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虹美菱B:2019年年度报告(英文版) 下载公告
公告日期:2020-03-28

长虹美菱股份有限公司CHANGHONG MEILING CO., LTD.

二〇一九年年度报告

Annual Report 2019

Section I. Important Notice, Contents and InterpretationBoard of Directors, Supervisory Committee, all directors, supervisors and senior executives of ChanghongMeiling Co., Ltd. (hereinafter referred to as the Company) hereby confirm that there are no any fictitiousstatements, misleading statements, or important omissions carried in this report, and shall take all responsibilities,individual and/or joint, for the reality, accuracy and completion of the whole contents.Mr. Wu Dinggang, Chairman of the Company, Mr. Pang Haitao, person in charge of accounting work and Mr.Yang Jun, person in charge of accounting organ (accountant in charge) hereby confirm that the Financial Report of2019 Annual Report is authentic, accurate and complete.The Company did not have directors, supervisors and senior executives of the Company could not guaranteethe reality, accuracy and completion of the whole contents or have objections.

All the directors attended the board meeting on deliberating the Report on site and by communication.Modified audit opinions notes

□ Applicable √ Not applicable

Shine Wing Certified Public Accountants Co., Ltd. (LLP) issued standard unqualified Auditors‘ Report forthe Company‘s Financial Report of 2019.

Major defects in internal control

□ Applicable √Not applicable

The Company had no major defects in internal control in the reporting period.

Risk warning of concerning the forward-looking statements with future planning involved in annual report

√ Applicable □Not applicable

Concerning the forward-looking statements with future planning involved in the Report, they do notconstitute a substantial commitment for investors, investors and the person concerned should maintain adequaterisk awareness, furthermore, differences between the plans, forecast and commitments should be comprehended.Investors are advised to exercise caution of investment risks.

Investors are advised to read the full text of annual report, and pay particular attention to the following riskfactors:

More details about the possible risks and countermeasures in the operation of the Company are described inthe report ―IX. Prospects for the future development of the company‖ of ―Section IV. Analysis and discussion ofthe operation‖, investors are advised to read the relevant content.

Securities Times, China Securities Journal, Hong Kong Commercial Daily and Juchao Website(www.cninfo.com.cn) are the media for information disclosure for year of 2020 that appointed by the Company.All public information under the name of the Company disclosed on the above said media and website shallprevail, and investors are advised to exercise caution.Does the Company need to comply with disclosure requirements of the special industry: noProfit distribution pre-plan or capitalizing of common reserves pre-plan deliberated by the Board in thereporting period

√ Applicable □ Not applicable

Whether has capitalizing of common reserves carried out

□Yes √ No

The profit distribution plan for year of 2019, that deliberated and approved by 36

th session of the 9

thBODwas: take total shares of 1,044,597,881 shares as base dated 31 December 2019, distributed 0.50 Yuan (taxincluded) bonus in cash for every 10-share hold by all shareholders, no share bonus issued and no capitalizing ofcommon reserves carried out.

Directors, supervisors and senior executives of the Company respectively signed Written ConfirmationOpinions for 2019 Annual Report.

Supervisory Committee of the Company formed Written Examination Opinions for 2019 Annual Report.

Contents

Section I. Important Notice, Contents and Interpretation ............................................................. 1

Section II Company Profile and Main Financial Indexes ...... 5

Section III. Summary of Company Business ................................................................................. 11

Section IV. Discussion and Analysis of the Operation .................................................................. 19

Section V. Important Events ............................................................................................................ 60

Section VI. Changes in shares and particular about shareholders ............................................ 141

Section VII. Preferred Stock ......................................................................................................... 149

Section VIII. Convertible Bonds ................................................................................................... 150Section IX. Particular about Directors, Supervisors, Senior Executives and Employees ....... 151Section X. Corporate Governance ................................................................................................ 165

Section XI. Corporate Bond .......................................................................................................... 181

Section XII. Financial Report ....................................................................................................... 182

Section XIII. Documents available for Reference ....................................................................... 350

Interpretation

ItemsRefers toContents
Company, The Company, Changhong Meiling or Meiling ElectricRefers toCHANGHONG MEILING CO.,LTD.
Sichuan Changhong or controlling shareholderRefers toSichuan Changhong Electric Co., Ltd.
Changhong GroupRefers toSichuan Changhong Electronics Holding Group Co., Ltd.
Hong Kong ChanghongRefers toCHANGHONG (HK) TRADING LIMITED
Meiling GroupRefers toHefei Meiling Group Holdings Limited
Industry Investment GroupRefers toHefei Industry Investment Holding (Group) Co., Ltd.
Shine WingRefers toShine Wing Certified Public Accountants (LLP)
Changhong Air-conditionerRefers toSichuan Changhong Air-conditioner Co., Ltd.
Zhongke MeilingRefers toZhongke Meiling Cryogenic Technology Co., Ltd.
Jiangxi MeilingRefers toJiangxi Meiling Electric Appliance Co., Ltd.
Changhong RidianRefers toGuangdong Changhong Ridian Technology Co., Ltd.
Zhongshan ChanghongRefers toZhongshan Changhong Electric Co., Ltd.
Changmei TechnologyRefers toChangmei Technology Co., Ltd.
Changhong HuayiRefers toChanghong Huayi Compressor Co., Ltd.
Meiling CANDYRefers toMeiling CANDY Washing Machine Co., Ltd.
Zhiyijia CompanyRefers toSichuan Zhiyijia Network Technology Co., Ltd.
CSRCRefers toChina Securities Regulatory Commission
Anhui Securities BureauRefers toChina Securities Regulatory Commission, Anhui Province Securities Regulatory Bureau
SSERefers toShenzhen Stock Exchange

Section II Company Profile and Main Financial IndexesI. Company profile

Short form of the stockChanghong Meiling, Hongmeiling BStock code000521, 200521
Short form of the Stock after changed (if applicable)N/A
Stock exchange for listingShenzhen Stock Exchange
Name of the Company (in Chinese)长虹美菱股份有限公司
Short form of the Company (in Chinese)长虹美菱
Foreign name of the Company (if applicable)CHANGHONG MEILING CO.,LTD.
Abbr. of English name of the Company (if applicable)CHML
Legal representativeWu Dinggang
Registrations add.No. 2163, Lianhua Road, Economic and Technology Development Zone, Hefei
Code for registrations add230601
Offices add.No. 2163, Lianhua Road, Economic and Technology Development Zone, Hefei
Codes for office add.230601
Websitehttp://www.meiling.com
E-mailinfo@meiling.com

II. Person/Way to contact

Secretary of the BoardRep. of security affairs
NameLi XiaZhu Wenjie
Contact add.No. 2163, Lianhua Road, Economic and Technology Development Zone, HefeiNo. 2163, Lianhua Road, Economic and Technology Development Zone, Hefei
Tel.0551-622190210551-62219021
Fax.0551-622190210551-62219021
e-maillixia@meiling.comwenjie.zhu@meiling.com

III. Information disclosure and preparation place

Newspaper appointed for information disclosureSecurities Times, China Securities Journal, Hong Kong Commercial Daily
Website for annual report publish appointed by CSRCJuchao website: http://www.cninfo.com.cn
Preparation place for annual reportRoom of secretary of the Board, 2/F , administrative center, Office building of the Company

IV. Registration changes of the Company

Organization codeUniform social credit code: 9134000014918555XK
Changes of main business since listing (if applicable)No changes
Previous changes for controlling shareholders (if applicable)1. In October 1993, after initial listing, controlling shareholder of the Company-- Hefei Meiling Industrial Corp. (renamed as Hefei Meiling Group Co., dated 23 May 1994), executing controlling rights of the Company and management right of the state-owned assets on behalf of Hefei State-owned Assets Management Office, named at that time; 2. From November 1997 to May 2003, controlling shareholder of the Company was Hefei Meiling Group Holding Co., Ltd. (established base on former Meiling Group Co.,, ―Meiling Group‖ for short), an enterprise solely owned by the State; mainly operating the state-owned capital in authorized from State-owned Assets Management Commission of Hefei City, ensuring the maintenance and appreciation of state-owned assets; 3. On 29 May 2003, Meiling Group entered into ―Equity Transfer Agreement‖ with Shunde GreenKel Enterprise Development Co., ltd. (―GreenKel‖), the 82,852,683 state-owned shares held by the Company was transfer to GreenKel. After transferring, GreenKel comes to the first largest shareholder of the Company. 4. According to the spirit of ―Bulletin of Treatment Opinions on GreenKel Company purchasing State-owned Assets Shares of Listed Company‖ (GZFCQ[2006] No.: 44) jointly issued from SASAC and Ministry of Finance in April 2006, Meiling Group took back the Meiling Electric 82,852,683 shares from GreenKel by procedures, which has been transferred. In September 2006, relevant equity transfer agreement signed between the Meiling Group and GreenKel is invalid, which was confirmed by the ―Award‖ ((2006) HZZ No.: 104) issued from arbitration commission of Hefei; the state-owned legal person‘s 82,852,683 shares, held by GreenKel, should return to Meiling Electric, and relevant equity consideration will pay to GreenKel by Meiling Group . On 29 December 2006, the 82,852,683 shares of Meiling Electric were transfer to Meiling Group by GreenKel, and Meiling Group becomes the controlling shareholder of Meiling Electric again. 5. On 18 May 2006 and 11 January 2007, Meiling Group entered into ―Equity Transfer Agreement of Meiling Electric‖ and ―Supplementary Agreement of Equity Transfer of Meiling Electric‖ respectively with Sichuan Changhong and Changhong Group, among the 123,396,375 shares held by Meiling Group, 82,852,683 shares were transferred respectively to Sichuan Changhong and Changhong Group according to the transfer way regulated in agreement; of this transferring, 45,000,000 shares (10.88% of total share capital of the Company) were transferred to Sichuan Changhong, the first largest shareholder of the Company while 37,852,683 shares (9.15% of total share capital of the Company) were transferred to Changhong Group, the third largest shareholder of the Company. 6. On 29 October 2008, Changhong Group and Sichuan Changhong entered into ―Equity Transfer Agreement of Hefei Meiling Co., Ltd.‖, the 32,078,846 restricted circulations A shares of Meiling Electric held by Changhong Group were transferred by agreement to Sichuan Changhong. On 23

V. Other relevant information(I) CPA engaged by the Company

December 2008, the aforesaid equity transfer was approved by ―Reply on Matters of Equity held byState-owned Shareholders of Hefei Meiling Co., Ltd.‖ (GZCQ(2008) No.: 1413) from SASAC; on 21January 2009, the aforesaid transfer was registered for ownership transfer in Shenzhen Branch of ChinaSecurities Depository and Clearing Corporation Limited. With this, the first majority shareholder of theCompany comes to Sichuan Changhong.

7. From 12 November 2018 to 25 February 2019, Sichuan Changhong and its concerted action HongKong Changhong totally buys 16,231,024 shares of the Company through the secondary market bybidding (including A-stock of 13,751,756 shares and B-stock of 2,479,268 shares), a 1.55% in total sharecapital of the Company. After stake enlarge, Sichuan Changhong and its concerted action HongKong Changhong holds 281,832,434 shares of the Company in total, a 26.98% of the total share capitalof the Company; of which, Sichuan Changhong directly holds 248,457,724 A-share of theCompany, a 23.79% in total share capital of the Company while Hong Kong Changhong holdscirculation B-share of the Company amounting as 33,374,710 shares, a 3.19% in total share capital of theCompany.

8. Ended as 31 December 2019, Sichuan Changhong and its concerted action Hong Kong Changhongtotally holds 281,832,434 shares of the Company, a 26.98% in total share capital of the Company;Sichuan Changhong directly holds 248,457,724 A-share of the Company, a 23.79% in total share capitalof the Company while Hong Kong Changhong holds circulation B-share of the Company amounting as33,374,710 shares, a 3.19% in total share capital of the Company.Name of CPA

Name of CPAShine Wing Certified Public Accountants (LLP)
Offices add. for CPA8/F, Block A, Fu Hua Mansion No.8 Chao Yang Men Bei da jie, Dong Cheng District, Beijing, P.R.C
Signing AccountantsLi Xifu, Xia Cuiqiong

(II) Sponsor engaged by the Company for performing continuous supervision duties in reporting period

□ Applicable √ Not applicable

(III) Financial consultant engaged by the Company for performing continuous supervision duties inreporting period

□ Applicable √ Not applicable

VI. Main accounting data and financial indexesWhether it has retroactive adjustment or re-statement on previous accounting data

□ Yes √ No

20192018Changes over last year2017
Operating income (RMB)16,553,252,894.9317,490,174,950.01-5.36%16,797,436,757.36
Net profit attributable to shareholders of the listed company (RMB)56,441,479.1438,658,256.9746.00%32,473,204.92
Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses (RMB)-50,454,661.39-3,142,791.01-1505.41%-97,705,959.02
Net cash flow arising from operating activities (RMB)1,285,003,985.04-220,560,615.36682.61%-551,501,994.74
Basic earnings per share (RMB/Share)0.05400.037045.95%0.0311
Diluted earnings per share (RMB/Share)0.05400.037045.95%0.0311
Weighted average ROE1.13%0.77%0.36 percentage points up0.64%
Year end of 2019Year end of 2018Changes over end of last yearYear end of 2017
Total assets (RMB)14,202,233,615.4715,561,810,184.54-8.74%15,961,511,966.81
Net assets attributable to shareholder of listed company (RMB)5,004,947,673.365,015,730,486.57-0.21%5,051,066,095.31

The cause of the accounting policy change and accounting error correction

□ Applicable √ Not applicable

Whether have corporate bonds or not

□Yes √ No

VII. Accounting data difference under domestic and foreign accounting standards(I) Difference of the net profit and net assets disclosed in financial report, under both IAS (InternationalAccounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)

□ Applicable √ Not applicable

The Company has no difference of the net profit and net assets disclosed in financial report, under both IAS(International Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles) in reportingperiod.(II) Difference of the net profit and net assets disclosed in financial report, under both foreign accounting rulesand Chinese GAAP (Generally Accepted Accounting Principles)

√ Applicable □ Not applicable

In RMB

Net profit attributable to shareholders of listed companyNet assets attributable to shareholders of listed company
Amount in this periodAmount in last periodAmount at period-endAmount at period-begin
Chinese GAAP56,441,479.1438,658,256.975,004,947,673.365,011,972,907.54
Items and amount adjusted by foreign accounting rules
Foreign accounting rules56,441,479.1438,658,256.975,004,947,673.365,011,972,907.54

The Company had no difference of the net profit or net assets disclosed in financial report, under either foreignaccounting rules or Chinese GAAP (Generally Accepted Accounting Principles) in the period.

(III) Reasons for the differences of accounting data under accounting rules in and out of China

√ Applicable □ Not applicable

The ―Notice of Relevant Issues of Audit for Company with Domestically Foreign Shares Offering‖ was issuedfrom CSRC dated 12 September 2007, since the day issuing, cancel the previous ―dual audit‖ requirement forcompanies who offering domestically listed foreign shares (B-share enterprise) while engaging securities practicequalification CPA for auditing. The Company did not compile financial report under foreign accounting rulessince 2007, the financial report of the Company is complying on the ―Accounting Standard for BusinessEnterprise‖ in China, and therefore, there are no differences of accounting data under accounting rules in and outof China at period-end.VIII. Quarterly main financial index

In RMB

Q 1Q 2Q 3Q 4
Operating income4,222,693,607.414,910,469,073.533,907,875,881.653,512,214,332.34
Net profit attributable to shareholders of the listed company60,526,575.53-6,192,552.9626,417,996.84-24,310,540.27
Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses36,385,461.05-31,910,064.208,955,796.33-63,885,854.57
Net cash flow arising from operating activities-921,543,887.111,295,027,887.30-172,257,908.291,083,777,893.14

Whether there are significant differences between the above-mentioned financial index or its total number and therelevant financial index disclosed in the company‘s quarterly report and semi-annual report

□Yes √ No

IX. Items and amounts of non-recurring profit (gains)/losses

√ Applicable □ Not applicable

In RMB

Item201920182017Note
Gains/losses from the disposal of non-current asset (including the write-off that accrued for impairment of assets)-9,537,945.52787,721.32-8,203,782.90Found more in ―Income from assets disposal‖
Governmental subsidy reckoned into current gains/losses (not including the subsidy enjoyed in quota or ration according to national standards, which are closely relevant to enterprise‘s business)103,813,820.0290,401,997.6368,403,702.36‖Found more in ―Other income‖, ―Non-operation income‖
Gains and losses arising from contingent proceedings irrelevant to normal operation of the Company-13,050,649.33‖Found more in ―Non-operation expenditure‖
Losses/gains from changes of fair values occurred in holding trading financial assets, derivative financial assets, trading financial liabilities and derivative financial liabilities, and investment income obtaining from the disposal of trading financial assets, derivative financial assets, trading financial liability, derivative financial liability and other debt investment, excluded effective hedging business relevant with normal operations of the Company27,685,917.00-18,928,688.8792,846,391.02Found more in ―Income of fair value changes‖, ―Investment income‖
Reversal of the account receivable and contract assets depreciation reserves subject to separate impairment test1,936,952.672,543,553.45Found more in ―Account receivable/other account receivable‖
Other non-operating income and expenditure except for the aforementioned ones1,070,165.28-2,614,761.682,680,908.22Found more in ―Non-operation income & expenditure‖
Less: impact on income tax15,170,286.7716,236,806.6624,087,520.95--
Impact on minority shareholders‘ equity (post-tax)2,902,482.151,101,317.881,460,533.81--
Total106,896,140.5341,801,047.98130,179,163.94--

Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for CompaniesOffering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according tothe lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering TheirSecurities to the Public --- Extraordinary Profit/loss, explain reasons

□ Applicable √ Not applicable

The Company has no items defined as recurring profit (gain)/loss according to the lists of extraordinary profit (gain)/loss in Q&AAnnouncement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, inthe period.

Section III. Summary of Company Business

I. Main businesses of the company in the reporting period(i) Main businesses of the CompanyThe Company is one of China's major electric appliance manufacturers, possesses four major domesticmanufacturing bases in Hefei, Mianyang, Jingdezhen and Zhongshan, and two overseas manufacturing bases inIndonesia and Pakistan. Currently, we have completed the industry layout of white electricity basically, coveringthe full product line including refrigerator, washing machine, air conditioner, kitchen and bath, small householdappliances and others, at the same time, the Company enters the new industrial fields as bio-medical and withcertain achievements made.

Over the past 30 years, the Company has always been adhering to the "independent innovation, created inChina", and always focus on refrigeration industry without stop, elaborately building the core competitiveness ofenterprises by technological innovation and product innovation. The company has set up the first RoHS publictesting center in Anhui Province, the state-level enterprise technology center and the top-end R & D team, so thatMeiling can continue to achieve breakthrough results in the variable frequency, intelligence, refreshment,thin-wall, energy-saving, forced air cooling, deep cooling and other fields. In recent years, the Company hassuccessively awarded many honors such as the ―Smart Refrigerator Intelligent Manufacturing Pilot DemonstrationProject‖, the ―National Green Factory‖, the ―National Industrial Design Center‖, the ―Green Pioneer Enterprisefor year of 2019‖ and ―Leading Brand of Preservation Technology in China‘s Refrigeration Industry for year of2019‖. Meanwhile, in 2019, the company‘s M Fresh full-thin series products performed well, three M Freshfull-thin refrigerators (BCD-482WQ3M, BCD-681WQ3S, BCD-686WQ3M) won the Reddot Design Award. Thefull-thin 656WQ3M refrigerator won the 2019 AWE Award, and the full thin BCD-501WQ3S refrigerator won the―Jiadian‖ logo of China Household Electrical Appliances Research Institute. In addition, M-fresh full thin seriesrefrigerators set three world records of the World Record Association, i.e. ―the domestic refrigerators withminimum embedded distance in the world‖, ―the domestic refrigerators with maximum volume ratio in the world‖,and ―the domestic refrigerators with widest storage temperature range in the world‖, which demonstratedMeiling's strong brand strength and innovation ability once again.In recent years, driven by the industry transformation and upgrades and consumption upgrades, the Companyhas adhered to the strategy of smart and variable frequency products, promoted the Company‘s products totransform and upgrade to become intelligent and high-end and comprehensively enhanced the competitiveness ofproducts in the industry by grasping the opportunities of ―refreshment‖, ―thin-wall‖, air cooling and energyefficiency upgrades and effectively resolving the pain points of customers. Under the guidance of the ―intelligent‖

strategy, since 2014, the Company has released and listed a number of CHiQ series of smart refrigerators andair-conditioning products, and continue to promote intellectualized and high-end products. Especially the ―MFresh Life‖ series of refrigerators equipped with water molecule activation and preservation technology launchedin 2017, and the Company has released the M Fresh Life high-end new products ―comprehensive thin‖ seriesrefrigerators with thin body, thin box and thin door in 2019, solve the pain points of users effectively. At the sametime, in order to seize the opportunity of energy efficiency upgrade and consumption upgrade, the Company'sfrequency conversion products accounted for an increasing proportion with the advantage of frequency conversiontechnology application.Facing the future, the Company will further improve the home internet layout, accelerate theintelligentization of home appliances, form a dual-growth engine of ―hardware + services‖, drive thetransformation and upgrading of the Company‘s profitability model, investigate the new value-added servicemodels for home appliance enterprises, meet new competition pattern in the industry, and achieve its ownsustainable and stable development under the guidance of the core values of ―professionalism and shareddevelopment‖. Meanwhile, based on the ―Smart Home Eco-system Project‖ and the existing products, thecompany will enhance the R&D, manufacturing, sales and cooperative capabilities of integrated white goods so asto provide users with a complete set of smart white goods system solutions.In reporting period, main income of the Company coming from refrigerator (freezer), air conditioner,washing machine, kitchen & toilet and small home appliances products, total amounting to 15,241.6670million Yuan, a 92.08% of the operating income.

(ii) Conditions of the industry the company involvedIn 2019, the international trade situation was complex and changeable, competition in the domestic marketwas further intensified, home appliance companies were gradually slowing down the pace of external expansion,and the endogenous growth momentum was significantly enhanced. At the same time, affected by factors such asthe structural upgrade of home appliances, diversified integration of channels, brand transformation, assetrestructuring, and cross-border entry, China's home appliance industry has been struggling to overcome internaland external problems, and the industry's overall operation has remained stable.

1.refrigerator industry

In 2019, the high pressure of the upstream raw materials in the refrigerator industry came to an endtemporarily, the production pressure and profit pressure on the enterprise side have been alleviated significantly,and the refrigerator industry departing from the high pressure of the cost entered a new development cycle. In thenew cycle, the market maintained a demand structure that focused on renewed demand and supplemented by newdemand. The average market price declined significantly, and the overall market showed a slight increase indemand, and going down in retail sales. According to the All View Cloud (AVC) omnichannel data, the China‘sretail volume of refrigerator market in 2019 was 32.78 million units, an increase of 0.2% on a year-on-year basis,retail sales amounted as 91.2 billion Yuan, decreased 4.8% from a year earlier, the refrigerator industry entered thenew development cycle of product price decline.

2. Air conditioning industry

Under the influence of economic downturn, poor real estate performance, and increasing rural marketholdings, the air-conditioning industry encountered a ―cold year‖ in 2019. From the perspective of the demandside, the real estate market was sluggish, and the demand for the third- and fourth-tier markets was insufficient.From the perspective of the supply side, the continuous increasing brands in the air-conditioning market, theexcess production capacity of the industry, the leading companies‘ continuous expansion of their productioncapacity, and the demand for performance growth resulted in oversupply in the industry, and constituted theinevitable background for the price war to return to the market. In addition, in the traditional sales season of theair-conditioning industry in May and June, the enthusiasm of the market was relatively low, leading to increasedmarket competition. In order to cope with market pressure, big brands made price-off promotions to drive themarket demand, and the production space of small and medium-sized brands was squeezed.

3. Washing machine industry

Despite that the macroeconomic situation in 2019 was severe and China‘s home appliance industry facedthree dilemmas, i.e. insufficient growth momentum, high operating costs, and decentralized user traffic, thewashing machine industry has performed steadily under such circumstances, and the retail market has grownbeyond expectations. The washing machine market benefited from significant product upgrades and achieved asmall increase. Front-loading washing machines with dryer were well received by consumers; clothes dryerproducts attracted consumer attention, and the market size expanded rapidly, increasing by nearly 50%. Accordingto the All View Cloud (AVC) omnichannel data, the retail volume of washing machine market in 2019 was 38.31million units, retail sales amounted as 76.4 billion Yuan, an increase of 3.9% and 2.5% respectively on a y-o-ybasis.

On the whole, in the context of the complex and changeable international trade situation and the new normalof China's economic development, the market competition in home appliance industry was intensifying. At thesame time, in the context of continued lack of stimulus in the real estate market, no obvious positives in macroeconomy, and the awakening of consumers‘ autonomous consumption consciousness, the emerging categories ofproducts in the home appliance market became bright spots, consumer demand for home appliances entered aperiod of renewal, and online and offline sales channels tended to balanced and stable development. In themedium and long term, as domestic residents' income continued to grow steadily, national policies guidedindustrial development to green and intelligent acceleration, the revision of mandatory standards forced theindustry upgrading and accelerated the elimination of outdated production capacity, home appliance enterpriseswith core competitiveness would comprehensively promote the high-quality development.II. Major changes in main assets(i) Major changes in main assets

Major assetsNote of major changes
Equity assetsInvested more capital for joint ventures in the period
Fixed assetsTransfer-in from construction in progress increased in the period
Intangible assetsLand use right increased in the period from subsidiary Changhong Air-conditioner
Construction in progressConstruction in progress transfer-in fixed assets in the period

(ii) Main overseas assets

√ Applicable □ Not applicable

Content of assetsReason for the formationAsset sizeLocationOperation modeControl measure to ensure the security of assetsIncome (RMB)Foreign assets accounted for net assets of the CompanyWhether exist significant impairment risk (Y/N)
60% equity of Changhong Ruba Trading CompanyInvestment establishmentUS$ 7.803 millionPakistanSalesDetails of risks control measures have been disclosed by the Company by way of announcement on appointed media (No. 2011-028, No. 2011-032, No. 2014-023, No. 2014-026, No. 2016-027, No. 2016-032, No. 2017-053 and No. 2017-059) on 28 May 2011, 19 April 2014, 25 March 2016 and 10 August 2017-12,768,353.620.25%N
40% equity of Changhong Ruba Electric Company(Private)Ltd.Investment establishmentUS$ 6.9761 millionPakistanManufactureDetails of risks control measures have been disclosed by the Company by way of announcement on appointed media (No. 2011-028, No. 2011-032, No. 2014-023, No. 2014-026, No. 2017-053 and No. 2017-059) on 28 May 2011, 19 April 2014 and 10 August 2017-9,015,854.360.00%N
100% equity of CHANGHONG MEILING ELECTRIC INDONESIA. PTInvestment establishmentUS$ 6 millionKELAPA GADING, JKT, IndonesiaSalesDetails of risks control measures have been disclosed by the Company by way of announcement on appointed media (No. 2016-027 and No. 2016-033) on 25 March 2016-1,369,150.340.48%N
Other notesN/A

III. Core Competitiveness Analysis

(1) Brand capacity

The Company is one of the famous home appliances manufacturers in China, owns several product lines suchas refrigerator, freezing box, air conditioner, washing machine and small household appliances. ―Meiling‖ brand islisted as one of the most valuable brands in China. In recent years, the Company has create the competitiveness ofthe brand by continuously reshaping its brand image, innovating core technology and developing high-end

intelligent products.In terms of reshaping brand image, in order to enhance the brand image and further expand the marketinfluence, the Company reposition the brand by implanting the corporate culture into the brand construction.In October 2015, the Company hold a press conference of "New LOGO release and offline of the 10

th

millionset of frequency conversion products" for renewing LOGO and launching the new brandproposition of ―Meiling, let the good comes‖. Along with the release of new LOGO, Meiling will also implementa brand strategy of "Good Trilogy", including the direct sensory experience of ―experience the good", the spiritsoul enjoyment of ―enjoy the good‖, and the lifestyle faith of ―believe in the good‖.

In terms of continuous innovation of core technologies, on the one hand, the company continuouslypromoted the innovation of intelligent and frequency conversion technologies to maintain the leading position inthe industry in order to meet the needs of industry and market development; on the other hand, in the boosting ofconsumption upgrades, in order to meet consumers‘ individualized, differentiated and diversified needs, thecompany returned to the fresh-keeping nature of refrigerator through the application of ―water molecule-activatedfresh-keeping technology‖, created the first ―1 cm free-embedded refrigerator‖ through research and developmentof full-thin GLS integration technology, achieved thin body and thin cabinet and thin door. The continuousinnovation of the company's key core technologies highlighted Meiling‘s professional capabilities.

In terms of high-end intelligent product development, the company promoted product innovation throughcontinuous technological innovation. Since 2014, the company has successively released CHiQ intelligent seriesproducts, ―M Fresh‖ refrigerators, and ―M Fresh‖ full-thin series products, and created three brand business cards,i.e. ―Meiling Fresh‖ and ―Meiling Thin‖, and ―Meiling Embedding‖ through the introduction of theaforementioned high-end intelligent products, which not only met market demand in a timely manner, but alsoenriched and enhanced the brand image.

Reshaping brand ability through continuous upgrading of products, Meiling will realize a young,international and professional brand image. Through gradual construction of the ideas of Wonderful Start Point,Wonderful Life Circle and Wonderful Ecology Circle, Meiling has become a people-oriented artist specializing inwhite appliances, a smarter scientific expert and a more reliable house keeper.

(2) Product capacity

In more than 30 years, the Company always focus on the refrigeration industry, has developed a variety ofdifferent types of refrigerator products, including three serial produces as ―MELNG美菱, CHiQ and Athena‖.Mainly included ―M Fresh‖ full-thin series fresh-keeping refrigerators equipped with water molecule-activatedfresh-keeping technology, such as BCD-656WQ3M, BCD-681WQ3S, etc., full-thin wall double curved embeddedseries refrigerators such as BCD-482W, CHiQ series high-end intelligent refrigerators and air conditioners,air-cooling cross-shaped side-by-side door series refrigerators such as BCD-501WPUCX and BCD-432WPU9CX,

air-cooling side-by-side door series refrigerators such as BCD-566WUPC, BD-380W air-cooling series productsexporting to Europe, BC / BD-106DTEB, 156DTEB, 211DTEB and dual-temperature BCD-212DTEB 2.0

th

generation thin door series freezer, and YCD-EL / FL289 medical refrigerator freezer combo, etc.

In terms of air-conditioning products, the company adhered to focusing on the core strategy of intelligenceand frequency conversion, and emphasized on the research of new frequency conversion control technologies,among them, the technological achievements of the ―research and application of high-efficiency operation andsecurity control technology of inverter air conditioners based on motor winding temperature measurementmethods‖ has reached international advanced levels, this technology is of great significance to the reliability ofrefrigeration compressors and the safe application of flammable and environmentally-friendly refrigerants inrefrigeration systems in the future; the frequency conversion solutions based on single-chip dual-drive on-boardreactor have been applied to new energy efficiency standard products, and the new energy efficiency productplatform development for new energy of air conditioner from1HP to3HP in 2020 has been completed, and theproduct has been launched in batches. Focused on carrying out the inverter core control technology research anddevelopment and product application such as PMV control technology for infrared temperature measurement andwinding temperature measurement, and vigorously promoted the competitive low-cost frequency conversionhardware solutions and the research and development of new structural products to cope with competition in theair-conditioning market.The Company owned advanced development and quality assurance systems, passed management systemcertification of ISO9001, ISO14001 and ISO45001. Product quality has been quality assurance and productperformance is reliable. At the same time, the company has authoritative certifications including ―national-leveltechnology center‖, ‖national-level industrial design center‖, ―national-level intellectual property demonstrationenterprise‖ as strong guarantees. In terms of technical research, it is committed to applying basic technologyresearch and industrialization transfer, and has established a technical strategic plan with ―intelligence, frequencyconversion, simulation‖ as core technologies, and ―energy saving, fresh keeping, and new materials‖ as keytechnologies, annual technical research project achievements conversion rate reached 85% above. In terms ofproduct development, based on the technological research results and consumption upgrade requirements, updatedthe annual product planning and development outline, increasingly upgraded the product structure, continued toincrease the development of mid-to-high-end products such as thin-wall, air-cooling, large-volume, frequencyconversion, and intelligence, and developed competitive core products. At the strategic level of the company,continued to adhere to the core idea of ―intelligent strategy, productism‖, and promoted the company's producttransformation, technological innovation, and industry leadership by advancing the subsequent research anddevelopment, promotion and technical update of intelligent and frequency conversion products. In addition, thecompany shall continue to improve the home appliance product line, lay out multiple product businesses such aswashing machines, kitchen and bath, small appliances, biomedical, and built a comprehensive home appliancebusiness.

In terms of washing machine products, the company actively developed the core technology of Meiling

washing machines, upgraded its product lineup, and enhanced its competitiveness. The company has successivelydeveloped and launched front-loading products with light luxury appearance, large volume, washing and dryer,and a number of patented pulsator products, among them, the ―One-Key Smart Wash‖ series large-volumetop-loading products represented by B120M500GX realized one-button start and one-button dehydration throughintelligent system, which is convenient and practical. The ―Tianpu‖ series inverter products represented byMB90-660BILG applied the industry-leading DD inverter direct drive and Tianpu washing technology to reduceresidual washing liquid and rinse cleaner and take good care of clothes.

In terms of kitchen and bathroom products, the company adhered to the leading of ―building a smart kitchenand becoming a leading brand of smart kitchen and bathroom products‖, established a smart kitchen voiceinteraction system with large-screen range hoods as its core, and completed the intelligentization layout of allcategories of ―Smart Kitchen‖ to achieve product interconnectivity and human-machine interaction; meanwhile, incombination with its own research and development technology advantages, deepened the productization ofinverter technology in range hoods and gas water heaters, and accelerated the research of zero-cold water gaswater heaters, condensing wall-hung boiler products, and water purification exclusive filter technology, andapplied for 4 invention patents and 4 utility model patents.

In the field of small home appliances, the company was committed to creating an influential brand of ―waterecological household appliances‖ by the operating strategies of ―grasping key categories for scale, strengtheningcore categories for influence establishment, and selecting and cultivating categories for ecology layout‖, launcheda number of intelligent ―water ecological home appliances‖ products, and has gained high recognition in themarket, and the humidifier and water dispenser products ranked in the top five of online industry. At the sametime, the company has continuously increased the investment in research and development of related products,aiming to increase the competitiveness of its products in terms of intelligence, health, and fashion.

In terms of cryogenic products, the company continued to increase investment in research and developmentand promoted the upgrade of technology, products and serve. The Company‘s existing ultra low freezer, plasmablaster freezer, blood bank refrigerator, medical refrigerator, combined refrigerator & freezer and medical freezerand other biomedical products and biological and medical integration solutions are have been widely used inmedical and health, disease control and epidemic prevention, blood systems, research institutes,bio-pharmaceutical, genetic engineering and life sciences and other fields. Especially in ultra low products, theCompany has the -40 °C ~ -164 °C ultra-low freezer storage tank with the largest volume, the widest temperaturezone, and mute design in the world.

(3) Operation capacity

The Company continues to conducted benchmark management to improve its basic management level.Meanwhile, constantly improve the internal management ability by continuously improve the upgrading in aspect

of efficiency of personnel, money and materials. A performance review and sharing system has been establishedwith clear target and quantity index based on performance and layered incentive sharing system, thus to inspirethe internal production capacity. Under the mainline of value chain management, the Company continued to carryout value creation and improve its competitiveness. Its ability to prevent risks has been also strengthened throughcontinuous improvement of internal control system.

(4) Marketing ability

The company has established a relatively complete sales network and service system to accelerate marketingtransformation and achieve the marketing transformation from product line-oriented sales management tochannel- and user-oriented business services, from single-category marketing to full-category marketing. Duringthe reporting period, the company worked on organizations, systems, institutions, procedures, account sets, etc.,and used smart trading platforms to effectively improve operating efficiency, reduce costs, and accumulatestrength for subsequent development. In overseas markets, the company increased the investments in overseasmarketing agencies, research and development bases, production bases, etc., cooperated with internationallyrenowned household appliance brands and distributors, continued to optimize the customer structure and enhancethe product structure, actively explored overseas markets, and exported products to more than 130 countries andregions.

Section IV. Discussion and Analysis of the Operation

I. Introduction

In 2019, China's economic operation as a whole remained within the target range, but under the influence of asignificant slowdown in global economic growth, repeated Sino-US trade frictions, and domestic economicstructural adjustment, the pressure on economic growth increased. Under the influence of many unfavorablefactors, China's home appliance industry was facing an unprecedented difficult situation. According to data fromthe National Appliances Information Center, the scale of retail sales of domestic appliances in 2019 was 803.2billion yuan, with a year-on-year decrease of 2.2%. Affected by the macro environment and its own developmentcycle, coupled with multiple unfavorable factors such as the sluggish real estate, the iterative upgrade ofconsumption structure, insufficient demand, and rising supply chain costs, the overall performance of the homeappliance industry in 2019 was unsatisfactory, and the growth rate slowed. In this context, actively embracing thechanging era, accelerating the brand internationalization construction, increasing the development in overseasmarkets, and promoting the product structural transformation and upgrading have become the starting points forcompetition in home appliance enterprises.II. Main Business Analysis(i) OverviewShows no difference with the summary disclosed in Report of the Board of Director

□Yes √No

1. Introduction

In 2019, refrigerator and freezer business achieved revenue of approximately RMB 7.905 billion, 3.22%decreased on a y-o-y basis; air-conditioning business achieved revenue of approximately RMB 5.909 billion,

12.81% down y-o-y; washing machine business achieve revenue around RMB 0.434 billion, with year-on-yeardecline of 15.53 %; other business of kitchen & toilet products, small home appliance and refrigerationaccessories have revenue approximately as RMB 1.195 billion with 19.47% up y-o-y. At the same time, revenuefrom foreign business gains RMB 3.908 billion, a y-o-y increase of 5.34%.

2. Progress of the company's development strategy and business plan during the reporting period

During the reporting period, in accordance with the development strategy and operating principles of―product leading, marketing transformation, efficiency enhancement and team activation‖ in 2019, the companyhas deployed the annual business plan, arranged the production and management, and carried out the followingactivities:

(1) Product leading

During the reporting period, the company continued to carry out product upgrades around two major productstrategies of intelligence and frequency conversion, took fresh keeping, thin-wall, and energy efficiency upgradesas breakthroughs, thereby comprehensively improved the competitiveness of its products; insisted on user needsas its starting point, carefully built the core competitiveness of enterprise with technological innovation andproduct innovation, and accelerated product upgrades.The company was characterized by ―Meiling Fresh, Meiling Thin, and Meiling Embedding‖, continued tocreate product feature cards, and further promoted the company's refrigerator (freezer) product upgrades and has agood market performance. The ―M Fresh‖ full-thin series refrigerators released in February 2019 developed thefull-thin GLS integrated technology (integrating thin body, thin cabinet and thin door) based on the upgrade ofwater molecule-activated fresh-keeping technology, and comprehensively upgraded product technology, quality,and performance, the products attracted widespread attention from the industry and the media after release andlaunch, both the IFA red dot award and the special report of CCTV News gave the company high evaluation of thefull thin refrigerator. The increase in sales of full thin products in 2019 drove the promotion of Meiling‘s share ofhigh-end refrigerators. According to data from CMM, the product share of Meiling refrigerators with prices ofmore than 11,000 yuan was 3.3%, a year-on-year increase of 1.9%.

(2) Marketing transformation

In the domestic market, after the company increased its investment in Zhiyijia Company, it thoroughlyutilized its intelligent trading platform to conduct marketing collaboration, improved operational efficiency andreduced costs. Through a series of specific marketing transformation measures, realized the transformation fromproduct line-oriented sales management to channel and user experience services, took the ―online and offlineintegration‖ as the main line, promoted omni-channel transformation and upgrade and model change, transformedfrom ―low value, low efficiency, high cost‖ to ―high value, high efficiency, low cost‖. According to the data ofCMM, the average price of the company‘s refrigerator products in the online market in 2019 increased by 25.2%,and the retail sales increased by 0.6%; the average price of the refrigerator offline market increased by 6.5%, andthe retail sales were basically flat. At the same time, the company‘s air-conditioning products seized theopportunity of strategic ODM brand cooperation, and ODM business grew rapidly. In the overseas market,through the transformation from the pursuit of scale to the pursuit of both scale and profit, we have achievedcontinuous improvement in the product structure, for example, the proportion of air-cooling refrigerator productshas exceeded 20%, and the operating quality of overseas refrigerator freezer has continued to improve. Theoverseas air-conditioning business has been actively adjusted, benign changes have been made, and operationscontinued to be improved.

(3) Efficiency promotion:

Focus on efficiency improvement and promote efficiency improvement. During the reporting period, theCompany carried out special work on capital pressure control, the net cash in-flow from operation, inventoryturnover and receivable turnover are increase substantially; continued to promote the ―five -ization and three

easy‖ work at the development end, exceed the annual target in aspect of platform reduction, box reduction andmodel reduction, and the research and development efficiency increased by more than 20% from a year earlier; inthe production side, organized and carried out the work on reducing staff while improving efficiency in theproduct structure optimization, process optimization and one-piece flow, and so on, and the manufacturingefficiency was promoted by more than 20%.

