andtherevenuefromrenderinglaborservicesshall notberecognized. 3.Abalienatetherighttouseassets Theamountofinterestrevenueshallbecalculatedandrecognizedinaccordance withthelengthoftimeforwhichtheCompany'scashisusedbyothersandthe actual interest rate; The amount of royalty revenue shall be calculated and recognizedinaccordancewiththeperiodandmethodofchargingasstipulatedin therelevantcontractoragreement. (25)Governmentsubsidies Agovernment subsidymeans themonetary and non-monetary assetsobtained freebytheCompanyfromthegovernment,butexcludingthecapitalinvestedby thegovernmentastheowner.Government subsidiesconsistofthegovernment subsidiespertinenttoassetsandgovernmentsubsidiespertinenttoincome. TheCompanydefinestheobtained governmentsubsidiesused forpurchase or construction, or forming the long-term assets by other ways as government subsidies pertinent to assets, and all the other government subsidies as governmentsubsidiespertinenttoincome.Ifthegovernmentdocumentdoesnot specifythesubsidyobject,thefollowingmodeisadoptedtoclassifythesubsidies intogovernmentsubsidiespertinenttoincomeandgovernmentsubsidiespertinent to assets: (1) if the government document specifies the project to which the subsidyaims,theamountisdividedaccordingtotherelativeproportionofthepaid amounttoform assets tothepaid amountto berecorded into expensesin the budgetofthisspecificproject,andthisdivisionproportionneedstobecheckedon everybalancesheetdateandbechangedwhennecessary;(2)ifthegovernment documentprovidesonlyageneralpresentationofthepurposewithoutspecifying thespecificproject,thesubsidyshallberegardedasgovernmentsubsidypertinent toincome. Thegovernmentsubsidiesofmonetaryassetsshallbemeasuredaccordingtothe amountreceivedorreceivable.Here,ifthereisanyexactevidenceshowingthat this subsidy is appropriated according to the fixed quota, it can be measured accordingtotheamountreceivable;otherwiseitshallbemeasuredaccordingto theamountactuallyreceived.Thegovernmentsubsidiesofnon-monetaryassets shallbemeasuredatthefairvalue;ifthefairvaluecannotbeobtainedinareliable way,thesubsidiesshallbemeasuredatthenominalamountofRMB1. Whenagovernmentsubsidyisactuallyreceived,theCompanyusuallyrecognizes and measures it according to theactually received amount. At the end of the period, however, if there is any exact evidence showing that the Company complieswithrelevantconditionsprovidedinthefinancialsupportingpolicyandit isexpectedtoreceivethecapitalsupportfromthegovernment,thissubsidyshall be measured according to the amount receivable. The government subsidy measuredaccordingtotheamountreceivableshallcomplywithallthefollowing conditions: (1) The amount of receivable subsidy has been confirmed by the authoritativegovernmentdepartmentbyissuingadocument,orthesubsidycanbe independently and reasonably measured and calculated in accordance with relevantprovisionsof theformally issuedfinancialfund management measures anditispredictedthatitsamountdoesnotinvolvesignificantuncertainty;(2)the subsidyisbasedonthefinanciallysupportedprojectthatisformallyreleasedby thelocalfinancialdepartmentandinitiativelydisclosedaccordingtoprovisionsof theRegulationofthePeople'sRepublicofChinaontheDisclosureofGovernment Information, as well as its financial fund management measures, and the management measuresmust be generous (any enterprise meeting thedefined conditionscanapplyforthesubsidy)andarenotformulatedspeciallyforspecific enterprises;(3)therelatedsubsidyapprovaldocumenthasclearlypromisedthe time limit of appropriation and appropriation of the fund is guaranteed by the correspondingfinancialbudget,soitcanbesurelyreceivedwithinthedefinedtime limit; (4) other conditions (if any) that shall be matched according to specific conditionsoftheCompanyandthismatterofsubsidy. Thegovernment subsidies pertinent to assetsshall be recognized as deferred incomeandshallbeequallydistributedwithintheservicelifeoftherelevantassets, and recorded into the current-period profits and losses. If the government subsidiespertinenttoincomesareusedforcompensatingtherelatedexpensesor losses incurred tothe Company,they shallbe recorded into the current-period profitsandlosses;ifthegovernmentsubsidiespertinenttoincomesareusedfor compensating the related future expenses or losses in the later period, the subsidiesshallberecordedintothedeferredincomeandshallberecordedintothe current-periodprofitsandlossesduringtheperiodwhentherelevantexpensesare recognized.Thegovernmentsubsidiesmeasuredatthenominalamountshallbe directlyrecordedintothecurrent-periodprofitsandlosses. Where it is necessary to refund any government subsidy which has been recognized,ifthereisadeferredincomebalanceconcerned,thebookbalanceof the deferred income shall be offset against, but the excessive part shall be includedinthecurrentprofitsandlosses;Ifthereisnodeferredincomeconcerned tothegovernmentsubsidy,theamountofrefundshallbedirectlyincludedinthe currentprofitsandlosses. (26)Incometaxes Incometaxesincludealltypesofdomesticandoverseataxamountsbasedonthe amountsoftaxableincomeoftheCompany.WhentheCompanyobtainsassetsor bearsliabilities,itrecognizestheirtaxbaseaccordingtothenationaltaxlawsand regulations.Ifthecarryingamountofassetsisgreaterthantheirtaxbaseorifthe carryingamountofliabilitiesislessthantheirtaxbase,thedifferencebetweenthe tax base and their carrying amount shall be treated as a taxable temporary difference;Ifthecarryingamount ofassetsisless than their taxbaseorif the carryingamountofliabilitiesisgreaterthantheirtaxbase,thedifferencebetween thetaxbaseandtheircarryingamountshallbetreatedasadeductibletemporary difference.1. Except for the deferred income tax liabilities arising from the followingtransactions, the Company shall recognize the deferred income tax liabilitiesarisingfromalltaxabletemporarydifferences:(1)Therecognitionofbusinessreputation;(2)Recognition of assets orliabilities arising from thetransaction that has thefollowing characteristics at the same time: The transaction is not businesscombination;theaccountingprofitswillnotbeaffected,norwillthetaxableamount(orthedeductibleloss)beaffected.Unlessthe Company can controlthe time of thereverse of taxabletemporarydifferences related to the investments of subsidiary companies, associatedenterprisesandcontractualenterprisesandthetemporarydifferencesareunlikelyto be reversed in the predictable future, the Company shall recognize the correspondingdeferredincometaxliabilities. 2.TheCompanyshallrecognizethedeferredincometaxliabilitiesarisingfroma deductibletemporarydifferencetotheextentoftheamountofthetaxableincome whichit ismostlikelytoobtainandwhichcanbededucted fromthedeductible temporary difference, however, it shall not recognize the deferred income tax assetsarisingfromtherecognitionofassetsorliabilitiesduringatransactionwhich issimultaneouslyfeaturedbythefollowing: (1)Thistransactionisnotbusinesscombination;and (2)Atthetimeoftransaction,theaccountingprofitswillnotbeaffected,norwillthe taxableamount(orthedeductibleloss)beaffected. Onthebalancesheetdate,wherethereisanyexactevidenceshowingthatitis likelytoacquiresufficientamountoftaxableincometaxinafutureperiodtooffset against the deductible temporary difference, the Company shall recognize the deferred income tax assets unrecognized in prior periods. If the deductible temporary differences related to the investments of subsidiary companies, associatedenterprisesandcontractualenterprisesarelikelytobereversedinthe expectedfutureandarelikelytoacquireanyamountoftaxableincometaxthat maybeusedformakingupthedeductibletemporarydifferences,theCompany shall recognize the deferred income tax assets corresponding to the said differences.3.Onthebalancesheetday,thecurrentincometaxliabilities(orassets)incurredinthecurrentperiodorpriorperiodsshallbemeasuredbytheCompanyinlightoftheexpectedpayable(refundable)amountofincometaxesaccordingtothetaxlaw;Thedeferredincometax assetsanddeferredincometaxliabilitiesshallbemeasured at thetax rate applicable to theperiod during whichthe assetsareexpectedtoberecoveredortheliabilitiesareexpectedtobesettled.In case the applicable tax rate changes, the Company shall remeasure thedeferredincometaxassetsanddeferredincometaxliabilities whichhavebeenrecognized.Excluding thedeferredincome taxassetsand deferredincometax liabilitiesarisingfromanytransactionoreventdirectlyrecognizedastheowners' equity,theCompanyshallrecordtheamountaffectedbytaxratechangeintothe incometaxexpensesofthecurrentperiodduringwhichthechangeoccurs. TheCompanyshallreexaminethecarryingamountofdeferredincometaxassets oneachbalancesheetday.Ifitisunlikelytoobtainsufficienttaxableincometaxes tooffsetthebenefitofthedeferredincometaxassets,thecarryingamountofthe deferredincometaxassetsshallbewrittendown.When itisprobabletoobtain sufficient taxableincometaxes, such write-down amount shallbe subsequently reversed.TheCompanyshallrecordtheincometaxesof thecurrentperiod anddeferredincometaxesotherthanbusinesscombinationsandtransactionsoreventsdirectlyrecognizedintheowners'equityintotheprofitstatementasincometaxexpensesorincomes.(27)LeasesTheterm"lease"referstoanagreementunderwhichthelessorconveystothelesseeinreturn forrenttheright touse anassetforan agreed periodof time.Leasesconsistoffinancingleasesandoperatingleases.1.Financingleases(1) Where a lease satisfies one or more of the following criteria, it shall berecognizedasafinancinglease:Theownershipoftheleasedassetistransferredtothelesseewhenthetermofleaseexpires;thelesseehastheoptiontobuytheleasedassetatapricewhichisexpectedtobefarlowerthanthefairvalueoftheleasedassetatthedatewhentheoptionbecomesexercisable.Thus,ontheleasebeginningdate,itcanbereasonablydeterminedthattheoptionwillbeexercised;eveniftheownershipoftheassetisnottransferred,theleasetermcovers themajorpart(over75%(included))oftheservicelifeoftheleasedasset;inthecaseof thelessee, thepresent value ofthe minimumlease paymentson the leasebeginningdateamountstosubstantiallyall(over90%(included))ofthefairvalueoftheleased asseton theleasebeginning date;in thecase ofthelessor, the presentvalueoftheminimumleasereceiptsontheleasebeginningdateamounts tosubstantiallyall(over90%(included))ofthefairvalueoftheleasedassetonthe leasebeginningdate;andtheleasedassetsareofaspecializednaturethatonly thelesseecanusethemwithoutmakingmajormodifications. A lease that does not satisfy the above conditions shall be recognized as an operatinglease. (2)Thefixedassetsleasedbyfinancingleaseshallberecordedintotheaccount basedonthelowerofthefairvalueofleasedassetsontheleasebeginningdate andthepresentvalueoftheminimumleasepayments,andadepreciationofthe saidfixedassetsshallbemadeinaccordancewiththedepreciationpoliciesforthe depreciableassetsownedbythelessee. 2.Operatingleases TherentspaidbythelesseeshallberecordedbytheCompanyintotherelevant assetcostsortheprofitsandlossesofthecurrentperiodbyusingthestraight-line method over each period of the lease term. The direct costs incurred from operatingleasescarriedon bytheCompany shallbe directlyrecorded into the profits and losses of the current period. The contingent rents involved in the operating leaseagreement shall be recorded into theprofits andlosses of the currentperiodinwhichtheyactuallyarise. (28)Hedging The Company designates main raw materials as a hedged item and forward contractasahedginginstrumenttoavoidtherisksofchangesincashflows. 1.Recognitionconditionofhedging (1)Atthecommencementofthehedging,theenterpriseshallspecifythehedging relationshipformally(namelytherelationshipbetweenthehedginginstrumentand the hedged item) and prepare a formal written document on the hedging relationship, risk management objectives and the strategies of hedging. This documentshallatleast specify thecontentsof hedginginstrument, thehedged item, the nature of the hedged risk and the method for the effectiveness assessment of the hedging and etc. The hedging shall be relevant to the designatedspecificidentifiablerisk,andwillultimatelyaffecttheprofitsandlosses oftheenterprise; (2)Thehedgingexpectation is highlyefficient and meetstherisk management strategy,whichisconfirmedforthehedgingrelationshipbyenterpriseatthevery beginning; (3)Foracashflowhedgingofforecasttransaction,theforecasttransactionshall belikelytooccur andshallmaketheenterprisefaced totheriskofchangesin cashflow,whichwillultimatelyaffecttheprofitsandlosses; (4)Theeffectivenessofhedgingcanbereliablymeasured; (5)The Companyshall continuouslyevaluate the effectivenessof hedgingand ensure that this hedging is highly effective in accounting period in which the hedgingrelationshipisspecified. 2.Measurementofhedging Thehedginginstrumentismeasuredatitsfairvalueonthedatewhenthehedging contractissigned,anditssubsequentmeasurementisdoneatitsfairvalue.The hedginginstrumentwithapositivefairvalueshallberecognizedasothercurrent assets,andthehedginginstrumentwithanegativefairvalueshallberecognized asother currentliabilities. Whereacash flow hedgingmeetstheconditions for adoptingthehedgingaccountingmethod,itshallbedealtwithinaccordancewith thefollowingprovisions: (1)Intheprofitorlossofthehedginginstrument,theportion,whichisattributedto theeffectivehedgingshallbedirectlyrecognizedastheowner'sequityandshall be presented as a separate item. The amount of the portion of the effective hedgingshallbeconfirmedinaccordancewiththeloweroftheaccumulativeprofit orlossof thehedginginstrument asofthecommencementof hedgingand the accumulativeamountofchangesinthepresentvalueoftheestimatedfuturecash flowofthehedgeditemasofthecommencementofthehedging. (2)Intheprofitorlossofthehedginginstrument,theportion,whichisattributedto theineffectivehedging(namelytheotherprofitorlossafterdeductingtheportion directlyrecognizedastheowner'sequity)shallberecordedintotheprofitandloss ofthecurrentperiod. (3)Therelevantprofitorloss directlyrecognizedintheowner'sequityoriginally shallbeshiftedoutduringthesameperiodinwhichthisnon-financialassetornon- financialliabilityaffectstheprofitorlossoftheenterpriseandshallberecorded into the current profits andlosses of the current period. However,when all or partialnetlossexpectedbytheenterprisetobedirectlyrecognizedintheowner's equityoriginallycannotbe madeupinthefutureaccountingperiod,theportion whichcannotbemadeupshallbeshiftedoutandshallberecordedintoprofits andlossesofthecurrentperiod. 3.Evaluationofeffectivenessofhedging The Company adopts ratio analysis to evaluate the effectiveness of hedging instrument, that is, the Company recognizes the effectiveness of hedging instrumentby comparingthehedginginstrument resulting fromthehedged risk withthefairvalueofthehedgeditemorchangeincashflowratio.Whenahedging satisfies the following two conditions simultaneously, it shall be recognized as beinghighlyefficient: (1) At the beginning and in subsequent periods of a hedging, this hedging expectationshallbehighly effectiveinoffsettingthechangesinthefairvalueor cashflowscausedbythehedgeditemduringthespecifiedperiods; (2)Thehedging’sactualoffsetresultsarewithinarangeof80%to125%. 4.Conditionsforterminatingthefairvaluehedgingaccountingmethod In case that hedgingmeets one of thefollowing conditions, the Company will terminateuseoffairvaluehedgingaccounting: (1)The hedginginstrument has expired or has beensold or exercised,or the relevantcontracthasbeenterminated. (2) Where the hedging instrument has been extended or replaced by another hedginginstrumentandtheextensionorreplacementisacomposingpartofthe hedgingstrategyclearlystatedontheCompany’swrittendocument,itshallnotbe deemedthatthehedginginstrumenthasexpiredortherelatedcontracthasbeen terminated.(3)Thishedgingdoesnotmatchtheconditionsforusingthehedgingaccountingmethodanymore.(4)TheCompanyhascancelledspecificationofhedgingrelationship.(29)CriticalaccountingestimatesThe management needs to make judgments and estimates in preparation offinancialstatements,andthesejudgmentsandestimateswillaffectthestatementamountsofrevenues,expenses,assetsandliabilities anddisclosurethereof,aswellasdisclosureofthecontingentliabilityonthebalancesheetdate.However,the result arising from uncertainty of these estimates may lead to materialadjustmentsforthecarryingamountoffutureaffectedassetsorliabilities.TheCompanyregularlyreviewsaforesaidjudgments,estimatesandassumptionsonagoingconcernbasis.Wherechangesinaccountingestimatesinfluenceonlythe current period of changes, the amount affected by changes shall berecognizedin thecurrent periodof changes;wherechanges influenceboth thecurrentperiodofchangesandthefutureperiod,theamountaffectedbychangesshallberecognizedinthecurrentperiodofchangesandthefutureperiod.Onthebalance sheetdate,theCompany needstomake judgments,estimatesandassumptionsforamountoffinancialstatementitemsinthefollowingimportantfields: 1.Classificationofleases The Company classifies leases into operating leases and financing leases in accordancewithprovisionsofAccountingStandardsforBusinessEnterprisesNo. 