(4) Team activation

Expand the career path of employees through the implementation of the normalized competing mechanismfor cadres to be prepared for both promotion and demotion and the establishment of exit paths for key positions,continue to deepen the performance management mechanism, implement the overall process performanceappraisal for all employees, and realize PDCA cycle for performance management through information integration,reconstruct the incentive mechanism, establish a three-tier incentive system, namely, incentives for businessresults, incentives for value lines, and incentives for special events, to encourage value creation for all employees.(ii) Revenue and cost

1. Constitute of operation revenue

In RMB

20192018Increase/decrease y-o-y
AmountRatio in operation revenueAmountRatio in operation revenue
Total operation revenue16,553,252,894.93100%17,490,174,950.01100%-5.36%
According to industries
Manufacture of household appliances15,442,277,862.8293.29%16,458,650,756.1594.10%-6.18%
Other business1,110,975,032.116.71%1,031,524,193.865.90%7.70%
According to products
Refrigerator, freezer7,904,855,681.1147.76%8,167,773,533.3346.70%-3.22%
Air-conditioning5,908,762,786.4535.70%6,777,093,389.4338.75%-12.81%
Washing machine434,111,186.882.62%513,917,450.542.94%-15.53%
Small appliance and kitchen & toilet993,937,389.596.00%689,072,966.203.94%44.24%
Other products200,610,818.791.21%310,793,416.651.77%-35.45%
Other business1,110,975,032.116.71%1,031,524,193.865.90%7.70%
According to region
Domestic12,638,965,715.0276.35%13,768,743,643.1878.72%-8.21%
Foreign3,914,287,179.9123.65%3,721,431,306.8321.28%5.18%

2. About the industries, products, or regions accounting for over 10% of the company’s operating income oroperating profit

√ Applicable □ Not applicable

In RMB

Operating revenueOperating costGross profit ratioIncrease/decrease of operating revenue y-o-yIncrease/decrease of operating cost y-o-yIncrease/decrease of gross profit ratio y-o-y
According to industries
Manufacture of household appliances15,442,277,862.8212,416,146,774.2319.60%-6.18%-6.46%0.25%
According to products
Refrigerator, freezer7,904,855,681.116,064,938,890.5323.28%-3.22%-5.10%1.53%
Air-conditioning5,908,762,786.454,996,871,222.1815.43%-12.81%-11.35%-1.40%
Small appliance and kitchen & toilet993,937,389.59835,102,165.4115.98%44.24%43.17%0.63%
According to region
Domestic11,534,341,837.699,040,203,991.3621.62%-9.53%-9.50%-0.03%
Foreign3,907,936,025.133,375,942,782.8713.61%5.34%2.78%2.15%

Under circumstances of adjustment in reporting period for statistic scope of main business data, adjusted mainbusiness based on latest one year‘s scope of period-end

□ Applicable √ Not applicable

3. Income from physical sales larger than income from labors

√ Yes □ No

IndustriesItemUnit20192018Increase/decrease y-o-y
Manufacture of household appliances industrySales volume10 thousand pieces/set1,778.481,606.4010.71%
Production10 thousand1,747.301,581.9410.45%
pieces/set
Inventory10 thousand pieces/set114.21145.39-21.45%

Reasons for y-o-y relevant data with over 30% changes

□ Applicable √ Not applicable

4. Fulfillment of the company’s signed significant sales contracts up to this reporting period

□ Applicable √ Not applicable

5. Constitute of operation cost

Industry classification

In RMB

IndustriesItem20192018Increase/decrease y-o-y
AmountRatio in operation costAmountRatio in operation cost
Manufacture of household appliancesRaw material11,370,677,092.4591.58%12,224,876,343.7092.10%-0.52%

Note: nil

6. Whether the changes in the scope of consolidation in Reporting Period

√ Yes □ No

More details can be seen in the report ―VII. Changes in the scope of the merger‖ and ―VIII. Interests in otherentities‖ of ―Section XII Financial Report‖

7. Major changes or adjustment in business, product or service of the Company in Reporting Period

□ Applicable √ Not applicable

8. Major sales and main suppliers

(1) Major sales client of the Company

Total top five clients in sales (RMB)6,099,260,682.93
Proportion in total annual sales volume for top five clients36.85%
Proportion of the related parties‘ sales in total annual sales volume for top five clients20.08%

Information of top five clients of the Company

SerialNameSales (RMB)Proportion in total annual sales
1Client I2,955,074,284.8617.85%
2Client II1,194,810,509.757.22%
3Client III1,088,958,743.006.58%
4Client IV491,287,888.592.97%
5Client V369,129,256.732.23%
Total--6,099,260,682.9336.85%

Other situation of main clients

□ Applicable √ Not applicable

(2) Main suppliers of the Company

Total purchase amount from top five suppliers (RMB)2,432,644,865.67
Proportion in total annual purchase amount for top five suppliers20.28%
Proportion of related party‘s purchase in total annual purchase amount for top five suppliers12.09%

Information of top five suppliers of the Company

SerialNameSales (RMB)Proportion in total annual purchase
1Supplier I630,001,756.385.25%
2Supplier II504,780,768.624.21%
3Supplier III477,640,350.953.98%
4Supplier IV437,841,044.493.65%
5Supplier V382,380,945.233.19%
Total--2,432,644,865.6720.28%

Other notes of main suppliers of the Company

□ Applicable √ Not applicable

(iii) Expenses

In RMB

20192018Increase/decrease y-o-yNote of major changes
Sales expense2,320,362,519.952,576,277,169.86-9.93%-
Administrative expense330,687,143.82317,917,548.034.02%-
Financial expense-14,216,050.60-39,305,608.7463.83%Exchange gains increased in the period
R&D expense334,218,689.69235,299,398.0642.04%More investment in R&D in the period

(iv) Investment in R&D

√ Applicable □ Not applicable

In 2019, the Company continues to insisted on the upgrade of fundamental research on core technology intechnical research, maintained its technological advantages, expanded the innovation and upgrade in thetechnological field, made breakthroughs in differentiation, continued to promote product upgrades, and led thedevelopment orientation in the industry.

In terms of the refrigerator, the Company focused on its technology planning and core technology for technologydevelopment, and carried out the research on human-computer interaction techniques, food refreshmenttechnology, energy saving and mute technology, wide rotation speed variable frequency technology, air ductdesign technology, and vacuum insulation technology, etc. Among them, the launch of the ―full thin‖ seriesrefrigerators once again led the refrigerator to the ―large volume ratio, embedded‖ development direction, greatlyreduced the occupation space and use space of the refrigerator through ―thin body, thin cabinet, and thin door‖; thelaunch of thin door series freezers completed a comprehensive upgrade of household freezer; ―M Fresh‖ seriesrefrigerators equipped with ―water molecule activated fresh keeping technology‖ continued to expand the productlineup, greatly increasing the company's market share of high-end products, brand influence and reputation. Inaddition, the company achieved high-end transformation, technological innovation and industry leadership andcontinued to increase the proportion of intelligent and inverter refrigerators by advancing the continuous researchand development, promotion and technological update of intelligent and inverter products; accelerated thepromotion of 0.1℃ inverter and air-cooling technology and products in overseas markets, and the proportion ofinverter and air-cooling refrigerators in the export markets accelerated. The ―retro‖ series and ―micro-frost‖ seriesrefrigerators have been developed to meet the differentiated and personalized needs of overseas markets.

In air conditioning, according to the strategic planning of holistic intelligent air ecosystem, the Company corewith the technical strategic as intelligence and frequency conversion, carrying out variable frequency control indepth, CFD&CAE simulation, intelligent voice, and basic core ability construction as recognition and interactionetc. In the field of frequency conversion control technology, the technological achievements of the ―research andapplication of high-efficiency operation and security control technology of inverter air conditioners based onmotor winding temperature measurement methods‖ has reached international advanced levels, this technology isof great significance to the reliability of refrigeration compressors and the safe application of flammable andenvironmentally-friendly refrigerants in refrigeration systems in the future; the frequency conversion solutionsbased on single-chip dual-drive on-board reactor have been applied to new energy efficiency standard products,and the new energy efficiency product platform development for new energy of air conditioner from1HP to3HP in2020 has been completed, and the product has been launched in batches. The intelligent Q5D freezer adoptingvoiceprint recognition technology has been launched, leading the personalized service era in the air-conditioningindustry, and greatly improving the brand image. The new energy efficiency first-level inverter series produced for

Xiaomi have begun mass production and launched to the market.

In terms of biomedical, Zhongke Meiling, a new three board listed subsidiary of the company, continuouslyincreased its R&D investment. During the reporting period, the various R & D and innovation work of ZhongkeMeiling proceeded smoothly as planned. New dual-system dual-compressor 289 series refrigerator-freezerproducts and 270 series low-temperature series products were developed and marketed. Intelligent wirelessmonitoring and Android screen control systems equipped with ultra-low temperature and medical refrigerators andother storage equipment to achieve product-end cloud integration; ultra-low temperature energy-saving noisereduction technology has been upgraded, and won the UL‘s ―energy efficiency star‖ certification; other homehealth products were developed and marketed, Meiling biomedical products gradually realized the ecologicallayout. During the whole year of 2019, Zhongke Meiling completed a total of 64 patent applications, including 14invention patents, 21 utility model patents, 21 design patents, and 8 software work patents; and obtained 27 newdomestic patent licensing.

R&D investment of the Company

20192018Change ratio
Number of R&D (people)1,5291,649-7.28%
Ratio of number of R&D16.62%15.52%1.10 points up
R&D investment (Yuan)782,372,129.86821,742,728.27-4.79%
R&D investment accounted for R&D income4.73 %4.70%0.03 points up
R&D investment capitalization (Yuan)128,970,096.82152,448,558.04-15.40%
Capitalization R&D investment accounted for R&D investment16.48%18.55%2.07 points down

The reason of great changes in the proportion of total R&D investment accounted for operation income than lastyear

□ Applicable √ Not applicable

Reason for the great change in R&D investment capitalization rate and rational description

□ Applicable √ Not applicable

(v) Cash flow

In RMB

Item20192018Increase/decrease y-o-y
Subtotal of cash in-flow from operation activity17,770,961,164.5016,778,361,372.575.92%
Subtotal of cash out-flow from operation activity16,485,957,179.4616,998,921,987.93-3.02%
Net cash flow from operation activity1,285,003,985.04-220,560,615.36682.61%
Subtotal of cash in-flow from investment activity3,292,055,574.163,668,508,401.66-10.26%
Subtotal of cash out-flow from investment activity2,415,012,035.854,623,429,604.21-47.77%
Net cash flow from investment activity877,043,538.31-954,921,202.55191.84%
Subtotal of cash in-flow from financing activity1,731,668,612.803,213,434,868.63-46.11%
Subtotal of cash out-flow from financing activity3,001,416,948.242,646,463,305.1113.41%
Net cash flow from financing activity-1,269,748,335.44566,971,563.52-323.95%
Net increased amount of cash and cash equivalent901,164,287.58-605,122,582.46248.92%

Main reasons for y-o-y major changes in aspect of relevant data

√Applicable □ Not applicable

In 2019, the net cash flow from operation activity amounted as 1285 million Yuan, increased 1506 million Yuanfrom a year earlier with 682.61% up, mainly because the cash received from good sales and offering labor servicein the period increased from a year earlier;Net cash flow from investment activity has major changes mainly because the entrusted financing expenditure inthe period declined on a y-o-y basis;Net cash flow from financing activity has major changes mainly because the cash received from loans in theperiod declined over that of last year;Reasons of major difference between the cash flow of operation activity in report period and net profit of theCompany

√Applicable □ Not applicable

Mainly because at end of the period, the inventory and operating receivables decreased over that of year-begin.III. Analysis of the non-main business

√Applicable □ Not applicable

In RMB

AmountRatio in total profitNoteWhether be sustainable (Y/N)
Investment income-32,695,507.49-46.86%Loss on delivery of the forward foreign exchange contracts in the periodN
Gains/losses from fair value changes52,993,630.1675.95%Mainly due to the assessment income of current forward foreign exchange contractN
Asset impairment-30,409,004.57-43.58%Provision for inventory depreciation increased in the periodN
Non-operation income6,479,922.989.29%--N
Non-operation expenditure5,409,757.707.75%--N
Credit impairment4,633,296.896.64%--N

IV. Assets and liability(i) Major changes of assets composition

In RMB

Year-end of 2019Year-begin of 2019Ratio changesNote of major changes
AmountRatio in total assetsAmountRatio in total assets
Monetary fund5,499,601,030.6438.72%4,596,077,557.4029.55%9.17%Collection of the entrust financing in the period
Account receivable1,387,961,981.669.77%1,673,362,136.2910.76%-0.99%Turn over of the account receivable speed up in the period
Inventory1,460,910,189.0610.29%2,174,436,573.6713.98%-3.69%Turn over of the inventory speed up in the period
Investment real estate96,343,760.130.68%46,846,507.410.30%0.38%Investment real estate from subsidiary increased in the period
Long-term equity investment88,556,511.700.62%67,552,541.780.43%0.19%Invested more capital for joint venture in the period
Fix assets2,180,572,946.8715.35%1,733,957,012.1411.15%4.20%Transfer-in from construction in progress increased in the period
Construction in progress252,494,792.311.78%464,558,352.602.99%-1.21%The construction in progress transfer to fixed assets in the period
Short-term loans1,103,991,045.967.77%2,336,373,929.6215.02%-7.25%Short-term loans are paid in the period
Long-term loans401,280,000.002.83%1,920,000.000.01%2.82%Long-term loans increased from parent company in the period

(ii) Assets and liability measured by fair value

√Applicable □ Not applicable

In RMB

ItemsAmount at the beginning periodChanges of fair value gains/losses in this periodAccumulative changes of fair value reckoned into equityDevaluation of withdrawing in the periodAmount of purchase in the periodAmount of sale in the periodOther changesAmount at end of the period
Financial assets
1.Trading financial assets (derivative financial assets excluded)9,253,635.59-1,523,366.677,730,268.92
Subtotal of financial assets9,253,635.59-1,523,366.677,730,268.92
Above total9,253,635.59-1,523,366.677,730,268.92
Financial liabilities55,586,666.70-54,516,996.8311,865.061,081,534.93

Other changes:

The exchange difference of the assessment on forward foreign exchange contract of Indonesia Changhong -subsidiary of the CompanyWhether there have major changes on measurement attributes for main assets of the Company in report period ornot

□Yes √ No

(iii) Assets right restricted ended as reporting periodEnded as the reporting period, the Company has no major assets been closed down, detain, freeze or pledge andguarantee. Other information of the assets right restricted found more in relevant content of ―54. Assets withownership or the right to use restricted‖ under VI. Notes to the major items in the consolidated financial

statements carry in Section XII. Financial ReportV. Investment(i) Overall situation

√Applicable □ Not applicable

Investment in the reporting (RMB)Investment in the same period of last year ( RMB)Changes
37,591,140.0046,004,000.00-18.29%

(ii) The major equity investment obtained in the reporting period

√Applicable □ Not applicable

In RMB

Name of investedPrincipal businessMethod of investmentAmount of investmentShareholdingCapital sourcesPartnersTerm of investmentType of productsStatus as of the balance sheet dateExpected returnCurrent investment profit and lossWhether litigation (Y/N)Date of disclosure (if applicable )Index of disclosure (if applicable )
Hefei Meiling Wulian Technology Co., Ltd.IoT home system and new intelligent hardware design, research and development, integration, sales and technical services; design, research and development, and sales of home appliance controller software and hardware and IoT software and hardware; design , research and development, manufacturing, sales and technical services of household appliances, commercial appliances, car appliances, and daily necessities products; information consulting, technology transfer, technical service and operation management in the field of Internet of Things and Internet technology; Internet data services; development, maintenance and sales of e-commerce software; import and export business of self-operated and agent goods and technologies (except for goods and technologies that are restricted for business operation or prohibited from importing and exporting by the state).Newly established10,000,000100%Own fundN/A20-yearSoftware serviceInvested 6 million Yuan in the PeriodNot applicable5,323,042.82N2018-12-11Juchao Website: http://www.cninfo.com.cn (Notice No.: 2018-071)
Changhong Ruba TradingBe engaged in the import, export, distributionCapital$ 7.803060%OwnRubaGeneralLong-tN/AIncreased 2.5041 millionNot app-12,768,353.62N2017-8-10Juchao Website: http://www.cninfo.c
Company(Private) Limitedand sale of household appliances.increasemillionfundTradingFZEermYuan ($363,000) in the periodlicableom.cn (Notice No.: 2017-053 and 2017-059)
Anhui Tuoxing Science and Technology Co., Ltd.Technology research and development, technical consulting, technical services, processing, sales, design, installation, maintenance of refrigeration equipment; mechanical and electrical equipment installation; warehousing services (except dangerous goods); processing and sales of metal products.Newly established10,000,00066.8703%Own fundN/ALong-termN/ABusiness registration completed in the PeriodNot applicable--N2019-4-20Juchao Website: http://www.cninfo.com.cn (Notice No.: 2019-025)
Sichuan Zhiyijia Network Technology Co., Ltd. (Note 1)Development and sales of computer software and hardware and undertake computer network engineering, import & export of goods and technologies (except the items prohibited by laws and regulations, restricted items operating with license), design and production of advertising, design, manufacturing and sales of the model, selling general merchandise, clothing, leather ware, shoes & hats, detergents, cosmetics, photographic apparatus, toys, audio equipment & apparatus, household appliances, electronics, communication equipment, communication device, instruments & apparatus, lamps, electro-mechanical & components, mechanical equipment & accessories, prepackaged food, office supplies, sportingCapital increase35,000,00050%Own fundSichuan Changhong Electric Co., Ltd.20-yearN/AIncrease capital of 29.08704 million Yuan in the period (of which: 20 million Yuan contributed for registered capital and 9,087,040 Yuan reckoned in capital reserve)Not applicable6,854,999.85N2019-8-31, 2019-09-27)Juchao Website: http://www.cninfo.com.cn (Notice No.: 2019-058 and 2019-067)
goods, hotel facilities, tourism cultural goods, gold-silver jewelry and value-added telecom service (entrusted operation), chemical raw materials & products (hazardous chemicals excluded), solar energy equipment and class-I medical devices through the internet.
Total--------------------590,310.95------

Note 1: On 16 December 2014, the Company entered into a joint venture agreement with controlling shareholder Sichuan Changhong Electric Co., Ltd., established the Sichuan ZhiyijiaNetwork Technology Co., Ltd. Jointly. On 5 Jan. 2015, Sichuan Zhiyijia Network Technology Co., Ltd established officially with registered capital of 50 million Yuan, of which, 15 million Yuancontributed by the Company, 30% hold of share-holding ratio, the Sichuan Changhong Electric Co., Ltd. contributed 35 million Yuan with 70% ratio takes. In 2019, the Company increasecapital of 29,087,040.00 Yuan (of which: 20 million Yuan contributed for registered capital and 9,087,040 Yuan reckoned in capital reserve)to Zhiyijia Company, the ratio of shareholding up to50% after increase.(iii) The material non-equity investment in the reporting period

√Applicable □ Not applicable

In RMB

Project NameInvestment MethodInvested with fixed assets (Y/N)Industry involved in Investment ProjectsInvestment Amount in this Reporting PeriodAccrued Actual Investment Amount up to the End of Reporting PeriodCapital SourceProject ScheduleAnticipated IncomeAccrued Realized Income up to the End of Reporting PeriodReasons for not Reaching the Planned Schedule and Anticipated IncomeDisclosed Date (if any)Disclosed Index (if any)
2 million automatic washing machines production base project(Note 1)Self-builtYManufacture of household appliances71,232,933.99269,806,804.13Own fund, fund-raisingCurrently, phase I of the washing machine project (the production line of full-automatic wave wheel washing machine with capacity of one million sets aThe production capacity of 2 million sets of automatic washing machine shall be formed after thisProject is under construction in the period without incomeNot applicable2017-3-30, 2017-4-14, 2019-7-9, 2019-7-26www.cninfo.com.cn (Announcement(2017-010, 2017-024, 2019-040, 2019-041, 2019-042, 2019-043
industrynnually in double shifts) has constructed and put into operation. The phase II (roller production line) will invest with the fund-raising and still in construction, most of the infrastructure transformation and equipment installation have been completed and expected to be put into operation in June 2020.project being put into operationoccurred temporaryand 2019-047)
Total------71,232,933.99269,806,804.13------------

Note 1: According to the Company's strategic development plan, combined with the Company's business needs, and in order to make up for the insufficient research and manufacturing capacityof washing machine industry so as to meet the market demands, the 29

th session of the 8

thBoard of Directors approved and agreed to invest no more than 371,210,000 Yuan in the constructionof the 2 million automatic washing machines production base project. Up to end of the February 2019, phase I (full-automatic wave wheel washing machine with capacity of one million setsannually in double shifts) of the ―production line of annual capacity with 2 million automatic washing machines ‖ project has put into normal operation. In combination with the company'sstrategic development planning and operational needs, and in order to further improve the service efficiency of the company's raised funds, after careful study and argumentation, the 24

th

sessionof the 9th BOD, the 13

thsession of the Supervisory Committee, and the second extraordinary general meeting of shareholders in 2019 passed the resolution and agreed to invest 120 million Yuanof the unused raised funds of the sub-project ―Freezer Intelligent Construction Project‖ of the ―Intelligent Manufacturing Construction Project‖ into the ―production base project (Phase II ) forannual production capacity of 2 million washing machines‖.Found more on Securities Times, China Securities Journal, Hong Kong Commercial Daily and www.cninfo.com.cn that the Company disclosed in the form of announcement (Announcement No.2017-010, No. 2017-024, No. 2019-040, No. 2019-041, No. 2019-042, No. 2019-043, No. 2019-047) on March 30, 2017, April 14, 2017, July 9, 2019 and July 26, 2019 respectively. Currently,the phase II (roller production line) still in construction, most of the infrastructure transformation and equipment installation have been completed and expected to be put into operation in June2020.

(iv) Financial assets investment

1. Securities investment

□Applicable √ Not applicable

The Company had no securities investment in the reporting period.

(2) Derivative investment

√Applicable □ Not applicable

In 10 thousand Yuan

OperatorRelated relationshipWhether related trade or notTypeInitial investmentStart dateEnd dateInvestment amount at period-beginAmount purchased in the reporting periodAmount sales in the reporting periodAmount of reserve for devaluation of withdrawing (if applicable)Investment amount at period-endRatio of investment amount at period-end in net assets of the Company at period-endActual gains/losses in period
Financial institutionN/ANoForward foreign exchange contract200,656.302017-9-292020-8-26149,739.86212,962.52297,358.41-73,225.5214.63%-7,881.56
Total200,656.30----149,739.86212,962.52297,358.41-73,225.5214.63%-7,881.56
Capital resourceOwn fund
Lawsuit involved (if applicable)Not applicable
Disclosure date for approval from the Board for investment of derivatives (if applicable)2019-3-29
Disclosure date for approval from board of shareholders for investment of derivatives (if applicable)2019-5-22
Risk analysis and controlling measures for derivatives holdings in the Period (including but not limited to market risk, liquidity risk, credit risks, operation risk and law risks etc.)Risk analysis: 1. Market risk: domestic and international economic situation changes may lead to exchange rate fluctuations, forward foreign exchange transactions are under certain market risk. Forward foreign exchange business is aiming to reducing impact on corporate profits by foreign exchange settlement and sale prices, exchange rate fluctuations. The Company will follow up the exchange fluctuation, on the basis of target rate determined from the business, relying on the research of the foreign currency exchange rates, combined with prediction of consignments, and burdening ability to price variations due to exchange rate fluctuations, then determine the plan of forward foreign exchange
contracts, and make dynamic management to the business, to ensure reasonable profit level. 2. Liquidity risk: all foreign exchange transactions are based on a reasonable estimate of the future import and export business, to meet the requirements of the trade authenticity. In addition, forward foreign exchange transactions are processed with bank credit, will not affect liquidity of company funds. 3. Bank default risk: if cooperative banks collapse within the contract time, the Company will not be able to transact the original foreign exchange contracts with contract price, which leads the risk of income uncertainty. So the Company chose five state-owned banks, the Chinese-funded banks in shareholding enterprise as Everbright Bank, Industrial Bank and the foreign-funded banks as UOB, OCBC, BEA etc. to conduct the trading of foreign exchange capital. These banks share a solid strength and management whose failure and the risk of loss may bring to the Company is very low. 4. Operational risk: improper operation of the person in charge of forward foreign exchange transactions may cause related risk also. The Company has formulated related management system which defines the operation process and responsibility to prevent and control risks. 5. The legal risks: unclear terms based in contract signed with banks for related transactions may lead legal risks when forward foreign exchange transactions are processing. The Company will strengthen legal review, and choose good bank to carry out this kind of business as to risk control.
Invested derivative products have changes in market price or fair value in the Period, as for analysis of the fair value of derivatives, disclosed specific applied methods and correlation assumption and parameter settingThe Company determines fair value in accordance with the Chapter VII ―Determination of Fair Value‖ carried in the Accounting Standards for Business Enterprises No.22 - Recognition and Measurement of Financial Instruments. Fair-value is basically obtained according to prices offered by bank and other pricing services. While fair-value of derivatives is mainly obtained according to the balance between prices given by outstanding contracts and forward prices given by contracts signed during the reporting period with bank. The differences are identified as trading financial assets and liabilities. During the reporting period, forward foreign exchange contracts and losses of the Company is (78,815,600) Yuan.
Specific principle of the accounting policy and calculation for derivatives in the Period compared with last period in aspect of major changesNot applicable
Special opinion on derivative investment and risk control by independent directorsUpon inspection, the independent directors of the Company believes that: during the reporting period, the Company carried out its foreign exchange forward deals in strict compliance with the standardized operation guidelines for listed issuer on main board (2015 amended) issued by Shenzhen Stock Exchange, the Articles of Association, Authorization Management of the Company, Management System in relating to Foreign Exchange Forward Deals of Hefei Meiling Co., Ltd., and these deals were conducted within the authorization scope under general meeting and board meeting. The Company conducts no foreign exchange transactions on the purpose of getting profit only, all of the forward foreign exchange transactions are operates based on normal operating and production, which is relying on specific business operations with purpose of avoiding the preventing the risks in exchange rate. The forward foreign exchange transactions of the Company are beneficial to prevent the exchange risks exposed by import and export business and thus met its requirement for operation development. There was no speculative operation, no break of relevant rules and regulations and relevant business was conducted under corresponding decision-making procedures. Interests of the Company and entire shareholders, especially minority shareholders, were not prejudiced.

(v) Application of raised proceeds

√Applicable □ Not applicable

1. Overall application of raised proceeds

√Applicable □ Not applicable

In 10 thousand Yuan

Raising yearWayTotal raised capitalsTotal raised capital used in PeriodTotal accumulative raised capitals usedTotal raised capital has purpose of uses changed in PeriodCumulative raised capitals has purpose of uses changed in totalRatio of cumulative raised capitals has purpose of uses changedTotal accumulative raised capitals unusedUsage of the retained raised capitals and what is expected to invested with those capitalsRaised capitals idle for more than two years
2016Non-public offering of A-shares154,073.27227626,960.22528498,111.61114947,246.03512747,246.03512730.66%37,320.244079The raised funds that the Company has not run out will continue to complete the corresponding investment as planned. At the same time, according to the planning for equity investment projects, it‘s agreed the Company to use the idle raised funds of no more than 199 million Yuan (The amount can be rolled over) to invest in the principal-protected financial products after being approved by the Company‘s board of directors, board of supervisors, and the resolutions of shareholders‘ meeting, and after the independent directors issuing agreed independent opinions and sponsor agencies issuing unanimous verification opinions. The remaining funds are deposited in the designated raised capital account.--
Total--154,073.27227626,960.22528498,111.61114947,246.03512747,246.03512730.66%37,320.244079--
Explanation on General usage of raised capital

2. Situation of committed project of raised proceed

√Applicable □ Not applicable

In 10 thousand Yuan

Being deliberated and approved by 1

st extraordinary shareholders meeting of 2016 and 17

th

session of 8

thBOD, and verified by the Reply on Private Placement of Changhong Meiling Co., Ltd. (CSRC XK [2016]No.1396) issued from CSRC, the Company successfully offering 280,858,676 shares (A-stock) to 7 qualified investors, including Sichuan Changhong Electric Co., Ltd. (hereinafter referred as to Sichuan Changhong),with price of 5.59 Yuan/Share and face value of 1.00 Yuan. According to the Verification Report XYZH/2016CDA40272 issued by Shine Wing Certified Public Accountants (LLP), total raised fund amounting to1,569,999,998.84 Yuan, less vary issuance changes (tax included) 29,267,276.08 Yuan, raised fund amounts to 1,540,732,722.76 Yuan.Ended as 31 December 2019, actually fund of raised used accumulative amounted as 981,116,111.49 Yuan in total, balance of the account for fund raised counted as 373,202,440.79 Yuan (including interest incomeaccumulative amounted as 7,725,012.59 Yuan and income from financial product at expiration 80,711,875.92 Yuan)The Company accumulative used the fund raised amounted as 981,116,111.49 Yuan, the use of purpose including: intelligent construction has 282,924,440.00 Yuan in used; R&D ability for intelligence and newproducts for intelligent household appliance has 382,310,007.72 Yuan in used; smart life project totally used 45,001,600.00 Yuan; used in current fund supplementary counted as 270,880,063.77 Yuan (including savinginterest of 147,341.01 Yuan)Committed investmentprojects and over-raised

fund investment

Committed investment projects and over-raised fund investmentChange the project (Y/N) (including partially changed)Total raised-fund commitmentInvestment after adjustment (1)Invested in the periodCumulative investment amount till end of Period-end (2)Investment progress till end of period-end (3)=(2)/(1)Date of reach a predetermined state of useBenefit achieved in the PeriodAchieved expected benefits (Y/N)Major changes of project feasibility (Y/N)
Committed investment project
Construction of intelligent manufacturing projectPartial change39,100.0039,100.0015,986.72363628,292.44400072.36%Intelligent manufacturing (Hefei) project: end of December of 2021; Production line for the annual capacity of 2 million washing machines(Phase II): June 2020--Not applicableN
Construction of intelligent R&D capability and new products development of the intelligent appliance technologyPartial change, the procedures for final approval completed55,900.0048,188.65847610,973.46164838,231.00077279.34%The project reach the intended usable state at end of the 2019--Not applicableN
Intelligent life projectChange completed32,000.004,500.160.04004,500.16100%----Not applicableY
Supplementary the floating capitalNo changes27,073.27227627,073.272276027,088.006377100.05%----Not applicableN
Subtotal of committed investment project--154,073.272276118,862.09075226,960.22528498,111.611149----------
Investment of the over-raised fund
No over-raised fund in the Period
Payment of bank loans (if applicable)----------
Supplementary the floating capital (if applicable)----------
Subtotal of over-raised fund investment------------
Total--154,073.272276118,862.09075226,960.22528498,111.611149----------
Conditions and reasons of failure to meet schedule or predicted income (by specific projects)Found in Note 1
Description of major changes in project feasibilityFound in Note 1
Amount, use of purpose and usage progress of the excessive raised fundNot applicable
Change of the implementation location of project with investment of raised fundNot applicable
Adjustment of the implementation ways of project with investment of raised fundFound in Note 1
Early investment and replacement with the raised fundFound in Note 2
Temporary replacement of the working capital with idle raised fundsNot applicable
Amount and reasons of cash surplus in raised funds during implementing the projectFound in Note 1
Use purpose and destination of the raised funds un-usedFound in Note 3
Problems or other circumstances in the use of raised funds and its disclosureRelevant information with raised funds concerned are disclosed in a timely, true, accurate and complete manner, there is no violation in the deposit, use, management and disclosure of the raised funds.

Note 1:

1.“Construction of intelligent manufacturing project ”:

(1) the original planning construction period of ―construction of intelligent manufacturing project‖ is 3-year, and with purposeof regulating the use of raised funds, the resolution of the 20

th session of the 9

th

BOD and the 11

th session of the 9

thSupervisoryCommittee of the Company passed and agreed to postpone the date that the project achieves the scheduled serviceable condition tothe end of December 2021. Currently, the project is in continuous progress.

(2) The original planning construction period of ―newly increasing 600,000 sets of medium and large-capacity environmentalprotection and energy-saving freezer intelligent production line construction project‖ (hereinafter, the ―freezer intelligent constructionproject‖) is one year. Being deliberated and approved by the resolution of 14

th session of 9

th BOD, 6

th session of 9

thSupervisoryCommittee, the 20

th

session of 9

th BOD and 11

th session of 9

thSupervisory Committee, the Company agreed to postpone the date thatthe project achieves the scheduled serviceable condition to the end of December 2021. However, the project has not beenimplemented because the construction site of the project has been temporarily occupied and the demand for freezers is uncertain dueto the change of market environment.

During the period, the company optimized the layout of the freezer‘s production capacity through intelligent upgrading andrebuilding, improved the freezer‘s production capacity and efficiency, and the freezer‘s production capacity has been able to meet themarket demand. The project had not been implemented, and the feasibility of the project had undergone major changes, if thecompany continued to implement the ―freezer intelligent construction project‖, it would not be able to achieve the expected economicbenefits and would face market and investment risks, therefore, in order to further improve the use efficiency of the funds raised bythe company, the resolutions of the 24

th meeting of the ninth board of directors, the 13

thmeeting of the ninth board of supervisors,and the 2

ndextraordinary shareholders meeting in 2019 agreed the company to change the unused raised funds of 120 million yuanfor the ―intelligent production line construction projects for annual increase of 600,000 sets of medium- and large-volumeenvironmentally-friendly and energy-saving freezers‖ and invest in the ―production base project for annual production of 2 millionsets of washing machines (Phase II)‖.

At the end of the reporting period, ―production base project for annual production of 2 million sets of washing machines (PhaseII)‖ were progressing smoothly. In terms of infrastructure construction, indoor fire protection systems and building renovations werecompleted, outdoor steel structures were completed, plant equipment foundations, steel platforms, and the secondary pipingconstruction except for the injection molding machine were completed. In terms of equipment, the main assembly of the roller finalassembly line was completed, the trial operation has started and the third batch of prototypes were trial-produced, the debugging ofthe cabinet riveting wiring program was completed, and the injection molding machine and supporting equipment could be installedand debugged after being delivered by the suppliers, and the paint spraying line was in the process of environmental impactassessment.

2.“Construction of intelligent R&D capability and new products development of the intelligent appliance technology ”

(1) the original planning construction period of ―Construction of intelligent R&D capability and new products development ofthe intelligent appliance technology‖ (hereinafter, the ―intelligent R&D project‖) is 3-year, and with purpose of regulating the use ofraised funds, being deliberated and approved by the resolution of the Board and Supervisory Committee, the Company agreed topostpone the date that the project achieves the scheduled serviceable condition to the end of December 2021.

(2) In order to accelerate the implementation of the company‘s ―intelligent research and development projects‖, ensure theindependence of intelligent research and development technology, shorten the development cycle of intelligent products, improve thecompany's research and development capabilities, and reduce the repeated investments in resources, the resolutions of the 31stmeeting of the ninth board of directors, the 16th meeting of the ninth board of supervisors, and the 4th extraordinary shareholders‘meeting in 2019 passed and agreed the company to change the use and investment of some of the funds raised in the ―intelligentresearch and development project‖, and use them to purchase intelligent infrastructure platform construction and software R & Dplatforms and other R & D assets from Sichuan Changhong Electric Co., Ltd. and its subsidiaries. The pricing of the relatedtransactions was subject to the appraised value of the underlying asset as of September 30, 2019, and the transaction price wasdetermined to be 46,617,300 yuan.

(3) As the construction of the ―intelligent research and development project‖ was completed and reached its intended use, inorder to improve the use efficiency of the raised funds, reduce the company's financial expenses, improve the company's liquiditysituation, and ensure the interests of shareholders, the resolutions of the 33rd meeting of the ninth board of directors of the company,the 17th meeting of the ninth board of supervisors, and the 1st extraordinary shareholders‘ meeting in 2020 passed and agreed thecompany to close the ―intelligent research and development project‖ and use the project‘s surplus raised funds of 125,084,220.44yuan (including interest income of 47,970,805.20 yuan from wealth management and deposits) as of November 30, 2019 and theinterest settled in the future to permanently supplement the company‘s working capital, and the specific amount was subject to theactual balance of the special account after deducting the balance of reserved contract and the guarantee deposit on the day the fundswere transferred out. At the same time, a total of 114,368,326.60 yuan, including the balance of the contract to be paid and theguarantee deposit would be reserved in the fund raising account and paid in accordance with the contract agreement.

(4) On January 15, 2020, the company withdrew the remaining raised funds, wealth management and interest income totaling126,766,362.64 yuan after deducting the balance of the contract to be paid and the guarantee deposit from the ―intelligent researchand development project‖ account for permanent supplements of the company‘s working capital. After the withdrawal, the remainingfunds of the special account of the raised funds amounted to 99,576,577.04 yuan, which would continue to be used to pay thecontract balance and guarantee deposit.

3.“Intelligent life project”

As the main body of the company‘s ―Intelligent life project‖, Changmei Technology used its own refrigeration equipmentmanufacturing advantages to look for new paths for enterprise development. However, due to the heavy asset burden, low turnoverrate, high operation and maintenance and property costs, it sustained losses. After careful research, the company considered that theoriginal business model of the smart life project was no longer competitive, if the company continued to implement the investmentproject with the raised funds, it would be difficult to achieve the expected investment income and may even generate greater losses.

In order to improve the use efficiency of raised funds, avoid further investment losses, focus on the main business, continue topromote the intelligent and high-end transformation and upgrade of major products, and safeguard the interests of shareholders, theresolutions of the 24th meeting of the ninth board of directors of the company, the 13th meeting of the ninth board of supervisors, andthe 2nd extraordinary shareholders‘ meeting in 2019 passed and approved the company to terminate the implementation of the―Intelligent life project‖ and use the remaining raised funds and financial management interest of the project to permanentlysupplement the working capital. During the reporting period, the company has withdrawn the remaining funds raised and interest

income from this account, a total of 305,843,051.27 yuan, to permanently supplement the company‘s working capital. After thewithdrawal, the remaining funds of the special account for the raised funds were 0 yuan, and the account was cancelled.At the same time, the company implemented the liquidation and cancellation of Changmei Technology Co., Ltd., the main bodyof the project, and is currently working on the liquidation and cancellation.

4. As of the end of the period, the investment progress of the ―Supplementary Liquidity Project‖ exceeded 100%, mainly due to theuse of raised funds including interest on deposits of raised funds.Note 2: Early investment and replacement with the raised fundEnded as 31 October 2016, the Company contributed self-raised fund 63,984,738.91 Yuan for the raised-fund investment project,the money has replaced as 63,984,738.91Yuan. Shine Wing CPA (LLP) made a special audit for pre-investment and carried out anAssurance Report on Invested Self-raised fund to the Raised-fund Investment Before Hand (XYZH/2016CD40285) (hereinafterreferred as to Assurance Report). Replacement are as:

In 10 thousand Yuan

Raised-fund investment projectTotal investmentCommitment capital for raised-fund projectInvestment of self-raised fund invested till end of 31 October 2016Amount replaced
Construction of intelligent manufacturing project39,870.6539,100.002,545.412,545.41
Construction of intelligent R&D capability and new products development of the intelligent appliance technology55,900.0055,900.002,053.062,053.06
Intelligent life project32,076.0032,000.001,800.001,800.00
Total127,846.65127,000.006,398.476,398.47

The replacement has been deliberated and approved by the 27

th session of 8

th BOD and 14

th session of 8

thsupervisory committee,independent directors are proposed an agreeable independent opinion, and sponsor institution carried out a verification opinionwithout objection.Note 3: Use purpose and destination of the raised funds un-usedThe raised-fund have not been used will continues to completed the corresponding investment according to the projectimplementation plan. Meanwhile, according to the raised-fund investment plan, and been deliberated and approved by the Board, theBoard of supervisors and shareholder general meeting at beginning of 2020, agreeable independent opinion from independentdirectors and with the verification opinion without objection issued by sponsor institution, it‘s agreed the Company to use the idleraised fund of no more than 199 million Yuan (the amount can be rolled over) to invest in principal-protected financial products, theremaining funds are deposit in the designated raised capital account.Use purpose of the raised-fund has no changes till recently.

3.Change of the raised funds

√Applicable □ Not applicable

In 10 thousand Yuan

Project after changedCorresponding original commitment itemTotal raised funds plans to invest after change (1)Amount actually invested in the periodCumulative investment amount actually till end of Period-end (2)Investment progress till end of period-end (3)=(2)/(1)Date of reach a predetermined state of useBenefit achieved in the PeriodAchieved expected benefits (Y/N)Major changes of project feasibility after changed (Y/N)
Production line for the annual capacity of 2 million washing machines(Phase II)freezer intelligent construction project12,0003,418.4462923,418.44629228.49%June 2020----N
Supplementary the floating capital permanentlyIntelligent life project30,584.30512730,584.30512730,584.305127100%----YN
Purchase part of the assets of intelligent R&D projectSelf-built part of the assets of intelligent R&D project4,661.73000%----YN
Supplemented the working capital permanently with the surplus raised funds of intelligent R&D projectConstructed an intelligent R&D project (completed)12,676.636264000%15 Jan. 2020--YN
Total--59,922.67139134,002.75141934,002.751419----------
Reasons for changes, decision-making procedures and information disclosure (explain by specific project)1. The company optimized the layout of the freezer‘s production capacity through intelligent upgrading and rebuilding, improved the freezer‘s production capacity and efficiency, and the freezer‘s production capacity has been able to meet the market demand. The project had not been implemented, and the feasibility of the project had undergone major changes, if the company continued to implement the ―freezer intelligent construction project‖, it would not be able to achieve the expected economic benefits and would face market and investment risks. Approved by the resolutions of the 24th meeting of the ninth board of directors, the 13th meeting of the ninth board of supervisors, and the 2nd extraordinary shareholders meeting in 2019 agreed the company to change the unused raised funds of 120 million yuan for the ―intelligent construction of freezer‖ invest in the ―production base project for annual production of 2 million sets of washing machines (Phase II)‖. Found more on relevant announcement (Notice No.: 2019-040, 2019-041, 2019-042 and 2019-047) released on 9 July 2019 and on 26 July respectively. 2. As the main body of the company‘s ―Intelligent life project‖, Changmei Technology used its own refrigeration equipment manufacturing advantages to look for new paths for enterprise development. However, due to the heavy asset burden, low turnover rate, high operation and maintenance and property costs, it sustained losses. After careful research, the company considered that the original business model of the smart life project was no longer competitive, if the
company continued to implement the investment project with the raised funds, it would be difficult to achieve the expected investment income and may even generate greater losses. The resolutions of the 24th meeting of the ninth board of directors of the company, the 13th meeting of the ninth board of supervisors, and the 2nd extraordinary shareholders‘ meeting in 2019 passed and approved the company to terminate the implementation of the ―Intelligent life project‖ and use the remaining raised funds and financial management interest of the project to permanently supplement the working capital. Found more on relevant announcement (Notice No.: 2019-040, 2019-041, 2019-043 and 2019-047) released on 9 July 2019 and on 26 July respectively. 3. In order to accelerate the implementation of the company‘s ―intelligent research and development projects‖, ensure the independence of intelligent research and development technology, shorten the development cycle of intelligent products, improve the company's research and development capabilities, and reduce the repeated investments in resources, the resolutions of the 31st meeting of the ninth board of directors, the 16th meeting of the ninth board of supervisors, and the 4th extraordinary shareholders‘ meeting in 2019 passed and agreed the company to change the use and investment of some of the funds raised in the intelligent R&D ability construction and Development on new products of Household Technology (hereinafter, the ―intelligent research and development project‖), and use them to purchase intelligent infrastructure platform construction and software R & D platforms and other R & D assets from Sichuan Changhong Electric Co., Ltd. and its subsidiaries. The pricing of the related transactions was subject to the appraised value of the underlying asset as of September 30, 2019, and the transaction price was determined to be 46,617,300 yuan. Found more on relevant announcement (Notice No.: 2019-077, 2019-078, 2019-079 and 2019-087) released on 30 October 2019 and on 28 December respectively. 4. As the construction of the ―intelligent research and development project‖ was completed and reached its intended use, the resolutions of the 33rd meeting of the ninth board of directors of the company, the 17th meeting of the ninth board of supervisors, and the 1st extraordinary shareholders‘ meeting in 2020 passed and agreed the company to close the ―intelligent research and development project‖ and use the project‘s surplus raised funds of 125,084,220.44 yuan (including interest income of 47,970,805.20 yuan from wealth management and deposits) as of November 30, 2019 and the interest settled in the future to permanently supplement the company‘s working capital, and the specific amount was subject to the actual balance of the special account after deducting the balance of reserved contract and the guarantee deposit on the day the funds were transferred out. At the same time, a total of 114,368,326.60 yuan, including the balance of the contract to be paid and the guarantee deposit would be reserved in the fund raising account and paid in accordance with the contract agreement. Found more on relevant announcement (Notice No.: 2019-088, 2019-089, 2019-091 and 2020-002) released on 26 December 2019 and on 11 Jan. 2020 respectively. On January 15, 2020, the company withdrew the remaining raised funds, wealth management and interest income totaling 126,766,362.64 yuan after deducting the balance of the contract to be paid and the guarantee deposit from the ―intelligent research and development project‖ account for permanent supplements of the company‘s working capital. After the withdrawal, the remaining funds of the special account of the raised funds amounted to 99,576,577.04 yuan, which would continue to be used to pay the contract balance and guarantee deposit.
Conditions and reasons of failure to meet schedule or predicted income (by specific projects)Not applicable
Presentation on the major changes in project feasibility after changedN/A

VI. Sales of major assets and equity(i) Sales of major assets

□Applicable √ Not applicable

No major assets are sold in the period(ii) Sales of major equity

□Applicable √ Not applicable

VII. Analysis of main holding company and stock-jointly companies

√Applicable □ Not applicable

(i) Particular about main subsidiaries and stock-jointly companies net profit over 10%

In RMB

Company nameTypeMain businessRegister capitalTotal assetsNet assetsOperating revenueOperating profitNet profit
Zhongke Meiling Cryogenic Technology Co., Ltd.SubsidiaryResearch and development, manufacturing and sales of ultra-low temperature freezer68,640,300309,500,258.51154,359,114.08222,867,915.6818,925,495.4116,517,245.60
Jiangxi Meiling Electric Appliance Co., Ltd.SubsidiaryManufacturing of refrigeration and freezer50,000,000278,394,484.83103,784,889.48964,046,994.2010,899,467.1610,899,867.16
Mianyang Meiling Refrigeration Co., Ltd.SubsidiaryManufacturing of refrigeration and freezer100,000,000131,681,596.40119,443,440.13294,954,937.052,408,485.892,438,371.51
Sichuan Changhong Air-conditioner Co., Ltd.SubsidiaryR&D, manufacturing and domestic sales of air-conditioning850,000,0002,877,152,635.651,289,120,047.034,433,502,406.44-74,204,533.09-85,189,135.69
Zhongshan Changhong Electric Co., Ltd.SubsidiaryR&D, manufacturing and foreign sales of air-conditioning184,000,000911,234,316.54-10,199,534.151,988,177,094.35-37,301,441.28-47,929,658.88
Hefei Meiling Group Holdings LimitedSubsidiarySales of white goods80,000,0001,358,945,884.47-88,824,059.004,470,160,912.0626,425,053.6826,607,807.69
Guangdong Changhong Ridian Technology Co., Ltd.SubsidiaryR&D, manufacturing and sales of kitchen and toilet products, small home appliances and water purifier83,000,000524,315,275.74155,582,873.62629,710,961.9321,745,971.9419,614,873.59

(ii) Subsidiary obtained and disposed in the period

√Applicable □ Not applicable

Company nameThe method of obtaining and disposing subsidiaries during the report periodThe influence to the whole production and performance
Hefei Meiling Wulian Technology Co., Ltd.Investment and EstablishmentThe company's wholly-owned subsidiary is invested by the Company with a capital investment of 10 million yuan. This company's establishment aims to further enhance the products‘ technology research and development capabilities in intelligence, frequency conversion, fresh-keeping, etc., while providing a platform for the incubation of the company's internal new technology. It has little impact on the company's overall production operations and performance.
Anhui Tuoxing Science and Technology Co., Ltd.Investment and EstablishmentControlling subsidiary of the Company and established with 10 million Yuan contributed from subsidiary of the Company Zhongke Meiling. The enterprise established aims to expand the business of Zhongke Meiling in field of biological medical treatment. It has little impact on the company's overall production operations and performance.
Nanchang Xiangyou Electronic Appliance Marketing Co., LtdClearing offMinor effect on the overall production and operation and performance of the company
Changsha Meizlai Electronic Appliance Marketing Co., LtdClearing offMinor effect on the overall production and operation and performance of the company
Zhongshan Hongling Trading Co., LtdClearing offMinor effect on the overall production and operation and performance of the company

(iii) Description of the holding company and stock-jointly companiesThe Company has no major holding and stock-jointly enterprise should be disclosed in the periodVIII. Structured entity controlled by the Company

□Applicable √ Not applicable

IX. Future Development Prospects(i) Competition pattern and development trend

In 2019, affected by the investment increase of real estate and the slowdown in the growth of sales of commercialhousing, consumers have gradually slowed the growth of new demand for traditional household appliances, andthe performance of the Chinese home appliance market has been flat. At the same time, 2020 is an important timepoint for China‘s economy to shift to focusing on development quality and the continuous advancement of―supply-side structural reforms‖, the continued novel coronavirus pneumonia epidemic has delayed theresumption of work and production of home appliance companies, and the company will face the risks of weak

macroeconomic growth, gradual weakening of the industry‘s traditional growth momentum, labor shortage, risingraw material prices, substantial increase in transportation costs and human resource costs, and cross-bordercompetition among internet enterprises.

With the gradual increase in the holdings of traditional home appliances, the proportion of renewal demand intotal demand has increased significantly, which is the main driving force for market growth at the current stage. Atthe same time, differentiated products and products touching the consumers‘ pain points and emerging homeappliances that can further improve the life experience of residents will become another momentum of marketgrowth.

1. Macro environment analysis

(1) economic environment

After two years of steady expansion of the global economy, the downside risks have increased significantly,and most countries‘ economic growth tends to weaken. Major financial institutions and organizations havelowered their forecasts for global economic growth in 2020. Although China's economy as a whole was operatingsteadily and staying within the target range in 2019, the trend of unilateral trade protectionism dominated by theUnited States has swept the globe, Sino-U.S. trade frictions have been temporarily suspended, and geopolitics andpublic opinion games will continue, Brexit and other factors have led to instability in Europe, and there are stillmany factors of global economic instability.

In addition, affected by the domestic and global novel coronavirus pneumonia epidemics, according toCMM‘s forecast, the growth of the domestic appliance market in 2020 is ―negative‖, and the decline in exportbusiness will be further expanded.

(2) Market potential

After the rapid growth period, the popularity rate of home appliance products is relatively high, and themarket has shifted from an incremental market to a stock market. The market for the home appliance industry hasseen a significant downward trend, the industry is facing insufficient demand, and the performance growth ofhome appliance companies has been in a trough period. The increase in e-commerce penetration, and changes inthe industry‘s promotional nodes, and the impact of the novel coronavirus pneumonia epidemic have made thepeak season for home appliance sales two months after the Spring Festival in recent years no longer exist. China‘seconomy has entered an important time point for continued reform; the real estate investment, the growth ofcommercial housing sales, and the slowdown in new consumer demand for household appliances have graduallyweakened the growth capacity of the home appliance industry. In addition, in the context of the novel coronaviruspneumonia epidemic, based on changes in consumer demand, health and intelligence will become one of themajor consumer pain points in the market. In recent years, home appliance products have a lot of room forimprovement in these two aspects, the advantages of healthy, intelligent and functional products have graduallyemerged, which has become the trend of home appliance industry transformation and consumption upgrade.

2. Refrigerator (freezer) industry

The inconvenience of road traffic caused by the spread of the novel coronavirus pneumonia epidemic in early2020 has stimulated the consumer‘s ―stock up‖ thought, the consumers‘ demand for refrigerator (freezer) capacityshall expand to a certain extent, the proportion of French, and side-by-side door will continue to increase.Secondly, the long-term storage of fruits and vegetables also reflects the advantages of fresh keeping products,and consumer acceptance of fresh keeping products will further increase. Finally, after the epidemic, consumers‘health and hygiene awareness will also enhance, and the importance of the internal storage environment ofrefrigerators will rise to the next level, the sterilizing and odor removing refrigerator products will also become anew choice.

3. Air-conditioning industry

Affected by the continued sluggish market, the air-conditioning industry has been dragged into the quagmireof ―price war‖, leading brands significantly has reduced their prices, the brand concentration has further increased,the industry competition has intensified, and the second and third tier brands are facing greater pressure. From theperspective of market channels, the online e-commerce platform market continues to grow significantly, and theoffline market is shrinking further. At the same time, the industry is gradually adapting to the impact of the sinkingof e-commerce channels and the network batch mode, and has strengthened the online and offline integratedoperations one after another. Facing the sluggish market, major brands in the industry are constantly seeking newgrowth points through multi-brand development and product innovation. On the one hand, under the general trendof consumer classification, more and more brands adopt separate development strategies for high-end and low-endbrands to meet the needs of different consumers. On the other hand, high-end brands and products continue toinnovate, as industry hotspots such as self-cleaning, comfortable air, and intelligence continue to grow, and newindustry hotspots such as fresh air conditioning have appeared.

In 2020, the overall air-conditioning market will continue its adjustment trend in 2019, the market continuesto be sluggish. With the impact of the novel coronavirus pneumonia epidemic and the implementation of newenergy efficiency policies, the industry‘s uncertainty is further intensified, the competition is extremely fierce, butthe industry‘s tendency to change becomes more obvious, and new channels and industrial structure upgradesusher in new development opportunities. Consumer health awareness will be further enhanced, and attention tofresh air will be further enhanced. In addition, the heat of health air-conditioning products with functions such aspurification of PM2.5, sterilization, dust removal, humidification, and increase of oxygen content will increase.The penetration rate of cleaning air-conditioning market will also further increase; the comfort-typeair-conditioning products to solve direct wind are also selling points to consumers; stimulated by the new energyefficiency policy, the proportion of sales of energy-saving products will continue to increase, and the price warwill continue.

4. Washing machine industry

After the ―Home Appliances Going to the Countryside‖ policy exited, the holding quantity of 100 householdsof washing machine products reached a high level, the industry entered the inventory cycle, and demand tightened.In the context of weak market demand becoming a normal, the main characteristics of the washing machine

industry at this stage are consumption upgrades, the market is transforming and upgrading to quality, and productscontinue to be iteratively updated. From the perspective of product types, washing machine upgrades are mainlyconcentrated in the washing and drying machine market, while from the perspective of washing capacity, they areaffected by demand factors such as the placing space and the rising proportion of small residential households, theupgrade trend is mainly concentrated at 10KG, from the perspective of market segment, the washing machinemarket presents new trends of the health represented by sterilization function, the specialization directed bywashing and care, and the sceneization represented by ultra-thin.In 2020, the washing machine market will still be based on steady development. With the rapidpopularization of mobile communication equipment in recent low-line areas and the decline of online trafficdividends, the washing machine market still maintains a structural traffic dividend, and consumer willingness andconsumption potentiality in rural areas become stronger. At the same time, under the effect of the epidemic,residents‘ awareness of health protection will rapidly increase, drum washing machines with high-temperaturewashing programs and pulsator washing machines with heating washing will become hot products in the market.After the epidemic is over, market education will deepen, and people will pay more attention to healthy washing.Under the concept of health, traditional high-temperature sterilization products, other products with multiplesterilization methods, classified washing products, and mini washing machine products will gain developmentopportunities.

In general, the home appliance industry has entered a consolidation phase, and the demand for refrigeratorand washing machine is almost saturated, there is still some room for popularization of air conditioners in therural market. From the demand side, the need for new replacements is less urgent than the popularization needsand is easily affected and suppressed by the epidemic, the total data of AVC predicts that the omni-channel retailsales of refrigerators, washing machines and air conditioners in 2020 will be -7.6%, -7.1% and -7.3% respectivelyon a year-on-year basis.(ii) Development strategy

1. Vision

Be a leading brand in China, World Class and respectable household appliance enterprise.

2.Strategy direction

Focus on ―products leadership, efficiency breakthrough, intelligent IoT, open cooperation‖, become a creatorwho makes people‘s lives become healthier and better, and realize the ―Meiling Dream‖ of becoming a Chinaleading, world-class and respectable home appliance company China‘s leading, world-class and respected homeappliance company.(iii) Business policy

The company‘s operation policy in 2020 is ―product leadership, marketing transformation, efficiencybreakthrough, and team activation‖, creates hard-core technology in products, advance faster in the market than itscompetitors, have sustainable hematopoietic functions in operations, and establish incentive mechanism of―striving hard without lifting your own whip‖.Product leadership: continue to adhere to ―productism‖, attach importance to product development,increase investment in research and development, increase the success rate of new products to market, andcontinue to create value. With product planning as the traction, energize the sales through technology, R & D, andmanufacturing, and energize for efficiency improvement, and continuously improve product market performanceand competitiveness.

The company builds ―first-class manufacturing‖ through ―improvement of quality, taste and brand‖, ―five-izationand two easy‖, and digital transformation; focuses on product quality details, and implementing quality isdesigned and manufactured, every detail link must be implemented, the market is a measurement of whether ourquality is in place, we has to focus on the key issues reflected by the market to ensure that the product is of highquality.

In 2020, the company will continue to adhere to the two core strategies of intelligence and frequencyconversion, take the M-fresh series and thin-walled series products as starting point to create Meiling‘s corecompetitiveness of ―fresh, thin, embedding‖, continue to promote the development of large-volume refrigerator &freezer, M-fresh refrigerator & freezer, thin-walled products, intelligent and inverter products, focus on boutiqueand hot products, mainly promote the second-generation products of M Fresh and thin-walled series. From therefrigerator fresh keeping and heat transfer mechanism, white goods intelligent fault diagnosis algorithm, airconditioning human comfort mechanism research and lean R & D innovation platform, select hard-coretechnology projects that have great value for users, continue to tackle key issues, and strive to solve consumerpain points, build the industry‘s leading and best products in the world, realize the transformation and upgradingof product structure, and support the implementation of serving the country through industry. At the same time,washing machine products strive to shape the ―ultra-thin, zero-displacement‖ and ―one-button smart washing‖product labels; kitchen and bathroom appliances, and small appliances respectively take the directions of ―smartkitchens‖ and ―water ecological appliances‖ to continuously increase the industry‘s influence.Marketing transformation:

Continue to promote the digital transformation of marketing business, reconstructing three systems withdigitization as the core, namely, establishing a marketing management system with terminal retail as the core,establishing a value management system with retail price as the core, and establishing an operation managementsystem with customer‘s business inventory as the core, actively explore intelligent trading mode. In the domesticmarket, refrigerator and freezer products focus on trendy and hoarding users, strive to create ―boutique‖ + ―hot‖products, continue to lead in ―thin‖ ―fresh‖ ―embedding‖ technologies; air-conditioning products focus on early

adopters and practical users, concentrate on the ―boutique‖ + ―hot‖ products strategy, create brand name cards for―good air‖ and ―good sleep‖ of air conditioning; washing machines focus on ―consolidating basic channels,developing O2O, breaking through TOP customers, starting export sales and OEM / ODM business‖ to carry outwork; kitchens and bathrooms, and small home appliances are working around the strategies of ―strengtheningnew retail and system integration‖ and ―fine products, live channels‖. In terms of overseas markets, the companycontinues to pursue the transformation from pursuing scale to pursuing both scale and profit, continues to improvethe product structure and consolidate the transformation results, at the same time, based on the balance of quantityand profit, we will rely on OEM as a scale support to further improve profitability.Efficiency breakthrough:

Keep up with the industry benchmark, continuously deepen in practice, emphasize that efficiencyimprovement cannot be limited to comparison with oneself, implement ―efficiency is life‖, and achievebreakthroughs in four aspects including capital efficiency, per capita output, single product output, and costreduction to drive the overall efficiency of the company.Team activation:

Formulate strategic planning and implement the ―Yongquan Plan‖, the company has formulated the 14thFive-Year Plan for Human Development, which provides strategic guidance for human resource transformation,talent organization development, and talent incentives. Through the implementation of the ―Yongquan Plan‖,establish a key talent selection mechanism, continue to complete the selection and training of management talents,strengthen the construction of professional and technical talent teams, and improve the company‘s talent reserveconstruction.

Establish the mechanism of ―tapping full potential of talents‖: adhere to the management cadre competitionmechanism, promote the ―two dares‖, that is, dare to make an exception for selecting high-potential talents, dareto eliminate inefficient cadres, and stimulate the team‘s wolf spirit; establish an interchange and dual-channeltalent development mechanism that integrates management lines and professional lines, break the ceiling for talentdevelopment; innovate the credit system to quantify the evaluation criteria and value contribution of R & Dtechnicians, and stimulate the innovation and initiative of R & D technicians.

Establish an incentive mechanism of ―striving hard without lifting your own whip‖: incentives can beexpected, contracting can be implemented, and guarantees for ―brave‖, ―morality‖, and ―intelligence‖ can beprovided; ―four-wheel drive‖ (career, authorization, income, equity) system manages the backbone and activatesthe end, thereby effectively motivating strugglers and entrepreneurs; reduce internal transaction costs, graduallyweaken KPIs, and actively challenge high goals and achieve high growth matching with high incentives.

3. Market strategy

(1) Refrigerator (freezer)

Continue to adhere to the intelligence and frequency two core product strategy; speed up the development

and upgrading of a new generation of intelligent product, implement the Company's intelligent strategy, andenhance the proportion of high-end products. Vigorously invest in basic technology research and productupgrading, continue to carry out intelligence, frequency, forced air cooling, refreshment, thin-wall and othertechnical researches, maintain technology-leading in the industry, promote the Company's product structure toupgrade to high end and intelligence, and drive the Company's industrial transformation and upgrading. By givinggreat impetus to ―enhancing the three-qualities‖, ―five -ization and three easy‖ and ―first-class manufacturing‖,comprehensively improve the efficiency and quality, reduce the product costs and enhance the comprehensivecompetitiveness of products .

In the domestic market, in the context of consumer grading, we adhere to the strategy of ―boutique‖ + ―hot‖products. On the one hand, start from satisfying high-value users pursuing quality of life, adhere to the boutiquestrategy, and continue to build Meiling‘s core competitiveness of ―fresh, thin, embedding‖ through strategies suchas fresh keeping leadership, embedding enhancement, appearance upgrade, and taste improvement, and strengthenits own profitability; on the other hand, start from satisfying low-income users pursuing high performance-to-priceratio, adhere to the ―hot‖ products strategy, and continue to improve the extreme performance-to-price ratio of hotproducts through strategies such as cost reduction and efficiency improvement, and quality improvement, andpromote stable growth in scale.In the overseas markets, quickly expand the scale on the premise of reasonable profits, continue to do a goodjob in ―focusing on products, focusing on markets, focusing on customers‖, and improve product competitivenessthrough continuous promotion of air cooling, inverter, and large volume products; constantly increase marketshare by focusing on strategic markets, key markets, and potential markets, and constantly increase market share;focus on strategic customers and key customers, develop potential customers, and focus and increase customerconcentration.

(2) Air-conditioning

In the domestic market, take the user as the center, seize the opportunities of the company reform andstrategic customer development, implement the ―boutique + hot prodcuts‖ strategy, adhere to the dual brandoperation of ―CHiQ‖ and ―Changhong‖ to create ―good air‖ + ―good sleep‖ products; focus on strong areas tocreate base markets, innovate marketing mode and focus on channels in weak areas; deepen channeltransformation on channels, actively embrace new channels, integrate online and offline operations, focus one-commerce, own channels, and O2O. Adhere to the goal-oriented and striver-oriented, establish value-creationsharing mechanism, strengthen the core technology capacity building such as frequency conversion, intelligenceand simulation, consolidate the foundation, force management, shorten the gap with competing products in cost,delivery time, appearance, quality and service, and continue to create greater value for customers.

In the overseas markets, work on ―improving efficiency, adjusting structure, promoting transformation, and

controlling risks‖, continuously improve product definition and service capabilities, promote the transformationfrom foreign trade thinking into marketing thinking, focus on core customers in key markets, and pay closeattention to the development of blank markets.

(3) Washing machine

Carry out marketing work around ―consolidating basic channels, developing O2O, breaking through TOPcustomers, starting export sales and OEM / ODM business‖, according to the strategic choice of ―excellent qualityand product differentiation‖, take ―quality first‖ and ―follow + innovation‖ as the product quality control strategyand product development strategy, shape the ―ultra-thin, zero-displacement‖ and ―one-button smart washing‖product labels, and build the core competitiveness of the product.

(4) Kitchen and bath, small household appliances

Continue to deepen the ―smart kitchen‖ concept, complete the smart kitchen product array and systemsolutions with ―voice‖ as the entrance, attach importance to usability and practicality, and enhance the smartkitchen operation and scene-based experience. At the same time, focus on the ―water ecological home appliances‖product line, focus on core strengths to create advantageous core product lines, and continuously improve theindustry influence.

(5) Bio-medical care

Unswervingly implement the strategy based on the related diversification in the bio-medical field, center onthe business framework layout of life science, smart cold chain, and family health, promote the product upgradeand service improvement of life science module. Based on cold storage business, rely on life sciences channelsystem and steadily expand the smart cold chain module, at the same time, promote the listing of household healthproducts such as atomizers and oxygen generators, quickly open the market, and promote the company‘s rapidgrowth.

The above business plan and business objectives do not represent the listed Company‘s profit forecast of2020, whether it can be achieved depends on the changes in market condition, the efforts of management team andother factors, there are a lot of uncertainties, investors should pay special attention to it.(iv) Possible risks and countermeasures

In the face of the home appliances market competition is more intense and other objective factors,thesurvival environment of enterprise will be even worse. In 2020, the Company will face risks as weakmacroeconomic growth, severe industry situation, spreading COVID-19 worldwide ,intensified competition andrising costs,Sino-US trade war, new business models and impact of the internet era.

1. Macroeconomic downside risks

After years of rapid growth after the reform and opening up, China's economy has entered a ―new normal‖ ofdeclining year by year. The products produced and sold by the company are consumer electrical products, and themarket demand is usually affected by the macroeconomic and consumer consumption levels. Affected by the

novel coronavirus pneumonia epidemic, China‘s economy faces greater pressure in the first quarter of 2020,which has a certain impact on consumers‘ income, purchasing power and willingness to buy. In addition, theuncertainty of the future development of real estate will also affect the needs of residents to purchase consumerappliances to a certain extent. If the future economic growth continues to slow down or decline, the demand andgross profit margin of the home appliance industry may be lower, which will adversely affect the company‘sprofitability.

2. Risk of spreading COVID-19 worldwide impacting the global economic growth

Since beginning of 2020, the COVID-19 epidemic has a strong impact on economic development in and outof China, home appliance in domestic market presents a ―negative growth‖ trend. Meanwhile, with the expansionand spreading of the epidemic in the world, the adverse impact on home appliances industry aboard is graduallyincreasing. In view of the unpredictable trend and impact of the global epidemic, if the spread of the epidemic isnot effectively contained in global scope for a long time, export business of the Company will suffer declines,which may bring greater market risk to the Company‘s production and operation.

3. Severe industry situation and tough competition

China's home appliance industry is a complete competing industry, there are many domestic andforeign-funded household appliances manufacturers providing products with a higher degree of homogenizationand fierce competition. With the withdrawal of national preferential policy, the industry broader market continuesto decline, the industry enters into aggressive growth from large-scale growth, the industry brand concentrationfurther strengthens, and the competition among the brands shows a new situation of oligarchy and giantcompetition. In recent years, the transformation and upgrading of the industry have been speeding up, and thecompetition for new energy efficiency in the industry has been normalized. Whoever can faster and moreaccurately grasp the opportunity of new energy efficiency switching will be able to enhance the competitivenessof products to a greater extent. If you can't accurately judge and follow the market dynamics of the industry, youmay be eliminated.

4. Impact of cross-border Internet industry and challenges of new business model

With the arrival of Internet era and artificial intelligence era, the Internet enterprises continue to crossboarder and swarm into intelligent home fields, which intensifies competition in the industry, subversive changesmay occur at any time, and traditional household appliance enterprises are facing serious challenges. At the sametime, under the impact of Internet economy and new business model, the home appliance manufacturers areactively promoting the transformation, new business model and new products emerge one after another in thehome appliance industry, the development of intelligent home appliances changes quickly, if unable to make rapidresponse or catch up with the development trend, it may be easily replaced or even completely subverted. Newrules of the game bring strong sense of crisis and sense of urgency to the enterprises.

5. Human resources risk

Household appliance industry is an industry with relatively intensive capital, technology, and labor. With the

gradual expansion of the company's business scope and scale, and the arrival of intelligent home appliances andthe impact of Internet, the company will greatly increase the demands for high-level management personnel,technical personnel, and innovative talents, talent introduction becomes one of the key points for human resourcesmanagement, if it cannot effectively enhance the company's attraction to high-quality talents from various aspects,the company's future development will be subject to constraints. At the same time, in its intelligent manufacturingtransformation period, the company needs higher requirements to the technical capacity and professional qualityof workers at the production line, the improvement for the company's product quality will be influenced if thecomprehensive quality of workers at the production line can not be enhanced. In addition, with the increase inorders, the demand for workers at the production line is increasing, but affected by the supply and demand in labormarket and the continuous rising labor costs, the company's cost pressure will be further enlarged.In view of the above risks, and combined with industry trend of 2020 and the insufficient in 2019, thecompany will continue to adhere to the business policy of ―product leadership, marketing transformation,efficiency breakthroughs, and team activation‖ in 2020, strengthen benchmarking, and quickly improve, and makeadvance arrangements in products, technologies, and markets so as to realize the high-end and intelligenttransformation of the company‘s products, while enriching product lines and creating a comprehensive appliancecompany. The company will carry out the following specific key work:

1. Technology and quality

Continue to carry out technical research on intelligence, frequency conversion, air cooling, fresh keeping,and thin wall, and attach great importance to product technology and quality. Aim at the focus issue of userexperience, implement it to the responsible person and to the specific solutions, and promote the solution ofproblem to maintain the company‘s industry- leading position in technology and quality and continue to improveproduct quality.

2. Improve efficiency and reduce costs

Continue to promote the company‘s work to increase revenue and reduce costs. On the one hand, thecompany‘s marketing end focuses on e-commerce, basic channels, TOP channels, and 2B business, andcontinuously increases the market share of product; on the other hand, all business units focus on various expenses,sort them out item by item, rigidly control various expense budgets, and put them into practice. At the same time,improve the organizational and personnel efficiency of the company‘s various product units, and from marketingheadquarters to branches.

3.Supply chain and manufacturing

Pay attention to the fluctuation of bulk materials, continue to promote the cost reduction of procurement andincrease the material return; pay attention to fund operation efficiency, improve the turnover rate of receivablesand inventory; continue to implement ―first-class manufacturing‖, ―less people engineering‖, ―smart production‖and ―intelligent manufacturing‖ etc. to comprehensively improve efficiency and quality, reduce product costs andenhance the company‘s product competitiveness.

4. Sales

Accelerating marketing transformation and unifying marketing service platforms to better adapt to majorchanges in market competition and consumer consumption behavior; accelerating brand and product collaboration,business and management integration to achieve overall efficiency improvement and cost reductions; activelyexploring interactive new marketing model under epidemic conditions to improve e-commerce organization, andfocus on continuously strengthening e-commerce products, prices, product rendering, product placeholder, onlineretail, and spot rate. Seize the market opportunity for home appliance demand after the novel coronavirusepidemic is over, and formulate corresponding sales strategies based on different markets.

5. Talent mechanism guarantees

Accelerate the implementation of the ―Yongquan Plan‖, and realize ―tapping full potential of talents‖ throughthe incentive mechanism of ―striving hard without lifting your own whip‖. Install a four-wheel drive system(career, authorization, income, and equity) for Meiling strugglers who are willing to struggle; effectively promotethe ―two dares‖, i.e. dare to make an exception for promoting high-potential talents, dare to eliminate inefficientcadres, and stimulate the team‘s wolf spirit; at the same time, promote dual channels for core talents, and providetalents with more adequate development paths from management lines and professional lines.

X. Reception of research, communication and interview(i) In the report period, reception of research, communication and interview

√Applicable □ Not applicable

TimeWayTypeBasic situation index of investigation
26 Feb. 2019Field researchInstitutehttps://view.officeapps.live.com/op/view.aspx?src=http%3A%2F%2Fstatic.cninfo.com.cn%2Ffinalpage%2F2019-02-27%2F1205854486.doc
2 Jul. 2019Field researchInstitutehttps://view.officeapps.live.com/op/view.aspx?src=http%3A%2F%2Fstatic.cninfo.com.cn%2Ffinalpage%2F2019-07-03%2F1206425298.doc
27 Nov. 2019Field researchInstitutehttps://view.officeapps.live.com/op/view.aspx?src=http%3A%2F%2Fstatic.cninfo.com.cn%2Ffinalpage%2F2019-11-28%2F1207121910.doc
18 Dec. 2019Field researchInstitutehttps://view.officeapps.live.com/op/view.aspx?src=http%3A%2F%2Fstatic.cninfo.com.cn%2Ffinalpage%2F2019-12-19%2F1207179544.doc
Reception (times)4
Number of hospitality20
Number of individual reception0
Number of other receptionN/A
Whether to disclose, release or divulge material information that is not publicly available (Y/N)N

Section V. Important EventsI. Profit distribution plan of common stock and capitalizing of common reserves plan(i) Formulation, Implementation and Adjustment of common stock Profit Distribution Policy EspeciallyCash Dividend policy during the Reporting Period

√Applicable □ Not applicable

During the reporting period, the company has strictly executed the profit distribution policy in accordance withthe "Articles of Association", the formulation and implementation of the company's cash dividend policy are inline with the provisions of "Articles of Association" and the requirements of the resolutions of shareholders'meeting, the dividends standards and proportion have been definite and clear, relevant decision-makingprocedures and mechanisms have been complete, the responsibilities of independent directors have been clear andhave played its due role, minority shareholders have had the opportunities to fully express their views andaspirations, and the legitimate interests of minority shareholders have been maintained. In addition, the―2018-2020 Shareholder Return Plan‖ approved by the company's board of directors and the resolutions ofshareholders‘ general meeting has made clear plans for the form and priority of profit distribution, the interval ofprofit distribution, the specific conditions and proportions of cash dividends, and the specific conditions forissuing stock dividend.

In the reporting period, the Company implemented Profit distribution plan for year of 2018, that is, distribute 0.6Yuan (tax included) in cash for every 10 shares held by all shareholders of the Company based on total sharecapital 1,044,597,881 shares dated 31 December 2018 (including 881,733,881 shares of A-share and 162,864,000shares of B-share), cash dividend of 62,675,872.86 Yuan was distributed in total.

Special explanation on cash dividend policy
Satisfy regulations of General Meeting or requirement of Article of Association (Y/N):Y
Well-defined and clearly dividend standards and proportion (Y/N):Y
Completed relevant decision-making process and mechanism (Y/N):Y
Independent directors perform duties completely and play a proper role (Y/N):Y
Minority shareholders have opportunity to express opinions and demands totally and their legal rights are fully protected (Y/N):Y
Condition and procedures are compliance and transparent while the cash bonus policy adjusted or changed (Y/N):Y

(ii) Profit distribution plan (pre-plan) of common stock and capitalizing of common reserves plan (pre-plan)in latest three years (including the reporting period)

1. Profit distribution plan for year of 2017

Distribute 0.6 Yuan (tax included) in cash for every 10 shares held by all shareholders of the Company based ontotal share capital 1,044,597,881 shares dated 31 December 2017, cash dividend of 62,675,872.86 Yuan wasdistributed in total.

2. Profit distribution plan for year of 2018

Distribute 0.6 Yuan (tax included) in cash for every 10 shares held by all shareholders of the Company based ontotal share capital 1,044,597,881 shares dated 31 December 2018, cash dividend of 62,675,872.86 Yuan wasdistributed in total.

3. Profit distribution plan for year of 2019

Distribute 0.5 Yuan (tax included) in cash for every 10 shares held by all shareholders of the Company based ontotal share capital 1,044,597,881 shares dated 31 December 2019, cash dividend of 52,229,894.05 Yuan wasdistributed in total.

The pre-plan had been deliberated and approved by the board of directors, and it need to be submitted the annualshareholders‘ general meeting of 2019 for its consideration.(iii) Cash dividend of common stock in latest three years (including the reporting period)

In RMB

Year for bonus sharesAmount for cash bonus (tax included)Net profit attributable to common stock shareholders of listed company in consolidation statement for bonus yearRatio of the cash bonus in net profit attributable to common stock shareholders of listed company contained in consolidation statementProportion for cash bonus by other ways(i.e. share buy-backs)Ratio of the cash bonus by other ways in net profit attributable to common stock shareholders of listed company contained in consolidation statementTotal cash bonus (including other ways)Ratio of the total cash bonus (other ways included) in net profit attributable to common stock shareholders of listed company contained in consolidation statement
201952,229,894.0556,441,479.1492.54%--52,229,894.0592.54%
201862,675,872.8638,658,256.97162.13%--62,675,872.86162.13%
201762,675,872.8632,473,204.92193.01%--62,675,872.86193.01%

(iv) The Company gains profits in reporting period and the retained profit of common stock shareholdersprovided by parent company is positive but no plan of cash dividend proposed of common stock

□Applicable √ Not applicable

II. Profit distribution plan and capitalizing of common reserves plan for the Period

√Applicable □ Not applicable

Bonus shares for every 10-share (Share)0
Dividends for every 10-share (RMB) (Tax included)0.5
Shares added for every 10-share base (Share)0
Equity base of distribution plan (Share)1,044,597,881
Total cash dividend (RMB) (Tax included)52,229,894.05
Cash dividend for other ways (i.e. repurchased) (RMB)0
Total cash dividend (including other way) (RMB)52,229,894.05
Profits available for distribution (RMB)884,127,743.42
Ratio of cash dividend (including other way) in total profit distribution100%
Cash dividend
Distribute 0.5 Yuan (tax included) in cash for every 10 shares held by all shareholders of the Company based on total share capital 1,044,597,881 shares dated 31 December 2019, cash dividend of 52,229,894.05 Yuan was distributed in total.
Detail explanation on profit distribution or capitalization from capital public reserve
For year of 2019, the individual statement of the parent company show net profit of 111,361,168.18 Yuan, according to the auditing from Shine Wing Certified Public Accountants (LLP). In accordance with relevant regulations, the retained profit at beginning of Current Year amounted as 908,358,682.91 Yuan, deducted the 2018 profit distributed 62,675,872.86 Yuan and after extract for statutory surplus reserve 11,136,116.82 Yuan, the retained profit in individual statement of the parent company cumulative counted as 945,907,861.41 Yuan at end of 2019. In addition, for year of 2019, the net profit attributable to owners of parent company amounted as 56,441,479.14 Yuan, accumulated retained profit according to the consolidated statement at the end of 2019 counted as 884,127,743.42 Yuan. Pursuit to relevant rules and regulation of Article of Association, and considering the interest of shareholders and long-term development needs of the Company, Board of Directors agrees that, based on total share capital 1,044,597,881 of the Company dated 31 December 2019, distributed 0.5 Yuan (tax included) in cash for every 10 shares held by shareholders, totally 52,229,894.05 Yuan distributed in total(tax included). Total share capital of the Company has no changes after distribution, the retained profit of the parent company amounted as 893,677,967.36 Yuan, rests of the retained profit will carry-over for distribute in later years. This plan has been considered and passed by the board of directors, and needs to be submitted to 2019 annual general meeting of the company for deliberation.

III. Implementation of commitment

1.Commitments that the actual controller, shareholders, related party, the buyer and the company havefulfilled during the reporting period and have not yet fulfilled by the end of reporting period

√Applicable □ Not applicable

CommitmentCommitment partyType/contentDateTermImplementation
Commitments made in acquisition report or equity change reportSichuan Changhong Electric Co., Ltd.(hereinafter, the ―Sichuan Changhong‖)About committed and promised in order to prevent horizontal competition in the Acquisition Report of Hefei Meiling Co., Ltd.1. The acquirer shall not engage in refrigerator business or activity which competes or will compete with business of Hefei Meiling Co., Ltd. (hereinafter referred to as the ―Meiling Electric ‖),or that which has interest conflict with Meiling Electrical Appliances.12 Jun. 2007Valid for long termStrictly implemented
2. The acquirer promises to apply shareholders‘ right on a legal and reasonable manner and shall not take any action to limit or affect the normal operation of Meiling Electric.Valid for long termStrictly implemented
3. For any opportunity to engage in competing business, the acquirer will advise Meiling Electric in written for engaging such business or not. If Meiling Electrical Appliances gives no clear written reply as to whether engaging the competing business or not within 20 days after receipt of the aforesaid letter, it shall be deemed that it will not engage in such business. The acquirer will only engage in non-competing business provided that Meiling Electric confirms not to or is deemed to not engage in such non-competing business.Valid for long termStrictly implemented
Commitment made during the non-public offer of 2010Sichuan ChanghongCommitment regarding to reducing and preventing competition with Meiling Electric1. It will not engage in such business or activity that competes with or has interest conflict with that of Meiling Electric except for the action taken for sake of Meiling Electric as required by Meiling Electrical Appliances.24 Jun. 2010Valid for long termStrictly implemented
2. The Company promises to apply shareholders‘ right on a legal and reasonable manner and shall not take any action to limit or affect the normal operation of Meiling Electric
3. In case that Meiling Electric expects, on the basis of its existing business, to expand its operation scope into the business which the
Company has already operated, the Company agrees to grant priority acquisition right to Meiling Electric regarding such business if the same conditions are met, provided that the Company is still the controlling shareholder or actual controller of Meiling Electric
Commitment regarding to reducing and standardizing related transaction with Meiling Electric1. Measures will be adopted to prevent continued related transaction with Meiling Electric: as to the related transaction that can not be prevented, it will sign related transaction agreement with Meiling Electric under the market principles of ―equally paid and mutual benefit‖, and fairly determined the transaction price according to the market prevailing standards.24 Jun. 2010Valid for long termStrictly implemented
2. Perform the necessary obligations to make related directors and related shareholder abstain from voting according to relevant regulation, and observe legal procedure for approving related transaction and information disclosure obligations.
3. Promise not to hurt legal interests of Meiling Electric and other shareholders through related transaction.
Commit to authorized Changhong Air-conditioner and Zhongshan Air-conditioner Electric Co., Ltd. (hereinafter referred to as the ―Zhongshan Changhong ‖) to use ―Changhong‖ trademark and relevant patents for free.6 Nov. 2010Valid for long termStrictly implemented
The Company1. Commit to disclose periodic reports on a truthful, accurate, complete, fair and prompt manner, to disclose all the information that have important influences over investors, to accept supervision under the CSRC and Shenzhen Stock Exchange.7 Jan. 2011Valid for long termStrictly implemented
2. Commit to make public clarification in respect of such information that is released from any public media and may result in misleading influences on stock price once the Company is aware of such information.
3. The directors, supervisors, senior management and core technicians of the Company will accept opinions and criticism from the social public, and they will not trade the Company‘s securities,
directly or indirectly, with any inside information and other illegal methods. The Company promises that the documents submitted to Shenzhen Stock Exchange exist no false statement or material omission, and no relevant information will be disclosed during the application for listing without prior content from Shenzhen Stock Exchange.
Commitment made in transfer of air conditioning assets propertySichuan Changhong1. Since the property transfer didn‘t involve the buildings and land currently used by Changhong Air-conditioner, Sichuan Changhong commits, upon the completion of equity transfer, to continue to lease such assets to Changhong Air-conditioner at market price.10 Dec. 2009Valid for long termStrictly implemented
2. After completion of this property transfer, Sichuan Changhong commits to manage to prevent new related transaction with Meiling Electric. For those which can not be prevented, Sichuan Changhong commits to determine the transaction price based on market accepted methods, so as to ensure fairness of related transaction and protection of the interest of Meiling ElectricValid for long termStrictly implemented
3. Sichuan Changhong commits that it will not engage in air conditioning and refrigerator business or activity which competes or will compete with business of Meiling Electric, or that which has interest conflict with Meiling Electric
Commitments by Annual performance incentive fund, incentive objects while purchasing stock of the Company with performance incentive funds and owned fundSome of the Directors, supervisors and senior executives of the Company as well as other incentive objects1. Make promise not to reduce the shares of Meiling bought in every year during implementation of the performance incentive fund via any market ways in the later first year, which was allowed to be reduced by 50% according to the laws and regulations in the second year, and the remaining 50% was allowed to be reduced in the third year in accordance with the laws and regulations.20 Jun. 2017Three years after current shares purchasedImplementing
2. The directors, supervisors and senior management promised to manage in accordance with the relevant management approaches in accordance with the "Company Law", "Securities Law" and "The Company‘s shares held by the directors, supervisors and senior management of the listed company and its change management rules", as objects of annual performance incentive fund of Meiling, including but not limited to: during his tenure, the shares transferred each year shall not exceed 25% of the total number of shares held of the Company; shall not sell the shares of the Company within six months after bought it or purchase again six months after sold it; shall not transfer the shares held within six months after Dismission.15 Aug. 2013; 3 Jul. 2014; 21 Jul. 2015; 20 Jun. 2017From the date when annual incentive fund plan deliberated and approved by general meeting to 6 moths after director, supervisor and senior executives resignedStrictly implemented
Commitments of not to reducing the sharesSichuan Changhong Electric Co., Ltd.and persons acting in concert CHANGHONG (HK) TRADING LIMITED1. Based on market conditions and as allowed by laws and rules, multiple measures were adopted adequately to increase shareholding of Meiling Electric, so as to demonstrate its firm confidence on the PRC economy and Meiling Electric with its actual actions, maintain sound development of capital market and promote recovery of healthy market9 Jul. 2015Valid for long termStrictly implemented
2. Continued to support operation and development of listed company as always and promoted the achievement of Meiling Electric. It is committed to bringing steady and real return to investors.
Commitment made during the non-public offer in 2016Sichuan ChanghongShares are not transfer within thirty-six (36) months since end of the private placement6 Mar. 201614 Oct. 2016 - 14 Oct. 2019Completed
Directors and senior executives of the CompanyCommitment on compensation of immediate dilution of return arising from non-public issuance of shares1. I hereby undertake not to deliver interests to other entities or individuals without consideration or at unfair conditions, nor to prejudice the Company‘s interests by other means.23 Feb. 2016Till the completion of projects invested with the proceeds from this non-public issuance of sharesImplementing
2. I hereby undertake to restrain my role related consumption behaviors.
3. I hereby undertake not to conduct any investment and consumption which is not related to performance of duties with utilization of any company assets.
6. For the period from the date of this commitment to the date of completion of this non-public issuance of shares, if the CSRC makes other new regulatory requirements on compensation of return measures and the commitment thereof, and in case that the above commitments cannot satisfy these new requirements from the CSRC, I hereby undertake to issue supplementary commitment in compliance with the latest CSRC requirements.
As one of the principals responsible for compensation of return measures, I, in case of break of the above commitments or refuse to perform the above commitments, agree to receive relevant punishment or to adopt relevant administration measures according to the systems, rules and regulations of the CSRC and Shenzhen Stock Exchange.
The Company1. Promise to truly, accurately, completely, fairly and timely publish periodic reports, disclose all information that has significant impacts on the investors, and accept the supervision and management of China Securities Regulatory Commission and the Shenzhen Stock Exchange.12 Oct. 2016Valid for long termStrictly implemented
2. Make commitments that the Company will publicly clarify in time after knowing any information on any public communications media that may cause misleading influence on the stock price
3. The Company‘s directors, supervisors and senior executives will listen carefully to the opinions and criticisms of the public and never use any acquired inside information and other improper means to directly or indirectly engage in the trading activities of the Company's stock.
Perform the commitment promptly or not√ Yes □ No
If the commitment is overdue and has not been fulfilled, the specific reasons for incomplete performance and the work plan for next step shall be explained in detailNot applicable

Note: for the commitments completed and exemption for implementing in above mentioned table, the Company will not disclose in next ordinary report

(ii) Concerning assets or project of the Company, which has profit forecast, and reporting period still inforecasting period, explain reasons of reaching the original profit forecast

□Applicable √ Not applicable

IV. Non-operational fund occupation from controlling shareholders and its related party

□Applicable √ Not applicable

No non-operational fund occupation from controlling shareholders and its related party in period.Disclosure date for specific approval opinion on fund occupation from CPA: 28 March 2020Disclosure index for specific approval opinion on fund occupation from CPA: Juchao website:

www.cninfo.com.cn-- Specific Explanation on Non-operational fund occupation and its related capitaltransactions for year of 2019 of Changhong Meiling Co., Ltd.V. Explanation from Board of Directors, Supervisory Committee and Independent Directors (if applicable)for “Qualified Opinion” that issued by CPA

□Applicable √ Not applicable

VI. Particulars about the changes in aspect of accounting policy, estimates and calculation methodcompared with the financial report of last year

√Applicable □ Not applicable

Found more details in 34. Change of major accounting policy and estimation under IV. Major accounting policyand estimation carried in the Section XII. Financial ReportVII. Major accounting errors within reporting period that needs retrospective restatement

□Applicable √ Not applicable

No major accounting errors within reporting period that needs retrospective restatement for the Company in theperiod.VIII. Compare with last year’s financial report; explain changes in consolidation statement’s scope

√Applicable □ Not applicable

In the reporting period, the consolidated financial statements of the Company cover 38 subsidiaries, includingSichuan Changhong Air-conditioner Co., Ltd, Zhongshan Changhong Electric Co., Ltd. And Zhongke MeilingCryogenic Technology Co., Ltd. etc. Compared with the previous year, during the reporting period two enterprisesare included in the consolidate scope, that is Hefei Meiling Wulian Technology Co., Ltd and Anhui TuoxingScience and Technology Co., Ltd. And the subsidiary Nanchang Xiangyou Electronic Appliance Marketing Co.,Ltd, Changsha Meizlai Electronic Appliance Marketing Co., Ltd and Zhongshan Hongling Trading Co., Ltd arereduced for clearing off.More details can be seen in the report ―VII. Changes in the scope of the merger‖ and ―XIII. Equity in otherentities‖ of ―Section XII Financial Report‖IX. Appointment and non-reappointment (dismissal) of CPA

(i) Accounting firm appointed

Name of domestic accounting firmShine Wing Certified Public Accountants (LLP)
Remuneration for domestic accounting firm (in 10 thousand Yuan)125
Continuous life of auditing service for domestic accounting firm11-year
Name of domestic CPALi Xifu, Xia Cuiqiong
Continuous life of auditing service for domestic CPALi Xifu (3 years), Xia Cuiqiong (5 years)
Name of foreign accounting firm (if applicable)N/A
Remuneration for foreign accounting firm (10 thousand Yuan) (if applicable)N/A
Continuous life of auditing service for foreign accounting firm (if applicable)N/A
Name of foreign CPA (if applicable)N/A
Continuous life of auditing service for foreign CPA (if applicable)-

(ii) Re-appointed accounting firms in this period

□Yes √ No

(iii) Appointment of internal control auditing accounting firm, financial consultant or sponsor

√Applicable □ Not applicable

In reporting period, Shine Wing Certified Public Accountants (LLP) was appointed as audit institute of internalcontrol for the Company, auditing charge for internal control amounting as 250,000 Yuan.X. Particular about suspension and termination of listing after annual report disclosed

□Applicable √ Not applicable

XI. Bankruptcy reorganization

□Applicable √ Not applicable

No bankruptcy reorganization occurred in reporting periodXII. Material lawsuits and arbitration of the Company

□Applicable √ Not applicable

(i) No significant lawsuits or arbitration occurred in the reporting period.(ii) Some other significant lawsuits and arbitration in the reporting period.To maintain the independence and integrity of "Meiling" trademark and trade name, the Company carried outserials of lawsuits, attribution and administration suits with ―Meiling‖ trademark and corporate name concerned,

please found more in 2014 first quarter report, 2014 semi-annual report, the 2014 annual report disclosedrespectively on April 19, 2014, August 12, 2014, and March 26, 2014 for the relevant progress. Up to now, thecompany has stopped the infringement enterprises using ―Meiling‖ trade name, i.e. the infringement of companyname and unfair competition behavior, through litigation and administrative complaints.