21– Leases. In classification, the management needs to make analysis and judgmentbasedonwhetheralltherisksandrewardsrelatedtotheownershipof leased assets have been essentially transferred to the lessee or whether the Company has essentially assumed all the risks and rewards related to the ownershipofleasedassets. 2.Appropriationofbaddebtprovision The Company adopts the allowance method to account the loss on bad debt according to the accounting policy of receivables. Impairment of accounts receivable is based on evaluation of collectability of accounts receivable. Identification of impairment of accounts receivable requires judgments and estimatesmadebythemanagement.Thedifferencebetweentheactualresultand theoriginalestimate willaffect thecarrying amountof accountsreceivable and appropriation or reversal of bad debt provision for accounts receivable in the periodduringwhichtheestimateischanged. 3).Provisionforobsoletestocks Thecompanymeasures inventoriesat thelower ofthe costand netrealizable valueaccording to theinventory accounting policy.If thecost of inventories is higher than thenet realizable valueand theinventories are obsolete andslow movingones,aprovisionfordeclinein valueofinventoriesshallbemade. The declineinvalueofinventoriestothenetrealizablevalueisbasedonevaluationof inventories’salabilityandrealizablevalue.Identificationofthedeclineinvalueof inventories requires the management to obtain exact evidence and make judgmentsandestimatesonthebasisofconsideringfactorssuchaspurposesof holdinginventories and influences of events after thebalance sheet date. The difference between the actual result and the original estimate will affect the carryingamountofinventoriesandmakingorreversalofprovisionfordeclinein valueofinventoriesintheperiodduringwhichtheestimateischanged. 4.Fairvalueoffinancialinstruments Forthefinancialinstrumentswhichhavenoactivetradingmarket,theCompany uses various valuation methods such as discount cash flow model analysis to determinetheirfairvalues.Invaluation,theCompanyneedstoestimateaspects including the futurecash flow,credit risk, marketvolatility and pertinency, and select aproper discountrate. These relatedhypotheses show uncertainty, and theirchangeswillinfluencethefairvalueofafinancialinstrument. 5.Provisionfornon-financialandnon-currentassetimpairment Onthebalancesheetdate,theCompanyjudgeswhetherthenon-currentassets other than financial assets may involve signs showing possible impairment. In additionto theimpairmenttest conducted onan annualbasis fortheintangible assetswith uncertain service life,when there is any sign showing impairment, suchanassetshallalsoundergoanimpairmenttest.Forthenon-currentassets otherthanfinancialassets,ifthereisanysignshowingthattheircarryingamount cannotberecovered,animpairmenttestshallbeperformed. Where the carrying amount of an asset or asset group is higher than the recoverableamount, namely,the higher ofthenetamount gotbyreducing the disposalexpensesfromthefairvalueandthepresentvalueoftheexpectedfuture cashflow,impairmenthasoccurred. The netamount got byreducing thedisposal expenses from the fair value is recognizedby referringtothe salesagreement priceof similarassets in afair transaction or the observable market price and reducing the incremental cost directlyattributabletodisposalofthisasset. Whenthepresentvalueofthefuturecashflowispredicted,greatjudgmentsshall bemadeonthisasset’s(orassetgroup’s)output,sellingprice,relatedoperating costandthediscountrateusedtocalculatethepresentvalue.Whenestimating the recoverable amount, the Company adopts all the related data accessible, includingtheforecastabouttheoutput,sellingpriceandrelatedoperatingcostthat ismadeaccordingtothereasonableandsupportedhypotheses. 6.Depreciationandamortization Fortheinvestmentrealestate,fixed assetsandintangible assets,thecompany makesdepreciationandamortizationusingthestraight-linemethodintheservice lifeaftertakingintoaccounttheirsalvagevalues.TheCompanyregularlyreviews theservicelife soastodetermine theamountofdepreciation andamortization expensestoberecordedintoeveryreportperiod.Theservicelifeisdeterminedby the Company according to the previous experience in similar assets and in combinationwiththeexpectedtechnologyupdate.Ifmajorchangesoccurinthe previousestimate,thedepreciationandamortizationexpenseswillbeadjustedin thefutureperiod. 7.Deferredincometaxassets Withinthelimitthatsufficienttaxableprofitcanbeobtainedverylikelytodeduct theloss,theCompanywillrecognizethedeferredincometaxassetsregardingall theunusedtaxlosses.ThisrequiresthemanagementoftheCompanytousealot ofjudgmentstoestimatethetimeandamountofthefuturetaxableprofitthatmay begeneratedandcombinethetaxplanningstrategytodeterminetheamountof thedeferredincometaxassetsthatshouldberecognized. 8.Incometax In the normal operating activities of the Company, the final tax treatment and calculationof some transactionsare uncertain tosome extent. Whether certain itemscanbechargedbeforetaxdependsonexaminationandapprovalofthetax authority.Ifthefinalrecognitionresultsofthesetaxissuesdifferfromtheinitially estimatedamount,thedifferencewillinfluencethecurrentincometaxanddeferred incometaxintheperiodwhenitisfinallyrecognized. 9.Accruedliabilities Basedon the contractterms, present knowledge andhistorical experience, the Company estimates the expected contract loss, delayed delivery penalty and litigationlossandmakescorrespondingprovision.Incasethatsuchacontingency hasformedacurrentobligationandthefulfillmentofthiscurrentobligationlikely causes outflow of economic benefits from the Company, the Company shall recognizethecontingencyasanaccruedliabilityaccordingtothebestestimateof thenecessaryexpensetobepaidfortheperformanceofthecurrentobligation.To agreat extenttherecognitionandmeasurementofaccruedliabilitiesdependon judgments madebythemanagement. Inthe judgingprocess,themanagement shallevaluatetheassociatedrisks,uncertainty,andcurrencytimevalueofsucha contingency.(30) Changes of accounting policies and accounting estimates and earlyerrorcorrection1.ChangesofaccountingpoliciesTherewerenochangesinaccountingpoliciesoftheCompanyduringtheReportPeriod. 2.Changesofaccountingestimates TherewerenochangesofaccountingestimatesintheCompanyduringtheperiod. 3.Earlyerrorcorrection TheCompanywasinvolvedinnoearlyerrorcorrectionduringtheperiod. VI.Taxes (1)MaintaxcategoriesandtaxratesoftheCompany Category TaxBase TaxRate Added-valuetax Valueaddedbecauseofsalesof 17.00%,13.00%,11.00%,6.00%, commoditiesorrenderingofservices 5.00%,3.00% Businesstax Taxableturnover 3.00%,5.00% Urbanmaintenance& Circulationtaxespayable 5.00%,7.00% constructiontax Educational Circulationtaxespayable 3.00% surcharges Localeducation Circulationtaxespayable 2.00% surcharge Embankment Salesrevenue 0.03%-0.10% protectionfee Businessincometax Taxableincome 15.00%,25.00%,16.50%,34.00% Note: Hong Kong Gree Electric Appliances Sales Limited and Gree Electric Appliances(Brazil)Co.,Ltd.,theoverseassubsidiarycompaniesoftheCompany paythecorrespondingtaxesaccordingtothelocaltaxlaws.Businessincometax ratesare16.50%and34.00%respectively. (2) Business income tax rates of major tax payer enterprises subject to differenttaxrates Taxpayer Incometax Taxpayer Incometax rate rate GreeElectricAppliances(Chongqing) 15.00% GreeElectricAppliances(Hefei) 15.00% Co.,Ltd. Co.,Ltd. ZhuhaiLandaCompressorCo.,Ltd. 15.00% HongKongGreeElectric 16.50% AppliancesSalesCo.,Ltd. ZhuhaiKaibangMotorManufacture 15.00% GreeElectricAppliances(Brazil) 34.00% Co.,Ltd. Co.,Ltd. GreeElectricAppliances GreeGreenRefrigeration (Shijiazhuang)Co.,Ltd. 15.00% TechnologyCenterCo.,Ltd.Of 15.00% Zhuhai ZhuhaiGreeXinyuanElectronicsCo., 15.00% GreeElectricAppliances 15.00% Ltd. (Zhengzhou)Co.,Ltd. GreeElectricAppliances(Wuhan)Co., 15.00% GreeElectricAppliances(Wuhu) 15.00% Ltd. Co.,Ltd. (3)Taxpreferencesandapprovaldocuments 1.TheCompanywas registeredinZhuhai, Guangdongprovince,and hasbeen enjoyingthepreferentialpolicyforthehighandnewtechenterprises(High-tech EnterpriseCertificateNo.GR201444001043).TheCompanyappliedtheincome taxrateof15.00%. 2.Deemedtobehighandnewtechenterprises,thefollowingsub-subsidiariesof the Company have acquired high-tech enterprise certificates, and applied the enterpriseincometaxrateof15.00%in2016: No. Nameoftaxpayer Certificatenumber Timeforacquiring Validperiod thecertificate 1 ZhuhaiLandaCompressorCo.,Ltd. GR201444000002 10October2014 Threeyears 2 HefeiLandaCompressorCo.,Ltd. GF201434000075 2July2014 Threeyears 3 ZhengzhouLandaCompressorCo.,Ltd. GR201441000234 23October2014 Threeyears 4 WuhanLandaCompressorCo.,Ltd. GR201442000567 14October2014 Threeyears 5 ZhuhaiGreeElectricalCo.,Ltd. GR201544000739 10October2015 Threeyears 6 GreeElectricEnterprises(Ma'anshan)Ltd. GR201434000348 2July2014 Threeyears 7 Zhuhai Kaibang Motor Manufacture Co., GR201544101531 10October2015 Threeyears Ltd. 8 HefeiKaibangMotorManufactureCo.,Ltd. GF201434000014 2July2014 Threeyears 9 Henan Kaibang Motor Manufacture Co., GR201441000147 23October2014 Threeyears Ltd. 10 GreeElectricAppliances(Hefei)Co.,Ltd. GR201434000153 2July2014 Threeyears 11 ZhuhaiGreeXinyuanElectronicsCo.,Ltd. GR201644007287 December9, Threeyears 2016 12 Zhuhai GreeDaikin Precision MoldCo., GR201644004203 November30, Threeyears Ltd. 2016 No. Nameoftaxpayer Certificatenumber Timeforacquiring Validperiod thecertificate 13 Gree Green Refrigeration Technology GF201444000382 October9,2014 Threeyears CenterCo.,Ltd.OfZhuhai 14 GreeElectricAppliances(Wuhan)Co.,Ltd. GR201642001340 December13, Threeyears 2016 15 Gree Electric Appliances (Shijiazhuang) GR201613000193 November2, Threeyears Co.,Ltd. 2016 16 GreeElectricAppliances(Zhengzhou)Co., GR201441000307 October23,2014 Threeyears Ltd. 17 GreeElectricAppliances(Wuhu)Co.,Ltd. GR201434000562 July2,2014 Threeyears 3. The following sub-subsidiaries of the Company enjoy the country’s western developmentpolicy,andappliedtheincometaxrateof15.00%. No. Nameoftaxpayer Preferentialtaxpolicy Starttime 1 Gree Electric Appliances (Chongqing) Co., Preferentialtaxpolicyof January1,2008 Ltd. westerndevelopment 2 ChongqingLandaCompressorCo.,Ltd. Preferentialtaxpolicyof January1,2015 westerndevelopment 3 ChongqingKaibangMotorManufactureCo., Preferentialtaxpolicyof January1,2013 Ltd. westerndevelopment VII. Notes and description of major items in consolidated financial statementsUnlessspeciallyindicated,themonetaryunitofthedatalistedinthissectionshallbe RMB Yuan. "Beginning of the period"and "beginning of the year" mean 1January2016;"endoftheperiod"and"endoftheyear"mean31December2016;"previousperiod"meanstheyearof2015;"currentperiod"meanstheyearof2016.(1)Monetarycapital Item Amountattheendoftheperiod AmountatthebeginningoftheperiodCash 2,069,645.31 2,395,117.18Bankdeposits 54,348,628,591.21 39,951,097,932.43Othermonetarycapital 6,108,277,792.95 7,687,087,609.64Depositsincentralbank 2,705,752,325.39 3,769,666,905.93Depositsinotherbanks 32,448,402,376.61 37,409,550,995.35 Total 95,613,130,731.47 88,819,798,560.53Including:Totalamount 109,031,267.06 4,729,515,158.98depositedabroadNote: 1.TheinvoicingandguaranteedepositinothermonetarycapitaloftheCompany isRMB6,077,539,766.88;thecreditmarginisRMB30,738,026.07; 2.ThereserverequirementsondepositintheCompany'sdepositsincentralbank areRMB2,703,513,915.69. 3.TheCompanydidnothaveanyamountinvolvingpotentialrecoveryriskatthe endoftheperiod. (2)Derivativefinancialassets Item Balanceattheendoftheperiod BeginningBalance Derivativefinancialassets- forwardforeignexchange 250,848,418.63 settlement/sale Total 250,848,418.63(3)Notesreceivable1.Notesreceivablearepresentedbycategory Item Amountattheendoftheperiod Amountatthebeginningoftheperiod Banker’sacceptance 29,878,639,384.77 14,879,805,537.96 Tradeacceptance 84,716,093.68 Total 29,963,355,478.45 14,879,805,537.96 2.Notesreceivablewhichhavebeenpledgedbutnotyetdueattheendofthe period Item Pledgedamountattheendoftheperiod Banker’sacceptance 24,406,512,494.25 Total 24,406,512,494.25 3.Notesreceivablewhichhavebeenendorsedordiscountedbutnotyetdueat theendoftheperiod Item Amountwhoserecognitionis Amountwhoserecognitionisnot terminatedattheendoftheperiod terminatedattheendoftheperiod Banker’sacceptance 42,426,151,663.20 Total 42,426,151,663.20 4.TheCompanyhadnonotescarriedforwardtotheaccountsreceivabledueto incapabilityofperformancebythedrawerattheendoftheperiod. (4)Accountsreceivable 1.Theaccountsreceivablearedisclosedbytype Amountattheendoftheperiod Type Bookbalance Baddebtprovision Percentage Percentage Carryingamount Amount (%) Amount (%) Receivableswith significantsingle 515,821,127. 379,709,258 amountsandsingle 36 14.62 .80 73.61 136,111,868.56 impairmentprovision appropriatedAccountsreceivablewithbaddebtprovision 2,991,849,61 84.80 167,426,833 5.60 2,824,422,782.81appropriatedbyaging 6.67 .86combination Otherinsignificant accountsreceivablewith 20,392,776.8 0.58 20,392,776. 100.00 singlebaddebtprovision 2 82 appropriated Total 3,528,063,52 100.00 567,528,869 16.09 2,960,534,651.37 0.85 .48Continued Amountatthebeginningoftheperiod Type Bookbalance Baddebtprovision Percentage Percentage Carryingamount Amount (%) Amount (%)Receivableswithsignificantsingle 455,090,253. 335,028,47amountsandsingle 61 13.44 9.96 73.62 120,061,773.65impairmentprovisionappropriatedAccountsreceivablewithbaddebtprovision 2,907,834,96 85.85 148,684,62 5.11 2,759,150,338.28appropriatedbyaging 7.26 8.98combination Otherinsignificant accountsreceivablewith 24,037,956.6 0.71 24,037,956. 100.00 singlebaddebtprovision 3 63 appropriated Total 3,386,963,17 100.00 507,751,06 14.99 2,879,212,111.93 7.50 5.572.Accountsreceivablewithbaddebtprovisionprovidedbyaginganalysisinthecombinations Amountattheendoftheperiod Aging Percentageof Accountsreceivable Baddebtprovision appropriation(%) Within1year 2,889,416,405.09 144,479,573.99 5.00 1to2years 98,424,647.70 19,684,929.55 20.00 Amountattheendoftheperiod Aging Percentageof Accountsreceivable Baddebtprovision appropriation (%) 2to3years 1,492,467.12 746,233.56 50.00 Over3years 2,516,096.76 2,516,096.76 100.00 Total 2,991,849,616.67 167,426,833.86 5.60 3. Receivables with significant single amounts and single impairment provision appropriated Percentageof Reasonfor Nameofdebtor Bookbalance Baddebtprovision appropriation appropriation(%) Customer 515,821,127.36 379,709,258.80 73.61 Insolvency Total 515,821,127.36 379,709,258.80 73.61 4. Other insignificant accounts receivable with single bad debt provision appropriated Nameofdebtor Bookbalance Baddebtprovision Percentageof Reasonfor appropriation(%) appropriationCustomer1 13,458,727.43 13,458,727.43 100.00 BankruptcyCustomer2 4,715,115.32 4,715,115.32 100.00 InsolvencyCustomer3 1,466,529.62 1,466,529.62 100.00 InsolvencyCustomer4 444,592.97 444,592.97 100.00 InsolvencyCustomer5 307,811.48 307,811.48 100.00 Bankruptcy Total 20,392,776.82 20,392,776.82 100.005. The amount of accounts receivable bad debt provision appropriated by theCompany in thecurrent period was RMB59,173,500.09,and there was nobaddebtprovisionreversedinthecurrentperiod.6. The Company’s accounts receivable actually written off in this period wasRMB8,077,488.07, and there was no important accounts receivable that waswrittenoff.7.TheaggregatebalanceamountofaccountsreceivablefortheCompany’stop5debtorsattheendoftheyearwasRMB1,079,712,287.83,accountingfor30.60%of the total balance of accounts receivable at the end of the year, and theaggregatebalanceamountofbaddebtprovisionappropriatedaccordinglyattheendoftheyearwasRMB407,903,816.82.8.TheCompanyhadnoaccountsreceivablethatwerestoppedfromrecognition duetofinancialassettransferinthecurrentperiod. 9. The Company had no assets or liabilities formed by transfer of accounts receivableanditscontinuousinvolvementintotheminthecurrentperiod. (5)Prepayments 1).Theprepaymentsarelistedbyagingasfollows: Amountattheendoftheperiod Amountatthebeginningoftheperiod Aging Percentage Percentage Amount (%) Amount (%) Within1year 1,801,709,353.49 99.27 809,311,758.91 95.45 1to2years 8,874,382.78 0.49 29,420,687.55 3.47 2to3years 1,223,829.65 0.07 2,743,640.94 0.32 Over3years 3,138,224.86 0.17 6,453,062.31 0.76 Total 1,814,945,790.78 100.00 847,929,149.71 100.00 2. At the end of the period, the Company had no prepayments whose aging exceededoneyearandamountwasimportant. 3.TheCompany’stotalprepaymentbalanceoftop5prepayingentitiesattheend oftheyearwasRMB1,338,718,433.44,accountingfor73.76%oftheprepayment balanceattheendoftheyear. (6)Interestsreceivable 1.Classificationofinterestsreceivable Item Balanceattheendoftheperiod BeginningBalance Interestondeposit 983,107,894.67 1,032,368,135.50 Loaninterest 7,893,862.11 7,150,605.17 Interestofsecurities 54,540,806.65 70,257,709.10 investment Total 1,045,542,563.43 1,109,776,449.77 2.TheCompanyhadnooverdueinterestsreceivableinthecurrentperiod. (7)Otherreceivables 1.Otherreceivablesaredisclosedbytype Amountattheendoftheperiod Type Bookbalance Baddebtprovision Carrying Amount Percentage Amount Percentage amount (%) (%) Otherreceivables withsignificantsingle amountsandsingle impairmentprovision appropriatedOtherreceivablewithbaddebtprovision 287,515,010.46 100.00 42,530,855.79 14.79 244,984,154.67appropriatedbyagingcombination Otherinsignificant receivableswith singlebaddebt provision appropriated Total 287,515,010.46 100.00 42,530,855.79 14.79 244,984,154.67Continued Amountatthebeginningoftheperiod Type Bookbalance BaddebtprovisionCarrying Amount Percentage Amount Percentage amount (%) (%) Otherreceivables withsignificantsingle amountsandsingle impairmentprovision appropriatedOtherreceivablewithbaddebtprovision 295,812,685.59 100.00 41,796,042.59 14.13 254,016,643.00appropriatedbyagingcombination Otherinsignificant receivableswith singlebaddebt provision appropriated Total 295,812,685.59 100.00 41,796,042.59 14.13 254,016,643.002.Otherreceivableswithbaddebtprovisionappropriatedbyaginganalysisinthe combinations Amountattheendoftheperiod Aging Percentageof Otherreceivables Baddebtprovision appropriation(%) Within1year 243,235,448.07 12,161,522.52 5.00 1to2years 10,931,010.76 2,186,202.18 20.00 2to3years 10,330,841.12 5,165,420.58 50.00 Over3years 23,017,710.51 23,017,710.51 100.00 Total 287,515,010.46 42,530,855.79 14.79 3.TheamountofbaddebtprovisionappropriatedbytheCompanyinthecurrent periodwasRMB688,536.07,andtherewasnobaddebtprovisionreversedinthe currentperiod. 4. Theamount of other receivablesactually written off bythe Company in the current period was RMB60,443.00, and there was no important accounts receivablethatwaswrittenoff. 5.Otherreceivablespresentedbythenatureofmoney Natureofmoney Amountattheendoftheperiod Amountatthebeginningofthe period Intercoursefunds 218,000,294.66 222,155,797.44 Hedgingfund 69,514,715.80 73,656,888.15 Total 287,515,010.46 295,812,685.59 6.Thetop5debtorsofotherreceivables Relationship Percentageto Nameofentity withthe Amount Aging totalother Baddebtprovision Company receivables appropriated (%) First Non-related 69,514,715.80 Within 24.18 3,475,735.79 party 1year Second Non-related 9,881,000.00 Within 3.44 494,050.00 party 1year Third Non-related 9,802,900.00 Within 3.41 490,145.00 party 1year Fourth Non-related 7,752,619.62 Within 2.70 387,630.98 party 1year Fifth Non-related 7,109,244.49 Within 2.47 355,462.22 party 1year Total 104,060,479.91 36.20 5,203,023.99 7.TheCompanyhadnootherreceivablesinvolvinggovernmentsubsidiesinthe currentperiod. 8.TheCompanyhadnootherreceivablesthatwerestoppedfromrecognitiondue tofinancialassettransferinthecurrentperiod. 9.TheCompanyhadnoassetsorliabilitiesformedbytransferofotherreceivables anditscontinuousinvolvementintotheminthecurrentperiod. (8)Buyingbackthesaleoffinancialassets 1.Presentedbythecategoryoffinancialassets Categoryofsubjectmatter Balanceattheendoftheperiod BeginningBalance Bonds 1,000,000,000.00 Including:treasurybonds 1,000,000,000.00 Less:provisionforimpairment Carryingamount 1,000,000,000.00 2.Presentedbythecategoryofbusinesses Item Balanceattheendoftheperiod BeginningBalance Pledge-stylereverseRepo 1,000,000,000.00 Total 1,000,000,000.00 3.Provided capital throughthepledgedrepurchase was presentedby category withintheresidualmaturity Term Balanceattheendoftheperiod BeginningBalance Within1month 1,000,000,000.00 Total 1,000,000,000.00 (9)Inventories 1).Typeofinventories Amountattheendoftheperiod Item Bookbalance Provisionforpricefall CarryingamountRawmaterial 3,346,047,573.00 138,267,102.68 3,207,780,470.32Goodsinprocess 969,710,357.81 969,710,357.81Finishedgoods 4,889,087,079.59 41,672,668.31 4,847,414,411.28 Total 9,204,845,010.40 179,939,770.99 9,024,905,239.41Continued AmountatthebeginningoftheperiodItem Bookbalance Provisionforpricefall CarryingamountRawmaterial 3,779,129,197.57 112,001,486.87 3,667,127,710.70Goodsinprocess 1,292,887,741.96 1,292,887,741.96 Amountatthebeginningoftheperiod Item Bookbalance Provisionforpricefall CarryingamountFinishedgoods 4,554,349,862.15 40,422,602.30 4,513,927,259.85 Total 9,626,366,801.68 152,424,089.17 9,473,942,712.512.Provisionforobsoletestocks Increaseinthecurrentperiod Decreaseforthe currentperiod Typeof Amountatthe Amountattheendinventories beginningof Amountof oftheperiod theperiod appropriation Others Reversed Write-off forthecurrent amount amountperiod Raw 112,001,486.87 14,309,951.01 11,955,664.80 138,267,102.68 material Finished 40,422,602.30 681,057.07 569,008.94 41,672,668.31 goods Total 152,424,089.17 14,991,008.08 12,524,673.74 179,939,770.99 Specific bases for making a provision for decline in value of inventories and reasonsofreversingorwritingofftheprovisionfordeclineinvalueofinventoriesin thecurrentperiod Reasonofwritingoff Specificbasisformakinga Reasonofreversingtheprovision theprovisionfor Item provisionfordeclineinvalue fordeclineinvalueofinventoriesin declineinvalueof ofinventories thecurrentyear inventoriesinthe currentyear Raw Theloweroftheinventorycost material andnetrealizablevalue Finished Theloweroftheinventorycost goods andnetrealizablevalue 3. The inventory balance at the end of the period did not contain capitalized amountsofborrowingcosts. 4. Theinventory balance at the end of theperiod did notinvolve finished but unsettledassetsformedunderconstructioncontract. (10)Othercurrentassets Item Amountattheendoftheperiod Amountatthebeginningof theperiod Hedginginstruments 19,564,070.50 43,205,378.75 Financingproducts 1,300,000,000.00 1,580,000,000.00 Inputtaxtobedeductedandprepaidtax 672,972,432.93 61,628,100.79 Total 1,992,536,503.43 1,684,833,479.54 (11)Disbursementofloansandadvances 1.Distributionofenterprisesandindividuals Item Amountattheendoftheperiod Amountatthebeginningof theperiod Disbursement of corporate loans and advances Including:(1)Loan 3,019,591,337.33 5,297,312,000.00 (2)Discount 1,839,344,548.42 2,777,807,263.38 Including: discount asset interest -11,130,112.82 -24,891,213.22 adjustment Totaldisbursementofcorporateloansand 4,858,935,885.75 8,075,119,263.38 advances Less:loanlossprovision 121,751,649.96 202,500,261.92 Including:combinedappropriation 121,751,649.96 202,500,261.92 Carrying amount of disbursement of 4,737,184,235.79 7,872,619,001.46 corporateloansandadvances 2.Changesinlossprovisionforloans Item Amountattheendoftheperiod Amountatthebeginningof theperiod BeginningBalance 202,500,261.92 165,867,755.21 Appropriationforthecurrentyear -80,748,611.96 36,632,506.71 Balanceattheendoftheperiod 121,751,649.96 202,500,261.92 (12)Financialassetsavailableforsale 1.Classificationoffinancialassetsavailableforsale Balanceattheendoftheperiod Item Provisionfor Bookbalance impairment Carryingamount Debtinstrumentavailableforsale 894,690,850.00 894,690,850.00 Including:amountmeasuredatthe 894,690,850.00 894,690,850.00 fairvalue Equityinstrumentavailableforsale 418,512,710.40 900,000.00 417,612,710.40 Including:amountmeasuredatthe 417,612,710.40 417,612,710.40 fairvalue Amountmeasuredbycost 900,000.00 900,000.00 Trustproducts 72,000,000.00 72,000,000.00 Total 1,385,203,560.40 900,000.00 1,384,303,560.40 Continued BeginningBalance Item Provisionfor Bookbalance impairment CarryingamountDebt instrument available for 926,838,050.00 926,838,050.00sale Including:amountmeasuredat 926,838,050.00 926,838,050.00 BeginningBalance Item Provisionfor Bookbalance impairment Carryingamount thefairvalue Equityinstrumentavailablefor 1,688,781,127.56 900,000.00 1,687,881,127.56 sale Including:amountmeasuredat 1,687,881,127.56 1,687,881,127.56 thefairvalue Amount measured by 900,000.00 900,000.00 cost Trustproducts 90,000,000.00 90,000,000.00 Total 2,705,619,177.56 900,000.00 2,704,719,177.56 2.Available-for-salefinancialassetsmeasuredatthefairvalueattheendofthe period Classificationoffinancialassetsavailablefor Equityinstrument Debtinstrument Total sale availableforsale availableforsale Equity instrument cost/Debt instrument 617,323,352.86 869,544,485.48 1,486,867,838.34 amortizationcost Fairvalue 417,612,710.40 894,690,850.00 1,312,303,560.40 Amountchangeinthefairvaluecumulatively -282,610,139.11 25,146,364.52 -257,463,774.59 recordedintoothercomprehensiveincome Impairmentamountappropriated 3.Available-for-salefinancialassetsmeasuredatcostattheendoftheperiod Bookbalance Provisionforimpairment Shareholding Cash Nameof Amountat Increase Decrease Amountat Increase Decrease ratiointhe dividend invested the inthe forthe Amountat the inthe forthe Amountat investedentity forthe entities beginning current current theendof beginning current current theendof (%) current ofthe period period theperiod ofthe period period theperiod period period period Zhuhai Dasheng 900,000.00 900,000.00 900,000.00 900,000.00 3.13 Co.Ltd. Total 900,000.00 900,000.00 900,000.00 900,000.00 4.Changesinimpairmentofavailable-for-salefinancialassetsintheReportPeriod Classificationoffinancialassets Equityinstrument Debtinstrument Total availableforsale availableforsale availableforsale Balanceofimpairmentappropriatedat 900,000.00 900,000.00 thebeginningoftheperiod Appropriationforthecurrentperiod Decreaseforthecurrentperiod Balanceofimpairmentappropriatedat 900,000.00 900,000.00 theendoftheperiod 5.TheCompanyhadnodramaticdecreaseorpersistentdecreaseintheclosing fairevalueofequityinstrumentavailableforsaleinthecurrentperiod. (13)Long-termequityinvestments BeginningBalance Increase/Decreaseinthecurrentperiod Appropr Balanceof Nameofinvested Investment Adjustment Cash iated Balanceatthe provisionfor entities Provisionfor Additional profits/losses ofother Changes dividends provisio endofthe impairment Originalvalue impairment investment Disinvestment recognized comprehens inother orprofits nfor Others period attheendof underthe iveincome equities declaredto impairm theperiod equitymethod distribute ent 1.Partnership Songyuan Food 60,891,468.90 4,234,163.53 65,125,632.43 GroupCo.,Ltd. Subtotal 60,891,468.90 4,234,163.53 65,125,632.43 2.Jointventure (Vietnam) Gree Electric 1,940,009.35 1,940,009.35 1,940,009.35 1,940,009.35 Appliances,Inc. Liaowang All Media 22,423,869.04 3,851,569.67 26,275,438.71 Communication Co.,Ltd. Beijing Gree Technology Co., 1,252,032.71 291,384.83 1,543,417.54 Ltd. Chongqing Pargo Mechanical 10,891,816.90 -523,735.65 10,368,081.25 Equipment Co., Ltd. GREE VOLINCO (HONG KONG) 419,538.00 181,063.58 600,601.58 LIMITED Subtotal 36,507,728.00 1,940,009.35 419,538.00 3,800,282.43 40,727,548.43 1,940,009.35 Total 97,399,196.90 1,940,009.35 419,538.00 8,034,445.96 105,853,180.86 1,940,009.35 (14)Investmentrealestate 1.Informationofinvestmentrealestate Item Housesandbuildings Total 1.Totaloforiginalcarryingamount 1.Beginningbalance 574,204,838.52 574,204,838.52 2.Increasedamountinthecurrentperiod 127,410,609.25 127,410,609.25 Including:amounttransferredinto 127,410,609.25 127,410,609.25 constructioninprogress 3.Decreasedamountinthecurrentperiod 121,243.33 121,243.33 Including:amounttransferredintofixed 121,243.33 121,243.33 assets 4.Balanceattheendoftheperiod 701,494,204.44 701,494,204.44 2.Accumulateddepreciationand accumulatedamortization 1.Beginningbalance 82,663,988.86 82,663,988.86 2.Increasedamountinthecurrentperiod 21,099,340.73 21,099,340.73 Including:appropriationoramortization 21,099,340.73 21,099,340.73 3.Decreasedamountinthecurrentperiod 5,759.10 5,759.10 Including:amounttransferredintofixed 5,759.10 5,759.10 assets 4.Balanceattheendoftheperiod 103,757,570.49 103,757,570.49 3.Provisionforimpairment 4.Carryingamount 1.Carryingamountattheendoftheperiod 597,736,633.95 597,736,633.95 2.Carryingamountatthebeginningofthe 491,540,849.66 491,540,849.66 period 2.Theoriginalvalueoftheinvestmentrealestateofwhichthecertificateoftitle hasnotyetobtainedbytheCompanywasRMB148,424,506.45attheendofthe period,andtherewasnoflawinpropertyrights. (15)Fixedassets 1.Informationoffixedassets Item Housesandbuildings Machineryequipment Transportationequipment Electronicequipment Otherequipments Total 1.Totaloforiginalcarryingamount: 1.Beginningbalance 11,023,730,601.04 9,134,149,525.49 598,887,765.65 650,098,351.71 316,050,673.13 21,722,916,917.02 2.Increasedamountinthecurrentperiod 2,072,952,725.78 1,749,920,708.73 43,004,494.37 122,165,231.73 81,861,388.34 4,069,904,548.95 Including:(1)Procurement 1,515,673,405.53 43,004,494.37 122,165,231.73 81,861,388.34 1,762,704,519.97 (2)Amounttransferredintoconstructionin 2,072,831,482.45 234,247,303.20 2,307,078,785.65 progress (3)Amounttransferredintoinvestmentreal 121,243.33 121,243.33 estate 3.Decreasedamountinthecurrentperiod 178,733,755.29 22,835,247.51 15,000,334.61 7,333,598.06 223,902,935.47 Including:Disposalorscrap 178,733,755.29 22,835,247.51 15,000,334.61 7,333,598.06 223,902,935.47 4.Balanceattheendoftheperiod 13,096,683,326.82 10,705,336,478.93 619,057,012.51 757,263,248.83 390,578,463.41 25,568,918,530.50 2.Accumulateddepreciation 1.Beginningbalance 1,815,042,931.58 3,503,123,791.52 320,585,140.19 438,485,978.44 194,943,254.02 6,272,181,095.75 2.Increasedamountinthecurrentperiod 428,659,700.70 972,280,174.28 90,086,202.79 145,002,091.84 77,523,516.52 1,713,551,686.13 Including:(1)Appropriation 428,653,941.60 972,280,174.28 90,086,202.79 145,002,091.84 77,523,516.52 1,713,545,927.03 (2)Amounttransferredintoinvestmentreal 5,759.10 5,759.10 estate 3.Decreasedamountinthecurrentperiod 99,680,429.97 16,757,644.35 2,719,194.99 3,092,185.20 122,249,454.51 Including:Disposalorscrap 99,680,429.97 16,757,644.35 2,719,194.99 3,092,185.20 122,249,454.51 4.Balanceattheendoftheperiod 2,243,702,632.28 4,375,723,535.83 393,913,698.63 580,768,875.29 269,374,585.34 7,863,483,327.37 3.Provisionforimpairment 1.Beginningbalance 13,995,429.77 4,462,623.00 124,245.35 340,445.95 18,922,744.07 2.Increasedamountinthecurrentperiod 4,861,077.55 8,282.39 24,475.49 10,171.84 4,904,007.27 Including:appropriation 4,861,077.55 8,282.39 24,475.49 10,171.84 4,904,007.27 3.Decreasedamountinthecurrentperiod 24,768.57 22,257.70 47,026.27 Including:Disposalorscrap 24,768.57 22,257.70 47,026.27 4.Balanceattheendoftheperiod 13,995,429.77 9,298,931.98 8,282.39 148,720.84 328,360.09 23,779,725.07 4.Carryingamount 1.Carryingamountattheendoftheperiod 10,838,985,264.77 6,320,314,011.12 225,135,031.49 176,345,652.70 120,875,517.98 17,681,655,478.06 2.Carryingamountatthebeginningofthe 9,194,692,239.69 5,626,563,110.97 278,302,625.46 211,488,127.92 120,766,973.16 15,431,813,077.20 period Note: The depreciation appropriated in the current period was RMB1,713,545,927.03, and the original price of construction in progress transferredintofixed assetsduring theperiod wasRMB2,307,078,785.65.Asof December 31, 2016, the original value of houses and buildings of which the certificateoftitlehasnotyetobtainedbytheCompanyisRMB8,773,913,735.29. 2.TheCompanyhadnotemporaryidlefixedassetsinthecurrentperiod. 3.TheCompanyhadnofixedassetsleasedinthroughfinancingleases. 