During the reporting period, the Company sued Hefei Meiling Electrical Appliances Co., Ltd. (hereinafter referredto as ―Meiling Electrical Appliances‖) for trademark infringement and unfair competition, Shanghai IntellectualProperty Court has concluded the final judgment of second instance, the Company won the case, the court orderedMeiling Electrical Appliances to immediately stop the relevant infringement to the Company, compensate for theinfringement losses and change its company name, and the changed company name shall not contain the word―Meiling‖. That is, any product marked with ―Meiling Electrical Appliances‖ after the expiration of the judgmentexecution period shall be regarded as an infringing and counterfeit product, once found, the Company willresolutely crack down according to law.

At present, only the kitchen ventilator, cooker, water heater, water purifiers and household electrical appliancesmanufactured and sold by the Company and its wholly-owned subsidiary - Hefei Meiling Group Holdings Limitedand Guangdong Changhong Ridian Technology Co., Ltd. are the company's regular products, any other smallhousehold appliances using same or similar trademark as our company or using the trade name similar to theCompany‘s name are the Company‘s products. In view of the infringement to the Company‘s trademark and tradename, false propaganda and unfair competition in the market, the Company has carried out many ways includingadministrative reports, criminal investigation and civil litigation to fight against infringement and counterfeitingbehavior in the whole country.XIII. Penalty and rectification

□Applicable √ Not applicable

No penalty and rectification for the Company in reporting period.XIV. Integrity of the company and its controlling shareholders and actual controllers

□Applicable √ Not applicable

During the reporting period, the Company and the controlling shareholders and the actual controllers have hadgood reputation, and there is no large amount due unliquidated debt sentenced by the court.XV. Implementation of the company’s stock incentive plan, employee stock ownership plan or otheremployee incentives

√Applicable □ Not applicable

Implementation for annual performance incentive fundOn August 9, 2012 and August 28, 2012, the Company considers the adoption of "Hefei Meiling annual

performance incentive fund implementation plan" (hereinafter referred to as "" incentive "") on the 16

thmeeting ofthe 7thboard of directors and the 2012-second provisional shareholders meeting. Details were disclosed oninformation disclosure media appointed by the Company as "Securities Times", "Chinese Securities Daily","Hong Kong Commercial Daily" and the Juchao network (www.cninfo.com.cn) on August 10, 2012 and August29 in the form of announcement (No.: 2012-028, No.:2012-035).

1. Implementation about 2012, 2013, 2014 and 2016 performance incentive fund provision and distributionplanSee details in "Implementation of the company's annual incentive fund" in "XI Implementation of the company'sstock incentive plan, employee stock ownership plan, or other employee incentive measures" in "Section VImportant Events" of the company's "2019 Semi-Annual Report" disclosed on 16 August 2019.Up to the end of this reporting period, the company's stock purchased by some 2012 annual performance incentiveobjects (non-directors, supervisors and senior management), 2013 annual performance incentive objects(non-directors, supervisors and senior management), the 2014 annual performance incentive objects(non-directors, supervisors and senior management) with their granted 2012 annual performance incentive fundsand own funds and 2013 & 2014 annual performance incentive funds and own funds have been fully released fortrading; the stock purchased by some 2016 annual performance incentive objects (non-directors, supervisors andsenior management), with their granted 2016 annual performance incentive funds and own funds are expired fortwo years, 50% of the stock shall be released for trading, details of the share reduction for the above mentionedobjects see below. In the Period, except for the director and deputy president Mr. Zhong Ming, the Company‘sshares purchased by the current directors, supervisors and senior executives among the performance incentivetargets due to the implementation of the 2012, 2013, 2014 and 2016 annual performance incentive plans have notreduced the shareholdings. On 22 August 2019, Mr. Zhong Ming reduced 78,725 stocks of holds throughcentralized bidding, found more on announcement (Notice No.: 2019-055) released on appointed media ChinaSecurities Journal, Securities Times, Hong Kong Commercial Daily and Juchao Website dated 22 August 2019.

2. Shareholding and reducing of performance incentive objects of the CompanyEnded as 31 December 2019, shares hold by all incentive objects amounting to 11,200,217 shares, a 1.0722 % intotal share capital of the Company, including 9,510,324 A-share, a 0.9104% in total share capital and 1,689,893B-share, a 0.1618% in total share capital of the Company. Other grantees of the 2012, 2013, 2014 and 2016incentive plan (including incumbent directors, supervisors and senior management) have reduced holding of5,313,598 in aggregate, accounting for about 0.5087% of the total share capital and 597,213 shares are reduced intotal during the reporting period.XVI. Major related party transaction(i) Related party transaction with routine operation concerned

√Applicable □ Not applicable

1. Related party transaction with routine operation concerned

SerialRelated partyRelationshipType of related party transactionContent of related party transactionPricing principleTrading price (in 10 thousand Yuan)Trading amount (in 10 thousand Yuan)Proportion in similar transactions (%)Trading limit approved (in 10 thousand Yuan)Whether over the approved limited or not (Y/N)Clearing form for related transactionAvailable similar market priceDate of disclosureIndex of disclosure
1Sichuan Changhong Electric Co., Ltd.Controlling shareholder and ultimate controllerCommodity purchasedPlastic particles, integrated circuit, steel plate & plastic parts and TV etc.Marketing price33,598.7033,598.702.80%60,000NSpot exchange, Bank acceptance-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
2Sichuan Changhong Electronics Holding Group Co., Ltd.Controlling shareholder and ultimate controllerCommodity purchasedTV, Air-conditioningMarketing price9.119.110.00%155,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
3Changhong Huayi Compressor Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerCommodity purchasedCompressor etc.Marketing price38,238.0938,238.093.19%72,000NSpot exchange, Bank acceptance-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
4Sichuan Changhong Mold Plastic Tech. Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerCommodity purchasedPlastic products and molds etc.Marketing price63,000.1863,000.185.25%140,000NSpot exchange, Bank acceptance-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
5Sichuan Changhong Jijia Fine Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerCommodity purchasedDoor shell, baseboard, holder, Sheet metal partsMarketing price24,924.6624,924.662.08%55,000NSpot exchange, Bank acceptance-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
6Sichuan Changhong Package Printing Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerCommodity purchasedPlastic box, fixed support block, foam and carton etc.Marketing price8,304.768,304.760.69%20,000NSpot exchange, Bank acceptance-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
7Sichuan Changhong Precision Electronics Tech. Co., Ltd.Other enterprise control under the same controllingCommodity purchasedPrinted boards and assemblies etc.Marketing price1,270.341,270.340.11%10,000NSpot exchange, Bank acceptance-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069
shareholder and ultimate controllerand 2019-072
8Sichuan Changhong New Energy Technology Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerCommodity purchasedBatteryMarketing price2.182.180.00%155,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
9081 Electronic GroupOther enterprise control under the same controlling shareholder and ultimate controllerCommodity purchasedPower transformerMarketing price49.4749.470.00%5,000NSpot exchange, Bank acceptance-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
10Guangdong Changhong Electronics Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerCommodity purchasedFoam pieces etc.Marketing price233.81233.810.02%5,000NSpot exchange, Bank acceptance-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
11Sichuan Changhong Intelligent Manufacturing Tech. Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerCommodity purchasedFrequency conversion integrated board shell, particleMarketing price99.3099.300.01%155,000NSpot exchange, Bank acceptance-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
12Panovasic Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerCommodity purchasedCentral controllerMarketing price426.64426.640.04%5,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
13Sichuan Changhong International Hotel Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerCommodity purchasedMid-autumn festival consolationMarketing price18.8618.860.00%155,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
14Sichuan Zhiyijia Network Technology Co., Ltd.Other enterprise control under the same controllingCommodity purchasedElectronic productsMarketing price96.0196.010.01%5,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069
shareholder and ultimate controllerand 2019-072
15Sichuan Changhong Power Source Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerCommodity purchasedBatteryMarketing price0.300.300.00%5,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
16Changhong International Holdings (Hong Kong) Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerCommodity purchasedTelevisionMarketing price39.4739.470.00%5,000NCash settlement11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
17Sichuan Changhong Electronic Products Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerCommodity purchasedVoice components, remote control and electrical components etc.Marketing price2,401.662,401.660.20%6,000NSpot exchange, Bank acceptance-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
18Sichuan Hongxin Software Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerCommodity purchasedInformation systemMarketing price16.9816.980.00%5,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
19Sichuan Changhong Property Service Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerCommodity purchasedExit card/permitMarketing price0.030.030.00%155,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
20Sichuan Ailian Science & Technology Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerCommodity purchasedInternet module, drawer guide rail and temperature sensor etc.Marketing price2,073.652,073.650.17%155,000NSpot exchange, Bank acceptance-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
21Sichuan Aichuang Technology Co., Ltd.Other enterprise control under the same controllingCommodity purchasedIntegrated frequency conversion board, fixedMarketing price9,800.569,800.560.82%20,000NSpot exchange, Bank acceptance-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069
shareholder and ultimate controllersupport board and connecting pipe etc.and 2019-072
22Sichuan Changhong Electronic System Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerCommodity purchasedLED display systemMarketing price4.744.740.00%5,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
23Hunan Grand-Pro Intelligent Tech. CompanyOther enterprise control under the same controlling shareholder and ultimate controllerCommodity purchasedIntelligent vacuum cleanerMarketing price777.09777.090.06%1,000NBank承兑结算-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
24Sichuan Changhong Network Technology Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerCommodity purchasedVideo conference terminalMarketing price9.309.300.00%5,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
25Lejiayi Chain Management Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerCommodity purchasedMid-autumn festival consolationMarketing price5.965.960.00%5,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
26GuangYuan Changhong Electronic Technology Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerCommodity purchasedWater dispenserMarketing price37.6637.660.00%5,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
27Sichuan Changhong Electronics Holding Group Co., Ltd.Controlling shareholder and ultimate controllerReceiving labor servicesShuttle bus fee, staff physical examination fee, inspection and test feeMarketing price68.3168.310.04%155,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
28Sichuan Changhong Electric Co., Ltd.Controlling shareholder and ultimate controllerReceiving labor servicesSoftware usage fee, Information systemMarketing price1,569.801,569.800.95%5,500NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057,
service fee, inspection and certification fee etc.Nov. 20192019-058, 2019-067, 2019-069 and 2019-072
29Sichuan Changhong Minsheng Logistics Co., LTDOther enterprise control under the same controlling shareholder and ultimate controllerReceiving labor servicesTransportation, storage, loading and unloadingMarketing price43,784.1043,784.1026.48%60,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
30Sichuan Changhong Mold Plastic Tech. Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerReceiving labor servicesConference organization fee, market support fee etc.Marketing price10.8410.840.01%5,500NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
31Sichuan Service Exp. Appliance Service Chain Co., Ltd.Other enterprise control under the same controlling shareholder and ultimateReceiving labor servicesAfter sales, installation and maintenance costs etc.Marketing price23,979.1723,979.1714.50%35,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
controller
32Sichuan Hongxin Software Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerReceiving labor servicesSoftware usage feeMarketing price34.4334.430.02%5,500NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
33Guangdong Changhong Electronics Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerReceiving labor servicesNetwork service fee, information consultation fee, etc.Marketing price47.8947.890.03%5,500NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
34Sichuan Jiahong Industrial Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerReceiving labor servicesBusiness activity feeMarketing price7.087.080.00%155,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
35Sichuan Changhong International Hotel Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerReceiving labor servicesBusiness activity feeMarketing price14.6214.620.01%155,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
36Sichuan Changhong International Travel Service Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerReceiving labor servicesTicketing feeMarketing price53.6153.610.03%155,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
37Sichuan Changhong Property Service Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerReceiving labor servicesProperty management fee, maintenance fee, etcMarketing price408.71408.710.25%155,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
38Panovasic Co., Ltd.Other enterprise control under the same controllingReceiving labor servicesExperimental technical service feeMarketing price37.2237.220.02%5,500NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069
shareholder and ultimate controllerand 2019-072
39Sichuan Zhiyijia Network Technology Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerReceiving labor servicesPlatform usage feeMarketing price296.10296.100.18%300NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
40Sichuan Changhong Network Technology Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerReceiving labor servicesCommunication feeMarketing price4.574.570.00%5,500NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
41Sichuan Changhong Intelligent Manufacturing Tech. Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerReceiving labor servicesEquipment repair cost, relocation labor cost, etc.Marketing price230.57230.570.14%155,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
42Sichuan Changhong Jijia Fine Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerReceiving labor servicesEquipment repair costMarketing price3.813.810.00%5,500NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
43Sichuan Changhong Electronic Products Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerReceiving labor servicesHuman resources servicesMarketing price45.0545.050.03%5,500NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
44081 Electronic GroupOther enterprise control under the same controlling shareholder and ultimate controllerReceiving labor servicesLabor cost for relocationMarketing price42420.03%5,500NBank承兑结算-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
45Sichuan Ailian Science & Technology Co., Ltd.Other enterprise control under the same controllingReceiving labor servicesEquipment repair costMarketing price2.632.630.00%155,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069
shareholder and ultimate controllerand 2019-072
46Sichuan Changhong Electric Co., Ltd.Controlling shareholder and ultimate controllerPurchase fuel and powerWater, electricity, gas etc.Marketing price1,795.671,795.670.15%60,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
47Changhong Huayi Compressor Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerPurchase fuel and powerSteamMarketing price82.5982.590.01%130NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
48Guangdong Changhong Electronics Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerPurchase fuel and powerWater, electricity etc.Marketing price142.93142.930.01%5,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
49Hefei Changhong New Energy Science &Other enterprise control under the samePurchase fuel and powerElectricity feeMarketing price36.8836.880.00%5,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057,
Technology Co., Ltd.controlling shareholder and ultimate controllerNov. 20192019-058, 2019-067, 2019-069 and 2019-072
50Sichuan Changhong Property Service Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerPurchase fuel and powerElectricity feeMarketing price2.192.190.00%155,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
51Sichuan Changhong Electric Co., Ltd.Controlling shareholder and ultimate controllerSale of goodsPlastic cement, Air-conditioning, waste materials, small household appliances etc.Marketing price2,277.332,277.330.15%8,000NSpot exchange, Bank acceptance-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
52Sichuan Changhong Electronics Holding Group Co., Ltd.Controlling shareholder and ultimate controllerSale of goodsFreshMarketing price31.9131.910.00%3,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
53Sichuan Changhong Jijia Fine Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsDoor shell, color plate and other componentsMarketing price4,482.464,482.460.29%10,000NSpot exchange, Bank acceptance-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
54Sichuan Changhong Mold Plastic Tech. Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsColor masterbatch, plastic particle, Air-conditioningMarketing price20,777.2220,777.221.35%35,000NSpot exchange, Bank acceptance-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
55Lejiayi Chain Management Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsRefrigerator, freezer, Air-conditioning, Washing machine, small household appliances etc.Marketing price6,254.866,254.860.41%7,200NSpot exchange, Bank acceptance-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
56PT.CHANGHONGELECTRICINDONESIAOther enterprise control under the same controlling shareholder and ultimate controllerSale of goodsRefrigerator, freezerMarketing price1,024.841,024.840.07%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
57CHANGHONG(HK)TRADINGLIMITEDOther enterprise control under the same controlling shareholder and ultimate controllerSale of goodsAir-conditioningMarketing price36,912.9336,912.932.39%100,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
58CHANGHONGELECTRIC(AUSTRALIA)Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsRefrigerator, freezerMarketing price6,629.126,629.120.43%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
59Panovasic Co., Ltd.Other enterprise control under the same controllingSale of goodsFreshMarketing price0.760.760.00%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069
shareholder and ultimate controllerand 2019-072
60Sichuan Changhong Device Tech. Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsAir-conditioningMarketing price8.148.140.00%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
61Sichuan Changhong Minsheng Logistics Co., LTDOther enterprise control under the same controlling shareholder and ultimate controllerSale of goodsRefrigerator, freezer, small household appliances etc.Marketing price167.50167.500.01%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
62Sichuan Service Exp. Appliance Service Chain Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsMaintenance parts etc.Marketing price599.76599.760.04%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
63Sichuan Changhong Gerun Environmental Protection Tech. Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsWaste materialsMarketing price743.53743.530.05%3,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
64Hefei Changhong Industrial Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsAir-conditioning, Washing machine, refrigeration etc.Marketing price111.05111.050.01%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
65Sichuan Huafeng Corp. GroupOther enterprise control under the same controlling shareholder and ultimate controllerSale of goodsAir-conditioning, FreshMarketing price12.8112.810.00%3,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
66Sichuan Zhiyijia Network Technology Co., Ltd.Other enterprise control under the same controllingSale of goodsRefrigerator, freezer, Washing machine,Marketing price295,507.43295,507.4319.14%480,000NSpot exchange, Bank acceptance-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069
shareholder and ultimate controllerAir-conditioning, small household appliances etc.and 2019-072
67Sichuan Changhong Property Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsAir-conditioningMarketing price95.0795.070.01%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
68Sichuan Changhong Network Technology Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsFreshMarketing price0.100.100.00%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
69Sichuan Changhong Wisdom Health Tech. Co., Ltd.Other enterprise control under the same controlling shareholder and ultimateSale of goodsFreshMarketing price0.440.440.00%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
controller
70Sichuan Changhong Property Service Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsAir-conditioning, FreshMarketing price6.606.600.00%3,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
71Guangdong Changhong Electronics Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsAir-conditioning, water purifier etc.Marketing price61.7361.730.00%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
72Sichuan Changhong Intelligent Manufacturing Tech. Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsElectromagnetic furnaceMarketing price3.343.340.00%3,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
73BVCH Optronics (Sichuan) Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsFreshMarketing price0.680.680.00%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
74Sichuan Changhong Electronic Products Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsFreshMarketing price8.228.220.00%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
75Sichuan Changhong Group Finance Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsFreshMarketing price1.841.840.00%3,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
76Changhong Huayi Compressor Co., Ltd.Other enterprise control under the same controllingSale of goodsWaste foamMarketing price0.110.110.00%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069
shareholder and ultimate controllerand 2019-072
77Sichuan Changhong Package Printing Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsFreshMarketing price0.350.350.00%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
78Sichuan Changhong Power Source Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsAir-conditioningMarketing price8.448.440.00%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
79Sichuan Changhong Education Technology Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsAir-conditioning, health potMarketing price1,194.401,194.400.08%3,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
80081 Electronic GroupOther enterprise control under the same controlling shareholder and ultimate controllerSale of goodsCompressor, AC contactorMarketing price1.721.720.00%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
81GuangYuan Changhong Electronic Technology Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsRefrigerator, freezer, Air-conditioning, Washing machineMarketing price112.06112.060.01%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
82Sichuan Ailian Science & Technology Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsAir-conditioningMarketing price2.092.090.00%3,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
83Sichuan Jiahong Industrial Co., Ltd.Other enterprise control under the same controllingSale of goodsFreshMarketing price13.8713.870.00%3,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069
shareholder and ultimate controllerand 2019-072
84Sichuan Changhong New Energy Technology Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsAir-conditioningMarketing price8.948.940.00%3,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
85Sichuan Changhong International Hotel Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsFreshMarketing price3.623.620.00%3,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
86Sichuan Changhong Precision Electronics Tech. Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsLogic integrated circuitMarketing price0.090.090.00%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
87Orion.PDP.Co.,ltdOther enterprise control under the same controlling shareholder and ultimate controllerSale of goodsRefrigeratorMarketing price3,473.673,473.670.22%4,200NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
88Changhong International Holdings (Hong Kong) Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsAir-conditioningMarketing price164.88164.880.01%100NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
89ChanghongEuropeElectrics.r.oOther enterprise control under the same controlling shareholder and ultimate controllerSale of goodsRefrigeratorMarketing price166.90166.900.01%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
90CHANGHONGELECTRICMIDDLEEASTFZCOOther enterprise control under the same controllingSale of goodsRefrigerator, Air-conditioningMarketing price1,285.901,285.900.08%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069
shareholder and ultimate controllerand 2019-072
91Sichuan Aichuang Technology Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsSmall home appliance, Fresh etc.Marketing price47.8647.860.00%3,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
92Mianyang Huafeng Interconnection Tech. Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of goodsAir-conditioningMarketing price844.98844.980.05%3,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
93Hunan Grand-Pro Intelligent Tech. CompanyOther enterprise control under the same controlling shareholder and ultimate controllerSale of goodsLabelMarketing price0.290.290.00%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
94Sichuan Changhong Mold Plastic Tech. Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerProvide labor servicesService chargeMarketing price7.047.040.21%5,500NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
95Sichuan Changhong Device Tech. Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerProvide labor servicesTechnical service feeMarketing price51.0851.081.55%5,500NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
96Sichuan Changhong Property Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerProvide labor servicesInstallation serviceMarketing price64.1564.151.94%5,500NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
97Changhong Huayi Compressor Co., Ltd.Other enterprise control under the same controllingProvide labor servicesTechnical service feeMarketing price37.7437.741.14%5,500NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069
shareholder and ultimate controllerand 2019-072
98Sichuan Aichuang Technology Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerProvide labor servicesTechnical service fee, labor processingMarketing price62.0362.031.88%3,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
99Sichuan Changhong New Energy Technology Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerProvide labor servicesService chargeMarketing price3.073.070.09%3,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
100Sichuan Changhong Minsheng Logistics Co., LTDOther enterprise control under the same controlling shareholder and ultimate controllerProvide labor servicesMaintenance costMarketing price0.960.960.03%5,500NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
101Sichuan Changhong Jijia Fine Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerProvide labor servicesService chargeMarketing price4.404.400.13%5,500NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
102Sichuan Changhong Electric Co., Ltd.Controlling shareholder and ultimate controllerProvide fuel powerWater, Electricity feeMarketing price1.351.350.00%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
103Guangdong Changhong Electronics Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerProvide fuel powerWater, electricity and gas chargesMarketing price65.1765.170.00%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
104Sichuan Changhong Minsheng Logistics Co., LTDOther enterprise control under the same controlling shareholder and ultimateProvide fuel powerWater, Electricity feeMarketing price7.337.330.00%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
controller
105Sichuan Changhong Jijia Fine Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerProvide fuel powerWater, Electricity feeMarketing price13.8313.830.00%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
106Sichuan Changhong Mold Plastic Tech. Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerProvide fuel powerWater, electricity and gas chargesMarketing price757.35757.350.05%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
107Panovasic Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerProvide fuel powerWater, electricity and gas chargesMarketing price0.370.370.00%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
108Sichuan Changhong Precision Electronics Tech. Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerProvide fuel powerWater, Electricity feeMarketing price1.541.540.00%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
109Sichuan Changhong Device Tech. Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerProvide fuel powerWater, Electricity feeMarketing price117.63117.630.01%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
110Sichuan Service Exp. Appliance Service Chain Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerProvide fuel powerWater, Electricity feeMarketing price0.950.950.00%12,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
111Guangdong Changhong Electronics Co., Ltd.Other enterprise control under the same controllingRent to related partiesOffice buildingMarketing price19.7519.750.11%5,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069
shareholder and ultimate controllerand 2019-072
112Hefei Changhong Industrial Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerRent to related partiesApartmentMarketing price25.7325.730.14%5,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
113Sichuan Aichuang Technology Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerRent to related partiesWarehouse, forkliftMarketing price4.194.190.02%3,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
114Sichuan Ailian Science & Technology Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerRent to related partiesWarehouseMarketing price0.270.270.00%3,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
115Panovasic Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerRent to related parties2# living area, workshopMarketing price4.534.530.02%5,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
116Sichuan Huafeng Corp. GroupOther enterprise control under the same controlling shareholder and ultimate controllerRent to related partiesConference roomMarketing price0.370.370.00%3,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
117Sichuan Service Exp. Appliance Service Chain Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerRent to related partiesOffice, workshop, forklift truck etc.Marketing price31.8331.830.17%5,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
118Sichuan Changhong Electric Co., Ltd.Controlling shareholder and ultimate controllerRent to related partiesApartment equipmentMarketing price217.20217.201.18%5,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069
and 2019-072
119Sichuan Changhong Jijia Fine Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerRent to related partiesForklift truck, workshop, Warehouse etc.Marketing price76.8676.860.42%5,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
120Sichuan Changhong Precision Electronics Tech. Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerRent to related partiesApartment, 2# living areaMarketing price12.0512.050.07%5,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
121Sichuan Changhong Minsheng Logistics Co., LTDOther enterprise control under the same controlling shareholder and ultimate controllerRent to related partiesRent parts of the office building, workshopMarketing price307.18307.181.67%5,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
122Sichuan Changhong Mold Plastic Tech. Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerRent to related parties2# living area, Warehouse etc.Marketing price731.56731.563.98%5,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
123Sichuan Changhong Device Tech. Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerRent to related partiesWarehouse,workshop, Apartment etc.Marketing price147.58147.580.80%5,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
124Changhong Huayi Compressor Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerRent to related partiesWarehouseMarketing price1.071.070.01%5,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
125Changhong International Holdings (Hong Kong) Co., Ltd.Other enterprise control under the same controllingRent to related partiesOffice, automobileMarketing price12.6312.630.07%5,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069
shareholder and ultimate controllerand 2019-072
126Sichuan Changhong Electric Co., Ltd.Controlling shareholder and ultimate controllerTo lease from related partiesworkshop, OfficeMarketing price362.61362.611.97%5,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
127Chengdu Changhong Electronic Technology Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerTo lease from related partiesOfficeMarketing price45.4545.450.25%5,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
128Guangdong Changhong Electronics Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerTo lease from related partiesStaff dormitory, workshopMarketing price26.2226.220.14%5,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
129Sichuan Changhong Electronics Holding GroupControlling shareholder and ultimate controllerTo lease from related partiesStaff dormitoryMarketing price4.284.280.02%155,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057,
Co., Ltd.Nov. 20192019-058, 2019-067, 2019-069 and 2019-072
130Sichuan Changhong Property Service Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerTo lease from related partiesworkshop, OfficeMarketing price0.850.850.00%155,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
131Beijing Changhong Tech. Co. Ltd,Other enterprise control under the same controlling shareholder and ultimate controllerTo lease from related partiesOfficeMarketing price7.897.890.04%5,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
132Sichuan Changhong Intelligent Manufacturing Tech. Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerPurchasing fixed assetsProduction line transformation etc.Marketing price3,679.693,679.694.96%7,300NSpot exchange, Bank acceptance-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
133Sichuan Hongcheng Real Estate Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerPurchasing fixed assetsProduction line transformation etc.Marketing price5.665.660.01%155,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
134Sichuan Changhong Electric Co., Ltd.Controlling shareholder and ultimate controllerPurchasing fixed assets, intangible assetsProduction equipment, patent right, Information system etc.Marketing price4,919.784,919.786.63%7,100NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
135Sichuan Hongxin Software Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerPurchasing fixed assetsInformation system etc.Marketing price327.97327.970.44%7,100NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
136Sichuan Changhong Network Technology Co., Ltd.Other enterprise control under the same controllingPurchasing fixed assetsCommunication network infrastructure of theMarketing price109.84109.840.15%7,100NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069
shareholder and ultimate controllernew plantand 2019-072
137Sichuan Changhong Electronic System Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerPurchasing fixed assetsLED display systemMarketing price12.6112.610.02%7,100NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
138Sichuan Zhiyijia Network Technology Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerPurchasing fixed assetsProjector, TelevisionMarketing price10.4710.470.01%7,100NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
139Sichuan Huanyu Industrial Co. Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerPurchasing fixed assetsWorkshop constructionMarketing price1,989.731,989.732.68%155,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
140Sichuan Jiahong Industrial Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerPurchasing fixed assetsInfrastructure of the greening for new plant etc.Marketing price134.75134.750.18%155,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
141Guangdong Changhong Electronics Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerPurchasing fixed assetsTelevisionMarketing price1.271.270.00%7,100NCash settlement11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
142Mianyang Technology Town Big Data Technology Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerPurchasing fixed assetsSecurity engineering of the new plantMarketing price111.28111.280.15%7,100NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
143Panovasic Co., Ltd.Other enterprise control under the same controllingPurchasing fixed assetsElectronic loadMarketing price0.090.090.00%7,100NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069
shareholder and ultimate controllerand 2019-072
144Sichuan Changhong Energy Sunshine Technology Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerPurchasing fixed assetsStreet lamp returnMarketing price-2.33-2.330.00%7,100NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
145Sichuan Changhong Gerun Environmental Protection Tech. Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of fixed assetsComputer, Air-conditioning etc.Marketing price0.460.460.02%3,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
146Sichuan Changhong Electronics Holding Group Co., Ltd.Controlling shareholder and ultimate controllerSale of fixed assetsBookcase, office furniture etc.Marketing price1.741.740.06%3,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
147Sichuan Jiahong Industrial Co., Ltd.Other enterprise control under the sameSale of fixed assetsOffice furniture, freezerMarketing price0.480.480.02%3,000NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057,
controlling shareholder and ultimate controllerNov. 20192019-058, 2019-067, 2019-069 and 2019-072
148Changhong Shundatong Tech. Development Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of fixed assetsComputer, office furniture , freezer etc.Marketing price12.8212.820.46%7,100NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
149Sichuan Changhong Electric Co., Ltd.Controlling shareholder and ultimate controllerSale of fixed assetsLaboratory, instrument etc.Marketing price102.88102.883.67%7,100NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
150Sichuan Changhong Jijia Fine Co., Ltd.Other enterprise control under the same controlling shareholder and ultimate controllerSale of fixed assetsCraneMarketing price1.001.000.04%7,100NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27 Sept. and 18 Nov. 2019Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071, 2018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
151Yuanxin Financial Lease Co., Ltd.Other enterprise control underFinancial leasing, factoringFinancial leasing, factoringMarketing price391.67391.67--1,500NCash settlement-11 Dec. and 28 Dec. 2018; 31 Aug., 27Juchao Website(www.cninfo.com.cn) Notice No.: 2018-071,
the same controlling shareholder and ultimate controllerand financing etc.and financingSept. and 18 Nov. 20192018-075, 2018-079, 2019-057, 2019-058, 2019-067, 2019-069 and 2019-072
Total----656,238.07--------------
Detail of sales return with major amount involvedNot applicable
Report the actual implementation of the daily related transactions which were projected about their total amount by types during the reporting period (if applicable)1. It is estimated that the related party transaction amount resulted by purchasing goods (including door shell and plastic products etc.) and purchasing fuel and power from Sichuan Changhong and its subsidiary by the Company for year of 2019 was 2960 million Yuan at most (tax-excluded), actually 1,363,961,200 Yuan occurred in reporting period
2. It is estimated that the related party transaction amount resulted by purchasing goods (including compressor purchased, robot cleaner etc.) from Changhong Huayi and its subsidiary by the Company for year of 2019 was 730 million Yuan at most (tax-excluded), actually 390,151,800 Yuan occurred in reporting period
3. It is estimated that the related party transaction amount resulted by purchasing or selling equipment, software, maintenance and spare parts and molds etc. from Sichuan Changhong and its subsidiary by the Company for year of 2019 was 71 million Yuan at most (tax-excluded), actually 56,076,800 Yuan occurred in reporting period
4. It is estimated that the related party transaction amount resulted by selling goods to and providing fuel and power to Sichuan Changhong and its subsidiary by the Company for year of 2019 was 6523 million Yuan at most (tax-included), actually 3,776,259,000 Yuan occurred in reporting period
5. It is estimated that the related party transaction amount resulted by accepting energy, power and service etc. from Huayi Compressor and its subsidiary for year of 2019 was 1.3 million Yuan at most (tax-included), actually 825,900 Yuan occurred in reporting period
6. It is estimated that the related party transaction amount resulted by leasing business from Sichuan Changhong and its subsidiary by the Company for year of 2019 was 50 million Yuan at most (tax-excluded), actually 20,301,400 Yuan occurred in reporting period
7. It is estimated that the related party transaction amount from domestic finished goods logistic business outsourcing to Sichuan Changhong Minsheng Logistic Co., Ltd. by the Company for year of 2019 was 600 million Yuan at most (tax-excluded), actually 437,841,000 Yuan occurred in reporting period
8. It is estimated that the related party transaction amount from after sales service of domestic goods outsourcing to Sichuan Service Exp. Appliance Service Chain Co., Ltd. by the Company for year of 2019 was 350 million Yuan at most, actually 239,791,700 Yuan occurred in reporting period.
9. It is estimated that the related party transaction amount resulted by accepting other service and labor service etc. or providing other service and labor
service etc. to Sichuan Changhong and its subsidiary by the Company for year of 2019 was 58 million Yuan at most (tax-excluded), actually 30,124,800 Yuan occurred in reporting period
10. It is estimated that the related party transaction amount resulted by selling goods from Sichuan Changhong Electronics Holding Group Co., Ltd and its subsidiary by the Company for year of 2019 was 102 million Yuan at most (tax-excluded), actually 64,620,700 Yuan occurred in reporting period.
11. It is estimated that the related party transaction amount resulted by purchasing goods and receiving labor services, fuel power, leasing and purchasing equipment etc. from Sichuan Changhong Electronics Holding Group Co., Ltd and its subsidiary by the Company for year of 2019 was 1823 million Yuan at most (tax-excluded), actually 186,063,700 Yuan occurred in reporting period.
12. It is estimated that the related party transaction amount resulted by accepting the financial leasing and factoring and financing etc. from Yuanxin Financial Lease Co., Ltd. by the Company was 15 million Yuan at most, actually 3,916,700 Yuan occurred in reporting period.
Reasons of major difference between the trading price and market priceNot applicable

Note: In accordance with relevant regulation of Rules Governing the Listing of Stocks on Shenzhen Stock Exchange and Authorization Management System of the Company, the related partytransaction with the related party in less than 3 million Yuan (3 million Yuan included) will implement after the approval by the President. Therefor, although the related party transaction withChanghong International Holdings (Hong Kong) Co., Ltd exceeds the estimated annual amount, the amount exceeded is within 3 million Yuan, and has being approved by the President of theCompany.

2. Related party transactions with Changhong Finance Company

The resolution of the 34

th session of the 8

thboard of directors on August 9, 2017 and the second extraordinarygeneral meeting of 2017 on September 12, 2017 approved and agreed the company to continue carry out thefinancial service cooperation with Sichuan Changhong Group Finance Co., Ltd. (hereinafter referred to as―Changhong Finance Company‖) and sign a triennial Financial Service Agreement, It is agreed that the maximumdeposit balance (including accrued interest and handling fees) and the highest principal and interest of outstandingloan the Company in any finance company within the three-year validity period from the effective date of the newagreement shall be adjusted to not exceed RMB 3.8 billion per day. In accordance with the agreement, ChanghongFinance Company shall provide a series of financial services such as deposit and loan in its business scopeaccording to the requirements of the Company and its subsidiaries. The related transactions between the companyand its subsidiaries and Changhong Finance Company from the beginning of Current Year to the end of thereporting period are as follows:

Up to 31 December 2019, the Company and its subsidiaries have opened financial business as savings, notedrawing and notes discounted with Changhong Finance Company. The Company and its subordinate companyowns 3,702,382,630.38 Yuan savings in Changhong Finance Company, takes 24.63% of the deposit takingbalance in Changhong Finance Company without 30% occupied, balance of notes drawing at period-end was999,585,345.49 Yuan and balance of notes discounted outstanding as 638,333,179.10 Yuan. More details are:

In RMB/CNY

ItemBalance at year-beginIncreased in Current YearDecreased in Current YearBalance at year-endInterest and commission charge received or paid
I. Savings in Changhong Group Finance Company3,119,117,207.9137,090,880,528.4836,507,615,106.013,702,382,630.38105,577,099.81
II. Borrowings from Changhong Group Finance Company
1.Short-term loans
2.Long-term loans
III. Other financial business
1.notes drawing819,806,514.072,158,744,838.851,978,966,007.43999,585,345.49887,859.77
2.notes discounted772,233,395.981,593,136,528.751,727,036,745.63638,333,179.1030,768,183.16

According to the regulation of Information Disclosure Business Memorandum No. 2 - Transactions and Related Transactions of theShenzhen Stock Exchange, the company issued the Risk Continuous Assessment Report About Sichuan Changhong Group FinanceCo., Ltd. for the deposit, loan and other financial services that the company carried out with Changhong Finance Company during the

reporting period, and disclosed at www.cninfo.com.cn on 28 March 2020(ii) Related transactions by assets acquisition and sold

□Applicable √ Not applicable

There are no related transactions by assets acquisition and sold in the period(iii) Related party transaction of joint foreign investment

√Applicable □ Not applicable

Co-investorAssociation relationshipInvested enterpriseMain business of the invested enterpriseRegistered capital of the invested enterpriseTotal assets of the invested enterprise (10 thousand Yuan)Net assets of the invested enterprise (10 thousand Yuan)Net profit of the invested enterprise (10 thousand Yuan)
Sichuan Changhong Electric Co., Ltd.Controlling shareholderSichuan Zhiyijia Network Technology Co., Ltd.Development and sales of computer software and hardware and undertake computer network engineering, import & export of goods and technologies (except the items prohibited by laws and regulations, restricted items operating with license), design and production of advertising, design, manufacturing and sales of the model, selling general merchandise, clothing, leather ware, shoes & hats, detergents, cosmetics, photographic apparatus, toys, audio equipment & apparatus, household appliances, electronics, communication equipment, communication device, instruments & apparatus, lamps, electro-mechanical & components, mechanical equipment & accessories, prepackaged food, office supplies, sporting goods, hotel facilities, tourism cultural goods, gold-silver jewelry and value-added telecom service (entrusted operation), chemical raw materials & products (hazardous chemicals excluded), solar energy equipment and class-I medical devices through the internet. Domestic road freight transportation, freight transport agency, manual freight service, warehouse service (hazardous chemicals excluded); installation service of household appliances.50 million Yuan (before capital increased); 70 million Yuan (after capital increased)336,679.269,401.92375.54
Progress of major projects under construction of the invested enterprise (if applicable)N/A

After deliberated and approved by the 26

th

session of 9

th BOD and 3

rd

extraordinary shareholders general meeting of 2019 held on 30

August 2019 and 26 September, the Company agreed to increase capital for Sichuan Zhiyijia Network Technology Co., Ltd.(hereinafter, the ―Zhiyijia Company‖) with own fund amounted as 29.08704 million Yuan (of which: 20 million Yuan reckoned inregistered capital and 9.08704 million Yuan reckoned in capital reserves), another shareholder Sichuan Changhong increase zero inthis time. After capital increased, registered capital of Zhiyijia Company up to 70 million Yuan from 50 million Yuan, the Companyand Sichuan Changhong holds 50% equity of the Zhiyijia Company respectively. The investment capital for Zhiyijia amounted as

44.08704 million Yuan in total after increasing the capital, of which, 35 million Yuan reckoned in registered capital and 9.08704million Yuan reckoned in capital reserves. The capital increase for Zhiyijia Company completed in the reporting period. Found moreon announcement (Notice No.: 2019-057, 2019-058, 2019-063 and 2019-067) released on appointed media China Securities Journal,Securities Times, Hong Kong Commercial Daily and Juchao Website dated 31 August 2019, 10 September and 27 Septemberrespectively.(iv) Connect of related liability and debt

√Applicable □ Not applicable

Whether has non-operational contact of related liability and debts or not

□Yes √ No

No non-operational contact of related liability or debts in Period(v) Other related party transactions

√Applicable □ Not applicable

1. On August 30 and September 26, 2019, the resolutions of the 26

thmeeting of the company‘s ninth board ofdirectors and the 3

rdextraordinary shareholders‘ meeting in 2019 passed and agreed to increase the estimatedrelated transactions amount occurred among the company and its holding subsidiaries with Zhiyijia Company in2019 totaling RMB 803 million, such as sales of goods, accepting services, etc.

2. On September 9 and September 26, 2019, the resolutions of the 27

thmeeting of the ninth board of directors ofthe company and the 3

rdextraordinary shareholders‘ meeting in 2019 passed and agreed the company to use itsown funds, together with Changhong Huayi Compressor Co., Ltd., and respectively increase capital of 500 millionyuan to Changhong Finance Company, with a total capital increase of RMB 1 billion. The capital increase wasdetermined based on the 100% equity evaluation value of 2,342,273,700 yuan of Changhong Finance Company asof March 31, 2019, of which 402,998,300 yuan of the Company‘s capital increase of 500 million yuan inChanghong Finance Company was included in its registration capital, and 97,001,700 yuan was included in itscapital reserve, while Changhong Finance Company‘s former shareholders, Changhong Group and SichuanChanghong, gave up their rights to subscribe for capital contributions this time and did not increase capital. Therelated transaction was conducted in accordance with the principles of openness, impartiality, fairness andreasonableness, and there was no situation that damaged the interests of the company and shareholders, especiallythe small and medium shareholders.

3. On October 17, 2019, the resolution of the 28

thmeeting of the ninth board of directors of the company passedand agreed the company to increase the estimated daily related transactions amount occurred among the companyand its holding subsidiaries with Sichuan Changhong Electric Co., Ltd. and its subsidiaries, and with SichuanChanghong Electronics Holding Group Co., Ltd. and its holding subsidiaries in 2019 totaling no more than 118million yuan (excluding tax), such as purchase or sales of equipment, sales of goods, etc.

4. On October 28, 2019, the resolution of the 29

thmeeting of the ninth board of directors of the company passedand agreed the company‘s subsidiary Sichuan Changhong Air-conditioner Co., Ltd. to purchase the land use rightsof four parcels of land (Four parcels of land with an area of 249,830.10 square meters, a total of 374.74 acres, thewarrants are MCGY 2012 No. 00251, MCGY 2012 No. 00254, Chuan 2018 MY Real Estate Property No.0002704, Chuan 2019 MY Real Estate Property No. 0027783). The pricing of this related transaction was subjectto the appraised value of the underlying land as of August 10, 2019, and the transaction price was determined tobe 112,635,100 yuan. The pricing of related transaction was fair and in line with the principles of openness,fairness and impartiality.

5. On November 29 and December 17, 2019, the resolutions of the 31

st

meeting of the ninth board of directors ofthe company, the 16

th meeting of the ninth board of supervisors, and the 4

thextraordinary shareholders‘ meeting of2019 passed and approved the company to change the use and investment of part of the funds raised in the―Intelligent R & D Project‖ and use them to purchase R & D assets such as intelligent infrastructure platformconstruction and software R & D platforms from Sichuan Changhong and its subsidiaries. The pricing of therelated transaction was subject to the appraised value of the underlying asset as of September 30, 2019, and thetransaction price was determined to be 46,617,300 yuan.

6. On November 29 and December 17, 2019, the resolutions of the 31

st

meeting of the ninth board of directors ofthe company, the 16

th meeting of the ninth board of supervisors, and the 4

thextraordinary shareholders‘ meeting of2019 passed and approved the estimated daily related transactions amount occurred among the company and itsholding subsidiaries with the related parties in 2020 totaling no more than 16,536,500,000 yuan (excluding tax),and agreed that the company and Sichuan Changhong Group Finance Co., Ltd. should continue to carry out thefinancial service related transactions such as loans and deposits in 2020.Related searches for disclosure website of interim report with major related transaction concerned

Interim reportDisclosure dateWebsite for disclosure
Resolution of the 26th session of 9th BOD (2019-057) Resolution of 3rd extraordinary shareholders general meeting of 2019(2019-067)31 Aug. 2019, 27 Sept.2019Juchao Website: http://www.cninfo.com.cn
Resolution of the 27th session of 9th BOD (2019-060) Capital Increased for Sichuan Changhong Group Finance Co., Ltd and Related Party Transaction (2019-061) Resolution of 3rd extraordinary shareholders general meeting of 2019(2019-067)10 Sept. 2019, 27 Sept. 2019Juchao Website: http://www.cninfo.com.cn
Resolution of the 28th session of 9th BOD (2019-069) Increase the forecast announcement of daily related party transactions for year of 2019 (2019-072)18 Oct. 2019Juchao Website: http://www.cninfo.com.cn
Resolution of the 29th session of 9th BOD (2019-073) Purchasing Land Use Right by Subsidiary Sichuan Changhong Air-conditioner Co., Ltd. and Related Party Transaction(2019-074)29 Oct. 2019Juchao Website: http://www.cninfo.com.cn
Resolution of the 31st session of 9th BOD (2019-077) Resolution of the 16th session of 9th Supervisory Committee(2019-078) Change Part of the Usage Direction for Raised Fund and Related Party Transaction(2019-079) Resolution of 4th extraordinary shareholders general meeting of 2019(2019-087)30 Nov. 2019, 18 Dec. 2019Juchao Website: http://www.cninfo.com.cn
Resolution of the 31st session of 9th BOD(2019-077) Resolution of the 16th session of 9th Supervisory Committee(2019-078) Forecast Announcement of Daily Related Party Transactions for year of 2020 (2019-080) Forecast of the Related Party Transaction Continuously With Sichuan Changhong Group Finance Co., Ltd. for year of 2020 (2019-081) Resolution of 4th extraordinary shareholders general meeting of 2019(2019-087)30 Nov. 2019, 18 Dec. 2019Juchao Website: http://www.cninfo.com.cn

XVII. Significant contract and implementations(i) Entrust, contract and leasing

1. Entrust

□Applicable √ Not applicable

No entrust in Period.

2. Contract

□Applicable √ Not applicable

No contract in Period.

3. Leasing

□Applicable √ Not applicable

No leasing in the period(ii) Major guarantee

√Applicable □ Not applicable

1. Guarantee

The guarantees provided by the company to the wholly-owned and holding subsidiaries are guarantees forsupporting bank credits generated by its production and operation. The guaranty style is the guarantee. Thecompany and its subsidiaries did not provide guarantees to subjects outside the scope of consolidated statements.The company and its holding subsidiaries had no overdue external guarantees, no external guarantees involvinglitigation, and no losses due to the award of the guarantee. Up to 31 December 2019, the external guarantees ofthe Company and subsidiaries are as follows:

In 10 thousand Yuan

Particulars about the external guarantee of the Company and subsidiaries (Barring the guarantee for subsidiaries)
Name of the Company guaranteedRelated Announcement disclosure dateGuarantee limitActual date of happeningActual guarantee limitGuarantee typeGuarantee termComplete implementation or notGuarantee for related party
---------
Total approving external guarantee in report period (A1)0Total actual occurred external guarantee in report period (A2)0
Total approved external guarantee at the end of report period ( A3)0Total actual balance of external guarantee at the end of report period (A4)0
Guarantee between the Company and the subsidiaries
Name of the Company guaranteedRelated Announcement disclosure dateGuarantee limitActual date of happening (Date of signing agreement)Actual guarantee limitGuarantee typeGuarantee termComplete implementation or notGuarantee for related party
Zhongshan Changhong Electric Co., Ltd.Notice No.: 2018-005, 2018-009 and 2018-029 released on 30 March, 11 May 2018 respectively70,00030 Mar. 201810,000Joint liability guarantyOne yearYN
11 Apr. 20186,000Joint liability guarantyOne yearYN
12 Apr. 20185,000Joint liability guarantyOne yearYN
18 Apr. 20185,500Joint liability guarantyOne yearYN
21 Aug. 20185,000Joint liability guarantyOne yearYN
11 Sept. 201810,000Joint liability guarantyOne yearNN
11 Oct. 20185,000Joint liability guarantyOne yearNN
25 Oct. 201810,000Joint liability guarantyOne yearYN
Notice No.: 2019-004, 2019-006 and 2019-012 released on 30 Jan., 23 Feb. 2019 respectively130,00022 Jan. 201910,000Joint liability guarantyOne yearNN
4 Apr. 20195,500Joint liability guarantyOne yearNN
30 Apr. 201910,000Joint liability guarantyOne yearNN
31 May 20195,000Joint liability guarantyOne yearNN
3 Jul. 20195,000Joint liability guaranty4-monthNN
23 Jul. 201915,000Joint liability guarantyOne yearNN
21 Aug. 20192,000Joint liability guarantyOne yearNN
19 Sept. 201910,000Joint liability guarantyOne yearNN
Guangdong Changhong Ridian Technology Co., Ltd.Notice No.: 2018-005, 2018-009 and 2018-029 released on 30 March, 11 May 2018 respectively25,50031 Aug. 20184,000Joint liability guaranty7-monthYN
22 Sept. 20184,500Joint liability guarantyOne yearYN
Notice No.: 2019-004, 2019-006 and26,00022 Jan. 20192,500Joint liability guarantyOne yearNN
30 Apr. 20194,000Joint liability guarantyOne yearNN
2019-012 released on 30 Jan., 23 Feb. 2019 respectively4 Sept. 20196,500Joint liability guarantyOne yearNN
Zhongke Meiling Cryogenic Technology Co., Ltd.Notice No.: 2018-005, 2018-009, 2018-056 and 2018-059 released on 30 March, 11 May and 18 Oct. 2018 respectively9,00029 Jun. 20181,000Joint liability guarantyOne yearYN
20 Jul. 20182,000Joint liability guaranty10-monthYN
Notice No.: 2019-004, 2019-006 and 2019-012 released on 30 Jan., 23 Feb. 2019 respectively14,00017 Jul. 20193,000Joint liability guarantyOne yearNN
23 Aug. 20192,000Joint liability guarantyOne yearNN
24 Sept. 2019920Joint liability guarantyOne yearNN
22 Oct. 20193,000Joint liability guarantyOne yearNN
30 Dec. 20192,000Joint liability guaranty11-monthNN
Sichuan Changhong Air-conditioner Co., Ltd.Notice No.: 2019-004, 2019-006 and 2019-012 released on 30 Jan., 23 Feb. 2019 respectively100,00030 Jul. 201920,000Joint liability guaranty8-monthNN
Changhong RUBA Trade CompanyNotice No.:2018-061 and No.: 2018-063 released on 9 Nov. 20186,26410 Jan. 20192,062.41Joint liability guarantyOne yearNN
10 Jan. 20191,888.08Joint liability guaranty10.5-monthYN
Notice No.: 2019-083, 2019-084 and 2019-087 released on 7 Dec., 18 Dec. 2019 respectively6,34523 Dec. 20192,103.51Joint liability guarantyOne yearNN
Jiangxi Meiling Electric Appliance Co., Ltd.Notice No.: 2019-004, 2019-006 and 2019-012 released on 30 Jan., 23 Feb. 2019 respectively25,00010 Jan. 20195,000Joint liability guarantyOne yearNN
21 Mar. 201910,000Joint liability guarantyOne yearNN
Hefei Meiling Nonferrous Metal Products Co., LtdNotice No.: 2019-004, 2019-006 and 2019-012 released on 30 Jan., 23 Feb. 2019 respectively3,00019 Jun. 2019500Joint liability guaranty6-monthYN

The above-mentioned guarantee objects are the wholly-owned and holding subsidiaries of the Company, and these wholly-ownedand holding subsidiaries are in normal production and operation, there are no overdue loans, and the guarantee risks are controllable.During the reporting period, the highest level of security the Company provided amounted to 3043.45 million Yuan by the approval,the actual amount of guarantee is 1959.74 million Yuan. At the end of the reporting period, the practical guarantee balance amountedto 1,355,859,200 Yuan, accounting for the Company‘s latest net assets ratio of 27.09%.Explanation on guarantee with composite way: N/A

2. Guarantee outside against the regulation

Total amount of approving guarantee for subsidiaries in report period (B1)304,345Total amount of actual occurred guarantee for subsidiaries in report period (B2)195,974.00
Total amount of approved guarantee for subsidiaries at the end of reporting period (B3)304,345Total balance of actual guarantee for subsidiaries at the end of reporting period (B4)135,585.92
Guarantee of the subsidiaries for the subsidiaries
Name of the Company guaranteedRelated Announcement disclosure dateGuarantee limitActual date of happeningActual guarantee limitGuarantee typeGuarantee termComplete implementation or notGuarantee for related party
---------
Total amount of approving guarantee for subsidiaries in report period (C1)0Total amount of actual occurred guarantee for subsidiaries in report period (C2)0
Total amount of approved guarantee for subsidiaries at the end of reporting period (C3)0Total balance of actual guarantee for subsidiaries at the end of reporting period (C4)0
Total amount of guarantee of the Company (total of three above mentioned guarantee)
Total amount of approving guarantee in report period (A1+B1+C1)304,345Total amount of actual occurred guarantee in report period (A2+B2+C2)195,974.00
Total amount of approved guarantee at the end of report period (A3+B3+C3)304,345Total balance of actual guarantee at the end of report period (A4+B4+C4)135,585.92
Ratio of actual guarantee (A4+B4+C4) in net assets of the Company27.09%
Including:
Amount of guarantee for shareholders, actual controller and its related parties (D)0
The debts guarantee amount provided for the guaranteed parties whose assets-liability ratio exceed 70% directly or indirectly (E)89,665.92
Proportion of total amount of guarantee in net assets of the Company exceed 50% (F)0
Total amount of the aforesaid three guarantees (D+E+F)89,665.92
Explanations on possibly bearing joint and several liquidating responsibilities for undue guarantees (if applicable)N/A
Explanations on external guarantee against regulated procedures (if applicable)N/A

□Applicable √ Not applicable

No guarantee outside against the regulation in Period.(iii) Entrust others to cash asset management

1. Trust financing

√Applicable □ Not applicable

Trust financing in the period

In 10 thousand Yuan

TypeCapital resourcesAmount for entrustUndue balanceOverdue amount
Bank financing productsIdle raised funds90,40000
Own fund30,00000
Broker financing productsOwn fund20,00000
Total140,40000

Details of the single major amount, or high-risk trust investment with low security, poor fluidity andnon-guaranteed:

√Applicable □ Not applicable

In 10 thousand Yuan

Trustee institution (or name of trustee)Trustee typeProduct typeAmountSource of fundsStart dateExpiry dateCapital investment purposeCriteria for fixing rewardReference annual rate of returnAnticipated income (if applicable)Actual gains/losses in periodActual collected gains/losses in periodAmount of reserve for devaluation of withdrawing (if applicable)Whether approved by legal procedure (Y/N)Whether has entrust finance plan in the futureSummary of the items and related query index (if applicable)
Soochow Securities Co., Ltd.BrokerAsset management plan20,000Own fund12 Apr. 2018Recovered in advanceThe asset is planned to invest in the Jinshiqi Phase II debt financing plan of 2018 issued by Jinshiqi International Holdings Co., Ltd. at the Beijing Financial Assets Exchange.It has been recovered in advance, and determined by the actual holding period8.50%(management rate and custody rate excluded)-2,269.502,269.50N/AYNot applicableJuchao Website(www.cninfo.com.cn) (Notice No.: 2018-014, 2018-015, 2019-025, 2019-060, 2019-076 and 2019-094)
Chengdu Branch of Bohai Bank Co., LtdBankPrincipal-guaranteed with floating income48,000Idle raised funds21 Dec. 201810 Jun. 2019The structured deposit product, the structural derivatives tied with the 3-month interbank lending rate in London (Libor)Annualized returns: 4.20%4.20%944.48944.48944.48N/AYNot applicableJuchao Website(www.cninfo.com.cn) (Notice No.: 2018-078)
Hefei Branch of ShanghaiBankPrincipal-guaranteed &23,000Idle raised26 Dec. 201830 Jan. 2019Investment of the central bank bill in bank market, treasury bond,Annualized returns:3.95%87.1285.8085.80N/AYNot applicableJuchao Website(www.cni
Pudong Development Bankincome-guaranteedfundscorporate bonds, short-term financing, medium-term bills, inter-bank borrowing, inter-bank deposits, bills or bill repurchase etc.3.95%nfo.com.cn) (Notice No.: 2018-080)
Hefei Branch of China Guangfa BankBankPrincipal-guaranteed with floating income10,000Idle raised funds27 Dec. 201828 Jan. 2019The principal of funds raised by this structured deposit is included in the unified operations management of the funds of China Guangfa Bank. The proportion of investment in money market instruments (including but not limited to bank deposits, inter-bank lending, buy-back, etc.) ranges from 20% to 100%, and the proportion of bonds (including but not limited to national debt, central bank bills, financial bonds, short-term financing bonds, enterprise bonds, medium-term notes, corporate bonds) and other financial assets ranges from 0% to 80%, and the income is invested in the financial derivatives linking to the exchange rate of the US dollar against the Hong Kong dollar.Annualized returns: 3.90%3.90%34.1934.1934.19N/AYNot applicableJuchao Website(www.cninfo.com.cn)(Notice No.: 2018-080)
Mianyang Branch of China EverbrightBankPrincipal-guaranteed & income-guaranteed10,000Idle raised funds28 Dec. 201828 Jan. 2019The product is mainly composed of risk-free assets investment and option trading. The product principal is invested in bank fixed timeAnnualized returns: 3.75%3.75%31.8531.2531.25N/AYNot applicableJuchao Website(www.cninfo.com.cn)(Notice No.: 2018-081)
Bankdeposits, and the corresponding application of funds is based on the bank deposits, and the income is linked to the bank‘s comprehensive liability cost.
Anhui Branch of Bank of CommunicationsBankPrincipal-guaranteed with floating income22,400Idle raised funds31 Jan. 20192 May 2019Take the funds collected by the structured deposit sales as the nominal principal, and trade the capital cost of the nominal principal as investment income and financial derivatives transactions related to comparison value of 3MShibor with the counter party.Annualized returns: 4.25%4.25%237.35242.57242.57N/AYNot applicableJuchao Website(www.cninfo.com.cn)(Notice No.: 2019-009)
Hefei Branch of Shanghai Pudong Development BankBankPrincipal-guaranteed & income-guaranteed10,000Idle raised funds30 Jan. 20192 May 2019Investment of the central bank bill in bank market, treasury bond, corporate bonds, short-term financing, medium-term bills, inter-bank borrowing, inter-bank deposits, bills or bill repurchase etc.Annualized returns: 4.20%4.20%105.86110.83110.83N/AYNot applicableJuchao Website(www.cninfo.com.cn)(Notice No.: 2019-009)
Hefei Branch of China Guangfa BankBankPrincipal-guaranteed with floating income10,000Idle raised funds30 Jan. 20192 May 2019The principal of funds raised by this structured deposit is included in the unified operations management of the funds of China Guangfa Bank. The proportion of investment in money market instruments (including but not limited to bank deposits, inter-bank lending, buy-back, etc.) ranges from 20% toAnnualized returns: 4.25%4.25%107.12107.12107.12N/AYNot applicableJuchao Website(www.cninfo.com.cn)(Notice No.: 2019-009)
100%, and the proportion of bonds (including but not limited to national debt, central bank bills, financial bonds, short-term financing bonds, enterprise bonds, medium-term notes, corporate bonds) and other financial assets ranges from 0% to 80%, and the income is invested in the financial derivatives linking to the exchange rate of the US dollar against the Hong Kong dollar.
Anhui Branch of Bank of CommunicationsBankPrincipal-guaranteed with floating income17,000Idle raised funds17 May 201916 Jul. 2019The structured deposits of Bank of Communication - win to fortune, and linked to the 3-month Shanghai interbank offered rate (3MShibor)Annualized returns: 4.10%4.10%114.58114.58114.58N/AYNot applicableJuchao Website(www.cninfo.com.cn)(Notice No.: 2019-033)
Chengdu Branch of Industrial Bank Co., Ltd.BankPrincipal-guaranteed with floating income20,000Idle raised funds17 May 201919 Aug. 2019This product is a corporate finance structured deposit from Industrial Bank, the annual interest rate its fixed income is 2.01%, and the floating income is linked to the fluctuations of the Shanghai Gold AM base price of the underlying Shanghai Gold Exchange.Annualized returns: 3.80%3.80%195.73195.73195.73N/AYNot applicableJuchao Website(www.cninfo.com.cn)(Notice No.: 2019-34)
Chengdu Branch of Bohai Bank Co., LtdBankPrincipal-guaranteed with floating income20,000Idle raised funds20 Jun. 201922 Jul. 2019The structured deposit product, the structural derivatives tied with the 3-month interbank lending rate in London (Libor)Annualized returns: 3.55%3.55%62.2562.2562.25N/AYNot applicableJuchao Website(www.cninfo.com.cn)(Notice No.: 2019-038)
ChengduBankPrincipal-gu26,000Idle20 Jun.18 Dec.The structured deposit product, theAnnualized3.85%496.38496.39496.39N/AYNotJuchao
Branch of Bohai Bank Co., Ltdaranteed with floating incomeraised funds20192019structural derivatives tied with the 3-month interbank lending rate in London (Libor)returns: 3.85%applicableWebsite(www.cninfo.com.cn)(Notice No.: 2019-038)
Huaining Road Branch of Hefei Science & Technology Rural Commercial BankBankPrincipal-guaranteed with floating income5,000Idle raised funds17 Jul. 201917 Sept. 2019The structured deposit product, contract code of the investment in gold futures: au1912Annualized returns: 3.80%3.80%32.2732.2732.27N/AYNot applicableJuchao Website(www.cninfo.com.cn)(Notice No.: 2019-046)
Hefei Branch of Shanghai Pudong Development BankBankPrincipal-guaranteed with floating income5,000Idle raised funds18 Jul. 201924 Sept. 2019The structured deposit product, investment of the central bank bill in bank market, treasury bond, corporate bonds, short-term financing, medium-term bills, inter-bank borrowing, inter-bank deposits, bills or bill repurchase etc., and option products with interest rate linkedAnnualized returns: 3.80%3.80%35.3934.8334.83N/AYNot applicableJuchao Website(www.cninfo.com.cn)(Notice No.: 2019-046)
Hefei Branch of Huaxia BankBankPrincipal-guaranteed with floating income7,000Idle raised funds19 Jul. 201919 Sept. 2019The structured deposit product, all or part of the interest generated by the deposit is linked to the gold futures priceAnnualized returns: 3.90%3.90%46.3746.3746.37N/AYNot applicableJuchao Website(www.cninfo.com.cn)(Notice No.: 2019-046)
Chengdu Branch of Industrial Bank Co., Ltd.BankPrincipal-guaranteed with floating income8,700Idle raised funds23 Aug. 201925 Nov. 2019The structured deposit product. A structured deposit refers to the business product that enables the depositor to obtain higher returns on the basis of taking certain risks byAnnualized returns: 3.80%3.80%85.1485.1485.14N/AYNot applicableJuchao Website(www.cninfo.com.cn)(Notice No.: 2019-054)
being linked to the fluctuation of interest rate, exchange rate and index etc., or the credit status of an entity.
Chengdu Wuyang Ave. Branch of China CITIC BankBankPrincipal-guaranteed with floating income30,000Own fund26 Aug. 201925 Nov. 2019The structured deposit product, which is invested through structural interest rate swap etc.Annualized returns: 3.90%3.90%291.69291.69291.69N/AYNot applicableJuchao Website(www.cninfo.com.cn)(Notice No.: 2019-056)
Chengdu Branch of Bohai Bank Co., LtdBankPrincipal-guaranteed with floating income12,000Idle raised funds23 Sept. 201923 Dec. 2019The structured deposit product, the structural derivatives tied with the 3-month interbank lending rate in London (Libor)Annualized returns: 3.95%3.95%118.75118.18118.18N/AYNot applicableJuchao Website(www.cninfo.com.cn)(Notice No.: 2019-065)
Chengdu Branch of Bohai Bank Co., LtdBankPrincipal-guaranteed with floating income5,000Idle raised funds26 Sept. 201923 Dec. 2019The structured deposit product, the structural derivatives tied with the 3-month interbank lending rate in London (Libor)Annualized returns: 3.95%3.95%47.6147.6147.61N/AYNot applicableJuchao Website(www.cninfo.com.cn)(Notice No.: 2019-066)
Total309,100------------3,074.135,350.78----------

Entrust financial expected to be unable to recover the principal or impairment might be occurred

□Applicable √ Not applicable

2. Entrust loans

□Applicable √ Not applicable

No entrust loans in the period.(iv) Other material contracts

□Applicable √ Not applicable

No other material contracts in the periodXVIII. Social responsibility(i) Performance of social responsibility: Not applicable(ii) Fulfill the precise social responsibility for poverty alleviationThe Company has no precise social responsibility for poverty alleviation in the period and has no follow-up planeither.(iii) Environment protectionThe listed Company and its subsidiary whether belongs to the key sewage units released from environmentalprotection department: √ Yes □ No

Name of company or subsidiaryMajor pollutants and name of typical pollutantsWay of dischargenumber of discharge outletsDistribution of discharge outletsconcentration of dischargePollutants discharge standards enactedTotal discharge volumeTotal discharge volume certifiedDischarge beyond the standards
Zhongshan Changhong Electric Co., Ltd.Exhaust constitutes the major pollutants, and the typical pollutants comprise of particulates, NMHC and odor concentration.High altitude emissions after meeting the treatment standards4One for 1#Workshop and 2#Workshop each; 3# workshop has 2Concentration of particulates discharge<20mg/m?; Concentration of NMHC emission:4.87mg/ m?; Concentration of stink: 724 non-dimensional.The Emission Limits for Air Pollutants (DB44/27—2001) applies to exhaust emission. Concentration of particulates discharge:120mg/ m?; Concentration of NMHC emission:120mg/ m?; Concentration of stink: 2000 non-dimensional.Satisfy the standards for total volume control208,800,000 standard cubic metersNot beyond the standards

Note: Sichuan Changhong Air Conditioner Co., Ltd. (hereinafter referred to as ―Changhong Air-conditioner‖), a wholly-ownedsubsidiary of the company, is operates located in Mianyang City, Sichuan Province. In 2018, Changhong Air-conditioner wasincluded in the list of key pollutant discharge units in the atmosphere for 2018. However, through active implementation of corporatesocial responsibility and social obligations in daily environmental protection and its pollutant control work, Changhong Air

Conditioning was no longer listed as a key pollutant discharge unit by Mianyang City Environmental Protection Department in 2019.

1.Construction and operation of pollution prevention facilities

The Company and its subsidiaries actively respond to the national ecological civilization construction plan, andactively participate in national environmental protection works in line with the purpose of actively fulfilling itscorporate social responsibility. In recent years, The Company and its subsidiaries have actively explored theintroduction of advanced management concepts and methods, and invested a large amount of money in thepurchase of pollution control equipment and facilities. And realized emission reduction by scientific technicalmethods by the investment in installation of activated carbon adsorption treatment equipment, welding dustpurifier facilities etc. At the same time, in order to ensure the effective operation of the management equipmentand facilities, the Company and its subsidiaries have adopted such management measures as setting up specialpersonnel to manage and maintain the operation of the equipment and facilities, formulating proper rules foroperation and maintenance of the equipment and facilities, emergency disposal regulations, supervision andassessment mechanism, allocating special maintenance funds and so on, so as to ensure the effective operation ofthe governing facilities in a full round, delivering its best to protect and improve the ecological environmentaround the enterprise.

2. Environment impact assessment and other required environment protection administrative license forconstruction projectsThe Company and its subsidiaries earnestly implement the Environmental Protection Law, the EnvironmentalImpact Assessment Law and the Regulations on Environmental Protection Management of Construction Projects,consciously abide by environmental protection laws and regulations, industry requirements and governmentregulations. For new, renovated and expanded projects, the Company and its subsidiaries adhere to the projectenvironmental impact assessment and "three simultaneous" system, fully implement environmental protectionmeasures, act well in environment protection management in respect of project planning, design, construction andoperation, make full use of advanced crafts and technological means to reduce environmental pollution.Environmental impact assessment is carried out synchronously while making the feasibility study for aconstruction project. Third-party professional parties are engaged to analyze the industrial policy, land useplanning, environmental impact and the feasibility of environmental protection measures of the project.Construction will be started only after approved by the competent environmental protection authorities. Duringthe construction, environmental protection requirements are earnestly implemented, environmental protectionfacilities are built synchronously, environmental protection acceptance of the project is arranged in time uponcompletion of the project to ensure that the project meets the acceptance criteria and could be put into officialoperation with all the environmental impact assessment requirements met. During the operation period, theCompany conducts pollution prevention to ensure the normal operation of environmental protection facilities instrict compliance with the relevant environmental impact assessment documents and the reply requirements of thecompetent environmental protection authorities.

3. Emergency plan for environmental emergencies

The Company and its subsidiaries have set up related emergency plans for environmental emergencies. The

Company and its subsidiaries have determined classified warning based on the different extent and severity ofenvironmental impacts that may be caused by the material environmental factors, defined the responsibilities foremergency response, regulated emergency handling procedures, established special team to handle emergenciesand organized regular rehearsal and appraisal of relevant emergency plans, so as to ensure the effectiveness ofthese plans, improve their capability of emergency handling and take precautions against contingent emergencies.

4. Independent plan to monitor environment

The Company and its subsidiaries have established regular monitoring plan for environmental pollutants, set upspecial funds for pollutants monitoring, and engaged third-party authoritative to regularly monitor the operation ofmajor pollution-production links and environmental protection treatment facilities in connection with the majorpollutants produced by the Company and its subsidiaries, to make sure that the Company and its subsidiariescould achieve emission standards in a full round.

5. Other environment information that should be disclosed

According to the Environmental Information Disclosure Measures of Enterprises and Institutions, the Companyand its subsidiaries have realized the disclosure of information relating to environmental impact assessment,project acceptance, pollutants production and discharge, solid waste management, important environmentalfactors, environmental objectives and performance of construction projects.

6. Other environment related information

In order to further realize the scientific and systematic environmental protection work of the Company and itssubsidiaries, the Company and its subsidiaries have established an environmental management system inaccordance with ISO14001 standards, set up an environmental protection organization, acquired environmentalprotection resources, regularly identified, updated and appraised environmental factors, compliance obligations,environmental risks and opportunities, and regularly determined environmental objectives and managementprograms. Through the implementation of management programs and continuous normal improvement, theenvironmental performance of the Company and its subsidiaries has been continuously improved. Through regularinternal audit and management review, as well as the verification and examination of the third parties, theenvironmental management system of the Company and its subsidiaries has been effectively controlled and fullymeets the system management standards and relevant regulations.XIX. Explanation on other significant events

√Applicable □ Not applicable

(1) In January 2019, Mr. Wu Dinggang, the former president of the company, applied for resignation as thepresident of the company due to changes in his personal work, but he continues to serve as the vice-president ofthe company, a member of the strategy committee of the board of directors, and a member of the remuneration andappraisal committee. At the same time, after the resolution of the 18

thmeeting of the ninth board of directors ofthe company, it‘s agreed to authorize Mr. Kou Huameng, the director and vice president of the company, to act onthe president‘s behalf, the term is from the effective date of the board resolution, i.e. January 11, 2019, to the dateon which the board of directors engages a new president. Found more on appointed media ―Securities Times‖,―China Securities Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that the Company disclosed

in the form of announcement (Announcement No. 2019-001 and No.2019-002) on 12 Jan. 2019.

(2) In 2019, former chairman of the Company Mr. Li Wei, applied for resign the followed positions for workcauses under the name of the Company, including chairman of 9

thBOD, Director, chief members of the strategycommittee member of the nomination committee. At the same time, the resolutions of the 22

th

meeting of the ninthboard of directors of the company passed and agreed to engage Mr. Wu Dinggang as the company‘s chairman ofthe ninth board of directors for a term of office consistent with the term of the current board of directors. Foundmore on appointed media ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖ andwww.cninfo.com.cn that the Company disclosed in the form of announcement (Announcement No. 2019-029 andNo.2019-030) on 27 April 2019.

(3) On January 14, 2019, the company received a Notification Letter of Caitong Fund Management Co., Ltd.About the Progress of Shareholding Reduction Plan of Changhong Meiling Co., Ltd. from Caitong FundManagement Co., Ltd. (hereinafter referred to as ―Caitong Fund‖) that held more than 5% of the company‘s shares,Caitong Fund reduced its holdings of the company‘s shares of 12,160,298 shares in total by centralized biddingtransactions or block trading from October 18, 2018 to January 13, 2019, accounting for 1.1641% of thecompany's total share capital.On February 13, 2019, the company received the ―Short Form Report on Changes in Equity of ChanghongMeiling Co., Ltd.‖ from Caitong Fund, Caitong Fund reduced its holdings of the shares of Changhong Meiling of2,600,729 shares in total by centralized bidding transactions from January 14, 2019 to February 12, 2019,accounting for 0.25% of the company's total share capital. After this equity change, Caitong Fund holds52,229,844 shares of Changhong Meiling, accounting for 4.999995% of Changhong Meiling's total share capital,which is no longer a shareholder holding more than 5% of the company's shares.On April 15, 2019, the company received a Notification Letter of Caitong Fund Management Co., Ltd. About theProgress of Shareholding Reduction Plan of Changhong Meiling Co., Ltd. from Caitong Fund. Caitong Fundreduced holding of 7,430,612 shares in The Company via collective bidding trading during the period from 13 Feb.2019 to 13 April 2019, accounting for 0.7113% of the total share capital of the Company. After the reduction,Caitong Fund still holds 44,799,232 shares of the company, accounting for 4.2887% of the company's total equity.Found more on appointed media ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖and www.cninfo.com.cn that the Company disclosed in the form of announcement (Announcement No. 2019-003,No.2019-011 and No.2019-024) on 15 Jan. 2019, 14 Feb. 2019 and 16 April 2019.

(4)The resolutions of the 19

th meeting of the Ninth Board of Directors, the 10

thmeeting of the Ninth Board ofSupervisors, and the 1

stExtraordinary General Meeting of 2019 passed and agreed the company to provide creditguarantees of 2980 million yuan in total for its wholly-owned and controlled subsidiaries in 2019, the guaranteeperiod is one year for the newly increased guarantee amount for the current year and the amount of renewalinsurance during Current Year.The resolutions passed at the 32

nd

meeting of the company‘s ninth board of directors and the 4

th

extraordinaryshareholders‘ meeting in 2019 agreed that the company would continue to provide domestic guarantees for RUBA

Trading Company‘s application for loans from local banks, the total guarantee amount did not exceed $ 9 millionwith guarantee period of one year, which was used for operating capital turnover of RUBA Trading Company.The resolutions of the 33

rd meeting of the Ninth Board of Directors, the 17

thmeeting of the Ninth Board ofSupervisors, and the 1

stExtraordinary General Meeting of 2020 passed and agreed the company to provide creditguarantees of 3670 million yuan in total for its wholly-owned and controlled subsidiaries in 2020, the guaranteeperiod is one year for the newly increased guarantee amount for the current year and the amount of renewalinsurance during Current Year.Found more on appointed media ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖and www.cninfo.com.cn that the Company disclosed in the form of announcement (Announcement No. 2019-004,No.2019-005, No.2019-006, No.2019-008, No.2019-010, No.2019-012, No.2019-083, No.2019-084,No.2019-085, No.2019-087, No.2019-088, No.2019-089, No.2019-090 and No.2020-002) on 30 Jan., 14 Feb., 23Feb., 7 Dec., 18 Dec., 26 Dec. 2019 and 11 Jan. 2020 respectively.

(5) The resolution of the 19

thmeeting of the Ninth Board of Directors of the Company passed and agreed thecompany to apply for a special credit line of up to 300 million yuan in the bank notes pool to Hefei Branch ofChina Everbright Bank; and being deliberated and approved by the resolution of 29

th session of 9

th BOD and 4

th

extraordinary shareholders general meeting of 2019, the Company and its subsidiary are agreed to apply for aspecial credit line of up to 600 million Yuan, 500 million Yuan, one billion Yuan, 300 million Yuan and 500million Yuan in the bank notes pool to Hefei Branch of Hangzhou Bank, Hefei Branch of Huaxia Bank, AnhuiBranch of Bank of Communications, Hefei Branch of Industrial Bank and Hefei Branch of China Zheshang Bankrespectivey, with a credit period of one year, the credit varieties are mainly used for special business of bill pooland bill pledge is adopted. Found more on appointed media ―Securities Times‖, ―China Securities Journal‖,―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that the Company disclosed in the form ofannouncement (Announcement No. 2019-004, No.2019-007, No.2019-073, No.2019-075 and No. 2019-087) on30 Jan. and 29 Oct. 2019 respectively.

(6) On February 25, 2019, the company received the Notice of Sichuan Changhong Electric Co., Ltd. and itsConcerted Action Person CHANGHONG (HK) TRADING LIMITED, Ltd. to Increase the Shareholding ofChanghong Meiling Co., Ltd. and the Equity Changes (hereinafter referred to as ―Notice‖). Sichuan Changhongand its concerted action person CHANGHONG (HK) TRADING LIMITED (hereinafter referred to as ―HKChanghong‖ or ―concerted action person‖) bought 16,231,024 shares of Changhong Meiling (including13,751,756 shares of Changhong Meiling A shares and 2,479,268 shares of Changhong Meiling B shares) bybidding transaction method through the secondary market from November 12, 2018 to February 25, 2019,accounting for 1.55% of Changhong Meiling‘s total share capital, consequently, the equity ratio of ChanghongMeiling held by Sichuan Changhong and concerted action person cumulative increased by 5% from September2009 to February 2019.Found more on appointed media ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖and www.cninfo.com.cn that the Company disclosed in the form of announcement (Announcement No. 2019-003

and detailed statement of changes in interests) on 26 Feb. 2019 and 28 Feb. 2019.

(7) In late March 2019, the Company received the "Notice of Civil Penalty" issued by U.SDepartmentofEnergy("DOE", i.e. the US Department of Energy) and accepted the settlement proposal proposed by the DOE. As of theend of the reporting period, the company has paid a fine of US$1,901,540 to the US Department of Energy. Foundmore on appointed media ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖ andwww.cninfo.com.cn that the Company disclosed in the form of announcement (Announcement No. 2019-014) on26 March 2019.

(8) The resolutions of the 20

th meeting of the Ninth Board of Directors, the 11

th

meeting of the Ninth Board ofSupervisors, and the 2018 Annual General Meeting of Shareholders passed and agreed the company to change thecorresponding accounting policies according to the relevant regulations and requirements of the Ministry ofFinance so as to apply to the new regulations. Found more on appointed media ―Securities Times‖, ―ChinaSecurities Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that the Company disclosed in theform of announcement (Announcement No. 2019-015, No.2019-016, No.2019-018, and No.2019-035) on 29March 2019, and 22 May 2019

(9) The resolutions of the 20

thmeeting of the Ninth Board of Directors and the 2018 Annual General Meeting ofShareholders passed and agreed the company and its subsidiaries to carry out forward foreign exchange fundtrading business from July 1, 2019 to June 30, 2020, the balance of the business transaction does not exceedUS$650 million (mainly including US dollar, Australian dollar, Euro, and other foreign exchanges are allconverted into US dollars), and the maximum single-business delivery period is no more than one year. Foundmore on appointed media ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖ andwww.cninfo.com.cn that the Company disclosed in the form of announcement (Announcement No. 2019-015,No.2019-020, and No.2019-035) on 29 March 2019, and 22 May 2019

(10) In accordance with the resolutions of the 20

thmeeting of the Ninth Board of Directors and the 2018 AnnualGeneral Meeting of Shareholders, in order to safeguard the company's value and the shareholders' rights, and inlight of the company's actual situation and business development needs, it‘s agreed to revise the relevantprovisions of the repurchase of shares and the business scope of the company in the "Articles of Association","Rules of Procedure of the General Meeting of Shareholders", and ―Rules of Procedure of the Board of Directors".Found more on appointed media ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖and www.cninfo.com.cn that the Company disclosed in the form of announcement (Announcement No. 2019-015,No.2019-022, and No.2019-035) on 29 March 2019, and 22 May 2019

(11) The resolutions of the 21

st meeting of the Ninth Board of Directors, the 12

th

meeting of the Ninth Board ofSupervisors passed and agreed the company to implement the new financial instrument standards and change therelevant accounting policies in accordance with the relevant regulations and requirements of the Ministry ofFinance. Found more on appointed media ―Securities Times‖, ―China Securities Journal‖, ―Hong KongCommercial Daily‖ and www.cninfo.com.cn that the Company disclosed in the form of announcement(Announcement No. 2019-025, No.2019-026, and No.2019-028) on 20 April 2019

(12) The resolutions of the 22

ndmeeting of the Ninth Board of Directors and the 2018 Annual General Meeting ofShareholders of the company passed and agreed the by-election of Mr. Zhong Ming as a non-independent directorof the Ninth Board of Directors of the Company, and his term of office is the same as that of the Ninth Board ofDirectors. Found more on appointed media ―Securities Times‖, ―China Securities Journal‖, ―Hong KongCommercial Daily‖ and www.cninfo.com.cn that the Company disclosed in the form of announcement(Announcement No. 2019-030, and No.2019-035) on 27 April 2019 and 22 May 2019

(13) In reporting period, the Company and its subordinate controlling subsidiary, have accumulated receivedvarious kinds of government subsidies as 101,096,075.33 Yuan. Found more on appointed media ―SecuritiesTimes‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that the Companydisclosed in the form of announcement (Announcement No. 2019-036, No. 2019-048 and No. 2019-093) on 12June, 13 August and 31 December 2019 respectively.

(14) The resolutions of the 20

th meeting of the Ninth Board of Directors, the 11

thmeeting of the Ninth Board ofSupervisors, and the 2018 Annual General Meeting of Shareholders passed the ―Plan for Profit Distribution of theCompany in 2018‖, and the independent directors of the company made independent approval opinions, takinginto account the interests of shareholders and the long-term development needs of the company, agreed thecompany to use the total share capital of 1,044,597,881 shares on December 31, 2018 as the base, and distribute acash dividend of 0.6 yuan (including tax) per every 10 shares to all shareholders, who distributed cash dividendsof 62,675,872.86 yuan (including tax) in total. After this allocation, the company's total share capital remainsunchanged, and the remaining undistributed profit of the parent company is 854,892,061.08 yuan, and theremaining undistributed profits shall be distributed after being carried forward in the subsequent years.On 18 June 2019, the Company released the profit distribution plan for year of 2018 and implemented the plan.Found more on appointed media ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖and www.cninfo.com.cn that the Company disclosed in the form of announcement (Announcement No. 2019-015,No.2019-016, No.2019-035, and No.2019-037) on 29 March 2019, 22 May 2019 and 18 June 2019.

(15) On June 28, 2019, the company received the ―Shareholding Reduction Plan‖ from Mr. Zhong Ming, thecompany's director and vice president, Mr. Zhong Ming planned to reduce his holdings of the Company‘s sharesof no more than 78,725 shares (not exceeding 0.0075% of the company's total share capital) by centralizedbidding transactions of the stock exchanges within six months after 15 trading days from the date of theannouncement of the shareholding reduction plan due to his own capital arrangements. On 23 August 2019, the―Notification letter on Completion of Shareholding Reduction plan‖ was received by the Company from Mr.Zhong Ming, the 78,725 shares, above mentioned, are reduced by centralized bidding transactions of the stockexchanges was completed as of 22 August 2019. Found more on appointed media ―Securities Times‖, ―ChinaSecurities Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that the Company disclosed in theform of announcement (Announcement No. 2019-039 and No. 2019-055) on 29 June 2019.

(16) Approved by the resolution of 25

th session of 9

thBOD, the Company and its subsidiary are agreed to write off

the bad debt of receivables, that irrecoverable- 12,604,521.25 Yuan in total. Found more on appointed media―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that theCompany disclosed in the form of announcement (Announcement No. 2019-039 and No. 2019-052) on 16 August2019.