4.TheCompanyhadnofixedassetsleasedoutthroughoperatingleases. (16)Constructioninprogress 1.Informationofconstructioninprogress Amountattheendoftheperiod Amountatthebeginningoftheperiod Item Provision Carrying Provision Bookbalance for amount Bookbalance for Carryingamount impairment impairment ChongqingGree 2,615.28 2,615.28 536,450,543.91 536,450,543.91 project WuhuGreeproject 19,094,736.70 19,094,736.70 532,806,043.38 532,806,043.38 ZhengzhouGree 8,730,392.91 8,730,392.91 286,394,999.36 286,394,999.36 PhaseIproject ShijiazhuangGree 15,648,723.23 15,648,723.23 121,878,738.99 121,878,738.99 project ChangshaHVAC 117,034,936.05 117,034,936.05 281,421,364.14 281,421,364.14 project WuhanGreeproject 33,638,875.33 33,638,875.33 117,494,691.58 117,494,691.58 Landacompressor 109,077,729.01 109,077,729.01 37,684,587.53 37,684,587.53 project GreeHQproject 92,157,312.16 92,157,312.16 45,748,249.58 45,748,249.58 GreeTOSOT 77,697,574.40 77,697,574.40 250,800.00 250,800.00 (Suqian)project WuhuPrecision Manufacturing 59,725,831.97 59,725,831.97 36,339,251.23 36,339,251.23 project Others 48,735,029.80 48,735,029.80 48,368,560.32 48,368,560.32 Total 581,543,756.84 581,543,756.84 2,044,837,830.02 2,044,837,830.02 2.Changesinconstructionprojectsinprogress Including: Interest Amountatthe Amount Amountatthe Amountof Amountof capitalization ItemName beginningofthe Increaseinthe Amounttransferred transferredinto endofthe capitalization capitalization rateforthe CapitalSource period currentperiod intofixedassets investmentreal period ofinterests ofinterestsfor currentperiod ofInvestment estate thecurrent (%) period ChongqingGree 536,450,543.91 42,144,491.26 578,592,419.89 2,615.28 Raised project independently WuhuGree 532,806,043.38 489,409,901.27 24,301,405.41 19,094,736.70 Raised project independently ZhengzhouGree 286,394,999.36 42,908,975.78 218,068,244.74 102,505,337.49 8,730,392.91 Raised PhaseIproject independently Shijiazhuang 121,878,738.99 37,770,954.12 144,000,969.88 15,648,723.23 Raised Greeproject independently ChangshaHVAC 281,421,364.14 230,168,988.98 394,555,417.07 117,034,936.05 Raised project independently WuhanGree 117,494,691.58 121,104,755.30 204,626,178.41 334,393.14 33,638,875.33 Raised project independently Landa Raised compressor 37,684,587.53 110,936,130.12 39,542,988.64 109,077,729.01 independently project GreeHQproject 45,748,249.58 61,901,439.29 15,492,376.71 92,157,312.16 Raised independently GreeTOSOT 250,800.00 77,446,774.40 77,697,574.40 Raised (Suqian)project independently WuhuPrecision Raised Manufacturing 36,339,251.23 127,493,407.24 104,106,826.50 59,725,831.97 independently project Others 48,368,560.32 119,319,405.23 118,683,462.54 269,473.21 48,735,029.80 Raised independently Total 2,044,837,830.02 971,195,321.72 2,307,078,785.65 127,410,609.25 581,543,756.84 Raised independently 3. The Company had no impairment of constructionin progressin the current period. (17)Intangibleassets Item Landuserights Patentrightsandothers Total 1.Totaloforiginalcarryingamount 1.Beginningbalance 2,945,239,569.13 18,899,842.05 2,964,139,411.18 2.Increasedamountinthecurrentperiod 772,205,744.28 969,474.81 773,175,219.09 Including:Procurement 772,205,744.28 969,474.81 773,175,219.09 3.Decreasedamountinthecurrent 1,367,530.52 1,367,530.52 period Including:Disposal 1,367,530.52 1,367,530.52 4.Balanceattheendoftheperiod 3,716,077,782.89 19,869,316.86 3,735,947,099.75 2.Accumulatedamortization 1.Beginningbalance 297,811,763.91 10,183,835.53 307,995,599.44 2.Increasedamountinthecurrentperiod 70,871,084.89 2,436,385.33 73,307,470.22 Including:appropriation 70,871,084.89 2,436,385.33 73,307,470.22 3.Decreasedamountinthecurrent 632,254.63 632,254.63 period Including:Disposal 632,254.63 632,254.63 4.Balanceattheendoftheperiod 368,050,594.17 12,620,220.86 380,670,815.03 3.Provisionforimpairment 4.Carryingamount 1.Carryingamountattheendofthe 3,348,027,188.72 7,249,096.00 3,355,276,284.72 period 2.Carryingamountatthebeginningof 2,647,427,805.22 8,716,006.52 2,656,143,811.74 theperiod (18)Deferredincometaxassets/Deferredincometaxliabilities 1.Deferredincometaxassetsnotoffset Balanceattheendoftheperiod BeginningBalance Item Deductibletemporary Deferredincome Deductible Deferredincome differences taxassets temporary taxassets differences Assetsdepreciation 827,413,296.99 132,246,754.17 410,412,835.71 77,110,236.61 reserves Deductibleloss 456,836,817.78 114,209,204.47 301,321,074.64 75,330,268.67 Accruedexpenses 57,983,419,537.57 8,697,537,604.97 51,189,425,884.98 7,678,526,424.69 Payrollpayable 414,478,017.73 62,171,702.65 715,736,768.61 107,674,163.51 Amortizationof 1,084,532,006.00 163,007,525.36 1,050,783,076.81 157,740,989.92 assets Others 3,295,065,226.21 498,544,360.53 4,402,472,094.43 667,994,052.87 Total 64,061,744,902.28 9,667,717,152.15 58,070,151,735.18 8,764,376,136.27 2.Deferredincometaxliabilitiesnotoffset Balanceattheendoftheperiod BeginningBalance Item Taxabletemporary Deferredincome Taxabletemporary Deferredincome differences taxliabilities differences taxliabilities Changesinfairvalue offinancialassets 25,146,364.52 6,286,591.13 52,755,526.90 13,188,881.73 availableforsale Changesinfairvalue ofderivativefinancial 288,444,183.59 43,830,564.01 assets Unrealizedexchange 219,749,465.07 36,258,661.19 gainandloss Interestsreceivable 1,045,542,563.43 192,010,519.27 1,109,776,449.77 222,911,701.49 Others 10,682,559.16 1,623,075.76 48,702,885.64 8,035,976.13 Total 1,589,565,135.77 280,009,411.36 1,211,234,862.31 244,136,559.35 3. Deferredincometaxassetsorliabilitieslisted bynetamountafteroffsetting: none 4.Breakdownofdeductibletemporarydifferencesordeductiblelossesofdeferred incometaxassetsnotrecognized Item Amountattheendofthe Amountatthe period beginningoftheperiod Deductibletemporarydifferences 618,551,183.95 414,210,775.76 Deductibleloss 53,024,670.60 51,266,242.49 Total 671,575,854.55 465,477,018.25 5.Thedeductiblelossesofdeferredincometaxassetsnotrecognizedwillbecome dueinthefollowingyears: Year Amountattheendofthe Amountatthebeginningoftheperiod period 2017 40,241,925.02 1,640,204.26 2018 7,462,548.70 40,241,925.02 2019 1,050,034.77 7,462,548.70 2020 871,529.74 1,050,034.77 2021 3,398,632.37 871,529.74 Total 53,024,670.60 51,266,242.49 (19)Othernon-currentassets Item Amountattheendoftheperiod Amountatthebeginningoftheperiod Advancepaymentfortheproject 9,662,883.09 13,936,886.60 Advancepaymentforequipment 1,183,323,428.17 643,063,213.53 Advancepaymentoflandtransfer 118,604,000.00 fee Total 1,311,590,311.26 657,000,100.13 (20)Short-termborrowings 1.Classificationofshort-termborrowings: Item Amountattheendoftheperiod Amountatthebeginningoftheperiod Guaranteedloan 825,378,407.00 1,328,471,206.03 Borrowingoncredit 9,875,703,238.32 4,948,188,930.00 Total 10,701,081,645.32 6,276,660,136.03 2.Therewasnoshort-termborrowingthathasbeenoverduebutnotyetrepaidin thecurrentperiod. (21)Borrowingsfromcentralbank Amountatthe Increaseinthe Decreaseforthe Amountattheendof Item beginningofthe currentperiod currentperiod theperiod period Billsrediscounted 8,000,000.00 14,833,543.30 18,559,543.30 4,274,000.00 Total 8,000,000.00 14,833,543.30 18,559,543.30 4,274,000.00 (22)Depositsfromcustomersandinterbank Item Amountattheendoftheperiod Amountatthebeginningoftheperiod Currentdeposits 24,465,859.45 60,747,235.82 Timedeposits 80,776,000.00 80,865,000.00 Draftdeposits 40,000,000.00 425,000,000.00 Total 145,241,859.45 566,612,235.82 (23)Derivativefinancialliabilities Item Balanceattheendoftheperiod BeginningBalance Derivativefinancialliabilities- forwardforeignexchange 394,763,490.33 1,189,028,366.37 settlement/sale Total 394,763,490.33 1,189,028,366.37(24)Notespayable Item Amountattheendoftheperiod AmountatthebeginningoftheperiodBanker'sacceptancebill 9,127,336,849.68 7,427,635,753.74 Total 9,127,336,849.68 7,427,635,753.74Note:Therewerenodueandunpaidnotespayableattheendoftheperiod.(25)Accountspayable1.Classification Item Amountattheendoftheperiod AmountatthebeginningoftheperiodWithin1year 29,234,118,164.73 24,430,253,525.991to2years 239,381,969.92 285,936,716.792to3years 30,764,375.53 26,375,396.94 Item Amountattheendoftheperiod Amountatthebeginningoftheperiod Over3years 37,202,350.92 51,702,732.75 Total 29,541,466,861.10 24,794,268,372.47 2.Therewerenoimportantaccountspayablewithagingexceeding1yearatthe endoftheperiod. (26)Advancereceivedfromcustomers 1.Classification Item Amountattheendoftheperiod Amountatthebeginningoftheperiod Loans 10,021,885,515.93 7,619,598,042.86 Total 10,021,885,515.93 7,619,598,042.86 2.Therewasnoadvancereceivedfromcustomerswithagingexceeding1yearat theendoftheperiod. 3.Therewerenoaccountsreceivableinadvancecorrespondingtoanysettledand uncompletedconstructioncontractprojectattheendoftheperiod. (27)Payrollpayable 1.Presentationbycategory Item BeginningBalance Increaseinthe Decreaseforthe Balanceatthe currentperiod currentperiod endoftheperiod 1.Short-termwages 1,697,113,495.90 5,359,621,409.33 5,354,216,468.60 1,702,518,436.63 andsalaries 2.Separationbenefits -definedcontribution 169,109.61 402,134,238.26 401,872,357.44 430,990.43 plan Total 1,697,282,605.51 5,761,755,647.59 5,756,088,826.04 1,702,949,427.06 2.Short-termwagesandsalaries Item BeginningBalance Increaseinthe Decreaseforthe Balanceatthe currentperiod currentperiod endoftheperiod 1.Wages,bonuses, subsidiesand 1,308,427,557.99 4,557,980,643.63 4,629,378,402.56 1,237,029,799.06 allowances 2.Employeewelfares 379,895,340.15 379,895,340.15 3.Socialinsurance 74,006.71 166,263,912.76 166,261,396.73 76,522.74 premiums Including:Medical 67,252.73 138,544,493.43 138,542,054.94 69,691.22 insurancepremium Industrialinjury 1,896.95 13,676,392.80 13,676,467.34 1,822.41 insurancepremium Birthinsurance 4,857.03 14,043,026.53 14,042,874.45 5,009.11 premium 4.Housing 585,200.38 108,636,772.87 108,691,049.42 530,923.83 accumulationfunds Item BeginningBalance Increaseinthe Decreaseforthe Balanceatthe currentperiod currentperiod endoftheperiod 5.Laborunion expendituresand 388,026,730.82 146,844,739.92 69,990,279.74 464,881,191.00 employeeeducation funds Total 1,697,113,495.90 5,359,621,409.33 5,354,216,468.60 1,702,518,436.63 3.Separationbenefits-definedcontributionplan Item BeginningBalance Increaseinthe Decreaseforthe Balanceatthe currentperiod currentperiod endoftheperiod 1.Basicendowment 146,442.07 380,594,249.18 380,322,934.26 417,756.99 insurancepremium 2.Unemployment 22,667.54 21,539,989.08 21,549,423.18 13,233.44 insurancepremium Total 169,109.61 402,134,238.26 401,872,357.44 430,990.43 (28)Taxespayable Item Balanceattheendoftheperiod BeginningBalance Added-valuetax 972,091,939.14 679,065,489.72 Businessincometax 1,756,176,018.77 1,945,548,593.78 Others 398,034,796.38 353,187,397.05 Total 3,126,302,754.29 2,977,801,480.55 (29)Interestspayable Item Amountattheendoftheperiod Amountatthebeginningoftheperiod Loaninterest 40,686,738.58 45,942,872.26 Interestoncustomerbankdeposits 1,095,238.67 2,443,837.49 Total 41,781,977.25 48,386,709.75 Note:Therewasnooverdueandunpaidinterestattheendoftheperiod. (30)Dividendspayable Nameofentity Amountattheendoftheperiod Amountatthebeginningofthe period Corporateshareholder 87,129,929.69 105,031.73 Publicshareholder 602,881.87 602,881.87 Total 87,732,811.56 707,913.60 (31)Otherpayables 1.Otherpayablespresentedbythenatureofmoney Item Balanceattheendoftheperiod BeginningBalance Intercoursefunds 1,881,107,200.55 2,098,888,616.86 Deposit 341,506,774.27 508,713,319.35 Total 2,222,613,974.82 2,607,601,936.21 2.Otherimportantpayableswithagingexceeding1year Nameofentity Balanceattheendofthe Aging Causeoffailingtorepay period orcarryover Entity1 187,342,963.94 2-3years Unsettled Total 187,342,963.94 (32)Non-currentliabilitiesduewithinoneyear Item Amountattheendoftheperiod Amountatthebeginningoftheperiod Long-termborrowings duewithin 2,403,745,557.37 oneyear Including:Long-termpledgeloans 2,403,745,557.37 duewithinoneyear Total 2,403,745,557.37 (33)Othercurrentliabilities Item Amountattheendoftheperiod Amountatthebeginningoftheperiod Installationandrepaircosts 1,458,677,991.64 1,687,646,974.96 Salesrebate 58,219,962,218.02 53,049,708,823.35 Fairvalueofhedginginstruments 43,442,850.00 Others 80,208,362.28 227,053,219.17 Total 59,758,848,571.94 55,007,851,867.48 (34)Long-termpayrollpayable 1.Long-termpayrollpayable Item Amountattheendoftheperiod Amountatthebeginningoftheperiod Definedbenefitplan 117,732,064.00 127,518,492.00 Total 117,732,064.00 127,518,492.00 2.Changesinthedefinedbenefitplan Item Amountforthecurrentperiod Amountforthepreviousperiod 1.Beginningbalance 127,518,492.00 106,716,248.00 2.Definedbenefitcostrecordedinthe -13,931,648.00 7,022,449.00 currentprofitsandlosses 1)Servicecostofthecurrentperiod 2,028,468.00 3,053,868.00 2.Pastservicecost -20,082,414.00 3)Netinterest 4,122,298.00 3,969,581.00 3.Defined benefit cost recorded in 8,412,589.00 17,952,049.00 othercomprehensiveincome Including: actuarial gains (losses 8,412,589.00 17,952,049.00 representedby“-”) 4.Otherchanges -4,267,369.00 -4,172,254.00 Including: paid benefits (payment -4,267,369.00 -4,172,254.00 representedby“-”) 5.Balanceattheendoftheperiod 117,732,064.00 127,518,492.00 3.Netliabilities(netassets)ofthedefinedbenefitplan Item Amountforthecurrentperiod Amountforthepreviousperiod 1.Beginningbalance 127,518,492.00 106,716,248.00 2.Definedbenefitcostrecordedinthe -13,931,648.00 7,022,449.00 currentprofitsandlosses 3.Definedbenefitcostrecordedin 8,412,589.00 17,952,049.00 othercomprehensiveincome 4.Otherchanges(payment -4,267,369.00 -4,172,254.00 representedby“-”) 5.Balanceattheendoftheperiod 117,732,064.00 127,518,492.00 4.Notesforthedefinedbenefitplan: (1)Contentsandassociatedrisksofthedefinedbenefitplan,anditsinfluenceson theCompany’sfuturecashflow,timeanduncertainty TheCompany’sdefined benefitplanisasupplementarypost-retirementpension planforsomeretirees,earlyretireesandservingofficersafternormalretirement. The present obligation value of this defined benefit plan was recognized by Towers-Watson actuarial company using the projected unit credit method on December31,2016.Thisdefinedbenefitplandidn’tinvolvebigamount,soitdidn’t leadtosignificantinfluenceonthefuturecashflowtheCompany. (2)Significantactuarialassumptionsandsensitivityanalysisresultsofthedefined benefitplan AccordingtorequirementsoftheAccountingStandardsforBusinessEnterprises No.9-Employee Compensation,thediscountrateadopted bytheCompanyat thetimeofdiscountisrecognizedbythemarketyieldsofhigh-quality corporate bondsinthetreasurybondsoractivemarketthatmatchtheobligatorytermand currencyofthedefinedbenefitplanonthebalancesheetdate;theannualgrowth rates and annual separation rates of all benefits are based on the actual measurementdata oftheCompany; thedeathrateisrecognizedbyreferringto theexperiencelife tableforinsurancebusiness ofChinaLifeInsurance(Group) Company.Sensitivityanalysisofdiscountrate: Sensitivityanalysisofdiscountrate InfluenceontheamountattheendoftheperiodInfluenceonthepresentobligationvalueofdefined -9,881,172.00welfarebenefitbyincreaseofonepercentagepointInfluenceonthepresentobligationvalueofdefined 12,619,915.00welfarebenefitbydecreaseofonepercentagepoint Sensitivityanalysisofdiscountrate Influenceontheamountattheendoftheperiod Influenceon the servicecost byincrease ofone -311,141.00 percentagepoint Influenceon theservice costbydecreaseofone 329,177.00 percentagepoint (35)Deferredincome Item BeginningBalance Increaseinthe Decreaseforthe Balanceattheend currentperiod currentperiod oftheperiod Government 134,571,708.03 71,343,966.78 33,834,630.06 172,081,044.75 subsidies Total 134,571,708.03 71,343,966.78 33,834,630.06 172,081,044.75 Itemsinvolvinggovernmentsubsidies: Amountof Amount Pertinentto Beginning subsidiesadded recordedinto Change Balanceatthe assets/Pertin Item Balance inthecurrent non-operating (Increase:+; endofthe entto period revenueinthe Decrease:-) period incomes currentperiod Environmental Pertinentto protectionupgrade 89,226,025.30 2,598,666.78 29,529,174.05 62,295,518.03 incomes project Scientificresearch Pertinentto projectof 40,287,575.04 68,245,300.00 3,981,283.17 104,551,591.87 incomes refrigeratingfield Others 5,058,107.69 500,000.00 324,172.84 5,233,934.85 Pertinentto incomes Total 134,571,708.03 71,343,966.78 33,834,630.06 172,081,044.75 (36)Equity Amountatthe Increase/Decreasefortheperiod(+,-) Item beginningofthe Amountatthe period New Bonus StockConverted Others Subtotal endoftheperiod Issue Issue fromReserve Total number 6,015,730,878.00 6,015,730,878.00 ofstocks (37)Capitalreserves Amountatthe Increaseinthe Decreasefor Amountattheend Item beginningofthe currentperiod thecurrent oftheperiod period period Capital(equity) 106,499,089.83 106,499,089.83 premium Othercapitalreserves 79,451,536.88 2,550,000.00 76,901,536.88 Total 185,950,626.71 2,550,000.00 183,400,626.71 (38)Othercomprehensiveincome Amountforthecurrentperiod Less:Amount recognizedinto Beginning other Amount Amount Balanceatthe Item Balance Amountincurred comprehensive Less:Income attributabletothe attributableto endoftheperiod beforeincometaxin incomeinprevious taxexpenses parentcompany minority thecurrentperiod periodand aftertax shareholders transferredtothe aftertax currentprofitsand losses 1.Othercomprehensiveincomenottobereclassifiedtoprofit -17,831,799.00 -8,412,589.00 -8,412,589.00 -26,244,388.00 orlossinsubsequentperiods Including:Changesduetorecalculatingandredefiningnet -17,831,799.00 -8,412,589.00 -8,412,589.00 -26,244,388.00 liabilitiesandnetassetsofthebenefitplan Sharesenjoyedinothercomprehensiveincomenottobe reclassifiedtoprofitorlossintheinvestedentityunderthe equitymethod 2.Othercomprehensiveincometobereclassifiedtoprofitor -107,096,727.03 -123,145,151.18 -124,270,264.68 47,182,000.82 -43,830,898.58 -2,225,988.74 -150,927,625.61 lossinsubsequentperiods Including:Sharesenjoyedinothercomprehensiveincometo bereclassifiedtoprofitorlossintheinvestedentityunderthe equitymethod Gainsandlossesfromchangesinfairvalueoffinancial -198,347,090.96 -117,730,422.98 -87,343,842.18 39,270,108.32 -67,430,700.38 -2,225,988.74 -265,777,791.34 assetsavailableforsale Gains and losses from held-to-maturity investments reclassifiedasfinancialassetsavailableforsale Effectivepartofcashflowhedginggainsandlosses -36,926,422.50 15,819,527.50 -36,926,422.50 7,911,892.50 44,834,057.50 7,907,635.00 Differencearisingfromtranslationoffinancialstatementsin 128,176,786.43 -21,234,255.70 -21,234,255.70 106,942,530.73 foreigncurrency Total -124,928,526.03 -131,557,740.18 -124,270,264.68 47,182,000.82 -52,243,487.58 -2,225,988.74 -177,172,013.61 (39)Surplusreserve Amountatthe Increaseinthe Decreaseforthe Amountattheend Item beginningofthe currentperiod currentperiod oftheperiod period Statutorysurplus 2,530,583,291.14 2,530,583,291.14 reserve Discretionary 969,088,265.45 969,088,265.45 surplusreserve Total 3,499,671,556.59 3,499,671,556.59 (40)Generalriskprovisions Amountatthe Increaseinthe Decreaseforthe Amountattheend Item beginningofthe currentperiod currentperiod oftheperiod period Generalrisk 207,764,066.72 59,606,573.65 267,370,640.37 provisions Total 207,764,066.72 59,606,573.65 267,370,640.37 (41)Undistributedprofit Amountforthe Amountforthe Extractionor Item currentperiod previousperiod distributionof dividends Undistributedprofitattheendofprevious 37,737,187,489.78 34,841,323,981.28 yearbeforeadjustment Total amount of adjusted undistributed profitatthebeginningoftheyear(profit increaseadjustedexpressedwith"+"and profitdecreaseadjustedexpressedwith"-") Undistributedprofitatthebeginningofthe 37,737,187,489.78 34,841,323,981.28 yearafteradjustment Add: Net profitattributable toownersof 15,420,964,990.94 12,532,442,817.66 parentcompanyforthecurrentperiod Less: Appropriation of statutory surplus 541,582,992.16 reserve Appropriationofgeneralriskprovisions 59,606,573.65 71,400,000.00 Cashdividend Ordinarystockdividendspayable 9,023,596,317.00 9,023,596,317.00 RMB15distributed per10shares Others Undistributedprofitattheendoftheperiod 44,074,949,590.07 37,737,187,489.78 (42)Operatingrevenuesandoperatingcosts 1).Operatingrevenuesandoperatingcosts Amountforthecurrentperiod Amountforthepreviousperiod Item Revenue Cost Revenue CostMainbusiness 93,187,780,602.40 58,696,494,773.92 87,930,981,568.34 57,397,354,027.10Otherbusinesses 15,114,784,691.30 14,189,146,443.08 9,814,155,625.82 8,619,999,717.99 Total 108,302,565,293.70 72,885,641,217.00 97,745,137,194.16 66,017,353,745.092).Mainbusiness(classifiedbyindustry) Amountforthecurrentperiod Amountforthepreviousperiod Item Revenue Cost Revenue CostHousehold appliances 93,187,780,602.40 58,696,494,773.92 87,930,981,568.34 57,397,354,027.10 manufacturing Total 93,187,780,602.40 58,696,494,773.92 87,930,981,568.34 57,397,354,027.103).Mainbusiness(classifiedbyproduct) Amountforthecurrentperiod AmountforthepreviousperiodNameofproduct Operatingincomes OperatingCost Operatingincomes OperatingCostAirConditioner 88,085,431,144.00 54,139,594,914.83 83,717,936,071.67 53,581,503,247.77Household 1,717,749,799.40 1,337,954,114.57 1,522,676,680.86 1,209,460,671.25Appliances Others 3,384,599,659.00 3,218,945,744.52 2,690,368,815.81 2,606,390,108.08 Total 93,187,780,602.40 58,696,494,773.92 87,930,981,568.34 57,397,354,027.10 4).Mainbusiness(classifiedbyregion) Amountforthecurrentperiod Amountforthepreviousperiod Nameofregion Operatingincomes OperatingCost Operatingincomes OperatingCost Domestic 76,937,875,361.69 45,233,448,281.99 74,596,089,512.78 46,279,216,061.59 Overseas 16,249,905,240.71 13,463,046,491.93 13,334,892,055.56 11,118,137,965.51 Total 93,187,780,602.40 58,696,494,773.92 87,930,981,568.34 57,397,354,027.10 (43)Interestrevenueandinterestexpense Item Amountforthecurrentperiod Amountforthepreviousperiod Interestrevenue 1,809,581,651.68 2,816,215,388.45 Including:interestrevenuefrom 1,317,476,875.61 1,641,482,866.81 depositsinotherbanks Interestrevenuefromloansand 459,317,481.07 1,154,283,006.27 advances Others 32,787,295.00 20,449,515.37 Interestexpense 93,317,462.31 652,352,307.92 Including:expensefrom transactionswithfinancial 87,683,940.13 636,765,738.01 institutions Others 5,633,522.18 15,586,569.91 Netinterestrevenue 1,716,264,189.37 2,163,863,080.53 (44)Taxesandsurcharges Item Amountforthecurrentperiod Amountforthepreviousperiod Urbanmaintenance& 504,887,574.65 389,355,259.75 constructiontax Educationalsurcharges 364,366,416.83 287,028,585.33 Wasteelectricalappliance 187,111,127.52 treatmentfund Item Amountforthecurrentperiod Amountforthepreviousperiod Housepropertytax 118,635,319.27 Landusetax 96,475,027.51 Commoditycirculationtaxand 66,690,910.38 24,182,343.52 industrialproducttaxofBrazil Others 92,237,870.79 51,328,011.35 Total 1,430,404,246.95 751,894,199.95 (45)Salesexpense Item Amountforthecurrentperiod Amountforthepreviousperiod Salesexpense 16,477,265,963.04 15,506,341,694.21 Total 16,477,265,963.04 15,506,341,694.21 (46)Overheadexpense Item Amountforthecurrentperiod Amountforthepreviousperiod OverheadExpense 5,488,955,551.20 5,048,746,635.48 Total 5,488,955,551.20 5,048,746,635.48 (47)Financialexpense Item Amountforthecurrentperiod Amountforthepreviousperiod Interestexpense 310,546,323.57 477,371,585.41 Less:Interestrevenue 1,483,937,707.71 1,163,270,340.63 Exchangegainandloss -3,702,265,763.57 -1,269,372,081.56 Bankcharges 25,583,325.41 22,348,829.52 Interestchargesfordefined 4,122,298.00 3,969,581.00 welfarebenefitobligations Others 404,926.26 155,176.08 Total -4,845,546,598.04 -1,928,797,250.18 (48)Assetimpairmentloss Item Amountforthecurrentperiod Amountforthepreviousperiod Lossonbaddebt 59,862,036.16 10,140,979.51 Inventoryfallingpriceloss 14,991,008.08 39,544,476.54 Fixedassetimpairmentloss 4,904,007.27 Loanloss -80,748,611.96 36,632,506.71 Total -991,560.45 86,317,962.76 (49)Incomesfromchangesinfairvalue Sourcesofincomesfromchanges Amountforthecurrentperiod Amountforthepreviousperiod infairvalue Derivativefinancialinstruments 1,093,332,134.65 -1,010,322,499.17 Total 1,093,332,134.65 -1,010,322,499.17 (50)Investmentincome Item Amountforthecurrentperiod Amountforthepreviousperiod Long-termequityinvestment incomemeasuredbyequity 8,034,445.96 3,246,089.30 method Investmentincomefromdisposal oflong-termequityinvestment Investmentincomefromderivative -2,499,880,308.06 -31,834,830.97 financialinstruments Investmentincomefromheld-to- maturityinvestment Investmentincome fromfinancial assets available for sale in the 106,026,836.37 69,975,774.52 holdingperiod Investmentincome fromdisposal of financial assets available for 118,210,455.91 sale Investmentincomefromfinancing 46,252,245.27 55,267,887.10 products Total -2,221,356,324.55 96,654,919.95 (51)Non-operatingrevenue Amountforthecurrent Amountfortheprevious Amountrecordedintothe Item period period currentnon-recurring profitandloss Gains from disposal of 2,838,642.05 1,039,883.33 2,838,642.05 non-currentassets Including: Gains from 1,443,342.07 1,039,883.33 1,443,342.07 disposaloffixedassets Gains from disposal of 1,395,299.98 1,395,299.98 intangibleassets Governmentsubsidies 1,059,429,776.56 1,363,726,411.04 960,287,886.56 Others 33,966,355.62 39,525,365.48 33,966,355.62 Total 1,096,234,774.23 1,404,291,659.85 997,092,884.23 Includingthescheduleofgovernmentsubsidies: Amountforthecurrent Amountfortheprevious Pertinentto Item period period assets/Pertinentto incomes Financialrewards 560,811,066.20 1,129,948,692.58 Pertinenttoincomes Capital allowance for 434,422,081.17 200,437,312.96 Pertinenttoincomes developmentprojects Technological innovation 47,135,783.17 15,818,285.71 Pertinenttoincomes subsidiesincome Others 17,060,846.02 17,522,119.79 Pertinenttoincomes Total 1,059,429,776.56 1,363,726,411.04 (52)Non-operatingexpenses Amountforthecurrent Amountfortheprevious Amountrecordedintothe Item period period currentnon-recurring profitandloss Totallossesfrom disposalofnon-current 15,083,762.45 9,118,859.43 15,083,762.45 assets Including:Lossesfrom 15,083,762.45 9,118,859.43 15,083,762.45 disposaloffixedassets Otherexpenses 5,658,770.90 1,930,318.93 5,658,770.90 Total 20,742,533.35 11,049,178.36 20,742,533.35 (53)Incometaxexpenses 1.Classification Item Amountforthecurrentperiod Amountforthepreviousperiod Incometaxexpensesofthe 3,828,860,539.58 2,829,504,601.40 currentperiod Deferredincometaxexpenses -822,305,366.85 -543,817,759.59 Total 3,006,555,172.73 2,285,686,841.81 2.Adjustmentprocessofaccountingprofitsandincometaxexpenses Item Amountforthecurrentperiod Totalprofit 18,531,190,076.60 Income tax expenses calculated by the 2,779,678,511.49 statutory/applicabletaxrate Impactbydifferenttaxratesapplicabletosubsidiaries 138,283,354.85 Impactbynon-deductiblecosts,expensesandlosses 6,273,466.01 Impact by deductible temporary differences or deductiblelossesofdeferredincometaxassetsnot 57,804,056.12 recognizedinthecurrentperiod Others 24,515,784.26 Incometaxexpenses 3,006,555,172.73 (54)Notestocashflowstatement 1).Othercashreceiptsrelatingtooperatingactivities Item Amountforthecurrentperiod Amountforthepreviousperiod Governmentsubsidies 904,422,050.73 1,401,723,859.34 Interestrevenue 1,429,898,563.90 1,225,637,912.76 Projectfundsadvanced 1,141,778,481.72 Others 604,505,599.02 913,499,942.27 Total 2,938,826,213.65 4,682,640,196.09 2).Othercashpaymentsrelatingtooperatingactivities Item Amountforthecurrentperiod Amountforthepreviousperiod Cash repayments for selling 5,377,555,062.31 4,825,484,308.95 expenses Cash repayments for overhead 1,570,776,084.61 1,018,131,336.10 expenses Net increase in margin of bill 531,713,129.29 2,723,201,655.00 pledge Returnedprojectfundsadvanced 254,456,006.00 1,368,170,206.45 Otherexpenses 637,024,568.93 500,197,577.40 Total 8,371,524,851.14 10,435,185,083.90 3).Othercashreceiptsrelatingtoinvestingactivities Item Amountforthecurrentperiod Amountforthepreviousperiod Receipts from forward foreign 143,435,881.62 exchangesettlementandsales Calloptionamount 6,500,000.00 Total 6,500,000.00 143,435,881.62 4).Othercashpaymentsrelatingtoinvestingactivities Item Amountforthecurrentperiod Amountforthepreviousperiod Payments from forward foreign 2,433,948,388.57 175,286,430.99 exchangesettlementandsales Netincreaseintimedeposits 15,479,979,000.00 Total 17,913,927,388.57 175,286,430.99 5).Othercashreceiptsrelatingtofinancingactivities Item Amountforthecurrentperiod Amountforthepreviousperiod Net decrease in margin ofloan 2,110,522,945.98 1,257,485,012.71 pledge Total 2,110,522,945.98 1,257,485,012.71 (55)Supplementaryinformationaboutcashflowstatement 1).Supplementaryinformationaboutcashflowstatement Item Amountforthe Amountforthe currentperiod previousperiod 1.Reconciliation ofnet profitto cashflows from operating activities: Netprofits 15,524,634,903.87 12,623,732,620.22 Add:Assetsdepreciationreserves -991,560.45 86,317,962.76 Fixed assets depreciation, oil and gas assets accumulated depreciation, productive biological assets accumulated 1,734,645,267.76 1,244,603,332.20 depreciationAmortizationofintangibleassets 73,307,470.22 58,942,276.28Amortizationoflong-termdeferredexpenses 8,722,728.06 14,181,491.53Lossesondisposaloffixedassets,intangibleassetsandother 12,245,120.40 8,078,976.10long-termassets(incomesexpressedwith“-”) Item Amountforthe Amountforthe currentperiod previousperiod Lossesondisposaloffixedassets(incomesexpressedwith “-”) Lossesfromchangesinfairvalue(incomesexpressedwith “-”) -1,093,332,134.65 1,010,322,499.17 Financialexpenses(incomesexpressedwith “-”) -3,245,961,681.45 -728,541,278.89 Investmentlosses(incomesexpressedwith “-”) 2,221,356,324.55 -96,654,919.95 Decreaseindeferredincometaxassets(increaseexpressed -909,857,443.38 -526,223,837.16 with “-”) Increaseindeferredincometaxliabilities(decreaseexpressed 87,552,076.53 -17,593,922.42 with “-”) Decreaseofinventories(increaseexpressedwith “-”) 421,521,791.28 -902,221,722.06 Decreaseinoperatingreceivables(increaseexpressedwith “-”) -5,230,038,952.26 34,387,642,523.89 Increaseinoperatingpayables(decreaseexpressedwith “-”) 4,723,681,135.75 -1,111,512,782.02 Others 532,467,060.69 -1,672,691,391.97 Netcashflowsfromoperatingactivities 14,859,952,106.92 44,378,381,827.68 2.Majorinvestingandfinancingactivitiesnot involvingcash receiptsandpayment: Conversionofdebtintocapital Convertiblebondsexpiringwithinoneyear Fixedassetsacquiredunderfinanceleases 3.Netchangesincashandcashequivalents: Endingbalanceofcash 71,321,360,022.83 77,365,016,845.22 Less:Beginningbalanceofcash 77,365,016,845.22 43,506,471,113.09 Add:Endingbalanceofcashequivalents Less:Beginningbalanceofcashequivalents Netincreaseincashandcashequivalents -6,043,656,822.39 33,858,545,732.13 Note:“Others”includesRMB501,348,103.22 netincreaseofbank’sacceptance bills, RMB 1,064,180,189.98 net decrease of legal deposit reserved and RMB30,365,026.07netincreaseofcreditmargin. 2.Therewasnonetcashpaidforacquisitionofsubsidiariesintheperiod. 3.Therewasnonetcashreceivedfordisposalofsubsidiariesintheperiod. 4).Compositionofcashandcashequivalents Amountattheendof Amountatthe Item theperiod beginningofthe period 1.Cash 71,321,360,022.83 77,365,016,845.22 Including:Cashonhand 2,069,645.31 2,395,117.18 Bankdepositforpaymentatanytime 38,868,649,591.21 39,951,097,932.43 Depositinthecentralbankforpayment 2,238,409.70 1,972,800.26 Amountattheendof Amountatthe Item theperiod beginningofthe period Depositsinotherbanks 32,448,402,376.61 37,409,550,995.35 2.Cashequivalents Including:Bondinvestmentsmaturingwithinthreemonths 3.Endingbalanceofcashandcashequivalents 71,321,360,022.83 77,365,016,845.22 (56)Assetswithrestrictedownershipsoruserights Item Amount Causeofrestriction Monetarycapital 8,811,791,708.64 Pledged and legal deposit reserved Billsreceivable 24,406,512,494.25 Pledged Total 33,218,304,202.89 (57)Monetaryitemsofforeigncurrencies 1.Monetaryitemsofforeigncurrencies: Item Balanceinforeigncurrencyat Exchangeratefor BalanceofRMBconvertedat theendofperiod conversion theendofperiod Monetarycapital: 41,933,924,181.19 Wherein:USD 6,033,116,042.54 6.9370 41,851,725,987.13 Euro 1,861,586.31 7.3068 13,602,238.85 HKD 16,028,418.45 0.8945 14,337,580.59 JPY 2,788,414.87 0.0596 166,164.48 BRL 25,331,176.05 2.1354 54,092,193.34 SingaporeDollar 3.50 4.7995 16.80 Bruneidollar 46.90 4.8216 226.13 Rupiah 4,000.00 0.0516 206.40 Accounts 2,617,312,846.01 receivable: Wherein:USD 356,739,468.26 6.9370 2,474,701,691.32 Euro 2,461,754.65 7.3068 17,987,548.91 HKD 35,956,833.64 0.8945 32,163,747.26 BRL 43,298,613.15 2.1354 92,459,858.52 Prepaidaccounts: 84,258,637.14 Wherein:USD 7,156,202.84 6.9370 49,642,579.10 Euro 2,845,943.18 7.3068 20,794,737.63 HKD 12,018,489.54 0.8945 10,750,659.08 JPY 678,017.63 0.0596 40,403.76 Pounds 11,901.08 8.5094 101,271.05 Swissfranc 430,803.00 6.7989 2,928,986.52 Otherreceivables: 11,366,660.05 Wherein:USD 1,342,007.58 6.9370 9,309,506.58 Euro 9,716.65 7.3068 70,997.62 Item Balanceinforeigncurrencyat Exchangeratefor BalanceofRMBconvertedat theendofperiod conversion theendofperiod HKD 1,904,753.65 0.8945 1,703,821.19 Pounds 9,010.00 8.5094 76,669.69 BRL 96,312.15 2.1354 205,664.97 Short-term 10,528,978,600.00 borrowing: Wherein:USD 1,517,800,000.00 6.9370 10,528,978,600.00 Accountspayable: 852,692,239.65 Wherein:USD 40,038,311.05 6.9370 277,745,763.75 Euro 3,991,912.52 7.3068 29,168,106.40 HKD 10,969,087.11 0.8945 9,811,958.11 JPY 375,692,170.00 0.0596 22,387,878.51 Pounds 4,201.80 8.5094 35,754.80 BRL 240,490,202.34 2.1354 513,542,778.08 Advancereceived 297,549,906.60 fromcustomers: Wherein:USD 29,896,816.85 6.9370 207,394,218.47 Euro 2,285,938.44 7.3068 16,702,895.00 HKD 20,154,838.86 0.8945 18,028,704.91 JPY 930,074,547.41 0.0596 55,424,088.22 Otherpayables: 179,698,938.47 Wherein:USD 24,983,405.85 6.9370 173,309,886.38 Euro 207,867.86 7.3068 1,518,848.88 HKD 4,862,487.36 0.8945 4,349,543.57 JPY 410,696.19 0.0596 24,473.80 BRL 232,362.01 2.1354 496,185.84 VIII.Changeintheconsolidationscope (1)Businesscombinationnotinvolvingenterprisesundercommoncontrol There was no business combination not involving enterprises under common controlinthecurrentperiod. (2)Businesscombinationinvolvingenterprisesundercommoncontrol Therewasnobusinesscombinationinvolvingenterprisesundercommoncontrol inthecurrentperiod. (3)Counterpurchase Counterpurchasedidnotoccurinthecurrentperiod. (4)Changesintheconsolidationscope 1.Establishmentofsubsidiaries Amountof Amountof subscribed paid-in Netassetsof Netprofit Equity Timepointof capital capital Ratioof theendofthe ofthe CompanyName acquisiti equity contribution contributio contributi period(ten period(ten onmode acquisition (ten n(ten on(%) thousand thousand thousand thousand Yuan) Yuan) Yuan) Yuan) GreePrecisionMold Establish January2016 8,000.00 8,000.00 100.00 9,250.70 1,250.70 (Wuhan)Co.,Ltd. ment ZhuhaiGreePrecision Establish January2016 10,000.00 10,000.00 100.00 10,729.95 729.95 MoldCo.,Ltd. ment ZhuhaiGreeNew Establish March2016 3,000.00 3,000.00 100.00 3,003.19 3.19 MaterialCo.,Ltd. ment ZhuhaiGreeEnergy Establish EnvironmentTechnology ment May2016 20,000.00 20,000.00 100.00 19,693.35 -306.65 Co.,Ltd. GreeElectricAppliances Establish April2016 30,000.00 30,000.00 100.00 29,983.76 -16.24 (Hangzhou)Co.,Ltd. ment 2.Disposalofsubsidiaries TheCompanywasnotinvolvedindisposalofsubsidiariesinthecurrentperiod. 