(17) Approved by the resolution of 26

th

session of 9

th

BOD, the subordinate controlling subsidiary- MeilingCANDY Washing Machine Co., Ltd is agreed to clearing off. Found more on appointed media ―Securities Times‖,―China Securities Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that the Company disclosedin the form of announcement (Announcement No. 2019-057) on 31 August 2019.

(18) Approved by the 24

th session of 9

th BOD, 13

th

session of 9

th Supervisory Committee and 2

nd

extraordinaryshareholders general meeting of 2019, the implementing body - Changmei Technology of the ―Intelligent lifeproject‖ is agreed to clearing off as an enterprise. Found more on appointed media ―Securities Times‖, ―ChinaSecurities Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that the Company disclosed in theform of announcement (Announcement No. 2019-040, No. 2019-041, No. 2019-043 and No. 2019-047) on 9 July,26 July 2019 respectively.

(19) Approved by the resolution of 27

th session of 9

th

BOD, the controlling subsidiary - Zhongke Meiling is agreedto implementing the first share issuance plan for year of 2019. The issuing object subscribes in cash and agreedthat the Company waives the right to subscribe for the shares on the same terms. Found more on appointed media―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that theCompany disclosed in the form of announcement (Announcement No. 2019-060 and No. 2019-062) on 10September 2019.XX. Major event of the subsidiary

√Applicable □ Not applicable

(1)The resolution of the 20

thmeeting of the Ninth Board of Directors of the company passed and agreed thecompany's subsidiaries, Zhongshan Changhong Electric Appliance Co., Ltd., Guangdong Changhong TechnologyCo., Ltd. and Hongyuan Geothermal Heat Pump Technology (Zhongshan) Co., Ltd. to donate a total of 130,000yuan to Nantou Town People's Government of Zhongshan City to expand the Nantou Town Central PrimarySchool. Found more on appointed media ―Securities Times‖, ―China Securities Journal‖, ―Hong KongCommercial Daily‖ and www.cninfo.com.cn that the Company disclosed in the form of announcement(Announcement No. 2019-015 and No.2019-023) on 29 March 2019.

(2)The resolution of the 21

stmeeting of the Ninth Board of Directors of the company passed and agreed ZhongkeMeiling Cryogenic Technology Co., Ltd (hereinafter referred to as ―Zhongke Meiling‖), a holding subsidiary ofthe company, to invest 10 million yuan to set up a wholly-owned subsidiary to engage in refrigeration engineeringequipment sales, design and other services. Found more on appointed media ―Securities Times‖, ―China SecuritiesJournal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that the Company disclosed in the form ofannouncement (Announcement No. 2019-025) on 20 April 2019.

长虹美菱股份有限公司2019年年度报告

(3) The resolution passed at the 32

nd

meeting of the ninth board of directors of the company agreed the companyand five natural persons to jointly invest US$ one million in the Philippines to establish a new trade-type jointventure subsidiary, CH-Meiling International (Philippines) Inc. (the company name is subject to the final approvalof local authorities), to work on the import and wholesale sales of all household appliances and other products.Found more on appointed media ―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖and www.cninfo.com.cn that the Company disclosed in the form of announcement (Announcement No. 2019-083)on 7 December 2019.

(4) Approved by resolution of 33

rd session of 9

thBOD, subordinate subsidiary - Sichuan ChanghongAir-conditioner Co., Ltd is agreed to invested approximately 39843000 Yuan for capacity expansion and technicaltransformation to improve the production capacity and technical standards. Found more on appointed media―Securities Times‖, ―China Securities Journal‖, ―Hong Kong Commercial Daily‖ and www.cninfo.com.cn that theCompany disclosed in the form of announcement (Announcement No. 2019-088) on 26 December 2019.

Section VI. Changes in shares and particular about shareholders

I. Changes in shares(i) Changes in shares

In Share

Before the ChangeIncrease/Decrease in the Change (+, -)After the Change
AmountProportionNew shares issuedBonus sharesCapitalization of public reserveOthersSubtotalAmountProportion
I. Restricted shares80,431,4087.70%000-69,877,638-69,877,63810,553,7701.01%
1. State-owned shares00.00%0000000
2. State-owned legal person‘s shares70,793,6256.78%000-69,877,638-69,877,638915,9870.09%
3. Other domestic shares8,370,3630.80%000008,370,3630.80%
Including: Domestic legal person‘s shares4,716,0770.45%000004,716,0770.45%
Domestic natural person‘s shares3,654,2860.35%000003,654,2860.35%
4. Foreign shares1,267,4200.12%000001,267,4200.12%
Including: Foreign legal person‘s shares00.00%0000000.00%
Foreign natural person‘s shares1,267,4200.12%000001,267,4200.12%
II. Unrestricted shares964,166,47392.30%00069,877,63869,877,6381,034,044,11198.99%
1. RMB ordinary shares802,569,89376.83%00069,877,63869,877,638872,447,53183.52%
2. Domestically listed foreign shares161,596,58015.47%00000161,596,58015.47%
3. Overseas listed foreign shares00.00%0000000.00%
4. Others00.00%0000000.00%
III. Total shares1,044,597,881100.00%000001,044,597,881100.00%

1. Reasons for share changed

√ Applicable □ Not applicable

During the reporting period, the 69,877,638 RMB common shares (A-stock), non-publicly offering by theCompany, subscribed by the controlling shareholder- Sichuan Changhong Electric Co., Ltd on 14 Oct. 2016 arereleased for trading dated 15 Oct. 2019. Details can be found in the announcement (No.: 2019-068) released on

appointed media Securities Times, China Securities Journal, Hong Kong Commercial Daily and Juchao Website(www.cninfo.com.cn) dated 11 October 2019.

2. Approval of share changed

□ Applicable √ Not applicable

3. Ownership transfer of share changed

□ Applicable √ Not applicable

4. Progress of shares buy-back

□ Applicable √ Not applicable

5. Implementation progress of the reduction of repurchases shares by centralized bidding

□ Applicable √ Not applicable

6. Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributableto common shareholders of Company in latest year and period

□ Applicable √ Not applicable

7. Other information necessary to disclose for the Company or need to disclosed under requirement from securityregulators

□ Applicable √ Not applicable

(ii) Changes of restricted shares

√ Applicable □ Not applicable

In Share

ShareholdersOpening shares restrictedShares released in PeriodRestricted Shares Increased In the PeriodEnding shares restrictedRestricted reasonsDate for released
Li Wei1,071,355357,118357,1181,071,355Share lockup in senior executivesOn 25 April 2019, Mr. Li Wei resigned from chairman of the ninth board of director for work remove, the original office term would have expired on 12 September 2020. According to the relevant requirements of the Implementation Rules on Shareholding Reduction by Shareholders, Directors, Supervisors and Senior Management of Listed Companies Issued by Shenzhen Stock Exchange, where a director, supervisor or senior management resigns prior to expiration of his term, shares transferred each year during the term as
determined when he takes the position and the six months upon expiration of his term shall not exceed 25% of the total shares held by him in The Company, and he is not allowed to transfer the shares held by him in The Company within six months after his resignation. Therefore, the lifting of restrictions on the sales of Company‘s shares should follow the above provisions
Sichuan Changhong Electric Co., Ltd.69,877,63869,877,63800Non-publicly placement with restriction in trading2019-10-15
Total70,948,99370,234,756357,1181,071,355----

II. Security offering and listing(i) Security offering in reporting period (Not including preferred stock)

□ Applicable √ Not applicable

(ii) Explanation on changes of total shares, shareholders structure and assets & liability structures

□ Applicable √ Not applicable

(iii) Current shares held by internal staffs

□ Applicable √ Not applicable

III. Particulars about shareholder and actual controller of the Company(i) Amount of shareholders of the Company and particulars about shares holding

In Share

Total shareholders at end of the Period61,760Total common shareholders at end of last month before annual report disclosed60,596Total preference shareholders with voting rights recovered at end of reporting period (if applicable)0Total preference shareholders with voting rights recovered at end of last month before annual report disclosed (if applicable)0
Particulars about shares held above 5% by shareholders or top 10 shares holding
Full name of ShareholdersNature of shareholderProportion of shares heldTotal shareholders at the end of report periodChanges in report periodAmount of restricted shares heldAmount of un-restricted shares heldNumber of share pledged/frozen
State of shareAmount
Sichuan Changhong Electric Co., Ltd.State-owned legal person23.79%248,457,7242,156,2000248,457,724--
Hefei Industry Investment HoldingState-owned legal person4.58%47,823,401-047,823,401--
(Group) Co., Ltd.
CHANGHONG (HK) TRADING LIMITEDForeign legal person2.59%27,077,797-027,077,797--
CAO SHENGCHUNForeign natural person1.41%14,766,086525,107014,766,086--
Caitong Fund- Ningbo Bank-Haitong Xingtai (Anhui) Emerging Industry Investment Fund (Limited Partnership)Domestic non-state-owned legal person1.03%10,733,452-010,733,452--
Ma GuobinDomestic nature person0.95%9,872,9349,872,93409,872,934--
China Construction Bank - Huaxia China Securities Sichuan State-owned enterprise reform exchange traded index securities investment fundDomestic general legal person0.68%7,128,9007,128,90007,128,900--
Philip Securities (H.K.) Co., Ltd.Foreign legal person0.60%6,296,913434,23006,296,913--
Zheng HuiruDomestic nature person0.59%6,173,7003,372,40006,173,700--
Zheng ShuminDomestic nature person0.55%5,700,0005,700,00005,700,000--
Strategy investors or general legal person becomes top 10 shareholders due to rights issued (if applicable)Not applicable
Explanation on associated relationship among the aforesaid shareholdersAmong the above shareholders, CHANGHONG (HK) TRADING LIMITED (hereinafter referred to as Hong Kong Changhong) is the wholly-owned subsidiary of Sichuan Changhong Electric Co., Ltd.; except the shares of the Company directly held by Hong Kong Changhong, 6,296,913 shares of B-stock are also held through Phillip Securities (Hong Kong) Co., Ltd., the foregoing shareholders constitute persons of uniform action. There existed no associated relationship or belong to the concerted actors as specified in the Measures for the Administration of Information Disclosure of Shareholder Equity Changes of Listed Companies among Sichuan Changhong, Hong Kong Changhong and other top 7 shareholders(Philip Securities (H.K.) Co., Ltd. excluded.); ―Caitong Fund- Ningbo Bank-Haitong Xingtai (Anhui) Emerging Industry Investment Fund (Limited Partnership) ‖ refers to the products of Caitong Fund Management Company subscribe for privately placement of 2016; The company neither knows whether there is any association among other shareholders, nor knows whether other shareholders belong to the persons acting in concert that is stipulated in the ―Administrative Measures on Information Disclosure of Changes in Shareholding of Listed Companies‖.
Particular about top ten shareholders with un-restrict shares held
Shareholders‘ nameAmount of unrestricted shares held at end of PeriodType of shares
TypeAmount
Sichuan Changhong Electric Co., Ltd.248,457,724RMB ordinary shares248,457,724
Hefei Industry Investment Holding (Group) Co., Ltd.47,823,401RMB ordinary shares47,823,401
CHANGHONG (HK) TRADING LIMITED27,077,797Domestically listed foreign shares27,077,797
CAO SHENGCHUN14,766,086Domestically listed foreign shares14,766,086
Caitong Fund- Ningbo Bank-Haitong Xingtai (Anhui) Emerging Industry Investment Fund (Limited Partnership)10,733,452RMB ordinary shares10,733,452
Ma Guobin9,872,934RMB ordinary shares9,872,934
China Construction Bank - Huaxia China Securities Sichuan State-owned enterprise reform exchange traded index securities investment fund7,128,900RMB ordinary shares7,128,900
Philip Securities (H.K.) Co., Ltd.6,296,913Domestically listed foreign shares6,296,913
Zheng Huiru6,173,700RMB ordinary shares6,173,700
Zheng Shumin5,700,000RMB ordinary shares5,700,000
Expiation on associated relationship or consistent actors within the top 10 un-restrict shareholders and between top 10 un-restrict shareholders and top 10 shareholdersFound more in ―Particulars about shares held above 5% by shareholders or top 10 shares holding‖
Explanation on top ten common shareholders involving margin business (if applicable)As of 30 December 2019, among the top 10 common shareholders, Ma Guobin holds 9,859,334 shares of the Company through customer credit trading secured account of Founder Securities Co., Ltd., and 13,600 shares hold through common securities account, thus 9,872,934 shares of the Company are held in total. Zheng Shumin holds 2,500,000 shares of the Company through customer credit trading secured account of China Galaxy Securities Co., Ltd., and 3,200,000 shares hold through common securities account, thus 5,700,000 shares of the Company are held in total.

Note 1: At end of the reporting period, the person acting in concert with controlling shareholder SichuanChanghong-- CHANGHONG (HK) TRADING LIMITED, holds B-stock of the Company as 33,374,710 shares,among which, 6,296,913 shares are held through Philip Securities (H.K.) Co., Ltd. by CHANGHONG (HK)TRADING LIMITEDNote 2: In the above table, "Particulars about shares held above 5% by shareholders or top 10 shares holding" issubject to the data on stock transfer books provided by China Securities Depository and Clearing CorporationLimited Shenzhen BranchWhether the top ten ordinary shareholders of the company and the top 10 ordinary shareholders of unrestrictedconditions have made the repurchase transactions as agreed during the reporting period.

□Yes √ No

The top ten ordinary shareholders of the company and the top 10 ordinary shareholders of unrestricted conditionshave not made the repurchase transactions as agreed during the reporting period.(ii) Controlling shareholder of the Company

1. Nature of controlling shareholders: local state-owned holding

2. Type of controlling shareholders: legal person

Controlling shareholders‘ nameLegal rep./person in charge of unitDated foundedOrganization codeMain business
Sichuan Changhong Electric Co.,Zhao Yong1993-4-891510700205412308DManufactures, sales and maintenance of household appliance, automotive electrical appliance, Electronic products and spare parts, communications equipment, lighting equipment, household products, computer and other Electronic equipment, specialized equipment of Electronic and
Ltd.Electronic, Electronic machinery and equipment, series products of batteries, Electronic medicine products, Electronic equipment, mechanical equipment , Refrigeration equipment and accessories digital monitoring products, metal products, apparatus and instruments, culture and office machines, culture and education and sports products, kitchen cabinet and gas appliance; house and equipment rental; packing products and technical services; road transportation; storage and discharging convey; R&D, sales and services of integrated circuit and software; consultancy and services of enterprise management; hi-tech project investment and other state-permitted business; development and operation of property; engineering construction for house and buildings; callback and disposal of obsolete appliance and Electronic products; services of Information Technology; consultancy and services of finance; sales, relevant import and export business of Chemical raw materials and products(Not contain dangerous chemicals), building materials, non-ferrous metal, Steel, plastics, packing material, mechanical and electrical equipment, Precious metals, Automotive components, Electronic components, Value added telecommunication service, agent service of telecommunication; designing, manufacturing, releasing and agency for the advertisement; R&D and design of the drone and unmanned aerial vehicle system as well as the promotion of drone technology; transfer and technical consulting service, production and sales of drone (any projects that needs permission by the law should subject to the approval by relevant authority )
Equity controlling and jointly of other foreign/domestic listed company by controlling shareholder in reporting period1. Ended as 31 December 2019, 30.60 percent equity of Changhong Huayi Compressor Co., Ltd. (stock code: 000404), the listed company in main board of SSE, were directly hold by Sichuan Changhong. 2. Up to 31 December 2019, 1,008,368,000 common shares of the Changhong IT (Stock code: 08016), the listed company in GEM of Hong Kong Stock Exchange, were held by Sichuan Changhong and its persons acting in concert, representing 69.3202 percent in total issued common shares of Changhong IT

3. Controlling shareholder changes in reporting period

□ Applicable √ Not applicable

Controlling shareholder stays the same in Period.

4. Other notes

On February 25, 2019, the company received the Notice of Sichuan Changhong Electric Co., Ltd. and itsConcerted Action Person Changhong (Hong Kong) Trading LIMITED. to Increase the Shareholding ofChanghong Meiling Co., Ltd. and the Equity Changes (hereinafter referred to as ―Notice‖). Sichuan Changhongand its concerted action person Changhong (Hong Kong) Trading Co., Ltd. (hereinafter referred to as ―HKChanghong‖ or ―concerted action person‖) bought 16,231,024 shares of Changhong Meiling (including13,751,756 shares of Changhong Meiling A shares and 2,479,268 shares of Changhong Meiling B shares) bybidding transaction method through the secondary market from November 12, 2018 to February 25, 2019,accounting for 1.55% of Changhong Meiling‘s total share capital, consequently, the equity ratio of ChanghongMeiling held by Sichuan Changhong and concerted action person accumulatively increased by 5% fromSeptember 2009 to February 2019. Found more on appointed media Securities Times, China Securities Journal,Hong Kong Commercial Daily and www.cninfo.com.cn that the Company disclosed in the form of announcement(Announcement No. 2019-013) on 26 Feb. 2019

(iii) Actual controller of the Company and its person acting in concert

1. Nature of actual controller: local state-owned assets management

2. Type of actual controller: legal person

Actual controllerLegal rep./person in charge of unitDated foundedOrganization codeMain business
State-owned Assets Supervision & Administration Commission of Mianyang Municipality------State-owned Assets Supervision & Administration Commission of Mianyang Municipality is entrusted by the same level government, together performs decision-making and management of state-owned asset owners, and is one organization which executes comprehensive management and supervision on its belonged state-owned assets.
Equity controlling of other foreign/domestic listed company by actual controller in reporting periodNot applicable

3. Changes of actual controller in Period

□ Applicable √ Not applicable

Actual controller stays the same in Period

4. Property rights and the block diagram of the control relationship between the Company and the actual control(ended as 31

stDecember 2019)

5. Actual controller controlling the Company by means of entrust or other assets management

23.22%

%

100%四川省绵阳市虹欢科技有限责任公司

%

100%四川省绵阳市虹欢科技有限责任公司

%

100%

%

100%

%

Changhong Meiling Co., Ltd.

Changhong Meiling Co., Ltd.

23.79%

四川省绵阳市虹欢科技有限责任公司

%

23.79%

四川省绵阳市虹欢科技有限责任公司

%

3.19%

%

3.19%

%

State-owned Assets Supervision & Administration Commission of Mianyang Municipality

State-owned Assets Supervision & Administration Commission of Mianyang MunicipalitySichuan Changhong Electronics Holding Group Co.,

Ltd.

Sichuan Changhong Electronics Holding Group Co.,

Ltd.Sichuan Changhong Electric Co., Ltd.

Sichuan Changhong Electric Co., Ltd.CHANGHONG (HK) TRADING LIMITED

□ Applicable √ Not applicable

(iv) Other legal person’s shareholders with over ten percent shares held

□ Applicable √ Not applicable

(v) Limitation and reducing the holdings of shares of controlling shareholders, actual controllers,restructuring side and other commitment subjects

□ Applicable √ Not applicable

Section VII. Preferred Stock

□ Applicable √ Not applicable

The Company had no preferred stock in the reporting.

Section VIII. Convertible Bonds

□ Applicable √ Not applicable

The Company had no convertible bonds in the Period

Section IX. Particular about Directors, Supervisors, Senior Executives and EmployeesI. Changes of shares held by directors, supervisors and senior executive

NameTitlePost statusSexAgeOffice dated fromOffice dated endedShares held at period-begin(Share)Amount of shares increase in this period(Share)Amount of shares decreased in this period (Share)Other changes (share)Shares held at period-end (Share)
Li WeiFormer ChairmanOffice leavingM472011-6-202020-9-121,428,4730001,428,473
Wu DinggangChairmanCurrently in officeM472014-7-32020-9-12570,500000570,500
Kou HuamengDirector, Deputy presidentCurrently in officeM502014-7-32020-9-1200000
Shi QiangDirectorCurrently in officeM512017-9-122020-9-1200000
Yong FengshanDirectorCurrently in officeM512017-9-122020-9-1200000
Zhong MingDirector, Deputy presidentCurrently in officeM472013-12-302020-9-12314,900078,7250236,175
Hu ZhaoguiDirector, Deputy presidentCurrently in officeM462018-6-212020-9-12178,050000178,050
Gan ShengdaoIndependent directorCurrently in officeM532014-7-32020-9-1200000
Ren JiaIndependent directorCurrently in officeM562014-7-32020-9-1200000
Lu YingjinIndependent directorCurrently in officeM552014-7-32020-9-1200000
Shao MinChairman of SupervisoryCurrently in officeM372017-9-122020-9-1200000
Huang HongSupervisorCurrently in officeF492017-9-122020-9-1200000
He XintanSupervisorCurrently in officeM392017-9-122020-9-1200000
Ji GeStaff supervisorCurrently in officeF382017-12-252020-9-1200000
Zhu WenjieStaff supervisorCurrently in officeM322015-4-82020-9-1200000
Liu HongweiExecutive deputy presidentCurrently in officeM562011-6-202020-9-121,689,8930001,689,893
Huang DanianDeputy presidentCurrently in officeM502017-9-122020-9-12356,450000356,450
Pang HaitaoCFO (person in charge of finance)Currently in officeM442017-10-252020-9-1200000
Li XiaSecretary of the BoardCurrently in officeF392009-5-222020-9-12552,800000552,800
Total------------5,091,066078,72505,012,341

II. Changes of directors, supervisors and senior executives

√ Applicable □ Not applicable

NameTitleTypeDateReasons
Li WeiChairmanOffice leaving2019-4-25Resigned his post as chairman of the Company due to personal reasons
Wu DinggangPresidentOffice leaving2019-1-12Resigned as President of the Company for personal reasons
ChairmanElection2019-4-26Being approved by the 22th session of 9th BOD, Mr. Wu Dinggang was elected as the chairman of the 9th BOD with service term same as the 9th BOD
Kou HuamengActing president worksAppointment2019-1-11
Zhong MingDirectorElection2019-5-21Being approved by the shareholders general meeting of 2018, Mr. Zhong Ming was elected as the non-independent director of the 9th BOD with service term same as the 9th BOD

III. Post-holding(i) Professional background, major working experience and present main responsibilities in Company ofdirectors, supervisors and senior executive at the present

1. Li Wei, male, the Han nationality from Tongliang, Chongqing, was born in February 1973, Member of CPC,Assistant Economist with Master degree, he is reading EMBA in USTC. He ever took the post of GeneralManager of Xi‘an Sales Branch of Sichuan Changhong Electronic Co., Ltd., General Manger of SoutheastOperation Management Center of Changhong Electronic (China) Marketing Co., Ltd., GM of Sichuan ChanghongAir-conditioner Co., Ltd., chairman of Zhongshan Changhong Electric Co., Ltd., and deputy president, presidentand deputy chairman of the Company. Now he serves as Director and GM of Sichuan Changhong Electric Co.,Ltd.

2. Wu Dinggang, male, the Han nationality from Suining, Sichuan Province, was born in March 1973, Member ofCPC, owns bachelor degree, graduate from Tianjin University of Commerce China (Tianjin University ofCommerce now), major in refrigeration equipment and cryogenic technique. He served successively as GM ofSuining Sale Branch and Chengdu Sales Branch of Sichuan Changhong Electric Co., LTD, director of Sichuanand Chongqing Marketing Management Department of Sichuan Changhong Electric Co., LTD, deputy GM ofChanghong Electronics (China) Marketing Co., GM of market planning center of Changhong Multimedia Industry,director and GM of Le-Jia-Yi Chain Management Co., Ltd., Zhongke Meiling Cryogenic Technology Co., Ltd.director and GM of Sichuan Changong Air Conditioner Co., Ltd and deputy president, president and deputychairman of the Company. Currently he serves as vice GM of Sichuan Changhong Electric Co., Ltd., partysecretary, chairman of the Company; Chairman of Zhongshan Changhong Electric Co., LTD; Chairman of

Sichuan Changhong Air-conditioner Co., Ltd. and Chairman of Zhongke Meiling Cryogenic Technology Co., Ltd.

3. Kou Huameng, male, the Han nationality from Yanting, Sichuan Province, was born in February 1970, Memberof CPC, master degree candidate, EMBA graduate from UESTC. He served successively as deputy director ofproduction office of Sichuan Changhong Electric Co., LTD, director of Guangxi Marketing managementCommittee, director of Fujian-Jiangxi Marketing Management and director and GM of Guangdong ChanghongDigital Technology Co., Ltd.; Sichuan Changhong Electric Co., Ltd, director of development managementdepartment of Sichuan Changhong Electric Co., Ltd.; now he serves as director and deputy president of theCompany (acting president/conducting works), and director of Changhong Huayi Compressor Co., Ltd.,

4. Shi Qiang, male, Han nationality, was born in July 1968, a member of the Communist Party of China, earned abachelor‘s degree in underwater sound electronic engineering from Southeast University, and is an engineer. Hesuccessively served as the office secretary of Changhong Company, director of quality management division, thedirector of goods and material department, liaison office of overseas marketing, the director of asset managementdepartment, deputy minister, minister, director of the office of the board of directors; Director of SichuanChanghong New Energy Technology Co., Ltd.; Director of Sichuan Changhong Power Source Co., Ltd. Currentlyhe serves as deputy party secretary, discipline inspection commission, director, secretary of Changhong HuayiCompressor Co., Ltd.; Director of Jiaxipera Compressor Co., Ltd., and director of Changhong Grand-Pro Tech.Co., Ltd. and director of the Company

5. Yong Fengshan, male, Han nationality, was born in Dingyuan, Anhui in June 1968, a member of the CommunistParty of China, a senior accountant, and a master degree holder. He ever took the posts of the director of financedepartment of Hefei Cable Factory, the director of finance division and the deputy chief accountant of HefeiMeiling Co., Ltd., the director of Hefei Department Store Co., Ltd., the deputy general manager and chiefaccountant of Hefei Meiling Group Holding Co., Ltd., the secretary of the party committee and the president ofHefei Industrial Investment Holdings Co., Ltd., the president of CAS (Hefei) Institute of Technology InnovationCo., Ltd., the vice president of Whirlpool (China) Co., Ltd., the president of Hefei Venture Capital Guidance FundCo., Ltd. , and the director of the Company.

6. Zhong Ming, male, the Han nationality from Meishan, Sichuan Province, was born in November 1972, memberof CPC, a senior engineer, EMBA master and a PhD major in engineering thermophysics. He successively servedas deputy director of research institution of Sichuan Changhong Air-conditioner Co., Ltd., deputy GM of SichuanChanghong Air-conditioner Co., Ltd. and technical director of household appliance group of Sichuan ChanghongElectric Co., LTD. He serves as director and deputy president of the Company currently and director of ZhongkeMeiling Cryogenic Technology Co., Ltd.

7. Hu Zhaogui, male, the Han nationality, born in Feixi Hefei in October 1974, a member of the Communist Partyof China, holds a master‘s degree, graduated from Chongqing University as a master of business administration.He has served successively as the head of marketing and sales department stationed abroad of Hefei Meiling Co.,Ltd., assistant president and general manager of the freezer and washing machine business division, and generalmanager of the domestic marketing division. He is currently the director and vice president of the Company and

the general manager of Sichuan Changhong Air Conditioner Co., Ltd., a subsidiary of the Company.

8. Gan Shengdao, male, the Han nationality from Tianchang, Anhui Province, was born in March 1967, memberof China Democratic National Construction Association, a doctoral candidate and Doctor of Economic. He servedsuccessively as teaching assistant, lecturer and associate professor in Department of National EconomicManagement of Sichuan University, the associate professor and professor in Department of BusinessAdministration of Sichuan University. An independent director of Liangshan Rural Commercial Bank Co., Ltd.,and an independent director of Chengdu Rainbow Electric (Group) Co., Ltd. Currently serves as a professor anddoctoral supervisor at Business School of Sichuan University, deputy director of the Financial Research Instituteof Sichuan University, an independent director of Sinoseal Holding Co.Ltd., an independent director of SichuanYahua Industrial Group Co., Ltd., an independent director of Yibin Wuliangye Co., Ltd., and an external directorof Sichuan Huashi Group Co., Ltd., Independent director of Chengdu GIMI Technology Co., Ltd., and anindependent director of the Company.

9. Ren Jia, male, Han nationality, was born in Nantong, Jiangsu in July 1963, a master degree holder, andgraduated from the Department of Materials Science and Engineering of Tsinghua University. He ever took theposts of the assistant general manager of Beijing Building Materials Imp. & Exp. Co., Ltd., the department deputymanager of Jiangsu Overseas Group Co., Ltd., the department deputy manager and assistant general manager ofJiangsu Economic and Trade Corporation, the general manager of Import and Export Company of ZhejiangXiangyang Group, the director and general manager of Nanjing Shenlu Textile & Apparel Co., Ltd., the deputygeneral manager of Guangzhou Anyka Microelectronics Co., Ltd., the deputy general manager of ShanghaiMultimedia Valley Investment Co., Ltd., independent director of Kingnet Co., Ltd., the partner of Shanghai HedaEnterprise Management Partnership (limited partnership), and vice president of SIMIC Group Co., Ltd. Hecurrently serves as chairman and general manager of SIMIC Technology Development Co., Ltd., the president ofShanghai Zhongke Xinwei Information Technology Park Co., Ltd., an independent director of InHand Networks,Executive partner of Shanghai Zhihe Technology Partnership,and an independent director of the Company.

10. Lu Yingjin, male, the Han nationality, was born in October 1964, Member of CPC, a doctoral candidate,Doctor of Management Science and Engineering of the UESTC. He served successively as Assistant Engineer ofShenli Field Drilling Technical Company and lecturer of Staff Education and Training Center of South-WestPetroleum Bureau, and he teaches in UESTC since 2002.And he has been a visiting scholar in the department ofcomputer science at the University of Kentucky in the United States. Now he serves as associate professor inEconomics and Management School of UESTC and Independent Director of the Company.

11. Shao Min, male, Han nationality, was born in Linyi, Shandong in March 1983, and earned a bachelor‘s degreein accounting major from Xi‘an Jiaotong University. He joined in work in July 2004, and ever served as thefinance manager of the branch office of Sichuan Changhong Electric Co., Ltd., the financial director of financedepartment, the project manager of asset management department, the director of asset management department,and the director of asset operation department of Sichuan Changhong Electric Co., Ltd. He currently serves as thedeputy director of asset management department of Sichuan Changhong Electric Co., Ltd., and the chairman ofthe Board of Supervisors of the Company.

12. Huang Hong, female, Han nationality, was born in Shehong, Sichuan in June 1970, a member of theCommunist Party of China, a master degree holder, and graduated from the University of Glasgow as a MBA. Shejoined in work in July 1992, and ever served as the financial director of finance department, the audit manager,marketing audit director, and audit chief of auditing department of Sichuan Changhong Electric Co., Ltd. Hecurrently serves as the deputy director of auditing department and the deputy director of labor union auditcommittee of Sichuan Changhong Electric Co., Ltd., and a supervisor of the Company.

13. He Xintan, male, Han nationality, was born in Xiayi, Henan in April 1980, a member of the Communist Partyof China, an economist, and earned a master‘s degree in management science and engineering from Xi‘anJiaotong University. He joined in work in July 2002, and successively took the posts of the operationsmanagement director of operation management department and the manager of general management office ofSichuan Changhong Electric Co., Ltd. Currently he serves as the deputy director of development and managementdepartment of Sichuan Changhong Electric Co., Ltd., and a director of Changhong Huayi Compressor Co., Ltd.,and a supervisor of the Company.

14. Ji Ge, female, Han nationality, was born in Nanyang, Henan Province in January 1982, a member of theCommunist Party of China, and earned a bachelor‘s degree in law from Hunan University and a master‘s degreefrom Anhui University. She joined Hefei Meiling Co., Ltd. in July 2005 and once served as the legal specialist oflegal department, the sponsor of legal affairs, and the intellectual property director of the legal department of theCompany. She currently serves as staff supervisor of the Company, the director of the legal department of theCompany, director of office of Party Committee, member of commission for Discipline Inspection, and director ofDiscipline Inspection office

15. Zhu Wenjie, male, the Han nationality from Hefei, Anhui Province, member of Communist Party of China,born in January 1988, a master degree,graduated from University of science and technology of China as a MBA.He started to work in Hefei Meiling Co., Ltd. in July 2010 after graduation, served as an accountant for bigcustomer accounting in financial management department of Hefei Meiling Co., Ltd., securities affairs assistant atthe office of secretary of the board, and director of securities affairs, and currently serves as the representative ofthe Company's securities affairs, director of securities affairs at the office of secretary of the board, and staffsupervisor of the Company.

16. Liu Hongwei, Male, Chinese American, bored in May 1963, Doctor of Applied Mechanics from LehighUniversity, graduate from department of mechanical engineering, Tsinghua University. He served successively inKulicke and Soffa Industries, Pennsylvania; Tessera Technology Corporation, Califonia; serves technical andmanagement post in Intel Corporation in Silicon Velleg. He joints the Hefei Meiling Co., Ltd. in 2007, now heserves as executive deputy president of the Company.

17. Huang Danian, male, Han nationality, was born in Huaining, Anhui in November 1969, a member of theCommunist Party of China, an engineer, and a master degree holder. He once served as the logistics director andthe deputy general manager, the director of the human resources department, the director of the comprehensiveplanning department, the director of the enterprise management department, and the assistant to the general

manager of Sales Company of Hefei Meiling Co., Ltd. He is now the vice president of Hefei Meiling Co., Ltd.

18. Pang Haitao, male, Han nationality, was born in Qionghai, Hainan in May 1975, a member of the CommunistParty of China, a senior accountant, a senior political engineer, and a bachelor degree holder, and earned theEMBA degree from Jiangxi University of Finance and Economics. He used to be a member of the financedepartment, the director of related transactions and the director of capital operations of Sichuan ChanghongElectric Co., Ltd., the chief of finance office of Guangdong Changhong Electronics Co., Ltd., the director ofgeneral ledger, the head of general management office, and the head of general ledger management office of thefinance department of Sichuan Changhong Electric Co., Ltd., the deputy general manager and chief financialofficer of Sichuan Changhong Development Co., Ltd., the deputy general manager and chief accountant of HuayiCompressor Co., Ltd. Currently he is the chief financial officer (person in charge of finance) of the Company.

19. Li Xia, female, the Han nationality from Qionglai, Sichuan Province, was born in October 1980, Member ofCPC and Intermediate Accountant with Master Degree. She graduated from Accounting Department of SichuanUniversity Business and Management School. She ever was Project Manager in Financing & Acquisition Officeof Asset Management Department and Business Executive in Board Office of Sichuan Changhong Electronic Co.,Ltd. she took the posts of Deputy GM and Financial Supervisor of Sichuan Changhong Innovation Investment Co.,Ltd., and chairman of supervisory committee of Zhongke Meiling Cryogenic Technology Co., Ltd.She is theSecretary of the Board, deputy secretary of the Party and secretary of discipline inspection commission of theCompany recently.(ii) Post-holding in shareholder’s unit

√ Applicable □ Not applicable

NameShareholder‘s unitTitleStart date of office termEnd date of office termDrawing remuneration and allowance from shareholder‘s unit (Y/N)
Wu DinggangSichuan Changhong Electric Co., Ltd.Deputy GM2019.01.122020.08.28Yes, drawing remuneration since work in the unit
Yong FengshanHefei Industry Investment Holding (Group) Co., Ltd.Party Secretary, Chairman2015.02.13-Y
Shao MinSichuan Changhong Electric Co., Ltd.Deputy director of assets management department2019.02.01-Y
Huang HongSichuan Changhong Electronics Holding Group Co., Ltd.Deputy Chief of auditing department2011.09.16-Y
He XintanSichuan Changhong Electric Co., Ltd.Deputy Chief of development and management department2019.02.01-Y
Post-holding in shareholder‘s unitN/A

(iii) Post-holding in other unit

√ Applicable □ Not applicable

NameOther unitTitleStart date of office termEnd date of office termDrawing remuneration and allowance from other unit (Y/N)
Yong FengshanWhirlpoor (China) Co., Ltd.Director2015-05.182019.06.15N
Deputy Chairman2015.07.10N
Hefei Venture Capital Guidance Fund Co., Ltd.Chairman2015.04.17-N
CAS (Hefei) Technical Innovation Engineering Institute Co., Ltd.Chairman2015.04.17-N
Hefei State-owned Assets Holding Co., Ltd.Chairman2015.04-N
Hefei Industry Investment Holding Co., Ltd.Chairman, GM2014.09-N
Anhui Integrated Circuit Industry Capital Co., Ltd.Chairman2017.05-N
Anhui IT Industry Investment Holdings Co., Ltd.Director2014.01-N
Jianghuai Automobile Co., Ltd.Director2018.07.212021.07.20N
Industrial Investment (HK) LtdDirector2017.04-N
Hefei Smart Energy Innovation Platform Co., Ltd.Director2017.06-N
Wu DinggangSichuan Zhiyijia Network Technology Co., Ltd.Director2015.01-N
Shi QiangChanghong Huayi Compressor Co., Ltd.Director2017.05.032021.05.17N
Secretary of the Board2018.03.05Y
Kou HuamengChanghong Huayi Compressor Co., Ltd.Director2015.04.162021.05.17N
Gan ShengdaoBusiness School of Sichuan UniversityProfessor, doctoral supervisor, deputy director of the Financial Research Institute of Sichuan University1990.07-Y
Sinoseal Holding Co.Ltd.Independent2011.06.212021.02.11Y
director
Sichuan Yahua Industrial Group Co., LtdIndependent director2015.06.092021.06.25Y
Sichuan Huashi Group Co., Ltd.Outside Director2015.08.10-Y
Yibing Wuliangye Co., Ltd.Independent director2016.11.18-Y
Ren JiaSIMIC Holdings Co., Ltd.Deputy president2013.012019.12.31Y
SIMIC Development Co., Ltd.Chairman/GM2014.07-N
Shanghai Hefa Enterprise Management Partnership (Limited Partnership)Partner / legal representative2016.052019.04.19N
Shanghai Zhongke Xinwei IT Park Co., Ltd.Chairman2018.01-N
Beijing Inhand Networks Co., LtdIndependent director2017.12.06-Y
Kingnet Co., Ltd.Independent director2018.05.122019.03.18Y
Shanghai Zhizhe Technology Co., Ltd.Legal representative2019.03.19-N
Shanghai Zhihe Technology PartnershipExecutive partner2019.4.12-N
Lu YingjinSchool of Management and Economics of UESTCAssociate professor2001.12.30-Y
He XintanChanghong Huayi Compressor Co., Ltd.Director2018.01.052021.05.17N
Hu ZhaoguiHongyuan Ground Energy Heat Tech. Co., Ltd.Deputy Chairman2017.12-N
Sichuan Tianyou Guigu Technology Co., Ltd.Director2018.01-N
Chengdu Guigu Environmental Tech. Co., Ltd.Director2018.06-N
Sichuan Zhiyijia Network Technology Co., Ltd.Director2018.01-N
Pang HaitaoHefei Xingmei Asset Management Co., Ltd.Director2018.02-N
Post-holding in other unitN/A

(iv) Punishment of securities regulatory authority in recent three years to the company’s current andoutgoing directors, supervisors and senior management during the reporting period

□ Applicable √ Not applicable

IV. Remuneration of directors, supervisors and senior executives

(i) Decision-making, determine basis and actually payment of remuneration for directors, supervisors andsenior executives

1. Procedure for deciding remunerations of directors, supervisors and senior managementImplemented in line with laws, regulations and relevant rules of ―Company Law‖, ―Article of Association‖ and―Enforcement Regulation of Remuneration and Evaluation Committee of the Board‖, including:

(1) Allowance plan of independent directors are implemented after deliberated in the Board and approved inShareholders‘ General Meeting. Other directors and non-staff supervisors except independent directors arereceived no remuneration from the Company.

(2) Remuneration of senior executives are deliberated and approved by the Board according to remunerationevaluation plan together with opinions of Remuneration and Evaluation Committee.The remuneration appraisal and payment for directors and senior executive of the Company for Current Year willdisclose in the Annual Report after review without objection from Remuneration & Appraisal Committee of theBoard and submit to the BOD for Current Year.

2. Bases on which remunerations of directors, supervisors and senior management are decidedThe Company conducted the performance examination on the task of directors, supervisors and senior executivesaccording to the HR management policy, wages of directors, supervisors and senior executives are decided bytheir performance and evaluations check by the Company. All wages are performing by the evaluation resultsaccording to the only evaluation standard that carried by the Company.

3. Actual payment of remunerations of directors, supervisors and senior managementAllowance of the independent directors are paid by the standards approved in Annual Shareholders‘ GeneralMeeting, other director, who serves as senior executive at the same time, and non-staff supervisors exceptindependent directors did not received remuneration from the Company; remunerations for senior executives ofthe Company are paid strictly by the unify remuneration valuation mechanism of the Company.

Directors, supervisors and senior executives of the Company has 18 in total up to 31 December 2019, actually 12person receiving remuneration from the Company, 2 staff supervisors are received their remuneration by actualpositions (non-supervisor post); furthermore, 3 independent directors are received the allowance monthly from theCompany; the Company will pay remuneration to senior executives in line with the performance appraisal bymonthly, quarterly and annual.

During the reporting period, the Company has established the executive compensation and performancemanagement program for the senior management of 2019 in accordance with the main scope, the responsibilities,the importance of the management positions of the senior management, and the compensation level of otherrelevant company and position, the program includes but not limited to the company's key performance indicator(KPI) and performance evaluation criteria, procedures and major evaluation system; the major programs andsystems of the reward and punishment; review the performance of duties of the company's senior management andconduct the annual performance appraisal.

At the end of Current Year, the Remuneration and Appraisal Committee combined the work report andself-evaluation of the senior management in 2019, followed the performance evaluation criteria and procedures,and evaluated the Key Performance Indicator (KPI) of the senior management in 2019; and other relevantindicators of performance evaluation; proposed the remuneration amount and performance appraisal approach ofthe senior management based on the job performance evaluation results and the remuneration policy, and reportedto the Board for approval.(ii) Remuneration for directors, supervisors and senior executives in reporting period

In 10 thousand Yuan

NameTitleSexAgePost statusTotal remuneration obtained from the Company (before taxes)Whether remuneration obtained from related party of the Company
Li WeiFormer chairmanM47Office leaving0Yes
Wu DinggangPresent chairmanM47Currently in office0Yes
Kou HuamengDirector, Deputy presidentM50Currently in office41.96No
Shi QiangDirectorM51Currently in office0Yes
Yong FengshanDirectorM51Currently in office0Yes
Zhong MingDirector, Deputy presidentM47Currently in office32.35No
Hu ZhaoguiDirector, Deputy presidentM46Currently in office38.87No
Gan ShengdaoIndependent directorM53Currently in office11.90No
Ren JiaIndependent directorM56Currently in office11.90No
Lu YingjinIndependent directorM55Currently in office11.90No
Shao MinChairman of SupervisoryM37Currently in office0Yes
Huang HongSupervisorF49Currently in office0Yes
He XintanSupervisorM39Currently in office0Yes
Ji GeStaff supervisorF38Currently in office23.50No
Zhu WenjieStaff supervisorM32Currently in office18.53No
Liu HongweiExecutive deputy presidentM56Currently in office49.04No
Huang DanianDeputy presidentM50Currently in office32.32No
Pang HaitaoCFO (person in charge of finance)M44Currently in office32.08No
Li XiaSecretary of the BoardF39Currently in office28.89No
Total--------333.24--

(iii) Equity incentive authorized for director, supervisor and senior executive in reporting period

□ Applicable √ Not applicable

V. Staff of the CompanyChanghong Meiling Co., Ltd. and its controlling subsidiaries owned on-job employees of 14,017 people in total.There are 58 people in retired are enjoying expenses paid by the Company.(i) Numbers, professional structure and education background

On-job employee in parent company (people)3,995
On-job employee in main subsidiary (people)10,022
Total on-job employees (people)14,017
Current total payroll(people)14,017
Number of retired employees with expenses paid by the parent company and main subsidiary (people)58
Professional structure
Types of professional categoryNumbers of professional category (people)
Production staff8,319
Salesman2,831
Technician2,243
Financial staff235
Administration staff389
Total14,017
Education background
Type of education backgroundNumbers (people)
High school and below9,214
Junior college2,111
Undergraduate2,533
Master and above159
Total14,017

(ii) Remuneration policyThe Company formulated human resources and compensation policy conducive to sustainable development ofenterprise according to the provisions of relevant laws and policies promulgated by the state and to the Company'sactual situation.In order to implement the core values of co-creation and sharing, especially to mobilize the work initiative andenthusiasm of grass-roots employees, the company had a comprehensive review on the incentive plan in 2019,based on authority with corresponding responsibility, further delegated powers to lower levels, made frontlinedecision-making, optimized and established a three-tiered incentive system, i.e. business performance incentives,value mainline incentives, and event incentive, to improve the business unit‘s operating efficiency and vitality;

promoted the development and application of the entire process performance management system, encouragedemployees to develop together with the company, and established a direct link between management and businessperformance; supervisor-level KPIs were linked with performance pay; implemented mandatory performancerankings for professional positions, and guided managers and employees to make performance contributions to thecompany‘s development.

The company established and optimized a unified evaluation mechanism for job promotion, set up positionsystems and promotion channels, implemented the point system evaluation criteria and internal job competitionmechanism, and incorporated annual evaluation and competition into the normalization, and gradually formed theemployment mechanism of ―those who want to do a job have a chance, those who can do a job have a platform,and those who get things done have a status‖. At the same time, the company shaped the corporate culture byproviding various holidays, allowances, condolences, and organizing a variety of leisure activities, sports culturefestival, carnivals, etc. so as to improve the employee satisfaction.(iii) Training plansTraining plan: The Company has established the Human Resources Strategic Layout, Staff Training ManagementProgram, Credit Management Method, Annual Talent Development & Training Plan and other systems andstandard work flows, set up the staff capacity model, built the knowledge assets management system ofChanghong Meiling and gradually established the growth mechanism by combining the training with theindividual employee development, and combining the qualification promotion with the career development.

1. The mechanism for the selection, education and use of reserve talents gradually presented. In 2019, theCompany established a clear evaluation model for talent standards, promote the construction of talent standardsfor management, supervisor level, general manager of domestic sales, and overseas regional managers; focused onadvancing the project for talent construction, and optimized the high-level talent development echelons such asreserve leaders, reserve cadres, reserve leaders, and outstanding university students, and so on; establishsuccession maps for each sequence of talents, and clarify the ability status of existing talent teams and futuretalent succession systems.

2. Talent cultivation is more effective in supporting the development of the company. In order to effectivelysupport the company‘s business policy of ―product leadership, marketing transformation, efficiency improvement,team activation‖, the company released the Human Resources Strategic Plan of Changhong Meiling, on the onehand, improve the training enthusiasm and development capabilities of R & D personnel through the projectpoints-based system, industry exchanges and other activities, on the other hand, aim at the shortcomings of teamand personal ability, and promote accurate training programs, focus on actual working scenes, targeted at the coretalent-oriented push courses, and the training effect gradually appears and the number of talents graduallyincreases.

3.The company coordinated the construction of an internal knowledge asset management system, including thetwo major contents, i.e. the establishment of ―Meiling School‖ and the bench-marking post knowledge extraction.

On the one hand, constructed the online knowledge asset management system ―Meiling School‖ for the first time,comprehensively started and advanced the talent knowledge asset bank of ―Technical School, Management School,Manufacturing School, and Quality School‖; on the other hand, sorted out, extracted, and internalized andintegrated the experience of internal posts into a standardized talent knowledge base for inheritance and influenceby combining the restructuring of ―internal trainer certification system‖ and the introduction of ―bench-markingpost knowledge extraction project‖.(iv) Labor outsourcing

□ Applicable √ Not applicable

Section X. Corporate GovernanceI. Corporate governance of the Company(i) Overview of the corporate governanceIn strict compliance with the Company Law, Securities Law, Governance Principles of Listed Company issued bythe CSRC, and the Rules Governing the Listing of Securities on Shenzhen Stock Exchange (amended in 2018),the Company continued to construct and perfect its governance structure, thereby forming its decision-making,supervision and operation management organization with general meeting, the board of directors, the board ofsupervisors and operation management as the major structure. The general meeting, board of directors, board ofsupervisors and operation management of the Company has definite terms of reference, which can ensure aneffective balance, scientific decision-making process and coordinative operation, laying firm foundation formaking decisions relating to the Company‘s continuous, steady and healthy development.

During the reporting period, the actual situation of corporate governance has been in line with the requirements ofrelevant state laws and regulations, and regulatory documents relevant to governance of listed companies issuedby China Securities Regulatory Commission and Shenzhen Stock Exchange.

1. Shareholders and general meeting

The Company standardized the procedures concerning convening, holding and voting of general meeting in strictcompliance with the Articles of Association and Rules of Procedure of General Meeting. All shareholders,especially the minority shareholders, were equally treated to ensure all shareholders shall rank equal status andcan fully exercise their right. During the reporting period, the Company convened shareholders general meetings.In addition to convening general meeting in forms of site conference, the Company offered convenience forshareholders to present general meeting via network voting which was safe, economic and convenient. At thesame time, all the matters submitted to the Company‘s general meeting of shareholders should count the votes ofthe small and medium investors separately, and the results of the vote count should be disclosed timely so as toeffectively protect the rights and interests of small and medium investors and ensure that all shareholders,especially the small and medium shareholders, fully exercise their rights.

2. The Company and controlling shareholders:

The Company has independent business and independent management capability. The Company and itscontrolling shareholders owe independent business, personnel, assets, organs and finance. During the period,controlling shareholder abide by requirement of Article of Association and Management System of RelatedTransactions, strictly regulate their behaviors, and no controlling shareholder has directly or indirectly intervenedin the Company‘s policy-making and business activities beyond the general meeting of stockholders, no capital orassets of the Company occupied by controlling shareholder and its affiliates either.

3. The directors and board of directors

Board Meeting are revoke and open in line with the regulation of Company Law and Article of Associationstrictly, voting and information disclosure procedures appliance with relevant rules. All directors of the Companycarry out work according to ―Rules of Procedure of the Board‖ and ―Independent Director System‖, seriouslyattend the board of directors and shareholders‘ meeting, exercise obligations by the law and faithfully performtheir duties vigorously, positively participate in trainings of related knowledge open by Shenzhen Stock Exchangeand Securities Bureau, and get familiar with related laws and regulations. Independent directors follow close tothe line of Instruction of Setting Up Independent Directors System in Listed Companies and Independent DirectorSystem, take an active part in decision-making of the Company and present a prior approval and independentopinions for related transactions and major events, bring out the functions of independent directors.

In the Period, Board of the Company setting up four special committees including strategy, remuneration andappraisal, audit and nomination, each special committee respectively undertakes the functions of discussion,policy making, supervision and assessment according to the relevant working instruction, and plays important rolein improving the scientific decision-making, decision-making efficiency and quality for the Board.

4. Supervisors and board of supervisors

The Company convened and held meeting of supervisors in strict compliance with the Company Law and Articlesof Association, and the voting and information disclosure procedures of supervisors‘ meeting complied withrelevant requirements. The 9

th

session of board of supervisors consisted or five supervisors, two of whom are staffsupervisor, the number and constitution of which met applicable laws and regulations. Our supervisors cancarefully performed their duties including presenting at general meeting and meeting of the board of directors inaccordance to the Rules of Procedures of Board of Supervisors, to exercise supervision over the board ofdirectors‘ decision-making procedures, subjects to be proposed and our operation in law, to review the periodicreports prepared by the Board and form written audit opinion in respect thereof and to make effective supervisionover our material transactions, connected transaction, financial position as well as the legality and compliance ofthe performance by directors and senior management and issue independent opinions in respect thereof.

5. The performance appraisal and incentive and constraint mechanism

The Company owes and continues to improve fair-ness and transparency performance appraisal standards andincentive and constraint mechanism for directors, supervisors and senior management, the engagement ofmanagers of the Company is open and transparent and meets the provisions of laws and regulations.

6. The stakeholders

The Company fully respects and maintains the legitimate rights and interests of stakeholders; strengthencommunication and negotiation with each other, realizes the coordination and balance of interests for all partiesincluding society, shareholders, company and staff, pushes forward the sustainable, steady and harmoniousdevelopment of the Company together.

7. The information disclosure and transparency

During the Period, the Company strengthens management of information disclosure, performs the duty ofinformation disclosure in strict accordance with the rules of related laws and regulations, Rules Governing thestock listed on Shenzhen Stock Exchange (2018 Reversion) and ―Management System of Information Disclosure‖,and appoints Securities Times, China Securities Journal, Hong Kong Commercial Daily and Juchao Website(www.cninfo.com.cn) for information disclosure medial; as for the major un-disclosed inside information,exercise strictly confidential procedures and controlling persons with inside information kowned. The Companyperform duty in aspect of truthfully, accurately, timely and completely discloses information, ensures all investorsobtain the Company‘s information equally and other legal interest.

8. Investor relations management

The Company has seriously done the job of the investor relations management in accordance with therequirements of the "Investor Relations Management System" and "Reception and Promotion system" during thePeriod. Received the consultation and research of the professional institutional investors to the company, checkingrecords for visitors and signing letter of commitment, disclosed the "investor relations activities record" timely.At the same time, communicated with the investors through the "interact easily" platform of Shenzhen StockExchange Investor Relations; seriously received the suggestion and opinions from investors, protect interest of theminority investors, earnestly accepted and replied the calls, faxes, and emails from the investors; cautiously dealtwith the media coverage.(ii) Is there any difference between the actual condition of corporate governance and relevant regulationsabout corporate governance for listed company from CSRC?

□Yes √ No

There are no differences between the actual condition of corporate governance and relevant regulations aboutcorporate governance for listed company from CSRC.II. Independent of the Company relative to controlling shareholders’ in aspect of businesses, personnel,assets, organization and financeThe Company totally separated in business, personnel, assets, institutions and financial aspects from SichuanChanghong (controlling shareholder), with independent business accounting, responsibility and risk andindependent business operation capability.

1. The business: the Company has an independent and complete business as well as operation ability, withspecialized procurement, production, technology, marketing, management, human resources and otherdepartments. We autonomously manage and operate business on our own. While the management staff areindependent from controlling shareholders and their subordinate enterprises. The Company is free frominterference by controlling shareholders and other affiliates, and there is no dependence on controllingshareholders and other affiliates.

2. The personnel: personnel, labor, personnel and salary of the Company are completely independent. President,vice president, person in charge of finance, Secretary of the board of directors and other senior managementpersonnel are working in the Company and receive salary, not receiving any remuneration and holding position of

any except directors, supervisors in the controlling shareholder and its subordinate enterprises.

3. Assets: the Company owns places of production and management independent from its controlling shareholder,owns complete assets structure, independent production system, auxiliary production systems and supportingfacilities, land use rights, ownership of houses and other assets, and independent purchase and sales system. Noassets occupied by controlling shareholders and other affiliates.

4. Institutions: the Company established organization completely independent from controlling shareholders; thegeneral meeting, board of directors, board of supervisors and the internal organization are capable of takingindependent action, with no controlling shareholder intervention of corporation's decision-making behavior. TheCompany strengthen the power restriction system via general meeting, the Board, supervisory committee,independent directors and vary committees, formulated an effective structure for corporate governance.

5. Financial aspects: the Company set up independent financial management, and independent accounting systemand financial management system, independently setting up banking account and tax declaration.

III. Horizontal competition

□ Applicable √ Not applicable

IV. In the report period, the Company held annual shareholders’ general meeting and extraordinaryshareholders’ general meeting

1. Annual Shareholders’ General Meeting in the report period

Session of meetingTypeRatio of investor participationDateDate of disclosureIndex of disclosure
First Extraordinary General Meeting of 2019Extraordinary General Meeting32.2110%2019-2-222019-2-23Juchao Website—(http://www.cninfo.com.cn) ―Resolution Notice of First extraordinary general meeting of 2019‖ No.: 2019-012
AGM of 2018AGM32.4336%2019-5-212019-5-22Juchao Website—(http://www.cninfo.com.cn) ―Resolution Notice of Annual General Meeting of 2018‖ No.: 2019-035
Second Extraordinary General Meeting of 2019Extraordinary General Meeting33.06%2019-7-252019-7-26Juchao Website—(http://www.cninfo.com.cn) ―Resolution Notice of Second extraordinary general meeting of 2019‖ No.: 2019-047
Third Extraordinary General Meeting of 2019Extraordinary General Meeting35.44%2019-9-262019-9-27Juchao Website—(http://www.cninfo.com.cn) ―Resolution Notice of Third extraordinary general meeting of 2019‖ No.: 2018-067
Fourth Extraordinary General Meeting of 2019Extraordinary General Meeting33.1795%2019-12-172019-12-18Juchao Website—(http://www.cninfo.com.cn) ―Resolution Notice of Fourth extraordinary general meeting of 2019‖ No.: 2019-087

2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore

□ Applicable √ Not applicable

V. Responsibility performance of independent directors(i)The attending of independent directors to Board meetings and general meeting

The attending of independent directors
Independent directorTimes of Board meeting supposed to attend in the report periodTimes of present in personTimes of attending by communicationTimes of entrusted presenceTimes of AbsenceAbsent the Meeting for the second time in a row (Y/N)Times of attending the shareholder general meeting
Gan Shengdao1711600N1
Ren Jia1711600N2
Lu Yingjin1711600N2

Explanation of absent the Board Meeting for the second time in a row:

No independent directors absent the Board Meeting for the second time in a row.(ii) Objection for relevant events from independent directorsWhether independent directors come up with objection about company‘s relevant matters or not

□ Yes √ No

Independent directors has no objections for relevant events in reporting period(iii) Other explanation about responsibility performance of independent directorsWhether the opinions from independent directors have been adopted or not

√ Yes □ No

Explanation on recommendations adopted or un-adopted:

During the report period, the independent directors of the 8

thsession of the Board, Mr. Gan Shengdao, Mr. Ren Jiaand Mr. Lu Yingjin, faithfully performed their duties, and prudently, earnestly and diligently exercised their rightsas independent directors in strict accordance with ―Corporation Law‖, ―Securities Law‖, ―Guidance on theEstablishment of Independent Director System in Listed Companies‖ of China Securities Regulatory Commission,―Stock listing Rules‖(Revised in 2018) of Shenzhen Stock Exchange, ―Articles of Association‖, ―Independent

Director System‖, ―Annual Report Working System of Independent Director‖, and rules of related laws andregulations, not influenced by the major shareholders, actual controllers, or other units and individuals having astake in the Company, actively attended the general meeting of shareholders and board meeting, madeindependent opinions on related matters, gave reasonable suggestions to the production and management and thebusiness development of the Company, gave full play to the role as independent directors, and maintained thelegitimate rights and interests of shareholders of the Company, especially the medium and small shareholders.

In reporting period, independent directors propose opinions on the Board, and details of suggestions as:

DatedItemsAgree/againstDisclosure index
2019-01-11Independent opinion on Resignation of President and the Authorization of Mr. Kou Huameng (Director and deputy President of the Company) to Perform the Duties of the PresidentAgreedJuchao Website(www.cninfo.com.cn)
2019-01-29Independent opinion on relevant proposal of the 19th session of 9th BODAgreedJuchao Website(www.cninfo.com.cn)
2019-03-27Independent opinion on relevant proposal of the 20th session of 9th BODAgreedJuchao Website(www.cninfo.com.cn)
2019-04-19Independent opinion on relevant proposal of the 21st session of 9th BODAgreedJuchao Website(www.cninfo.com.cn)
2019-04-26Independent opinion on relevant proposal of the 22nd session of 9th BODAgreedJuchao Website(www.cninfo.com.cn)
2019-07-08Independent opinion on relevant proposal of the 24th session of 9th BODAgreedJuchao Website(www.cninfo.com.cn)
2019-08-15Independent opinion on relevant proposal of the 25th session of 9th BODAgreedJuchao Website(www.cninfo.com.cn)
2019-08-30Independent opinion on Capital Increase for Sichuan Zhiyijia Network Technology Co., Ltd. and Increase Daily Related Party Transaction with Zhiyijia Network TechnologyAgreedJuchao Website(www.cninfo.com.cn)
2019-09-09Independent opinion on relevant proposal of the 27th session of 9th BODAgreedJuchao Website(www.cninfo.com.cn)
2019-10-17Independent opinion on relevant proposal of the 28th session of 9th BODAgreedJuchao Website(www.cninfo.com.cn)
2019-10-28Independent opinion on relevant proposal of the 29th session of 9th BODAgreedJuchao Website(www.cninfo.com.cn)
2019-11-29Independent opinion on relevant proposal of the 31st session of 9th BODAgreedJuchao Website(www.cninfo.com.cn)
2019-12-06Independent opinion on Providing Internal GuaranteeAgreedJuchao
and External Loan to the Overseas Controlling SubsidiaryWebsite(www.cninfo.com.cn)
2019-12-25Independent opinion on relevant proposal of the 33rd session of 9th BODAgreedJuchao Website(www.cninfo.com.cn)

VI. Responsibility performance of subordinate special committee of the Board in report period(i) Responsibility performance for strategy committee of the BoardIn accordance with the requirements of the relevant laws and regulations of the Company Law and the ListingRules of the Shenzhen Stock Exchange and the relevant requirements of the CSRC and the Shenzhen StockExchange, the Strategic Committee under the Board of Directors of the company has strictly followed theprovisions of the Articles of Association and the Working Rules of the Strategic Committee of the Board ofDirectors, strictly performed their duties, and offered proposals and carried out positive guides for the company'sstrategic development and foreign investments, the specific situation is as follows:

1. On 17 March 2019, the Strategic Committee convened the 5

th meeting of the Strategy Committee of the 9

th

Board of Directors, deliberated and approved the one proposal as development plans for year of 2019.According to the Company‘s medium and long term development strategy, the committee members combinedwith the macroeconomic situation and industry status and summarized the annual work situation in 2018,discussed and established the Company‘s business thoughts and business plans in 2019, and further ensured therealization of the Company‘s medium and long term development strategic targets.

2. On August 28, 2019, the Strategy Committee held the 6

th

meeting of the Ninth Board Strategy Committee andreviewed and approved two proposals, i.e. ―Proposal on Increasing Capital in Sichuan Zhiyijia NetworkTechnology Co., Ltd. and Increasing Daily Related Transactions with it‖ and ―Proposal on Liquidation andCancellation of the Subsidiary Meiling Candy Washing Machine Co., Ltd.‖.

(1) Under the industry background of complete set of consumption, scenario-based marketing, and intelligenthome in home appliance market, in order to further utilize Zhiyijia‘s mature smart trading platform, reduce thecompany‘s repeated investment in such platform construction, and use the advantages of smart trading platform togive full play to the synergy advantages of the Company and its controlling shareholder Sichuan Changhong in themarketing of home appliances, so as to better adapt to market competition and consumer consumption behavior.The company submitted to the board of directors for approval of the company to increase capital of RMB29,087,040 yuan (of which 20 million yuan is included in the registered capital and 9,087,040 yuan is included inthe capital reserve) in Zhiyijia Company with its funds, while the other shareholder Sichuan Changhong didn‘tincrease capital this time. At the same time, the company submitted to the board of directors for approval ofincreasing the estimated amount totaling 803 million yuan for the related transactions occurred among thecompany and its holding subsidiaries with Zhiyijia Company in 2019, such as sales of goods and acceptingservices, and increasing the estimated amount totaling 8,526 million yuan for the related transactions occurredamong the company and its holding subsidiaries with Zhiyijia Company in 2020, such as sales of goods andaccepting services. It‘s agreed to submit the proposal to the company‘s board of directors for review.

(2) In view of the change of the actual controller of Italy Candy Hoover Group S.r.l. (hereinafter referred to as―Candy Group‖), another shareholder of the company‘s holding subsidiary Meiling Candy Washing Machine Co.,Ltd. (hereinafter referred to as ―Meiling Candy‖ or ―joint venture‖), due to this change, Meiling Candy sufferedlosses. In order to ensure the interests and future development of Meiling Candy and its shareholders, afterfriendly negotiations with Candy Group, the company submitted to the board of directors for approval ofliquidating and cancelling Meiling Candy. It‘s agreed to submit the proposal to the company‘s board of directorsfor review.

3. On 6 September 2019, the strategy committee held the 7

th meeting of the strategy committee of the 9

thboard ofdirectors, and reviewed and approved the one proposal as Capital Increase for Sichuan Changhong GroupFinance Co., Ltd and Related Party Transaction.

In view of the fact that Changhong Finance Company has provided high-quality financial services such asdeposits and loans to the company and its holding subsidiaries for many years, in order to further enhance thecompany‘s financial business level, increase the company‘s investment and financing ability in the financialmarket, expand the company‘s financing scale, and obtain stable financial investment returns, the companysubmitted to the board of directors for approval of using its own funds together with Changhong Huayi torespectively increase capital of 500 million yuan to Changhong Finance Company, with a total capital increase ofone billion yuan, of which 402,998,300 yuan of the Company‘s capital increase of 500 million yuan in ChanghongFinance Company was included in its registration capital, and 97,001,700 yuan was included in its capital reserve,while Changhong Finance Company‘s former shareholders, Changhong Group and Sichuan Changhong, gave uptheir rights to subscribe for capital contributions this time and did not increase capital. It agreed to submit thematter to the board of directors for consideration.

4. On October 25, 2019, the Strategy Committee held the 8

thmeeting of the Ninth Board Strategy Committee,which considered and approved the ―Proposal on Establishing a Sales Branch of the Subsidiary SichuanChanghong Air-conditioner Co., Ltd.‖.According to the business needs of Changhong Air Conditioning, a subsidiary of the company, it‘s recommendedto agree Changhong Air-conditioner to set up ―Sichuan Changhong Air Conditioning Co., Ltd. Baoding QingyuanBranch‖ in Qingyuan District, Baoding City, Hebei Province (tentative name, subject to industrial and commercialregistration), and use this branch as the main body of Changhong Air-conditioner‘s local electricity replacing coalproject and ground source heat pump reconstruction project to promote business development. It‘s agreed tosubmit the proposal to the company‘s board of directors for review.

5. On December 4, 2019, the Strategy Committee convened the 9

thmeeting of the Ninth Board StrategyCommittee, which considered and approved the ―Proposal on Investment and Establishment of a PhilippineSubsidiary‖.According to the company‘s overseas development strategy, in order to further increase the brand awareness of thecompany‘s products in Southeast Asian countries and expand the company‘s overseas sales volume of home

appliances, it was agreed that the company and five natural persons jointly invest $ 1 million in the Philippines toestablish a new trade-type joint venture subsidiary, CH-Meiling International (Philippines) Inc. (ChanghongMeiling International (Philippines) Co., Ltd., the company name shall be subject to the final approval of the localcompetent authority), to engage in the import, wholesale and sales of household appliances and other products.Among them, the company invested US $ 999,500 with its own funds, accounting for 99.95% of the registeredcapital, and the other five natural persons contributed US $ 500 with its own funds, accounting for 0.05% of theregistered capital. It‘s agreed to submit the proposal to the company‘s board of directors for review.

6. On March 16, 2020, the Strategy Committee held the 10

th

meeting of the Ninth Board Strategy Committee,which reviewed and approved the Proposal on the Company‘s Development Plan in 2020 and the Proposal onCapital Increase in Zhongshan Changhong Electric Co., Ltd.

(1) According to the company‘s medium and long-term development strategy, combined with the company‘smacro environment and industry situation, after analyzing the overall situation of the company‘s work in 2019, itdiscussed and established the company‘s 2020 business ideas and plans, and strive to achieve the annual businessgoals of 2020.

(2) According to the company‘s overseas development strategy and the business development needs of ZhongshanChanghong, a wholly-owned subsidiary, in order to supplement the liquidity of Zhongshan Changhong andquickly reduce the asset-liability ratio, it agreed the company and its wholly-owned subsidiary ChanghongAir-conditioner to increase capital of RMB 150 million to Zhongshan Changhong with its own funds by theexisting shareholding ratio, of which the Company‘s capital increase was 135 million yuan and ChanghongAir-conditioner‘s capital increase was 15 million yuan. After the completion of the capital increase, the registeredcapital of Zhongshan Changhong increased to 334 million yuan, and the shareholding ratios of the company andChanghong Air-conditioner in Zhongshan Changhong remained unchanged, which were 90% and 10%. It‘s agreedto submit the proposal to the company‘s board of directors for review.

(ii) Responsibility performance for audit committee of the BoardAudit committee of the Board performed its functions of supervision and examination to maintain theindependence of audition in auditing for year of 2019 according to the requirements of related laws andregulations such as Company Law and Rules Governing the Listing of Stocks on Shenzhen Stock Exchange andrelated requirements of Securities Regulatory Commission and Shenzhen Stock Exchange by abiding of Articlesof Incorporation, Implementing Regulations of Audit Committee of Board of the Directors, and Annual WorkRules of Audit Committee, the details are as follows:

1. On 24 January 2019, the ―Financial Statement Report for year of 2018 and Arrangement of Internal ControlAuditing‖ and ―Un-audited Financial Accounting Statement for year of 2018‖ were deliberated and approved in

thsession of 9

thaudit committee of the Board. Found more details in ―(II) Responsibility performance for auditcommittee of the Board‖ of ―VI. Responsibility performance of subordinate special committee of the Board inreport period‖ carried in ―Section IX. Corporate Governance‖ disclosed in Annual Report 2018, released onJuchao Website (www.cninfo.com.cn) dated 29 March 2019.

2. On 9 March 2019, the 9

th session of 9

thaudit committee of the Board deliberated the first draft of Annual

Report 2018, after a preliminary audit opinion issued from Shine Wing CPA (LLP). Found more details in ―(II)Responsibility performance for audit committee of the Board‖ of ―VI. Responsibility performance of subordinatespecial committee of the Board in report period‖ carried in ―Section IX. Corporate Governance‖ disclosed inAnnual Report 2018, released on Juchao Website (www.cninfo.com.cn) dated 29 March 2019.

3. On 17 March 2019, the audit committee held the 10

th session of the 9

th

audit committee of the board o whichreviewed and approved six proposals as "The Company's 2018 Annual Audited Financial Reports", "2018 InternalControl Audit Report", "Summary report about the company's 2018 annual audit work taken up by Shine WingCertified Public Accountants", "Motion on reappointment of the audit institution for 2019 annual financial reportand internal controls and its payment", "Motion on the company to carry out forward foreign exchange transactionbusiness" and ―Change of the Accounting Standards‖, and agreed to submit the above motions to the board ofdirectors for consideration.

4. On 17 April 2019, the ―Financial Statement of 1Q of 2019‖ was deliberated and approved in 11

th

session of 9

th

audit committee of the Board, the financial statement present a real, accurate and completed financial status andoperation results of the Company for 1Q of 2019. The financial statements of 1Q of 2019 agree to submit forapproval in the Board.

5. On 5 August 2019, the ―Financial Statement of Semi-annual 2019‖ was deliberated and approved in 12

th

sessionof 9th

audit committee of the Board, the financial statement present a real, accurate and completed financial statusand operation results of the Company for semi-annual of 2019. The company's semi-annual financial report for2019 was not audited. The financial statements of semi-annual 2019 agree to submit for approval in the Board.

6. On 15 October 2019, the ―Financial Statement of 3Q 2019‖ was deliberated and approved in 13

th

session of 9

th

audit committee of the Board, the financial statement present a real, accurate and completed financial status andoperation results of the Company for 3Q of 2019. The financial statement of 3Q 2019 agree to submit for approvalin the Board.

7. On 20 January 2020, the ―Financial Statement Report for year of 2019 and Arrangement of Internal ControlAuditing‖ and ―Un-audited Financial Accounting Statement for year of 2019‖ were deliberated and approved in

th

session of 9

thaudit committee of the Board, the un-audited financial statement presented an objectifiedfinancial status and operation results for year of 2019 basically.

8. On 9 March 2020, the audit committee held the 15

th session of the 9

thaudit committee after the Shine WingCertified Public Account (LLP) issued preliminary audit opinion. Reviewed the auditing draft of financial reportfor year of 2019, proposed specific opinions; members of audit committee communicated with certified publicaccountant who was responsible for audition of the company, the certified public accountant who was beresponsible for annual audition of the company reported related matters and adjusted matters during the auditionto the audit committee, and matters of the company needs to be adjusted have been adjusted according toadjustment opinions of the certified public accountant who was responsible for annual audition. The auditcommittee read the first draft of audited financial accounting statements for 2019 of the company according toaudition condition known from certified public accountant who was responsible for annual audition andproduction operation condition and financial performances reported by management level of the company,considered that the annual financing accounting statements for 2019 audited preliminarily by the Shine Wing

Certified Public Account can truly, correctly and completely reflect the operation condition of the company, andconfirmed the preliminary audit opinions of financing accounting statements of the company issued by the ShineWing Certified Public Account.

9. On 16 March 2020, the 16

th session of the 9

thaudit committee of the Board deliberated and approved thefollowed five proposals as‖ Audited Financial Statement Report of 2019‖, ―Auditing Report of Internal Controlfor year of 2019‖, ?Summary Report on Auditing Works for year of 2019 from Shine Wing Certified PublicAccount‖, ―Auditing Institution for Financial Report of 2020 and Internal Control Auditing Re-engagement andRemuneration Paid‖, and ―Opening Business of Forward Exchange‖, and agreed to submit these auditinginstitutions to board of the directors of the Company for deliberation.(iii) Responsibility performance for nominations committee of the BoardThe nominations committee under the board of directors practically performed their duties on the basis ofrequirements of laws and regulations of ―Company Law‖ and ―Rules Governing the Listing of Stocks on ShenzhenStock Exchange‖ and related requirements of China Securities Regulatory Commission and Shenzhen StockExchange, and in strict accordance with ―Articles of Association‖, ―Implementation Rules of NominationsCommittee of the Board‖, in the reporting period, the nominations committee reviewed and maderecommendations to the engaged senior management that needed to be submitted to the board for considerationand nomination.

1. On 9 Jan. 2019, the nomination committee held its 6

th meeting of the nomination committee of the 9

thboard ofdirectors, deliberated and approved proposal of acting as the chairman by the director and deputy president Mr.Kou Huameng. In view of the resignation of president - Mr. Wu Dinggang, the Company agreed to authorizeddirector and deputy president Mr. Kou Huameng acting as the Chairman of the Company;duration of the actingperiod will end till the new president appointed since 11 Jan. 2019, and submitted to the board of directors fordeliberation.

2. On 24 April 2019, the nomination committee held its 7

th meeting of the nomination committee of the 9

thboardof directors, deliberated and approved two proposal of qualification auditing for the chairman elected as 9

thBODand qualification auditing for the non-independent director elected as 9

thBOD.In view of the resignation of former president Mr. Li Wei due to work causes, he has resigned the post as presidentand director etc. of the 9

thBOD of the Company. In line with the needs of operation management, and completethe by-election work for vacancy of president as soon as possible, after reviewed by the nomination committee ofthe Board, Mr. Wu Dinggang was suggested to serves as the president of 9

th

BOD of the Company by election,office term same as the 9

thBOD‘s. Meanwhile, in view of the Mr. Zhong Ming, recommend by the controllingshareholder - Sichuan Changhong, as a candidate of non-independent director of 9

thBOD, after approval, Mr.Zhong Ming was agreed to nominated as the non-independent director of 9

thBOD of the Company by nominationcommittee, office term same as the 9

th

BOD‘s.(iv) Responsibility performance for remuneration and appraisal committee of the boardIn line with relevant laws and regulation of Company Law and ―Rules Governing the Listing of Stocks onShenzhen Stock Exchange‖ as well as requirement from CSRC and Shenzhen Stock Exchange, remuneration andappraisal committee of the Board, strictly follow rules of ―Article of Association‖ and ―Implementation Rules of

remuneration and appraisal committee of the Board‖, in the reporting period, the committee proposed suggestionson the performance evaluation standards and incentive & restraint mechanism for directors, supervisors and seniorexecutives, and review the appraisal and remuneration of directors, supervisors and senior executives, accrual anddistribution for performance incentive fund included. More details are as:

1. On 19 March 2019, the 2

nd meeting of the Remuneration and Appraisal Committee of the 9

thBoard of Directorswas convened. The meeting reviewed and approved the "Appraisal and Payment of Remuneration of Directorsand Senior Executives in Current Year 2018", and carried out follow opinions:

The committee assessed and reviewed the remunerations and payment status of the Company‘s directors andsenior executives in 2018, and considered that the allowances received by the independent directors of theCompany should be paid at the allowance rate approved by the general meeting of shareholders; theremunerations received by the Company‘s senior executives from the Company should be strictly based on theCompany‘s remuneration and assessment system, the remuneration information disclosed by the Company wastruthful, accurate, and complete and conformed to requirements of ―Content and Format Norm for InformationDisclosure of Companies Publicly Issuing Securities No. 2 - Content and Format of Annual Report (Revised in2017)‖ of China Securities Regulatory CommissionThe Board of Directors of the Company reviewed and passed the remuneration assessment and payment mattersof the directors and senior executives in the Company‘s 2018 annual report based on the remuneration assessmentstatus of senior executives of the Company and the opinions of the remuneration and appraisal committee.

2. On 16 March 2020, the remuneration and appraisal committee of the 9

thSession of Board of Directorsconvened the 3

rdmeeting which reviewed and approved the ―Remuneration Assessment and Payment of Directorsand Senior Executives of the Company in 2019‖ and issued the following review opinions:

The committee assessed and reviewed the remunerations and payment status of the Company‘s directors andsenior executives in 2019, and considered that the allowances received by the independent directors of theCompany should be paid at the allowance rate approved by the general meeting of shareholders; theremunerations received by the Company‘s senior executives from the Company should be strictly based on theCompany‘s remuneration and assessment system, the remuneration information disclosed by the Company wastruthful, accurate, and complete and conformed to requirements of ―Content and Format Norm for InformationDisclosure of Companies Publicly Issuing Securities No. 2 - Content and Format of Annual Report (Revised in2017)‖ of China Securities Regulatory CommissionThe Board of Directors of the Company reviewed and passed the remuneration assessment and payment mattersof the directors and senior executives in the Company‘s 2019 annual report based on the remuneration assessmentstatus of senior executives of the Company and the opinions of the remuneration and appraisal committee.VII. Works from Supervisory CommitteeWhether the Company has risks or not in reporting period that found in supervisory activity from supervisorycommittee

□Yes √ No

Supervisory committee has no objection about supervision events in reporting periodVIII. Appraisal and incentive to senior management

(i) Evaluation mechanism for senior executives of the CompanyThe Company formulated ―Implementation Rules of Remuneration and Appraisal Committee of the Board‖, theremuneration and appraisal committee established 2019 annual compensation and performance management planfor the senior management of the Company in accordance with the main scope, responsibilities, importance oftheir management positions and the remuneration level of other relevant enterprises and positions; the planincluded but not limited to key performance indicator (KPI), performance appraisal standards, procedures andmajor programs and systems of main appraisal system, reward and punishment; investigated the execution of dutyof the senior management and implemented annual performance appraisal to them. After reviewed by thecommittee, submit to the Board for approval.At the end of Current Year, combined with the senior management‘s working reports and self-evaluation of 2019,and according to the performance evaluation criteria and procedures, the Compensation and Appraisal Committeehas carried out performance appraisal to the senior management‘s key performance indication (KPI) in 2019 andother related indicators; proposed the remuneration amount and performance assessment methods for seniormanagement according to the job performance evaluation results and remuneration distribution policy, andreported to the Board of Directors for approval.(ii) Establishment and implementation of performance incentive mechanismThe Company formulated a mid-long term incentive and restraint mechanism, that is ―Implementation Plan ofAnnual Performance Incentive Fund‖ in 2012, on 9 August 2012 and 28 August 2012, the Plan was deliberatedand approved in 16

th meeting of 7

th session of the Board and 2

ndextraordinary general meeting 2012. Details ofthe aforesaid event can be found in the announcement (No.: 2012-028 and No.: 2012-035) released on appointedmedia Securities Times, China Securities Journal, Hong Kong Commercial Daily and Juchao Website(www.cninfo.com.cn) dated 10 August 2012 and 29 August 2012. Up November 2017, the annual performanceincentive plan was completed, and we will continue to disclose the follow-up treatment on shares held byincentive objects; implementation of the annual performance incentive fund found more in ― Implementation ofAnnual Performance Incentive Fund‖ of ―XV Implementation of the company‘s stock incentive plan, employeestock ownership plan or other employee incentives‖ in ―Section V. Important Event‖ carried in the Report.IX. Internal Control(i) Details of major defects in IC appraisal report that found in reporting period

□Yes √ No

(ii) Appraisal Report of Internal Control

Date of evaluation report of internal control disclosed (Full-text)2020-3-28
Index of evaluation report of internal control disclosed (Full-text)Juchao Website (www.cninfo.com.cn)
The ratio of the total assets of units included in the scope of evaluation accounting for the total assets on the company's consolidated financial statements99.21%
The ratio of the operating income of units included in the scope of evaluation accounting for the operating income on the company's consolidated financial statements99.16%
Defects Evaluation Standards
CategoryFinancial ReportsNon-financial Reports
Qualitative criteria1. Material defect: severally or jointly with other defects, will lead to material wrong reporting in financial reports being not able to prevented or found or rectified in a timely manner. Occurrence of the followings will be deemed as material defect: 1. inefficiency of environment control; 2. fraud of directors, supervisors and senior management; 3. The external auditor finds material wrong reporting in current financial statement, while the Company has not found such reporting during its operation; 4. The material defect identified and reported to the management fails to be rectified in a reasonable time period; 5. The audit committee and audit department of the Company exercise invalid supervision upon internal control; 6. Other defects which may affect financial statement users to make correct judgment. 2. Major defect: severally or jointly with other defects, will lead to wrong reporting in financial reports being not able to prevented or found or rectified in a timely manner which still needs attention from the management though it doesn‘t reach or exceed material defect as described above. Occurrence of the followings will be deemed as major defect: (1) Financial losses caused by guaranteeing and investing in securities and financial derivatives transactions and disposing property right and stock right without authorization; (2) The company's financial staff or other relevant business personnel have unclear powers and responsibilities or job chaos, or are suspected of being involved in economic or job-related crimes and have been transferred to the judiciary; (3) Punishment or severely negative impacts on the company's image due to the bias implementation of the policy or accounting errors, etc.; (4) Financial losses caused by destroying, concealing, or altering the important original evidences at will, such as invoices and checks, etc. (5) Cash income is not entered into the account book, or public funds are deposited in private account or "private coffer" is established by breaking the rules. 3. General defect: other internal control related defects that do not constitute material defects or major defect.Occurrence of the followings shall be deemed as material defect, otherwise as major defect or general defect subject to the level of influence. 1. breach of national laws, regulations or regulatory documents; 2. procedure for making significant decisions is not scientific; 3. absence of system may lead to invalid system; 4. Material or major defects are not likely to rectify; 5. Large negative effects on the company and disclosed in the form of announcement; 6. Other issues that materially affect the Company.
Quantitative standard1. Proportion of potential wrong reporting in total operating income: Material defect: wrong reporting ≧0.5%; Major defect: 0.1% ≤ wrong reporting<0.5%; General defect: wrong reporting<0.1%. 2. Proportion of potential wrong reporting in total profit: Material defect: wrong reporting ≧10%; Major defect: 5% ≤ wrong reporting<10%; General defect: wrong reporting<5%. 3. Proportion of potential wrong reporting in total assets: Material defect: wrong reporting ≧0.5%; Major defect: 0.1% ≤ wrong reporting<0.5%; General defect: wrong reporting<0.1%. 4. Proportion of potential wrong reporting in total owners’ equity: Material defect: wrong reporting ≧0.5%; Major defect: 0.1% ≤ wrong reporting<0.5%; General defect: wrong reporting<0.1%.1. Proportion of direct property loss in total operating income: Material defect: wrong reporting ≧0.1%; Major defect: 0.05% ≤ wrong reporting<0.1%; General defect: wrong reporting<0.05%. 2. Proportion of direct property loss in total profit: Material defect: wrong reporting ≧10%; Major defect: 5% ≤ wrong reporting<10%; General defect: wrong reporting<5%. 3. Proportion of direct property loss in total assets: Material defect: wrong reporting ≧0.2%; Major defect: 0.1% ≤ wrong reporting<0.2%; General defect: wrong reporting<0.1%. 4. Proportion of direct property loss in total owners’ equity: Material defect: wrong reporting ≧0.2%; Major defect: 0.1% ≤ wrong reporting<0.2%; General defect: wrong reporting<0.1%.
Amount of significant defects in financial reports0
Amount of significant defects in non-financial reports0
Amount of important defects in financial reports0
Amount of important defects in non-financial reports0

X. Auditing report of internal control

√ Applicable □ Not applicable

Deliberation section of auditing report of IC
We consider that: in all major aspects, Changhong Meiling Co., Ltd. has efficiency in financial report of internal control dated 31 December 2019 according to Basic Standards of Internal Control for Enterprise and relevant regulations.
Disclosure details of audit report of internal controlDisclosed
Disclosure date of audit report of internal control (full-text)2020-3-28
Index of audit report of internal control (full-text)Juchao Website (www.cninfo.com.cn)
Opinion type of auditing report of ICStandard unqualified
whether the non-financial report had major defectsNo

Whether CPA carries out qualified opinion for audit report of internal control or not

□Yes √ No

Whether the opinions are consistent in audit report of internal control carrying out by CPA and the self-evaluationreport of the Board or not

√ Yes □ No

Section XI. Corporate BondWhether the Company has a corporation bonds that issuance publicly and listed on stock exchange and withoutdue on the date when annual report approved for released or fail to cash in full on due

□Yes √No

Section XII. Financial ReportI. Audit report

Type of audit opinionStandard unqualified opinion
Date for signing the report2020-3-26
Name of audit instituteShine Wing Certified Public Accountants (LLP)
Serial of Auditing ReportXYZH/2020CDA40020
Name of CPALi Xifu, Xia Cuiqiong

Auditor’s Report

XYZH/2020CDA40020

To Shareholders of Changhong Meiling Co., Ltd.:

I. Auditor’s opinionWe, as the auditors, audited the financial statements of Changhong Meiling Co., Ltd. (the ―Company‖), whichincluded the consolidated balance sheet as of 31 December 2019, the consolidated statement of income, theconsolidated statement of cash flow and the consolidated statement of changes in equity of the Company forCurrent Year ended 31 December 2019, together with the relevant notes thereto.We are the view that the attached financial statements are prepared in accordance with the Business AccountingStandards in all material aspects, which reflect fairly the consolidated financial position of the Company as of 31December 2019 and the operating results and cash flow of the Company for Current Year of 2019.II. Basis for audit opinionsWe conducted this audit under the requirements of the Auditing Standards of the Certified Public Accountant ofthe PRC. The section headed ―Certified Public Accountant‘s responsibility for audit of financial statement‖ in theaudit report has further clarified our responsibilities under these standards. Pursuant to the code of professionalconduct as certified public accountant in the PRC, we are independent of the Company and have performed otherresponsibility as required by our professional ethics. We believe that the audit evidence obtained by us issufficient and adequate, which provides foundation for us to issue audit opinion.III. Key audit issues

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit ofthe financial statements of the current period. These matters were addressed in the context of our audit of thefinancial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion onthese matters. The key audit matter we identified is as follows:

1.Recognition of revenue
Please refer to note (iv) 24 and note (vi) 37.
Key audit mattersAudit address
Sales revenue of the Company was mainly sourced from sales of refrigerator, air conditioner, small household appliances and kitchen and washing machines to both domestic and overseas customers. As indicated in note (vi) 37 of the financial statement - Operating income and cost, the operating income was RMB 16,553,252,894.93 in 2019. Since the truthfulness and completeness of revenue recognition has material impact on operating results, Therefore, the recognition of operating income will consider as the key audit matters.Main auditing procedures for revenue recognition are including: 1) know and test the cycle internal control of sales and collection, to assess the design and effectiveness of the internal control; 2) understand the business substance, inspect significant sales contract and the corresponding sales invoice, on a random basis, receipt of notes, delivery information confirmed through systems, verify that whether revenue was recognized upon satisfaction of required conditions and whether the revenue recognition was made in right timing, and verify that whether profit was adjusted through aggressive sales policy; 3) Carry out supervision and other procedures to the important inventory at end of the period, well-known the progress of the contracts and follow up the abnormal situations found in inspection; 4) Conduct inquiry through issue of letters, and carry out additional audit procedures for the items for which reply was abnormal; 5) review collection of trade receivables, confirm the conformity between the entities owing receivables and name of customers to verify whether there was collection of receivables from third parties, to review the truthfulness of the collection and revenue; 6) review collection of receivables in subsequent period; 7) make cut-off test and analysis re-review on revenue.
2.Capitalization of development expense
Please refer to note (iv) 18 and note (vi) 15
Key audit mattersAudit address
The development expense occurred for research and development of non-patent technology in 2019 was RMB 128,970,096.82, which was capitalized and accounted for as1) Understand the key control of capitalization of development expenditures, implement internal control audit procedures, understand the scope and accounting methods of development expenditures, understand and make research and development on related control systems and processes, and test the effectiveness of
development expense in the consolidated financial statement. Development expense could only be capitalized upon satisfaction of all the capitalization conditions set out in note (iv) 18 to the financial statement. Since to confirm whether all the capitalization conditions are met requires the management to make significant judgment and estimate, we deem this matter important in the context of our audit. Therefore, the capitalization of development expenditure will consider as the key audit matters.relevant internal control design and operation; 2) Implementation: compare the developed projects in intangible assets with machinery models for external sales, and re-verify the truthfulness of capitalization of completely developed projects 3) Dual purpose testing: inspect the project reports and inspection and acceptance reports formed during the research and development and commercialization of developed products, and judge the sufficiency of basis for accounting of development expense

IV. Other informationThe management of Changhong Meiling Co., Ltd. (the ―Management‖) is responsible for other information whichincludes the information covered in the Company‘s 2019 annual report excluding the financial statement and ouraudit report.The audit opinion issued by us for the financial statement has not covered other information, for which we do notissue any form of assurance opinions.Considering our audit on financial statements, we are liable to read other information, during which, we shallconsider whether other information differs materially from the financial statements or that we understand duringour audit, or whether there is any material misstatement.Based on the works executed by us, we should report the fact if we find any material misstatement in otherinformation. In t his regards, we have nothing to report.V. Responsibilities of management and those charged with governance for the financial statementsThe management is responsible for the preparation of the financial statements in accordance with the AccountingStandards for Enterprise to secure a fair presentation, and for the design, establishment and maintenance of theinternal control necessary to enable the preparation of financial statements that are free from materialmisstatement, whether due to fraud or error.In preparing the financial statements, the management is responsible for assessing the Company‘s ability tocontinue as a going concern, disclosing matters related to going concern and using the going concern assumptionunless the management either intends to liquidate the Company or to cease operations, or has no realistic

alternative but to do so.Those charged with governance are responsible for overseeing the Company‘s financial reporting process.VI. Responsibilities of the auditor for the financial statementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue an audit report that includes our audit opinion.Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordancewith the CAS will always detect a material misstatement when it exists. Misstatements can arise from fraud orerror and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of the financial statements.As part of an audit in accordance with the CAS, we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:

(1) identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient andappropriate to provide a basis for audit opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.