3.Changesintheconsolidationscopearisingfromothercauses TheCompanywasnotinvolvedinchangesintheconsolidationscopearisingfrom othercausesinthecurrentperiod. IX.Equityinothersubjects (1)Equityinsubsidiaries 1.Compositionoftheenterprisegroup Main Shareholdingratio Votingright Serial Name locationof Placeof Natureof (%) percentage Acquisition Number operation registration business (%) mode Direct Indirect GreeElectric Commercial 1 Appliances(Hefei) HefeiCity HefeiCity manufacture 100.00 100.00 Establishment Co.,Ltd. GreeElectric Chongqing Chongqing Commercial 2 Appliances City City manufacture 97.00 97.00 Establishment (Chongqing)Co.,Ltd. GreeElectric Commercial 3 Appliances(Wuhu) WuhuCity WuhuCity manufacture 100.00 100.00 Establishment Co.,Ltd. GreeElectric Commercial 4 Appliances(Wuhan) WuhanCity WuhanCity manufacture 100.00 100.00 Establishment Co.,Ltd. GreeElectric Zhengzhou Zhengzhou Commercial 5 Appliances City City manufacture 100.00 100.00 Establishment (Zhengzhou)Co.,Ltd. Main Shareholdingratio Votingright Serial Name locationof Placeof Natureof (%) percentage Acquisition Number operation registration business (%) mode Direct Indirect Business GreeElectric combination Appliances Shijiazhuan Shijiazhua Commercial not involving 6 (Shijiazhuang)Co., gCity ngCity manufacture 100.00 100.00 enterprises Ltd. under common control GreeElectric Manaus, Manaus, Commercial 7 Appliances(Brazil) Brazil Brazil manufacture 100.00 100.00 Establishment Co.,Ltd. Business combination ZhuhaiGreeGroup involving 8 FinanceCompany ZhuhaiCity ZhuhaiCity Finance 88.31 0.94 89.25 enterprises Limited under common control ZhuhaiHengqin 9 GREEbusiness ZhuhaiCity ZhuhaiCity Others 100.00 100.00 Establishment factoringCo.,Ltd. Business combination ZhuhaiLanda Commercial involving 10 CompressorCo.,Ltd. ZhuhaiCity ZhuhaiCity manufacture 100.00 100.00 enterprises under common control 11 HefeiLanda HefeiCity HefeiCity Commercial 100.00 100.00 Establishment CompressorCo.,Ltd. manufacture 12 ZhengzhouLanda Zhengzhou Zhengzhou Commercial 100.00 100.00 Establishment CompressorCo.,Ltd. City City manufacture 13 ChongqingLanda Chongqing Chongqing Commercial 100.00 100.00 Establishment CompressorCo.,Ltd. City City manufacture 14 WuhanLanda WuhanCity WuhanCity Commercial 100.00 100.00 Establishment CompressorCo.,Ltd. manufacture Business combination ZhuhaiMeilingda Commercial involving 15 Refrigeration ZhuhaiCity ZhuhaiCity manufacture 100.00 100.00 enterprises TechnologyCo.,Ltd. under common control Business combination ZhuhaiMeiling Commercial involving 16 GeneralMotorsCo., ZhuhaiCity ZhuhaiCity manufacture 100.00 100.00 enterprises Ltd. under common control Business combination ZhuhaiKaibangMotor Commercial not involving 17 ManufactureCo.,Ltd. ZhuhaiCity ZhuhaiCity manufacture 100.00 100.00 enterprises under common control 18 HefeiKaibangMotor HefeiCity HefeiCity Commercial 100.00 100.00 Establishment ManufactureCo.,Ltd. manufacture 19 HenanKaibangMotor Zhengzhou Zhengzhou Commercial 100.00 100.00 Establishment ManufactureCo.,Ltd. City City manufacture ChongqingKaibang Chongqing Chongqing Commercial 20 MotorManufacture City City manufacture 100.00 100.00 Establishment Co.,Ltd. Main Shareholdingratio Votingright Serial Name locationof Placeof Natureof (%) percentage Acquisition Number operation registration business (%) mode Direct Indirect Business combination ZhuhaiGreeElectrical Commercial involving 21 Co.,Ltd. ZhuhaiCity ZhuhaiCity manufacture 100.00 100.00 enterprises under common control Business combination GreeElectric Ma'anshan Ma'anshan Commercial involving 22 Enterprises City City manufacture 100.00 100.00 enterprises (Ma'anshan)Ltd. under common control 23 GreeElectrician Meishan Meishan Commercial 100.00 100.00 Establishment (Meishan)Co.,Ltd. City City manufacture GREE(Zhongshan) Zhongshan Zhongshan Commercial 24 SmallHome City City manufacture 100.00 100.00 Establishment AppliancesCo. Gree(Shijiazhuang) Shijiazhuan Shijiazhua Commercial 25 SmallHome gCity ngCity manufacture 100.00 100.00 Establishment AppliancesCo.,Ltd. GreeGreen Technical 26 Refrigeration ZhuhaiCity ZhuhaiCity researchand 100.00 100.00 Establishment TechnologyCenter development Co.,Ltd.OfZhuhai ZhengzhouGree Zhengzhou Zhengzhou Commercial 27 GreenResources City City manufacture 100.00 100.00 Establishment RecyclingCo.,Ltd ShijiazhuangGreen Shijiazhuan Shijiazhua Commercial 28 ResourcesRecycling gCity ngCity manufacture 100.00 100.00 Establishment Co.,Ltd. HunanGreen Ningxiang Ningxiang Commercial 29 ResourcesRecycling County County manufacture 100.00 100.00 Establishment Co.,Ltd TianjinGreen Commercial 30 ResourcesRecycling TianjinCity TianjinCity manufacture 100.00 100.00 Establishment Co.,Ltd. WuhuGreen Commercial 31 ResourcesRecycling WuhuCity WuhuCity manufacture 100.00 100.00 Establishment Co.,Ltd. 32 ZhuhaiGreeDakin ZhuhaiCity ZhuhaiCity Commercial 51.00 51.00 Establishment DeviceCo.,Ltd. manufacture ZhuhaiGreeDaikin Commercial 33 PrecisionMoldCo., ZhuhaiCity ZhuhaiCity manufacture 51.00 51.00 Establishment Ltd. WuhuPrecision Commercial 34 ManufacturingCo., WuhuCity WuhuCity manufacture 100.00 100.00 EstablishmentLtd. ZhuhaiLigao 35 Precision ZhuhaiCity ZhuhaiCity Commercial 100.00 100.00 Establishment ManufacturingCo., manufactureLtd. ZhuhaiGreeTOSOT Commercial 36 LifeElectric ZhuhaiCity ZhuhaiCity manufacture 100.00 100.00 Establishment AppliancesCo.,Lid. GreeTOSOT(Suqian) Commercial 37 HomeAppliancesCo., SuqianCity SuqianCity manufacture 100.00 100.00 EstablishmentLtd. 38 ZhuhaiHVAC ZhuhaiCity ZhuhaiCity Commercial 100.00 100.00 Establishment EquipmentCo.,Ltd. manufacture 39 ChangshaGreeHVAC Changsha Changsha Commercial 100.00 100.00 Establishment EquipmentCo.,Ltd. City City manufacture GreeHVAC Commercial 40 Equipment(Wuhan) WuhanCity WuhanCity manufacture 100.00 100.00 Establishment Co.,Ltd. Main Shareholdingratio Votingright Serial Name locationof Placeof Natureof (%) percentage Acquisition Number operation registration business (%) mode Direct Indirect ZhuhaiIVP 41 Information ZhuhaiCity ZhuhaiCity IT 100.00 100.00 Establishment TechnologyCo.,Ltd. Business combination ZhuhaiGreeXinyuan Commercial involving 42 ElectronicsCo.,Ltd. ZhuhaiCity ZhuhaiCity manufacture 100.00 100.00 enterprises under common control Business combination HongKongGree Kowloon, Kowloon, not involving 43 ElectricAppliances HongKong HongKong Sales 100.00 100.00 enterprises SalesCo.,Ltd. under common control ZhuhaiGreeElectric 44 AppliancesSalesCo., ZhuhaiCity ZhuhaiCity Sales 100.00 100.00 Establishment Ltd. BrazilUnitedElectric 45 AppliancesIndustry Sao Paulo, SaoPaulo, Sales 100.00 100.00 Establishment andCommerceCo., Brazil BrazilLtd. ShanghaiGREEAir Shanghai Shanghai 46 ConditionersSales City City Sales 90.00 9.70 99.70 Establishment Co.,Ltd 47 Gree(USA)SalesCo., California, California, Sales 51.00 51.00 Establishment Ltd. USA USA ZhuhaiGREE Commercial 48 IntelligentEquipment ZhuhaiCity ZhuhaiCity manufacture 100.00 100.00 Establishment Co.,Ltd. GREEIntelligent Commercial 49 Equipment(Wuhan) WuhanCity WuhanCity manufacture 100.00 100.00 Establishment Co.,Ltd. ZhuhaiGREE 50 IntelligentEquipment ZhuhaiCity ZhuhaiCity Commercial 100.00 100.00 Establishment TechnologyResearch manufacture InstituteCo.,Ltd. 51 GreePrecisionMold WuhanCity WuhanCity Commercial 100.00 100.00 Establishment (Wuhan)Co.,Ltd. manufacture 52 ZhuhaiGreePrecision ZhuhaiCity ZhuhaiCity Commercial 100.00 100.00 Establishment MoldCo.,Ltd. manufacture 53 ZhuhaiGreeNew ZhuhaiCity ZhuhaiCity Commercial 100.00 100.00 Establishment MaterialCo.,Ltd. manufacture ZhuhaiGreeEnergy Commercial 54 Environment ZhuhaiCity ZhuhaiCity manufacture 100.00 100.00 Establishment TechnologyCo.,Ltd. GreeElectric Hangzhou Hangzhou Commercial 55 Appliances City City manufacture 100.00 100.00 Establishment (Hangzhou)Co.,Ltd.Note:TheCompanydirectly holds90.00%of totalstocks ofShanghaiGreeAirConditionersSalesCo.,Ltd.,andGreeElectricAppliances(Chongqing)Co.,Ltd.as the subsidiary of the Company holds its remaining 9.70% stocks, so theCompanyholdsits99.70%stocksinthedirectandindirectways.TheCompanydirectlyholds88.31%oftotalstocksofZhuhaiGreeGroupFinanceCompanyLimited,andZhuhaiGreeElectricalCo.,Ltd.andZhuhaiGreeXinyuanElectronics Co., Ltd. as the wholly-owned subsidiaries of the Companyrespectivelyholdits0.47%stocks,sotheCompanyholdsits89.25%stocksinthe directandindirectways. Gree(USA)SalesCo.,Ltd.,asub-subsidiary companyoftheCompanywasnot incorporatedintheconsolidationscopefrom2014duetorestrictionontransferof funds. 2.Importantnon-whollyownedsubsidiaries Profitsorlosses Dividends Shareholding Votingright attributableto declaredto Equitybalance ratioof percentageof minority distributeto ofminority Name minority minority shareholdersin minority shareholdersat shareholders shareholders thecurrent shareholdersin theendofthe (%) (%) period thecurrent period period GreeElectric Appliances 3.00 3.00 14,857,268.94 87,024,897.96 48,117,770.91 (Chongqing)Co., Ltd. ZhuhaiGree GroupFinance 10.75 10.75 60,811,016.64 429,075,026.61 CompanyLimited 3.Mainfinancialinformationofimportantnon-whollyownedsubsidiaries (1)Financialstatus Balanceattheendoftheperiod Name Non-current Currentassets Non-currentassets Currentliabilities liabilities GreeElectric Appliances(Chongqing) 2,889,634,545.84 1,261,548,033.46 2,543,701,911.83 3,554,970.57 Co.,Ltd. ZhuhaiGreeGroup FinanceCompany 35,511,283,801.20 11,770,097,736.78 43,194,419,559.68 95,566,381.92 Limited Continued BeginningBalance Name Non-current Currentassets Non-currentassets Currentliabilities liabilitiesGreeElectricAppliances(Chongqing) 4,267,831,515.11 1,228,196,742.01 1,485,186,099.71 1,328,826.45Co.,Ltd. ZhuhaiGreeGroup FinanceCompany 44,319,401,521.88 9,834,481,659.64 50,554,233,985.97 153,230,603.09 Limited (2)Operatingresults Amountforthecurrentperiod Name Operating Total Cashflowsfrom incomes Netprofits comprehensive operating income activities GreeElectricAppliances 6,003,558,290.41 495,242,297.87 495,242,297.87 64,403,152.96 (Chongqing)Co.,Ltd. ZhuhaiGreeGroupFinance 1,806,178,786.46 565,683,875.70 544,977,003.92 - CompanyLimited 5,377,361,048.61 Continued Amountforthepreviousperiod Name Operating Total Cashflowsfrom incomes Netprofits comprehensive operatingactivitiesincome Gree Electric Appliances 6,668,782,311.95 367,278,130.36 367,278,130.36 487,964,532.02 (Chongqing)Co.,Ltd. ZhuhaiGreeGroupFinance 2,852,036,700.04 592,829,933.87 620,298,930.28 15,342,532,527.17 CompanyLimited (2)Equitiesinassociatedenterprisesorcontractualenterprises 1.Importantassociatedenterprisesorcontractualenterprises Nameofassociated Main Shareholdingratio Votingright enterpriseorcontractual locationof Placeof Natureof (%) percentage enterprise operation registration business (%) Direct Indirect SongyuanFood GroupCo., Songyuan Songyuan Food 50.00 50.00 Ltd. City City manufacture 2.Mainfinancialinformationofimportantcontractualenterprises Balanceattheendofthe Balanceatthebeginningofthe Item period/Amountforthecurrent period/Amountfortheprevious period period Currentassets 407,574,846.75 288,769,751.43 Including:cashandcash 23,020,793.05 20,090,818.97 equivalents Non-currentassets 75,961,459.15 55,741,214.24 Totalassets 483,536,305.90 344,510,965.67 Currentliabilities 320,766,972.07 196,337,103.69 Non-currentliabilities 16,249,370.16 13,546,800.00 Totalliabilities 337,016,342.23 209,883,903.69 Minorityequity 11,843,831.45 8,475,401.38 Equityattributabletothe shareholdersoftheparent 134,676,132.22 126,151,660.60 company Balanceattheendofthe Balanceatthebeginningofthe Item period/Amountforthecurrent period/Amountfortheprevious period period Shareofnetassetscalculatedby 67,338,066.11 63,075,830.30 theshareholdingratio Operatingincomes 317,020,789.86 219,398,899.40 Financialexpense 1,104,901.12 3,133,133.84 Incometaxexpenses 2,917,430.30 1,205,151.39 Netprofits 9,337,295.16 8,468,327.05 Netprofitattributabletotheparent 8,468,327.05 6,328,722.88 company Totalcomprehensiveincome 8,468,327.05 6,328,722.88 attributabletotheparentcompany 3.TheCompanyhasnoimportantassociatedenterprises. X.Riskassociatedwithfinancialinstruments Main financial instrumentsof the Company include monetarycapital, derivative financialassets,notesreceivable,interestsreceivable,loans,receivables,buying backthesaleoffinancialassets,financialassetsavailableforsale,otherfinancial liabilities(e.g.,payables)arisingfromoperation,etc.Thesefinancialinstruments aimtoprovidefundsforoperationoftheCompany. ThefinancialinstrumentsoftheCompanymayleadtothemainrisksofcreditrisks, liquidityrisksandmarketrisks. SetoutbelowarechangesintheCompany’sfinancialinstrumentsatthebeginning andendoftheperiod: Financialassets Item Amountatthebeginningofthe Amountattheendoftheperiod period Monetarycapital 95,613,130,731.47 88,819,798,560.53 Derivativefinancialassets 250,848,418.63 Billsreceivable 29,963,355,478.45 14,879,805,537.96 Accountsreceivable 2,960,534,651.37 2,879,212,111.93 Interestsreceivable 1,045,542,563.43 1,109,776,449.77 Otherreceivables 244,984,154.67 254,016,643.00 Buyingbackthesaleof 1,000,000,000.00 financialassets Disbursementofloansand 4,737,184,235.79 7,872,619,001.46 advances Available-for-salefinancial 1,384,303,560.40 2,704,719,177.56 assets Othercurrentassets 1,992,536,503.43 1,684,833,479.54 Financialassets Item Amountatthebeginningofthe Amountattheendoftheperiod period Total 138,192,420,297.64 121,204,780,961.75 Continued Financialliabilities Item Amountatthebeginningofthe Amountattheendoftheperiod periodShort-termborrowing 10,701,081,645.32 6,276,660,136.03Borrowings from the central 4,274,000.00 8,000,000.00bank Depositsfromcustomersand 145,241,859.45 566,612,235.82 interbank Derivativefinancialliabilities 394,763,490.33 1,189,028,366.37 Billspayable 9,127,336,849.68 7,427,635,753.74 Accountspayable 29,541,466,861.10 24,794,268,372.47 Interestspayable 41,781,977.25 48,386,709.75 Otherpayables 2,222,613,974.82 2,607,601,936.21 Non-current liabilities due 2,403,745,557.37 withinoneyear Othercurrentliabilities 59,758,848,571.94 55,007,851,867.48 Total 111,937,409,229.89 100,329,790,935.24 (1)Creditrisks Credit risks refer to financial losses suffered by one party to the financial instrumentduetotheotherparty’sinabilitytofulfillobligations. The Company will have transactions with recognized customers with a good reputation only.According to thepolicyoftheCompany,allthecustomers who requirethecredit formfor transactionsshallundergocreditreview. Besides,the Company implements continuous monitoring on the balance of accounts receivabletoensurethattheCompanyisnotconfrontedwiththemajorriskofbad debts. FinancialassetsoftheCompany includemonetarycapital,accountsreceivable, etc.Thecreditrisksofthesefinancialassetscomefromnonperformance ofthe transactioncounterparty,andthemaximumriskexposureisequaltothecarrying amountoftheseinstruments.TradetermsbetweentheCompanyandcustomers focus on advances, banker's acceptance bill or the mode of pay on delivery, assistedbydealoncredit. Themonetarycapitalisdepositedinstate-ownedfinancialinstitutionswithahigher creditrating,minimizingtherisk;allthenotesreceivablearebanker'sacceptance bills, and the risk exposure is rather small. The carrying amount of interests receivable, accounts receivable, prepayments and other receivables in the consolidatedbalancesheetisthehighestcreditriskwithwhichtheCompanymay be confronted. As of theend of the report period,the total of theCompany’s accountsreceivableandotherreceivablesaccountedfor1.76%(whichwas1.94% at theendoftheprevious year) ofthetotal assets,andtheCompany was not confrontedwithanymajorcreditriskwithinoneyearduetotheaboveamounts. FortheCompany’screditriskexposuresarisingfromtheaccountsreceivableand otherreceivables,refertothedisclosedinformationin“7(4)Accountsreceivable, (7)Otherreceivables”. (2)Liquidityrisks Liquidity risks refer to risks of fund shortage generated when the enterprise performs the obligation to settle accounts by cash payment or other financial assets. AsindicatedbychangesintheCompany’sfinancialinstrumentsatthebeginning and end of the period, the proportion of the Company’s "Financial assets" to "Financialliabilities"attheendofthereportperiodis1.23,whichshowsthatthe Companyhasadequateliquidityandtheriskinshortageofliquidityislow. (3)Marketrisks Market risks refer to fluctuation risks of the fair value or future cash flow of financialinstrumentduetochangesinthemarketprice,includingexchangerate riskandinterestraterisk. 1.Exchangeraterisk ForpresentedamountsinRMBconvertedfromforeigncurrencyfinancialassets andforeigncurrencyfinancialliabilitiesheldbytheCompanyasof31December 2016,seethe“Note7(57)Monetaryitemsofforeigncurrencies”. The Company will minimize the exchange risk by carrying out the forward exchangetransactionbusinessandcontrollingthescaleofforeigncurrencyassets andliabilitiesaccordingtochangesinthemarketexchangerate. 2.Interestraterisks Interestrateriskreferstothefluctuationriskofthefairvalueorfuturecashflowof financialinstrumentsduetochangesinthemarketrateofinterest. SetoutbelowaretheCompany’sliabilitieswithinterestsasofDecember31,2016: Reportitem Amount Interestraterange Remarks Short-termborrowing 10,701,081,645.32 1.00%-5.80% Floatinginterestrate Borrowings from the 4,274,000.00 1.875% Fixedinterestrate centralbank Depositsfromcustomers 145,241,859.45 0.42%-4.25% Floatinginterestrate andinterbank XI.Fairvalue (1)Fairvaluesofassetsandliabilitiesattheendofperiodthataremeasured atthefairvalue Fairvalueattheendofperiod Item Measurementofthe Measurement Measurement fairvalueatthefirst ofthefairvalue ofthefair Total layer atthesecond valueatthe layer thirdlayer Continuousfairvalue measurement(1)Financialassetsavailable 1,312,303,560.40 1,312,303,560.40forsale 1.Equityinstrument 417,612,710.40 417,612,710.40 investment 2.Debtinstrument 894,690,850.00 894,690,850.00 investment (2)Derivativefinancial 250,848,418.63 250,848,418.63 assets (3)Derivativefinancial 394,763,490.33 394,763,490.33 liabilities (2) Determination basis for the market price of continuous and non- continuousfairvaluemeasurementitemsatthefirstlayer TheCompany’scontinuousfairvaluemeasurementitemsatthefirstlayerfocus ontheheldderivative financial instrumentswithanactivemarket,allofwhichcan obtainthequotedpriceunadjustedforthesameassetsorliabilitiesintheactive market. XII.Relatedpartiesandrelatedtransaction (1)ParentcompanyoftheCompany Name Incidence Enterprise Placeof Corporate Natureof Registered relation type registration representative business capital ZhuhaiGree Wholly Investment GroupCo., Parent state- Zhuhai ZhouLewei andasset RMB800 Ltd. company owned management million enterprise Continued Shareholding Percentageof Unifiedsocialcredit Name ratioofparent votingrightsof Ultimatecontrolling code/businesslicense companytothe parentcompanyto partyoftheCompany cod Company(%) theCompany(%) ZhuhaiMunicipalState-ZhuhaiGree ownedAssetsGroupCo.,Ltd. 18.22 18.22 Supervisionand 914404001925371865Administration Commission (2)SubsidiariesoftheCompany Fordetails,seetheCompany’sequitiesinsubsidiariesprovidedinNotes9(1). (3)JointventureandpartnershipoftheCompany FordetailsabouttheCompany’simportantcontractualenterprisesandassociated enterprises, see the Company’s equities in contractual arrangements and associatedenterprisesprovidedinNotes9(2). (4)OtherrelatedpartiesoftheCompany Relatedparty RelationshipwiththeCompany Unifiedsocialcredit code/businesslicensecod HebeiShengshiXinxingGree Thecompanyinwhichthe TradingCo.,Ltd. Company'sdirectorservesas 91130104578233484U generalmanager ZhejiangShengshiXinxingGree Thecompanyinwhichthe TradingCo.,Ltd. Company'sdirectorservesas 91330104574384699W generalmanager Henan Shengshi Xinxing Gree Thecompanyinwhichthe TradingCo.,Ltd. Company'ssupervisorservesas 914101005792072538 generalmanager ZhuhaiGreeMagneto-Electric Holdingsubsidiaryoftheparent 440400400033940 Co.,Ltd. company ZhuhaiGreeIslandInvestment Grandsoncompanyofholding 91440400698148911E Co.Ltd. subsidiaryoftheparentcompany ZhuhaiGreeZhiyeCo.,Ltd. Holdingsubsidiaryoftheparent 91440400192551084D company ZhuhaiGreeMeidaTechnology Grandsoncompanyofholding 91440400551665906L Co.,Ltd. subsidiaryoftheparentcompany ZhuhaiJiananGroupCo.,Ltd. Holdingsubsidiaryoftheparent 91440400192528511L company Relatedparty RelationshipwiththeCompany Unifiedsocialcredit code/businesslicensecod Zhuhai Gree New Technology Holdingsubsidiaryoftheparent 440400000039750 DevelopmentCo.,Ltd. company ZhuhaiGreeServiceCo.,Ltd. Wholly-ownedsubsidiaryofthe 91440400192555907E parentcompany Zhuhai Xima Pearl New Media Anenterpriseforwhichthe Co.,Ltd. ChairmanoftheCompanyactsas 91440400MA4UJCE825 adirector ZhuhaiYinlongNewEnergyCo., AnenterprisewheretheChairman Ltd. oftheCompanyholdsmorethan 914404006981977566 5%ofitsshares Asubsidiaryofanenterprise Hebei YinlongNew EnergyCo., wheretheChairmanofthe 91130481052675755J Ltd. Companyholdsmorethan5%of itsshares Asubsidiaryofanenterprise ShijiazhuangZhongboAutomobile wheretheChairmanofthe 91130123728816635P Co.,Ltd. Companyholdsmorethan5%of itsshares Asubsidiaryofanenterprise ZhuhaiYinlongElectricAppliance wheretheChairmanofthe 91440400566684800M Co.,Ltd. Companyholdsmorethan5%of itsshares Asubsidiaryofanenterprise AltairnanoInc. wheretheChairmanofthe 91130481596827470T Companyholdsmorethan5%of itsshares Asubsidiaryofanenterprise Zhuhai Guangtong Automobile wheretheChairmanofthe 91440400708129467A Co.,Ltd. Companyholdsmorethan5%of itsshares (5)Relatedtransactions (1)Purchaseofcommodities/receivingofservices Typeofrelated Contentsof Amountfor Amountfor Relatedparty transactions related thecurrent theprevious transactions period period HebeiShengshiXinxingGree Billmargindeposit Interest 60,928.57 TradingCo.,Ltd. expense ZhejiangShengshiXinxing Billmargindeposit Interest 747,290.08 710,591.75 GreeTradingCo.,Ltd. expense HenanShengshiXinxingGree Billmargindeposit Interest 167.63 150,953.97 TradingCo.,Ltd. expense SongyuanFoodGroupCo., Deposit-taking Interest 16,289.16 Ltd. expense ZhuhaiGreeMagneto-Electric Deposit-taking Interest 37.38 205.28 Co.,Ltd. expense ZhuhaiGreeIslandInvestment Deposit-taking Interest 2,201.45 101.26 Co.Ltd. expense ZhuhaiGreeZhiyeCo.,Ltd. Deposit-taking Interest 23.01 22.87 expense ZhuhaiGreeMeidaTechnology Deposit-taking Interest 5,051.25 Co.,Ltd. expense Typeofrelated Contentsof Amountfor Amountfor Relatedparty transactions related thecurrent theprevious transactions period period ZhuhaiJiananGroupCo.,Ltd. Deposit-taking Interest 235.13 expense ZhuhaiGreeGroupCo.,Ltd. Deposit-taking Interest 43,286.97 1,598,588.12 expense ZhuhaiGreeServiceCo.,Ltd. Deposit-taking Interest 57,130.01 103,541.89 expense ZhuhaiGreeMeidaTechnology Materials Fittings 99,506.00 Co.,Ltd. procurement BeijingGreeTechnologyCo., Materials Fittings 15,391,683.84 19,670,398.04 Ltd. procurement ZhuhaiGreeNewTechnology Materials Fittings 22,500.00 DevelopmentCo.,Ltd. procurement ZhuhaiJiananGroupCo.,Ltd. Purchaseof Infrastructure 60,260,151.24 10,877,679.83 services project LiaowangAllMedia Servicesourcing Publicityand 9,480,148.47 CommunicationCo.,Ltd. advertisingfee ChongqingPargoMechanical Materials Fittings 9,424,113.00 EquipmentCo.,Ltd. procurement Total 95,610,743.19 33,112,083.01 2.Salesofcommodities/renderingofservices Typeofrelated Contentsof Amountforthe Amountforthe Relatedparty transactions related currentperiod previousperiod transactions HebeiShengshiXinxing Loan Interest 73,954,466.93 13,314,704.27 GreeTradingCo.,Ltd. revenue ZhejiangShengshiXinxing Loan Interest 36,743,189.58 5,196,069.01 GreeTradingCo.,Ltd. revenue HenanShengshiXinxing Loan Interest 7,019,809.06 9,859,319.77 GreeTradingCo.,Ltd. revenue SongyuanFoodGroupCo., Loan Interest 1,131,000.00 Ltd. revenue HebeiShengshiXinxing Salesof Sales 2,426,277,876.40 2,671,040,237.44 GreeTradingCo.,Ltd. commodities revenue ZhejiangShengshiXinxing Salesof Sales 4,318,366,377.22 5,231,798,174.85 GreeTradingCo.,Ltd. commodities revenue HenanShengshiXinxing Salesof Sales 5,228,133,544.67 6,447,701,610.96 GreeTradingCo.,Ltd. commodities revenue Salesof Sales/ AltairnanoInc. commodities/ international 140,163,417.09 international factoring factoring income Salesof Sales/internati HebeiYinlongNewEnergy commodities/ onalfactoring 375,065,512.13 Co.,Ltd. international income factoring Salesof Sales/ ShijiazhuangZhongbo commodities/ international 352,389,421.47 AutomobileCo.,Ltd. international factoring factoring income Typeofrelated Contentsof Amountforthe Amountforthe Relatedparty transactions related currentperiod previousperiod transactions Salesof Sales/ ZhuhaiYinlongElectric commodities/ international 440,049,319.68 ApplianceCo.,Ltd. international factoring factoring income Salesof Sales/ ZhuhaiYinlongNew commodities/ international 497,553,383.40 EnergyCo.,Ltd. international factoring factoring income Salesof Sales/ ZhuhaiGuangtong commodities/ international 438,999,878.82 AutomobileCo.,Ltd. international factoring factoring income ZhuhaiXimaPearlNew Salesof Sales 2,006,407.36 MediaCo.,Ltd. commodities revenue Total: 14,337,853,603.81 14,378,910,116.30 3.TheCompanywasnotinvolvedinassociatedtrusteeshipmanagement/contracting orentrustedmanagement/contracting-outinthecurrentperiod. 4.TheCompanywasnotinvolvedinassociatedleaseinthecurrentperiod. 5.TheCompanywasnotinvolvedinassociatedguaranteeinthecurrentperiod. 6.Fundborrowingofrelatedparty Relatedparty Borrowing/ Loanamount Startdate Datedue Description lending ZhejiangShengshi 22January 22July2016 Buyer's XinxingGreeTradingCo., Lending 2,133,500,000.00 2016to30 to17June credit Ltd. June2016 2017 17March 17 HebeiShengshiXinxing 2016to27 September Buyer's GreeTradingCo.,Ltd. Lending 2,300,000,000.00 October2016 2016to27 credit October 2017 September Factoring AltairnanoInc. Lending 8,949,967.50 22,2016 service principal HebeiYinlongNew September Factoring EnergyCo.,Ltd. Lending 50,917,000.00 18,2016 service principal ShijiazhuangZhongbo September8, Factoring AutomobileCo.,Ltd. Lending 6,980,915.10 2016 service principal ZhuhaiYinlongElectric August24, Factoring ApplianceCo.,Ltd. Lending 115,008,471.17 2016 service principal ZhuhaiYinlongNew Factoring EnergyCo.,Ltd. Lending 182,027,397.52 May31,2016 service principal ZhuhaiGuangtong August24, Factoring AutomobileCo.,Ltd. Lending 137,858,372.08 2016 service principal 7.Remunerationsforkeymanagement Item Amountforthecurrentperiod Amountforthepreviousperiod Totalremunerationactuallyreceivedfrom the Company (before tax) within the 20,605,141.50 23,205,065.00 reportperiod (6)Accountsreceivableandpayablebyrelatedparties 1.Itemsreceivable Balanceattheendoftheperiod BeginningBalance ItemName Relatedparty Provisionfor Provisionfor Bookbalance impairment Bookbalance impairment ZhejiangShengshi Disbursem XinxingGree 333,000,000.00 8,325,000.00 entof TradingCo.,Ltd. loansand HebeiShengshi advances XinxingGree 1,645,000,000.00 41,125,000.00 TradingCo.,Ltd. HebeiShengshi XinxingGree 1,757,710,624.00 350,000,000.00 TradingCo.,Ltd. Bills HenanShengshi receivable XinxingGree 2,487,000,000.00 1,735,856,740.65 TradingCo.,Ltd. ZhejiangShengshi XinxingGree 294,190,332.90 921,084,690.00 TradingCo.,Ltd. Prepaid ZhuhaiGuangtong accounts AutomobileCo., 1,921,596.00 Ltd.2.Itemspayable Amountattheendof Amountatthe theperiod beginningofthe ItemName Relatedparty period Bookbalance Bookbalance ZhuhaiGreeZhiyeCo.,Ltd. 5,403.59 5,380.58 ZhuhaiGreeMagneto-ElectricCo., 8,776.04 8,735.40Ltd. ZhuhaiGreeIslandInvestmentCo. 787,115.44 42,004.84 Ltd. ZhuhaiJiananGroupCo.,Ltd. 435.90 ZhuhaiGreeMeidaTechnologyCo., 1,046,464.17 Ltd. Customerdeposit HebeiShengshiXinxingGreeTrading 139,581.61 23,434.74 Co.,Ltd. ZhejiangShengshiXinxingGree 20,124.00 210,048,073.21 TradingCo.,Ltd. ZhuhaiGreeGroupCo.,Ltd. 189,660.16 52,070,790.24 ZhuhaiGreeServiceCo.,Ltd. 2,352,126.54 2,902,445.42 HenanShengshiXinxingGree 6,558.89 1,417.33 TradingCo.,Ltd. Accountspayable ZhuhaiGreeMeidaTechnologyCo., 3,913.50 Amountattheendof Amountatthe theperiod beginningofthe ItemName Relatedparty period Bookbalance Bookbalance Ltd. BeijingGreeTechnologyCo.,Ltd. 15,391,683.84 4,263,831.21 HebeiShengshiXinxingGreeTrading 729,581,825.37 265,591,592.37 Co.,Ltd. ZhejiangShengshiXinxingGree 329,346,785.60 29,565,963.03 Advancereceived TradingCo.,Ltd. fromcustomers HenanShengshiXinxingGree 3,152,874,976.57 479,197,575.37 TradingCo.,Ltd. HebeiYinlongNewEnergyCo.,Ltd. 193,008,018.00 ZhuhaiGreeGroupCo.,Ltd. 877.59 2,320.30 ZhuhaiGreeZhiyeCo.,Ltd. 0.69 0.69 ZhuhaiGreeMagneto-ElectricCo., 1.13 4.39 Ltd. ZhuhaiGreeIslandInvestmentCo. 101.04 5.39 Ltd. Interestspayable ZhuhaiJiananGroupCo.,Ltd. 0.06 ZhuhaiGreeMeidaTechnologyCo., 134.30 Ltd. HebeiShengshiXinxingGreeTrading 17.91 3.01 Co.,Ltd. ZhejiangShengshiXinxingGree 1,755.40 140,006.17 TradingCo.,Ltd. XIII.Share-basedpayments TheCompanyhadnoshare-basedpaymentsinthecurrentperiod. XIV.Commitments Asof December31,2016, theCompanyhad nosignificant commitments tobe disclosed.XV.ContingenciesOn 12 September, 2013, the Company initiatively applied for and gainedpermissionoftheUSConsumerProductSecurityCommission(CPSC)andHealthCanada torecalldehumidifiers sold inthe USandCanada. TheCompany hasaccruedsufficientexpensesbasedontheestimatedloss.TherecallingworkforU.S. andCanada has beenbasicallycompleted asof theapprovaldate of thereport. MJC(GREEUSA,INC.),ashareholderofUnitedStatesGreeLtd.(GREEUSAINC) suedtheCompanyanditssubsidiaryHongKongGreeElectricAppliancesCo.,Ltd. (HKGREEELECTRICAPPLIANCES),seekingUSD0.15billioncompensationfor MJC’S loss. The Company should pay a compensation of USD42.5 million according tothe first-instancejudgment of thecourt on 2June, 2015, and the Company has applied for appeal regarding this judgment result. An amicable settlementwasreachedasof31December2016. XVI.Eventsafterthebalancesheetdate Accordingtotheresolutionpassedatthetwelfthmeetingofthetenthsessionof theBoardofDirectorsoftheCompany,theprofitdistributionplanoftheCompany fortheyear 2016isasfollows:calculatedbytotalstockcapital oftheCompany equivalent to 6,015,730,878 stocks, all directors will be distributed a cash of RMB18.00(tax included)per 10 stocks, withthe totalamount ofcashes to be distributed in such a way up to RMB10,828,315,580.40and thebalance to be carried forward to the next year. This distribution preplan still needs to be approvedbythegeneralmeetingofshareholders. XVII.OtherImportantEvents None. XVIII.Notestomainitemsoffinancialstatementsoftheparentcompany (1)Accountsreceivable 1.Theaccountsreceivablearedisclosedbytype Balanceattheendoftheperiod Type Bookbalance Baddebtprovision Percentage Percentage Carryingamount Amount (%) Amount (%) Receivableswith significantsingle amountsand singleimpairment provision appropriatedAccounts receivablewith impairment 1,065,828,407.54 99.99 36,205,434.95 3.40 1,029,622,972.59 provision appropriatedby combination Including:aging 708,422,824.33 66.46 36,205,434.95 5.11 672,217,389.38 combination Consolidation 357,405,583.21 33.53 357,405,583.21 scopecombination Balanceattheendoftheperiod Type Bookbalance Baddebtprovision Percentage Percentage Carryingamount Amount (%) Amount (%) Otherinsignificant accounts receivablewith 6,626,237.91 0.01 6,626,237.91 100.00 singlebaddebt provision appropriated Total 1,072,454,645.45 100.00 42,831,672.86 3.99 1,029,622,972.59Continued BeginningBalance Type Bookbalance Baddebtprovision Percentage Percentage Carryingamount Amount (%) Amount (%)Receivableswithsignificantsingleamountsandsingleimpairmentprovision appropriatedAccounts receivablewith impairment 3,448,181,921.97 99.86 32,076,772.24 0.93 3,416,105,149.73 provision appropriatedby combination Including:aging 617,539,971.74 17.88 32,076,772.24 5.19 585,463,199.50 combination Consolidation 2,830,641,950.23 81.98 2,830,641,950.23 scopecombination Otherinsignificant accounts receivablewith 4,715,115.32 0.14 4,715,115.32 100.00 singlebaddebt provision appropriated Total 3,452,897,037.29 100.00 36,791,887.56 1.07 3,416,105,149.732.Accountsreceivablewithbaddebtprovisionprovidedbyaginganalysisinthecombinations Amountattheendoftheperiod Aging Percentageof Accountsreceivable Baddebtprovision appropriation(%)Within1year 705,734,211.53 35,286,710.58 5.001-2years 2,212,360.54 442,472.11 20.002-3years Over3years 476,252.26 476,252.26 100.00 Total 708,422,824.33 36,205,434.95 5.11 3.Accountsreceivablewithinsignificantamountsbutanindependentimpairment testconductedattheendoftheperiod Contentsofaccounts Bookbalance Baddebt Percentageof Cause receivable amount appropriation(%) Customer1 4,715,115.32 4,715,115.32 100.00 Insolvency Customer2 1,466,529.62 1,466,529.62 100.00 Insolvency Customer3 444,592.97 444,592.97 100.00 Insolvency Total 6,626,237.91 6,626,237.91 100.00 4.TheamountofbaddebtprovisionappropriatedbytheCompanyinthecurrent periodwas RMB6,039,785.30,andtherewasno baddebtprovisionreversedin thecurrentperiod. 5.TherewerenoaccountsreceivableactuallywrittenoffwithintheReportPeriod. 6.Top5debtorsinthebalanceofaccountsreceivableattheendoftheperiod Percentage Relationshipwith tototal Baddebt Nameofentity theCompany Amount Years accounts provision receivable appropriated (%) First Relatedparty 234,820,955.37 Within1 21.90 year Second Non-relatedparty 165,273,582.05 Within1 15.41 8,263,679.10 year Third Relatedparty 122,584,627.84 Within1 11.43 year Fourth Non-relatedparty 78,388,872.23 Within1 7.31 3,919,443.61 year Fifth Non-relatedparty 62,117,494.65 Within1 5.79 3,105,874.73 year Total 663,185,532.14 Within1 61.84 15,288,997.44 year 7.TheCompanyhadnoaccountsreceivablethatwerestoppedfromrecognition duetofinancialassettransferinthecurrentperiod. 8. The Company had no assets or liabilities formed by transfer of accounts receivableanditscontinuousinvolvementintothem. (2)Otherreceivables 1.Otherreceivablesaredisclosedbytype Balanceattheendoftheperiod Type Bookbalance Baddebtprovision Carrying Amount Percentage Amount Percentage amount (%) (%) Otherreceivableswith significantsingle amountsandsingle impairmentprovision appropriatedOtherreceivableswithimpairmentprovision 858,883,497.54 100.00 10,708,129.65 1.25 848,175,367.89appropriatedbycombination Including:aging 146,077,865.11 17.01 10,708,129.65 7.33 135,369,735.46 combination Consolidationscope 712,805,632.43 82.99 712,805,632.43 combination Otherinsignificant receivableswithsingle baddebtprovision appropriatedTotal 858,883,497.54 100.00 10,708,129.65 1.25 848,175,367.89Continued BeginningBalance Type Bookbalance BaddebtprovisionCarrying Amount Percentage Amount Percentage amount (%) (%) Otherreceivableswith significantsingle amountsandsingle impairmentprovision appropriatedOtherreceivableswithimpairmentprovision 581,971,236.58 100.00 7,349,235.79 1.26 574,622,000.79appropriatedbycombination Including:aging 118,505,911.90 20.36 7,349,235.79 6.20 111,156,676.11 combination Consolidationscope 463,465,324.68 79.64 463,465,324.68 combination Otherinsignificant receivableswithsingle baddebtprovision appropriated Total 581,971,236.58 100.00 7,349,235.79 1.26 574,622,000.792. Other receivableswith bad debt provisionprovided byaging analysis in the combinations Amountattheendoftheperiod Aging Percentageof Otherreceivables Baddebtprovision appropriation(%)Within1year 138,708,558.08 6,935,427.91 5.001to2years 575,711.59 115,142.32 20.002to3years 6,272,072.05 3,136,036.03 50.00Over3years 521,523.39 521,523.39 100.00 Total 146,077,865.11 10,708,129.65 7.333.TheamountofbaddebtprovisionappropriatedbytheCompanyinthecurrentperiodwas RMB3,388,893.86,andtherewasno baddebtprovisionreversedinthecurrentperiod.4. The amount of other receivables written off by the Company in the currentperiodwasRMB30,000.00.5.Otherreceivablespresentedbythenatureofmoney Natureofmoney Bookbalanceattheendofthe Bookbalanceatthebeginningofthe period periodIntercoursefunds 789,368,781.74 508,314,348.43Hedgingfund 69,514,715.80 73,656,888.15 Total 858,883,497.54 581,971,236.586.Top5debtorsinthebalanceofotherreceivablesattheendoftheperiod Relationship Percentageto Baddebt Nameofentity withthe Amount Aging totalother provision Company receivables appropriated(%) First Related 186,587,737.59 Within1year 21.72 party Second Related 181,618,708.26 Within1year 21.15 party Third Related 140,661,273.17 Within1year 16.38 party Fourth Non-related 69,514,715.80 Within1year 8.09 3,475,735.79 party Fifth Related 62,976,000.00 Within1year 7.33 party Total 641,358,434.82 74.67 3,475,735.79 (3)Long-termequityinvestment 1.Long-termequityinvestmentclassification Decrease Item Beginning Increaseinthe forthe Balanceattheend Balance currentperiod current oftheperiod period Investmentinsubsidiaries 6,759,419,886.99 850,000,000.00 7,609,419,886.99 Investmentincontractual 60,891,468.90 4,234,163.53 65,125,632.43 enterprises Investmentinassociated 36,507,728.00 4,219,820.43 40,727,548.43 enterprises Subtotal 6,856,819,083.89 858,453,983.96 7,715,273,067.85 Minus:Provisionfor impairmentoflong-term 1,940,009.35 1,940,009.35 equityinvestment Total 6,854,879,074.54 858,453,983.96 7,713,333,058.50 2.Detailsofinvestmentinsubsidiaries Appropriation Shareholding Percentage ofprovision Nameofinvested Accounting Increase/ Balanceattheend ratiointhe ofvoting Provision for entities method Investmentcost BeginningBalance decrease oftheperiod invested rightsinthe for impairment Cashdividend entity(%) invested impairment forthe entity(%) current period GreeElectric Cost Appliances(Brazil) method 130,239,414.36 130,239,414.36 130,239,414.36 100.00 100.00 Co.,Ltd. GreeElectric Cost Appliances method 223,100,000.00 223,100,000.00 223,100,000.00 97.00 97.00 2,813,805,033.97 (Chongqing)Co.,Ltd. ShanghaiGREEAir Cost ConditionersSales method 1,800,000.00 1,800,000.00 1,800,000.00 99.70 99.70 Co.,Ltd ZhuhaiGreeGroup Cost FinanceCompany method 1,400,371,239.99 1,400,371,239.99 1,400,371,239.99 89.25 89.25 Limited ZhuhaiGreeElectrical Cost 184,680,359.95 184,680,359.95 184,680,359.95 100.00 100.00 Co.,Ltd. method ZhuhaiLanda Cost 968,225,519.93 968,225,519.93 968,225,519.93 100.00 100.00 CompressorCo.,Ltd. method ZhuhaiGreeXinyuan Cost 54,290,096.61 54,290,096.61 54,290,096.61 100.00 100.00 ElectronicsCo.,Ltd. method ZhuhaiGreeTOSOT Cost LifeElectric method 30,000,000.00 30,000,000.00 30,000,000.00 100.00 100.00 AppliancesCo.,Lid. ZhuhaiKaibangMotor Cost 83,860,929.67 83,860,929.67 83,860,929.67 100.00 100.00 ManufactureCo.,Ltd. method GreeElectric Cost Appliances(Hefei) method 505,370,626.10 505,370,626.10 505,370,626.10 100.00 100.00 Co.,Ltd. HongKongGree Cost ElectricAppliances method 472,879.08 472,879.08 472,879.08 100.00 100.00 SalesCo.,Ltd. ZhuhaiGreeElectric Cost AppliancesSalesCo., method 5,000,000.00 5,000,000.00 5,000,000.00 100.00 100.00 Ltd. Appropriation Shareholding Percentage ofprovision Nameofinvested Accounting Increase/ Balanceattheend ratiointhe ofvoting Provision for entities method Investmentcost BeginningBalance decrease oftheperiod invested rightsinthe for impairment Cashdividend entity(%) invested impairment forthe entity(%) current period ZhuhaiGreeDakin Cost 283,117,574.47 283,117,574.47 283,117,574.47 51.00 51.00 DeviceCo.,Ltd. method ZhuhaiGreeDaikin Cost PrecisionMoldCo., method 201,911,186.86 201,911,186.86 201,911,186.86 51.00 51.00 Ltd. GREE(Zhongshan) Cost SmallHome method 30,000,000.00 30,000,000.00 30,000,000.00 100.00 100.00 AppliancesCo. GreeGreen Refrigeration Cost 676,040,000.00 676,040,000.00 676,040,000.00 100.00 100.00 TechnologyCenter method Co.,Ltd.OfZhuhai ZhuhaiHVAC Cost 100,000,000.00 100,000,000.00 100,000,000.00 100.00 100.00 EquipmentCo.,Ltd. method GreeElectric Cost Appliances(Wuhan) method 510,000,000.00 510,000,000.00 510,000,000.00 100.00 100.00 1,237,168,070.90 Co.,Ltd. GreeElectric Cost Appliances method 720,000,000.00 720,000,000.00 720,000,000.00 100.00 100.00 (Zhengzhou)Co.,Ltd. ZhengzhouGree Cost GreenResources method 5,000,000.00 5,000,000.00 5,000,000.00 100.00 100.00 RecyclingCo.,Ltd HunanGreen Cost ResourcesRecycling method 5,000,000.00 5,000,000.00 5,000,000.00 100.00 100.00 Co.,Ltd WuhuGreen Cost ResourcesRecycling method 2,000,000.00 2,000,000.00 2,000,000.00 100.00 100.00 Co.,Ltd. Gree(Shijiazhuang) Cost SmallHome method 10,000,000.00 10,000,000.00 10,000,000.00 100.00 100.00 AppliancesCo.,Ltd. Appropriation Shareholding Percentage ofprovision Nameofinvested Accounting Increase/ Balanceattheend ratiointhe ofvoting Provision for entities method Investmentcost BeginningBalance decrease oftheperiod invested rightsinthe for impairment Cashdividend entity(%) invested impairment forthe entity(%) current period GreeElectric Cost Appliances(Wuhu) method 20,000,000.00 20,000,000.00 20,000,000.00 100.00 100.00 Co.,Ltd. ShijiazhuangGreen Cost ResourcesRecycling method 5,000,000.00 5,000,000.00 5,000,000.00 100.00 100.00 Co.,Ltd. GreeElectric Appliances Cost 98,940,059.97 98,940,059.97 98,940,059.97 100.00 100.00 677,650,338.60 (Shijiazhuang)Co., method Ltd. TianjinGreen Cost ResourcesRecycling method 5,000,000.00 5,000,000.00 5,000,000.00 100.00 100.00 Co.,Ltd. ZhuhaiLigaoPrecision Cost ManufacturingCo., method 30,000,000.00 30,000,000.00 30,000,000.00 100.00 100.00 Ltd. ChangshaGreeHVAC Cost 50,000,000.00 50,000,000.00 50,000,000.00 100.00 100.00 EquipmentCo.,Ltd. method ZhuhaiIVPInformation Cost 100,000,000.00 100,000,000.00 100,000,000.00 100.00 100.00 TechnologyCo.,Ltd. method GreeTOSOT(Suqian) Cost HomeAppliancesCo., method 140,000,000.00 140,000,000.00 140,000,000.00 100.00 100.00 Ltd. WuhuPrecision Cost ManufacturingCo., method 30,000,000.00 30,000,000.00 30,000,000.00 100.00 100.00 Ltd. ZhuhaiGreeNew Cost 30,000,000.00 30,000,000.00 30,000,000.00 100.00 100.00 MaterialCo.,Ltd. method ZhuhaiGREE Cost IntelligentEquipment method 100,000,000.00 100,000,000.00 100,000,000.00 100.00 100.00 Co.,Ltd. ZhuhaiHengqinGREE Cost businessfactoringCo., method 50,000,000.00 50,000,000.00 50,000,000.00 100,000,000.00 100.00 100.00 Ltd. Appropriation Shareholding Percentage ofprovision Nameofinvested Accounting Increase/ Balanceattheend ratiointhe ofvoting Provision for entities method Investmentcost BeginningBalance decrease oftheperiod invested rightsinthe for impairment Cashdividend entity(%) invested impairment forthe entity(%) current period ZhuhaiGreePrecision Cost 100,000,000.00 100,000,000.00 100,000,000.00 100.00 100.00 MoldCo.,Ltd. method GreePrecisionMold Cost 80,000,000.00 80,000,000.00 80,000,000.00 100.00 100.00 (Wuhan)Co.,Ltd. method ZhuhaiGREE IntelligentEquipment Cost 50,000,000.00 50,000,000.00 50,000,000.00 100.00 100.00 TechnologyResearch method InstituteCo.,Ltd. ZhuhaiGreeEnergy Cost Environment method 200,000,000.00 200,000,000.00 200,000,000.00 100.00 100.00 TechnologyCo.,Ltd. GreeHVAC Cost Equipment(Wuhan) method 40,000,000.00 40,000,000.00 40,000,000.00 100.00 100.00 Co.,Ltd. GreeElectric Cost Appliances method 300,000,000.00 300,000,000.00 300,000,000.00 100.00 100.00 (Hangzhou)Co.,Ltd. Total 7,559,419,886.99 6,759,419,886.99 850,000,000.00 7,609,419,886.99 4,728,623,443.47 3.Detailsofinvestmentinassociatedandcontractualenterprises BeginningBalance Increase/Decreaseinthecurrentperiod Balanceof Nameofinvested Investment Adjustmentof Cash Balanceatthe provisionfor entities Provisionfor Additional profits/losses other Changes dividendsor Appropriated endofthe impairmentat Originalvalue impairment investment Disinvestment recognized comprehensive inother profits provisionfor Others period theendofthe underthe income equities declaredto impairment period equitymethod distribute 1.Partnership SongyuanFood 60,891,468.90 4,234,163.53 65,125,632.43 GroupCo.,Ltd. Subtotal 60,891,468.90 4,234,163.53 65,125,632.43 2.Jointventure (Vietnam)Gree Electric 1,940,009.35 1,940,009.35 1,940,009.35 1,940,009.35 Appliances,Inc. BeijingGree TechnologyCo., 1,252,032.71 291,384.83 1,543,417.54 Ltd. LiaowangAll Media 22,423,869.04 3,851,569.67 26,275,438.71 Communication Co.,Ltd. ChongqingPargo Mechanical 10,891,816.90 -523,735.65 10,368,081.25 EquipmentCo., Ltd. GREEVOLINCO (HONGKONG) 419,538.00 181,063.58 600,601.58 LIMITED Subtotal 36,507,728.00 1,940,009.35 419,538.00 3,800,282.43 40,727,548.43 1,940,009.35 Total 97,399,196.90 1,940,009.35 419,538.00 8,034,445.96 105,853,180.86 1,940,009.35 (4)Operatingrevenuesandoperatingcosts Amountforthecurrentperiod Amountforthepreviousperiod Item Revenue Cost Revenue Cost Mainbusiness 88,506,006,087.61 62,704,978,589.70 84,687,595,777.18 63,586,529,934.73 Other 11,690,016,898.63 11,452,513,666.53 8,916,145,362.57 8,428,141,722.16 businesses Total 100,196,022,986.24 74,157,492,256.23 93,603,741,139.75 72,014,671,656.89(5)Investmentincome Item Amountforthecurrent Amountforthe period previousperiodLong-termequityinvestmentincomemeasuredby 4,728,623,443.47 24,756,274.91costmethodLong-termequityinvestmentincomemeasuredby 8,034,445.96 3,246,089.30equitymethodInvestment income from disposal of derivative -1,603,282,165.02 143,435,881.55financialassets Total 3,133,375,724.41 171,438,245.76XIX.Supplementaryinformation(1)Scheduleofnon-recurringprofitandlossfortheyear Item Amount Description ProfitandlossProfitandlossfromdisposalofnon-currentassets -12,245,120.40 fromdisposaloffixed/intangible assets Governmentalsubsidiesrecordedintothecurrentgains Financialrewards, andlosses(excludingthegovernmentalsubsidiesclosely technological relatingtothebusinessoftheenterpriseandenjoyedbya 960,287,886.56 innovation fixedquotaorafixedamountinaccordancewiththestate subsidiesand policies) development projectgrants,etc. Gainsandlossesofthefairvaluechangeofthederivative Investment financialinstrumentsheldbytheCompany,investment income,gainsand incomefromdisposalofthederivativefinancial -1,136,058,635.86 lossesfrom instruments,held-to-maturityinvestmentsandfinancial changesinfair assetsavailableforsale,exceptfortheeffectivehedging value Item Amount Description businessinrelationtothenormaloperationofthe Company Reversalofimpairmentprovisionfortheaccounts receivableforwhichanindependentimpairmenttestis 5,556,302.40 conducted Non-operatingincomesandexpendituresotherthanthe 28,307,584.72 aboveitems Totalnon-recurringprofitandloss -154,151,982.58 Less:Influenceamountofincometax 17,078,192.05 Netnon-recurringprofitandloss -171,230,174.63 Including:non-recurringprofitandlossattributableto -179,555,454.27 ownersoftheparentcompany Non-recurringprofitandlossattributabletominority 8,325,279.64 shareholders(2)Calculatingprocessofbasicearningspershareanddilutedearningspershare1)Basicearningspershare Item SerialNumber Amountforthe Amountforthe currentperiod previousperiodTotalstocksatthebeginningoftheperiod a 6,015,730,878.00 3,007,865,439.00The increased stocks by capitalization ofcapital reserves or distribution of stock b 3,007,865,439.00dividendduringthereportperiodTheincreasedstocksbyissuanceofnewstocksordebt-equityswapduringthereport cperiod Thenumberofmonthsfromthenextmonth afterincreaseofstockstotheendofthe d reportperiod Thenumberofmonthsofthereportperiod e 12 12 Thedecreasedstocksbyrepurchaseduring f thereportperiod Thenumberofmonthsfromthenextmonth afterdecreaseofstockstotheendofthe g reportperiod The number ofshrunk stocks during the h reportperiod Item SerialNumber Amountforthe Amountforthe currentperiod previousperiod Theweightedaveragenumberofoutstanding i=a+b+c×d÷e- 6,015,730,878.00 6,015,730,878.00 ordinaryshares f×g÷e-h Netprofitattributabletoshareholdersof j 15,420,964,990.94 12,532,442,817.66 ordinarystocksoftheCompany Netprofitattributabletoshareholdersof ordinarystocksoftheCompanyafter k 15,600,520,445.21 12,313,582,570.49 deductionofnon-recurringprofitandloss Calculateaccordingtothenet profitattributableto l=j÷i 2.56 2.08 shareholdersofordinarystocks Basic oftheCompany earnings Calculateaccordingtothenet pershare profitattributableto shareholdersofordinarystocks m=k÷i 2.59 2.05 oftheCompanyafterdeduction ofnon-recurringprofitandloss 2)Dilutedearningspershare Item Serial Amountforthe Amountforthe Number currentperiod previousperiod Totalstocksatthebeginningoftheperiod a 6,015,730,878.00 3,007,865,439.00 Theincreasedstocksbycapitalizationof capitalreservesordistributionofstock b 3,007,865,439.00 dividendduringthereportperiod Theincreasedstocksbyissuanceofnew stocksordebt-equityswapduringthereport c period Thenumberofmonthsfromthenextmonth afterincreaseofstockstotheendofthereport d period Thenumberofmonthsofthereportperiod e 12 12 Thedecreasedstocksbyrepurchaseduring f thereportperiod Thenumberofmonthsfromthenextmonth afterdecreaseofstockstotheendofthe g reportperiod Thenumberofshrunkstocksduringthereport h period Item Serial Amountforthe Amountforthe Number currentperiod previousperiod Theweightedaveragenumberofoutstanding i=a+b+c× ordinaryshares d÷e- 6,015,730,878.00 6,015,730,878.00 f×g÷e-h Theweightedaveragenumberofincreased ordinarysharesbywarrants,stockoptionand j convertiblebonds Netprofitattributabletoshareholdersof k 15,420,964,990.94 12,532,442,817.66 ordinarystocksoftheCompany Netprofitattributabletoshareholdersof ordinarystocksoftheCompanyafter l 15,600,520,445.21 12,313,582,570.49 deductionofnon-recurringprofitandloss Calculateaccordingtothenet profitattributabletoshareholders m=k÷(i+j) 2.56 2.08 ofordinarystocksofthe Diluted Company earnings Calculateaccordingtothenet pershare profitattributabletoshareholders ofordinarystocksofthe n=l÷(i+j) 2.59 2.05 Companyafterdeductionofnon- recurringprofitandloss 3)Rateofreturnonnetassetsandearningspershare Weighted Earningspershare Profitduringthereportperiod average Diluted returnon Basicearnings earningsper netassets pershare share Net profit attributable to shareholders of ordinary 30.41% 2.56 2.56 stocksoftheCompany Net profit attributable to shareholders of ordinary stocks of the Company after deduction of non- 30.77% 2.59 2.59 recurringprofitandloss SectionXIIndexofDocuments (1) The accounting statements signed and sealed by Dong Mingzhu, the Company's legal representative, Wang Jingdong, responsible person in chargeofaccountingworkandLiaoJianxiong,in-chargepersonofaccounting institution.(2) The originalaudit report sealed by China Audit Union Power CertifiedPublic Accountants Co., Ltd. and signed and sealed by certified publicaccountantsWangBingandHeLi.(3) Originals and original drafts of all the Company's documents andannouncementspublished onthenewspapersdesignatedbyCSRCandonwww.cninfo.com.cnwithintheReportPeriod. GREEELECTRICAPPLIANCES,INC.OFZHUHAI Legal representative: Dong Mingzhu 27 April, 2017
格力电器 000651
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