(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances.

(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made by the management.

(4) Conclude on the appropriateness of the management‘s use of the going concern assumption and, based on theaudit evidence obtained, whether a material uncertainty exists related to events or conditions that may castsignificant doubt on the Company‘s ability to continue as a going concern. If we conclude that a materialuncertainty exists, we are required by the CAS to draw users‘ attention in audit report to the related disclosures inthe financial statements or, if such disclosures are inadequate, to modify audit opinion. Our conclusions are basedon the information obtained up to the date of audit report. However, future events or conditions may cause theCompany to cease to continue as a going concern.

(5) Evaluate the overall presentation, structure and content of the financial statements, and whether the financialstatements represent the underlying transactions and events in a manner that achieves fair presentation.

(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business

activities within the Company to express audit opinion on the financial statements. We are responsible for thedirection, supervision and performance of the group audit. We remain solely responsible for audit opinion.We communicate with those charged with governance regarding, among other matters, the planned scope andtiming of the audit and significant audit findings, including any significant deficiencies in internal control that weidentify during our audit.We also provide those charged with governance with a statement that we have complied with relevant ethicalrequirements regarding independence, and communicate with them all relationships and other matters that mayreasonably be thought to bear on our independence, and where applicable, related safeguard measures.From the matters communicated with those charged with governance, we determine those matters that were ofmost significance in the audit of the financial statements of the current period and are therefore the key auditmatters. We describe these matters in the auditor‘s report unless law or regulation precludes public disclosureabout the matter or when, in extremely rare circumstances, we determine that a matter should not becommunicated in the auditor‘s report because of the adverse consequences of doing so would reasonably beexpected to outweigh the public interest benefits of such communication.

Shine Wing Certified Public Accountants (LLP)Chinese CPA: (engagement partner): Li xifu
Chinese CPA: Xia cuiqiong
Beijing China26 March 2020

II. Financial StatementStatement in Financial Notes are carried in RMB/CNY

1. Consolidated balance sheet

Prepared by Changhong Meiling Co., Ltd.

In RMB

Item2019-12-312018-12-31
Current assets:
Monetary funds5,499,601,030.644,596,077,557.40
Settlement provisions
Capital lent
Tradable financial assets7,730,268.92
Financial assets measured at fair value and whose changes are included in current gains/losses9,253,635.59
Derivative financial assets
Note receivable1,865,165,499.502,387,830,887.74
Account receivable1,387,961,981.661,670,988,644.76
Receivable financing
Accounts paid in advance25,270,406.3786,180,459.26
Insurance receivable
Reinsurance receivables
Contract reserve of reinsurance receivable
Other account receivable97,241,894.8062,129,574.17
Including: Interest receivable9,510,208.632,653,712.36
Dividend receivable661,434.48
Buying back the sale of financial assets
Inventories1,460,910,189.062,174,436,573.67
Contractual assets
Assets held for sale
Non-current asset due within one year
Other current assets63,604,031.961,184,686,956.96
Total current assets10,407,485,302.9112,171,584,289.55
Non-current assets:
Loans and payments on behalf
Debt investment
Finance asset available for sales45,000,000.00
Other debt investment
Held-to-maturity investment
Long-term account receivable
Long-term equity investment88,556,511.7061,869,440.55
Investment in other equity instrument
Other non-current financial assets45,000,000.00
Investment real estate96,343,760.1346,846,507.41
Fixed assets2,180,572,946.871,733,957,012.14
Construction in progress252,494,792.31464,558,352.60
Productive biological asset
Oil and gas asset
Right-of-use assets
Intangible assets933,248,463.84817,579,958.94
Expense on Research and Development101,078,659.57108,210,966.60
Goodwill
Long-term expenses to be apportioned
Deferred income tax asset97,453,178.14112,203,656.75
Other non-current asset
Total non-current asset3,794,748,312.563,390,225,894.99
Total assets14,202,233,615.4715,561,810,184.54
Current liabilities:
Short-term loans1,103,991,045.962,336,373,929.62
Loan from central bank
Capital borrowed
Trading financial liability1,081,534.93
Financial liabilities measured at fair value and whose changes are included in current gains/losses55,586,666.70
Derivative financial liability
Note payable3,490,271,482.403,727,754,399.60
Account payable2,343,116,374.582,282,174,981.38
Accounts received in advance425,149,194.97354,551,354.80
Contractual liability
Selling financial asset of repurchase
Absorbing deposit and interbank deposit
Security trading of agency
Security sales of agency
Wage payable196,507,174.68163,638,627.79
Taxes payable68,558,391.66109,753,432.17
Other account payable689,477,603.21660,320,360.26
Including: Interest payable12,340,385.617,519,756.26
Dividend payable3,579,491.9417,317,286.45
Commission charge and commission payable
Reinsurance payable
Liability held for sale
Non-current liabilities due within one year1,708,193.90273,682,737.85
Other current liabilities
Total current liabilities8,319,860,996.299,963,836,490.17
Non-current liabilities:
Insurance contract reserve
Long-term loans401,280,000.001,920,000.00
Bonds payable
Including: Preferred stock
Perpetual capital securities
Lease liability
Long-term account payable3,016,921.445,017,208.00
Long-term wages payable13,774,110.6119,073,101.29
Accrual liability166,099,143.97273,063,677.21
Deferred income179,970,971.92160,250,963.60
Deferred income tax liabilities6,256,759.143,098,699.11
Other non-current liabilities
Total non-current liabilities770,397,907.08462,423,649.21
Total liabilities9,090,258,903.3710,426,260,139.38
Owner‘s equity:
Share capital1,044,597,881.001,044,597,881.00
Other equity instrument
Including: Preferred stock
Perpetual capital securities
Capital public reserve2,684,366,619.102,684,369,598.46
Less: Inventory shares
Other comprehensive income-18,931,430.36-18,143,569.26
Reasonable reserve
Surplus public reserve410,786,860.20400,673,993.50
Provision of general risk
Retained profit884,127,743.42904,232,582.87
Total owner‘ s equity attributable to parent company5,004,947,673.365,015,730,486.57
Minority interests107,027,038.74119,819,558.59
Total owner‘ s equity5,111,974,712.105,135,550,045.16
Total liabilities and owner‘ s equity14,202,233,615.4715,561,810,184.54

Legal Representative: Wu DinggangPerson in charge of accounting works: Pang HaitaoPerson in charge of accounting institute: Yang Jun

2. Balance Sheet of Parent Company

In RMB

Item2019-12-312018-12-31
Current assets:
Monetary funds4,040,632,437.182,897,004,041.87
Trading financial assets5,967,556.00
Financial assets measured at fair value and whose changes are included in current gains/losses9,253,635.59
Derivative financial assets
Note receivable1,722,707,248.742,433,243,946.64
Account receivable1,158,563,389.331,050,282,023.37
Receivable financing
Accounts paid in advance34,374,932.0758,710,427.38
Other account receivable41,964,639.42182,744,033.52
Including: Interest receivable7,880,186.852,653,712.36
Dividend receivable661,434.48
Inventories339,728,296.66911,130,106.30
Contractual assets
Assets held for sale
Non-current assets maturing within one year
Other current assets11,930,690.861,113,987,528.70
Total current assets7,355,869,190.268,656,355,743.37
Non-current assets:
Debt investment
Available-for-sale financial assets45,000,000.00
Other debt investment
Held-to-maturity investments
Long-term receivables
Long-term equity investments1,698,744,114.991,731,109,903.70
Investment in other equity instrument
Other non-current financial assets45,000,000.00
Investment real estate7,314,721.807,618,550.16
Fixed assets1,138,092,635.671,082,915,540.08
Construction in progress106,575,581.28125,064,106.10
Productive biological assets
Oil and natural gas assets
Right-of-use assets
Intangible assets483,887,751.05462,425,105.64
Research and development costs56,295,271.7457,383,653.72
Goodwill
Long-term deferred expenses
Deferred income tax assets77,849,317.7778,357,299.17
Other non-current assets
Total non-current assets3,613,759,394.303,589,874,158.57
Total assets10,969,628,584.5612,246,229,901.94
Current liabilities
Short-term borrowings1,009,757,944.821,911,719,726.13
Trading financial liability1,016,052.00
Financial liabilities measured at fair value and whose changes are included in current gains/losses19,893,875.00
Derivative financial liability
Notes payable1,936,867,907.422,001,442,110.63
Account payable1,497,704,307.482,011,821,519.82
Accounts received in advance147,365,864.56105,815,140.88
Contractual liability
Wage payable39,633,867.8731,271,182.48
Taxes payable20,427,731.1321,992,129.58
Other accounts payable520,559,494.30427,293,961.56
Including: Interest payable13,175,235.765,801,215.14
Dividend payable3,579,491.9417,317,286.45
Liability held for sale
Non-current liabilities due within one year258,588,504.48
Other current liabilities
Total current liabilities5,173,333,169.586,789,838,150.56
Non-current liabilities:
Long-term loans401,280,000.001,920,000.00
Bonds payable
Including: preferred stock
Perpetual capital securities
Lease liability
Long-term account payable
Long term employee compensation payable13,774,110.6119,073,101.29
Accrued liabilities158,742,319.21266,641,323.73
Deferred income67,664,815.5353,118,676.50
Deferred income tax liabilities742,725.60
Other non-current liabilities
Total non-current liabilities642,203,970.95340,753,101.52
Total liabilities5,815,537,140.537,130,591,252.08
Owners‘ equity:
Share capital1,044,597,881.001,044,597,881.00
Other equity instrument
Including: preferred stock
Perpetual capital securities
Capital public reserve2,753,017,007.102,753,017,007.10
Less: Inventory shares
Other comprehensive income
Special reserve
Surplus reserve410,568,694.52400,455,827.82
Retained profit945,907,861.41917,567,933.94
Total owner‘s equity5,154,091,444.035,115,638,649.86
Total liabilities and owner‘s equity10,969,628,584.5612,246,229,901.94

Legal Representative: Wu DinggangPerson in charge of accounting works: Pang HaitaoPerson in charge of accounting institute: Yang Jun

3. Consolidated Profit Statement

In RMB

Item20192018
I. Total operating income16,553,252,894.9317,490,174,950.01
Including: Operating income16,553,252,894.9317,490,174,950.01
Interest income
Insurance gained
Commission charge and commission income
II. Total operating cost16,579,810,406.6217,455,505,586.22
Including: Operating cost13,455,692,376.8514,226,402,020.40
Interest expense
Commission charge and commission expense
Cash surrender value
Net amount of expense of compensation
Net amount of withdrawal of insurance contract reserve
Bonus expense of guarantee slip
Reinsurance expense
Tax and extras153,065,726.91138,915,058.61
Sales expense2,320,362,519.952,576,277,169.86
Administrative expense330,687,143.82317,917,548.03
R&D expense334,218,689.69235,299,398.06
Financial expense-14,216,050.60-39,305,608.74
Including: Interest expenses93,523,492.74101,451,047.10
Interest income133,568,862.29127,986,419.36
Add: other income110,281,102.6994,938,682.39
Investment income (Loss is listed with ―-‖)-32,695,507.493,931,358.68
Including: Investment income on affiliated company and joint venture-8,049,228.81-23,357,648.90
The termination of income recognition for financial assets measured by amortized cost(Loss is listed with ―-‖)
Exchange income (Loss is listed with ―-‖)
Net exposure hedging income (Loss is listed with ―-‖)
Income from change of fair value (Loss is listed with ―-‖)52,993,630.16-45,949,257.12
Loss of credit impairment (Loss is listed with ―-‖)4,633,296.89
Losses of devaluation of asset (Loss is listed with ―-‖)-30,409,004.57-39,253,891.46
Income from assets disposal (Loss is listed with ―-‖)-9,537,945.52787,721.32
III. Operating profit (Loss is listed with ―-‖)68,708,060.4749,123,977.60
Add: Non-operating income6,479,922.986,486,445.70
Less: Non-operating expense5,409,757.7021,268,525.58
IV. Total profit (Loss is listed with ―-‖)69,778,225.7534,341,897.72
Less: Income tax expense26,266,024.94-533,886.62
V. Net profit (Net loss is listed with ―-‖)43,512,200.8134,875,784.34
(i) Classify by business continuity
1.continuous operating net profit (net loss listed with ?-‖)43,512,200.8134,875,784.34
2.termination of net profit (net loss listed with ?-‖)
(ii) Classify by ownership
1.Net profit attributable to owner‘s of parent company56,441,479.1438,658,256.97
2.Minority shareholders‘ gains and losses-12,929,278.33-3,782,472.63
VI. Net after-tax of other comprehensive income-2,068,017.04-15,324,313.47
Net after-tax of other comprehensive income attributable to owners of parent company-787,861.10-10,881,247.24
(I) Other comprehensive income items which will not be reclassified subsequently to profit of loss
1.Changes of the defined benefit plans that re-measured
2.Other comprehensive income under equity method that cannot be transfer to gain/loss
3.Change of fair value of investment in other equity instrument
4.Fair value change of enterprise's credit risk
5. Other
(ii) Other comprehensive income items which will be reclassified subsequently to profit or loss-787,861.10-10,881,247.24
1.Other comprehensive income under equity method that can transfer to gain/loss
2.Change of fair value of other debt investment
3.gain/loss of fair value changes for available-for-sale financial assets
4.Amount of financial assets re-classify to other comprehensive income
5.Gain/loss of held-to-maturity investments that re-classify to available-for-sale financial asset
6.Credit impairment provision for other debt investment
7.Cash flow hedging reserve
8.Translation differences arising on translation of foreign currency financial statements-787,861.10-10,881,247.24
9.Other
Net after-tax of other comprehensive income attributable to minority shareholders-1,280,155.94-4,443,066.23
VII. Total comprehensive income41,444,183.7719,551,470.87
Total comprehensive income attributable to owners of parent Company55,653,618.0427,777,009.73
Total comprehensive income attributable to minority shareholders-14,209,434.27-8,225,538.86
VIII. Earnings per share:
(i) Basic earnings per share0.05400.0370
(ii) Diluted earnings per share0.05400.0370

As for the enterprise combined under the same control, net profit of 0 Yuan achieved by the merged party beforecombination while 0 Yuan achieved last periodLegal Representative: Wu DinggangPerson in charge of accounting works: Pang HaitaoPerson in charge of accounting institute: Yang Jun

4. Profit Statement of Parent Company

In RMB

Item20192018
I. Operating income9,296,448,243.299,527,195,962.62
Less: Operating cost8,437,561,503.108,403,695,872.50
Taxes and surcharge76,143,013.2360,224,004.51
Sales expenses519,213,849.71795,840,509.28
Administration expenses135,073,396.64139,521,280.49
R&D expenses124,622,622.12100,055,433.15
Financial expenses3,761,368.953,339,104.39
Including: interest expenses75,661,399.9378,111,310.86
Interest income96,733,624.7178,419,587.54
Add: other income71,320,375.5059,460,881.42
Investment income (Loss is listed with ―-‖)33,377,287.0245,078,361.41
Including: Investment income on affiliated Company and joint venture74,962.32-4,601,912.14
The termination of income recognition for financial assets measured by amortized cost (Loss is listed with ―-‖)
Net exposure hedging income (Loss is listed with ―-‖)
Changing income of fair value (Loss is listed with ―-‖)15,591,743.41-8,683,770.89
Loss of credit impairment (Loss is listed with ―-‖)9,455,668.24
Losses of devaluation of asset (Loss is listed with ―-‖)-17,125,818.42-13,569,683.39
Income on disposal of assets (Loss is listed with ―-‖)-736,644.05-3,459,155.14
II. Operating profit (Loss is listed with ―-‖)111,955,101.24103,346,391.71
Add: Non-operating income907,600.613,972,014.46
Less: Non-operating expense250,826.6713,050,649.33
III. Total Profit (Loss is listed with ―-‖)112,611,875.1894,267,756.84
Less: Income tax1,250,707.00-2,177,974.85
IV. Net profit (Net loss is listed with ―-‖)111,361,168.1896,445,731.69
(i)continuous operating net profit (net loss listed with ?-‖)111,361,168.1896,445,731.69
(ii) termination of net profit (net loss listed with ?-‖)
V. Net after-tax of other comprehensive income
(I) Other comprehensive income items which will not be reclassified subsequently to profit of loss
1.Changes of the defined benefit plans that re-measured
2.Other comprehensive income under equity method that cannot be transfer to gain/loss
3.Change of fair value of investment in other equity instrument
4.Fair value change of enterprise's credit risk
5. Other
(II) Other comprehensive income items which will be reclassified subsequently to profit or loss
1.Other comprehensive income under equity method that can transfer to gain/loss
2.Change of fair value of other debt investment
3.gain/loss of fair value changes for available-for-sale financial assets
4.Amount of financial assets re-classify to other comprehensive income
5.Gain/loss of held-to-maturity investments that re-classify to available-for-sale financial asset
6.Credit impairment provision for other debt investment
7.Cash flow hedging reserve
8.Translation differences arising on translation of foreign currency financial statements
9.Other
VI. Total comprehensive income111,361,168.1896,445,731.69
VII. Earnings per share:
(i) Basic earnings per share0.10660.0923
(ii) Diluted earnings per share0.10660.0923

Legal Representative: Wu DinggangPerson in charge of accounting works: Pang HaitaoPerson in charge of accounting institute: Yang Jun

5. Consolidated Cash Flow Statement

In RMB

Item20192018
I. Cash flows arising from operating activities:
Cash received from selling commodities and providing labor services17,222,030,229.1715,976,109,415.91
Net increase of customer deposit and interbank deposit
Net increase of loan from central bank
Net increase of capital borrowed from other financial institution
Cash received from original insurance contract fee
Net cash received from reinsurance business
Net increase of insured savings and investment
Cash received from interest, commission charge and commission
Net increase of capital borrowed
Net increase of returned business capital
Net cash received by agents in sale and purchase of securities
Write-back of tax received376,209,568.82513,524,044.20
Other cash received concerning operating activities172,721,366.51288,727,912.46
Subtotal of cash inflow arising from operating activities17,770,961,164.5016,778,361,372.57
Cash paid for purchasing commodities and receiving labor service13,458,134,618.8314,150,885,874.62
Net increase of customer loans and advances
Net increase of deposits in central bank and interbank
Cash paid for original insurance contract compensation
Net increase of capital lent
Cash paid for interest, commission charge and commission
Cash paid for bonus of guarantee slip
Cash paid to/for staff and workers1,513,839,139.231,593,886,073.87
Taxes paid526,773,134.14354,788,287.80
Other cash paid concerning operating activities987,210,287.26899,361,751.64
Subtotal of cash outflow arising from operating activities16,485,957,179.4616,998,921,987.93
Net cash flows arising from operating activities1,285,003,985.04-220,560,615.36
II. Cash flows arising from investing activities:
Cash received from recovering investment3,091,000,000.003,440,000,000.00
Cash received from investment income53,507,866.9278,170,149.44
Net cash received from disposal of fixed, intangible and other long-term assets20,786,170.9618,142,337.83
Net cash received from disposal of subsidiaries and other units
Other cash received concerning investing activities126,761,536.28132,195,914.39
Subtotal of cash inflow from investing activities3,292,055,574.163,668,508,401.66
Cash paid for purchasing fixed, intangible and other long-term assets326,109,415.77632,592,327.39
Cash paid for investment2,010,087,040.003,944,000,001.00
Net increase of mortgaged loans
Net cash received from subsidiaries and other units obtained
Other cash paid concerning investing activities78,815,580.0846,837,275.82
Subtotal of cash outflow from investing activities2,415,012,035.854,623,429,604.21
Net cash flows arising from investing activities877,043,538.31-954,921,202.55
III. Cash flows arising from financing activities
Cash received from absorbing investment8,441,064.0024,865,000.00
Including: Cash received from absorbing minority shareholders‘ investment by subsidiaries8,441,064.0024,865,000.00
Cash received from loans1,723,227,548.803,144,071,966.63
Other cash received concerning financing activities44,497,902.00
Subtotal of cash inflow from financing activities1,731,668,612.803,213,434,868.63
Cash paid for settling debts2,820,687,076.562,514,013,375.52
Cash paid for dividend and profit distributing or interest paying148,244,143.81129,757,442.60
Including: Dividend and profit of minority shareholder paid by subsidiaries2,274,030.001,364,418.00
Other cash paid concerning financing activities32,485,727.872,692,486.99
Subtotal of cash outflow from financing activities3,001,416,948.242,646,463,305.11
Net cash flows arising from financing activities-1,269,748,335.44566,971,563.52
IV. Influence on cash and cash equivalents due to fluctuation in exchange rate8,865,099.673,387,671.93
V. Net increase of cash and cash equivalents901,164,287.58-605,122,582.46
Add: Balance of cash and cash equivalents at the period -begin4,484,643,187.935,089,765,770.39
VI. Balance of cash and cash equivalents at the period -end5,385,807,475.514,484,643,187.93

Legal Representative: Wu Dinggang Person in charge of accounting works: Pang HaitaoPerson in charge of accounting institute: Yang Jun

6. Cash Flow Statement of Parent Company

In RMB

Item20192018
I. Cash flows arising from operating activities:
Cash received from selling commodities and providing labor services8,627,727,420.597,727,625,739.70
Write-back of tax received197,261,437.46252,804,115.39
Other cash received concerning operating activities89,705,595.4269,407,867.46
Subtotal of cash inflow arising from operating activities8,914,694,453.478,049,837,722.55
Cash paid for purchasing commodities and receiving labor service7,246,530,970.046,922,851,690.83
Cash paid to/for staff and workers411,671,230.56503,716,419.03
Taxes paid169,363,775.8770,693,096.67
Other cash paid concerning operating activities415,890,005.54375,443,290.96
Subtotal of cash outflow arising from operating activities8,243,455,982.017,872,704,497.49
Net cash flows arising from operating activities671,238,471.46177,133,225.06
II. Cash flows arising from investing activities:
Cash received from recovering investment3,091,000,000.003,400,000,000.00
Cash received from investment income58,097,866.9279,368,449.44
Net cash received from disposal of fixed, intangible and other long-term assets12,166,744.581,977,299.42
Net cash received from disposal of subsidiaries and other units
Other cash received concerning investing activities383,604,810.26159,661,646.80
Subtotal of cash inflow from investing activities3,544,869,421.763,641,007,395.66
Cash paid for purchasing fixed, intangible and other long-term assets172,239,570.50230,279,910.34
Cash paid for investment2,016,087,040.003,954,704,000.00
Net cash received from subsidiaries and other units obtained
Other cash paid concerning investing activities75,496,976.70295,811,872.57
Subtotal of cash outflow from investing activities2,263,823,587.204,480,795,782.91
Net cash flows arising from investing activities1,281,045,834.56-839,788,387.25
III. Cash flows arising from financing activities
Cash received from absorbing investment
Cash received from loans1,480,244,977.592,292,940,156.01
Other cash received concerning financing activities184,297,930.6329,222,628.76
Subtotal of cash inflow from financing activities1,664,542,908.222,322,162,784.77
Cash paid for settling debts2,249,508,734.861,590,083,600.00
Cash paid for dividend and profit distributing or interest paying133,129,179.81114,844,654.18
Other cash paid concerning financing activities117,503,039.34472,573,573.53
Subtotal of cash outflow from financing activities2,500,140,954.012,177,501,827.71
Net cash flows arising from financing activities-835,598,045.79144,660,957.06
IV. Influence on cash and cash equivalents due to fluctuation in exchange rate6,329,365.902,349,591.64
V. Net increase of cash and cash equivalents1,123,015,626.13-515,644,613.49
Add: Balance of cash and cash equivalents at the period -begin2,894,384,811.053,410,029,424.54
VI. Balance of cash and cash equivalents at the period -end4,017,400,437.182,894,384,811.05

Legal Representative: Wu Dinggang Person in charge of accounting works: Pang HaitaoPerson in charge of accounting institute: Yang Jun

7. Statement of Changes in Owners’ Equity (Consolidated)

This Period

In RMB

Item2019
Owners‘ equity attributable to the parent CompanyMinority interestsTotal owners‘ equity
Share capitalOther equity instrumentCapital reserveLess: Inventory sharesOther comprehensive incomeReasonable reserveSurplus reserveProvision of general riskRetained profitOtherSubtotal
Preferred stockPerpetual capital securitiesOther
I. Balance at the end of the last year1,044,597,881.002,684,369,598.46-18,143,569.26400,673,993.50904,232,582.875,015,730,486.57119,819,558.595,135,550,045.16
Add: Changes of accounting policy-1,023,250.12-2,734,328.91-3,757,579.03-4,385,295.55-8,142,874.58
Error correction of the last period
Enterprise combine under the same control
Other
II. Balance at the beginning of this year1,044,597,881.002,684,369,598.46-18,143,569.26399,650,743.38901,498,253.965,011,972,907.54115,434,263.045,127,407,170.58
III. Increase/ Decrease in this year (Decrease is listed with ―-‖)-2,979.36-787,861.1011,136,116.82-17,370,510.54-7,025,234.18-8,407,224.30-15,432,458.48
(i) Total comprehensive income-787,861.1056,441,479.1455,653,618.04-14,209,434.2741,444,183.77
(ii) Owners‘ devoted and decreased capital-2,979.36-2,979.368,143,349.038,140,369.67
1.Common shares invested by shareholders8,140,369.678,140,369.67
2. Capital invested by holders of other equity instruments
3. Amount reckoned into owners equity with share-based payment
4. Other-2,979.36-2,979.362,979.36
(III) Profit distribution11,136,116.82-73,811,989.68-62,675,872.86-2,341,139.06-65,017,011.92
1. Withdrawal of surplus reserves11,136,116.82-11,136,116.82
2. Withdrawal of general risk provisions
3. Distribution for owners (or shareholders)-62,675,872.86-62,675,872.86-2,341,139.06-65,017,011.92
4. Other
(IV) Carrying forward internal owners‘ equity
1. Capital reserves conversed to capital (share capital)
2. Surplus reserves conversed to capital (share capital)
3. Remedying loss with surplus reserve
4.Carry-over retained earnings from the defined benefit plans
5.Carry-over retained earnings from other comprehensive income
6. Other
(V) Reasonable reserve
1. Withdrawal in the report period
2. Usage in the report period
(VI)Others
IV. Balance at the end of the report period1,044,597,881.002,684,366,619.10-18,931,430.36410,786,860.20884,127,743.425,004,947,673.36107,027,038.745,111,974,712.10

Last Period

In RMB

Item2018
Owners‘ equity attributable to the parent CompanyMinority interestsTotal owners‘ equity
Share capitalOther equity instrumentCapital reserveLess: Inventory sharesOther comprehensive incomeReasonable reserveSurplus reserveProvision of general riskRetained profitOtherSubtotal
Preferred stockPerpetual capital securitiesOther
I. Balance at the end of the last year1,044,597,881.002,684,806,344.07-7,262,322.02391,029,420.33937,894,771.935,051,066,095.31106,110,485.805,157,176,581.11
Add: Changes of accounting policy
Error correction of the last period
Enterprise combine under the same control
Other
II. Balance at the beginning of this year1,044,597,881.002,684,806,344.07-7,262,322.02391,029,420.33937,894,771.935,051,066,095.31106,110,485.805,157,176,581.11
III. Increase/ Decrease in this year (Decrease is listed with ―-‖)-436,745.61-10,881,247.249,644,573.17-33,662,189.06-35,335,608.7413,709,072.79-21,626,535.95
(i) Total comprehensive income-10,881,247.2438,658,256.9727,777,009.73-8,225,538.8619,551,470.87
(ii) Owners‘ devoted and decreased capital-436,745.61-436,745.6123,299,029.6522,862,284.04
1.Common shares invested by shareholders24,865,000.0024,865,000.00
2. Capital invested by holders of other equity instruments
3. Amount reckoned into owners equity with share-based payment
4. Other-436,745.61-436,745.61-1,565,970.35-2,002,715.96
(III) Profit distribution9,644,573.17-72,320,446.03-62,675,872.86-1,364,418.00-64,040,290.86
1. Withdrawal of surplus reserves9,644,573.17-9,644,573.17
2. Withdrawal of general risk provisions
3. Distribution for owners (or shareholders)-62,675,872.86-62,675,872.86-1,364,418.00-64,040,290.86
4. Other
(IV) Carrying forward internal owners‘ equity
1. Capital reserves conversed to capital (share capital)
2. Surplus reserves conversed to capital (share capital)
3. Remedying loss with surplus reserve
4.Carry-over retained earnings from the defined benefit plans
5.Carry-over retained earnings from other comprehensive income
6. Other
(V) Reasonable reserve
1. Withdrawal in the report period
2. Usage in the report period
(VI)Others
IV. Balance at the end of the report period1,044,597,881.002,684,369,598.46-18,143,569.26400,673,993.50904,232,582.875,015,730,486.57119,819,558.595,135,550,045.16

Legal Representative: Wu Dinggang Person in charge of accounting works: Pang HaitaoPerson in charge of accounting institute: Yang Jun

8. Statement of Changes in Owners’ Equity (Parent Company)

This Period

In RMB

Item2019
Share capitalOther equity instrumentCapital public reserveLess: Inventory sharesOther comprehensive incomeReasonable reserveSurplus reserveRetained profitOtherTotal owners‘ equity
Preferred stockPerpetual capital securitiesOther
I. Balance at the end of the last year1,044,597,881.002,753,017,007.10400,455,827.82917,567,933.945,115,638,649.86
Add: Changes of accounting policy-1,023,250.12-9,209,251.03-10,232,501.15
Error correction of the last period
Other
II. Balance at the beginning of this year1,044,597,881.002,753,017,007.10399,432,577.70908,358,682.915,105,406,148.71
III. Increase/ Decrease in this year (Decrease is listed with ―-‖)11,136,116.8237,549,178.5048,685,295.32
(i) Total comprehensive income111,361,168.18111,361,168.18
(ii) Owners‘ devoted and decreased capital
1.Common shares invested by shareholders
2. Capital invested by holders of other equity instruments
3. Amount reckoned into owners equity with share-based payment
4. Other
(III) Profit distribution11,136,116.82-73,811,989.68-62,675,872.86
1. Withdrawal of surplus reserves11,136,116.82-11,136,116.82
2. Distribution for owners (or shareholders)-62,675,872.86-62,675,872.86
3. Other
(IV) Carrying forward internal owners‘ equity
1. Capital reserves conversed to capital (share capital)
2. Surplus reserves conversed to capital (share capital)
3. Remedying loss with surplus reserve
4.Carry-over retained earnings from the defined benefit plans
5.Carry-over retained earnings from other comprehensive income
6. Other
(V) Reasonable reserve
1. Withdrawal in the report period
2. Usage in the report period
(VI)Others
IV. Balance at the end of the report period1,044,597,881.002,753,017,007.10410,568,694.52945,907,861.415,154,091,444.03

Legal Representative: Wu DinggangPerson in charge of accounting works: Pang HaitaoPerson in charge of accounting institute: Yang JunLast period

In RMB

Item2018
Share capitalOther equity instrumentCapital public reserveLess: Inventory sharesOther comprehensive incomeReasonable reserveSurplus reserveRetained profitOtherTotal owners‘ equity
Preferred stockPerpetual capital securitiesOther
I. Balance at the end of the last year1,044,597,881.002,753,017,007.10390,811,254.65893,442,648.285,081,868,791.03
Add: Changes of accounting policy
Error correction of the last period
Other
II. Balance at the beginning of this year1,044,597,881.002,753,017,007.10390,811,254.65893,442,648.285,081,868,791.03
III. Increase/ Decrease in this year (Decrease is listed with ―-‖)9,644,573.1724,125,285.6633,769,858.83
(i) Total comprehensive income96,445,731.6996,445,731.69
(ii) Owners‘ devoted and decreased capital
1.Common shares invested by shareholders
2. Capital invested by holders of other equity instruments
3. Amount reckoned into owners equity with share-based payment
4. Other
(III) Profit distribution9,644,573.17-72,320,446.03-62,675,872.86
1. Withdrawal of surplus reserves9,644,573.17-9,644,573.17
2. Distribution for owners (or shareholders)-62,675,872.86-62,675,872.86
3. Other
(IV) Carrying forward internal owners‘ equity
1. Capital reserves conversed to capital (share capital)
2. Surplus reserves conversed to capital (share capital)
3. Remedying loss with surplus reserve
4.Carry-over retained earnings from the defined benefit plans
5.Carry-over retained earnings from other comprehensive income
6. Other
(V) Reasonable reserve
1. Withdrawal in the report period
2. Usage in the report period
(VI)Others
IV. Balance at the end of the report period1,044,597,881.002,753,017,007.10400,455,827.82917,567,933.945,115,638,649.86

Legal Representative: Wu DinggangPerson in charge of accounting works: Pang HaitaoPerson in charge of accounting institute: Yang Jun

Annotations to Financial Statements of Changhong Meiling Co., Ltd.

From 1 January 2019 to 31 December 2019

(Unless otherwise specified. RMB for record in the statement)

I. Company profile

Changhong Meiling Co., Ltd (hereinafter referred to as ―the Company‖) ,originally named as Hefei MeilingCo., Ltd. is an incorporated Company established and reorganized by Hefei Meiling Refrigerator GeneralFactory and approved on June 12

th

1992 through [WanTiGaiHanZi (1992) No.039] issued by originalMechanism Reform Committee of Anhui Province. On August 30

th1993, through Anhui ProvincialGovernment [Wanzhenmin (1993) No.166] and re-examination of China Securities Regulatory Commission,the Company made first public issue for 30 million A shares and the Company was listed on Oct. 18

th, 1993in Shenzhen Stock Exchange. On August 13

th, 1996, the Company was approved to issue 100 million Bshares to investors abroad through [ZhengWeiFa (1996) No.26] issued by China Securities RegulatoryCommission. The Company went public in Shenzhen Stock Exchange on August 28

th, 1996.

State-owned Assets Supervision & Administration Commission of the State Council approved such transferswith Document Guozi Chanquan No.253 in 2007 Reply on Matters of Hefei Meiling Group HoldingsCompany Limited Transferring Partial State-owned Ownership, Hefei Meiling Group Holdings CompanyLimited (hereinafter abbreviated as Meiling Group) transferred its holding 37,852,683 shares in 82,852,683state-owned shares of the Company to Sichuan Changhong Electronic Group Co., Ltd (hereinafterabbreviated as Changhong Group), other 45,000,000 shares to Sichuan Changhong Electric Co. Ltd(hereinafter abbreviated as Sichuan Changhong). On Aug 15, 2007, the above ownership was transferred andCleaning Corporation Limited.

On 27 August 2007, State-owned Assets Supervision & Administration Commission of Anhui ProvincialGovernment replied with Document [WGZCQH (2007) No.309] Reply on ―Related Matters of Share MergerReform of Meiling Co., Ltd.‖, agreed the Company‘s ownership split reform plan. The Company madeconsideration that non-tradable share holders deliver 1.5 shares to A share holders per 10 shares, and originalMeiling Group made prepayment 3,360,329 shares for some non-tradable share holders as consideration forsplit reform plan.

On 29 May 2008, concerning 34,359,384 state-owned shares (including 3,360,329 shares paid for othernon-tradable shareholders by original Meiling Group in share reform) held by original Meiling Group, the―Notice of Freely Transfer of Meiling Electrics Equity held by Meiling Group‖[HGZCQ(2008) No. 59]issued from State-owned Assets Supervision & Administration Commission of Hefei Municipal, agrees totransfer the above said shares to Hefei Xingtai Holding Group Co., Ltd.(―Xingtai Holding Co.,‖) for free. On7 August 2008, the ―Reply of Transfer Freely of Part of the Shares of Hefei Meiling Co., Ltd. held byState-owned shareholders‖ [GZCQ (2007) No. 752] issued by SASAC, agrees the above said transferring.

On October 29, 2008, Changhong Group Company signed Agreement on Equity Transfer of Hefei MeilingCo., Ltd with Sichuan Changhong, in which 32,078,846 tradable A-shares with conditional subscription of

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

the Company (accounting for 7.76% in total shares) held by Changhong Group Company. On 23 December2008, ―Reply of Transfer Freely of Part of the Shares of Hefei Meiling Co., Ltd. held by State-ownedshareholders‖ [GZCQ (2008) No. 1413] issued by SASAC agrees the above said share transferring.

On 24 December 2010, being deliberated and approved in 32

nd Session of 6

th BOD and 2

ndExtraordinaryShareholders‘ General Meeting of 2010 as well as approval of document [ZJXP (2010) No. 1715] fromCSRC, totally 116,731,500 RMB ordinary shares (A stock) were offering privately to target investors withissue price of RMB 10.28/share. Capital collecting amounting to RMB 1,199,999,820 after issuing expensesRMB 22,045,500 deducted, net capital collected amounting to RMB 1,177,954,320, and paid-in capital(share capital) increased RMB 116,731,500 with capital reserve (share premium) RMB 1,061,106,088.5increased. The increasing capital has been verified by Capital Verification Report No.:

[XYZH2010CDA6021]issued from Shinwing CPA Co., Ltd.

On 20 June 2011, the general meeting of the Company considered and approved the 2010 profit distributionplan, namely to distribute cash dividends of RMB0.5 (tax included) plus two shares for every ten shares heldby shareholders to all shareholders, based on the total share capital of 530,374,449 shares as of 31 December2010. The total share capital of the Company upon profit distribution increased to 636,449,338 shares. Thecapital increase was verified by Anhui Huashen Zhengda Accounting Firm with the verification reportWHSZDKYZ (2011) No.141.

On 26 June 2012, the general meeting of the Company considered and approved the 2011 profit distributionand capitalization of capital reserve plan, namely to distribute cash dividends of RMB0.5 (tax included) plustwo shares for every ten shares to all shareholders capitalized from capital reserve, based on the total sharecapital of 636,449,338 shares as of 31 December 2011. The total share capital of the Company uponimplementation of capitalization of capital reserve increased to 763,739,205 shares from 636,449,338 shares,and was verified by Anhui Anlian Xinda Accounting Firm with the verification report WALXDYZ (2012)No.093.

On November 18, 2015, considered and approved by the 12

th Session of the 8

thBOD of the company and thefirst extraordinary general meeting in 2016, and approved by the document of China Securities RegulatoryCommission [CSRC License No. (2016) 1396] ―Reply to the approval of non-public offering of shares ofHefei Meiling Co., Ltd.‖, the company has actually raised funds of 1,569,999,998.84 Yuan by non-publicoffering of no more than 334,042,553 new shares at face value of 1 Yuan per share and with issue price noless than RMB 4.70 per share, after deducting the issue costs of 29,267,276.08 Yuan , the net amount ofraised funds is 1,540,732,722.76 Yuan , the increased paid-in capital (share capital) of 280,858,676.00 Yuan ,increased capital reserve (share premium) of 1,259,874,046.76 Yuan. This capital increase has been verifiedby No.[XYZH2016CDA40272]capital verification report of Shine Wing Certified Public Accountants

(LLP).

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

Ended as 31 December 2019, total share capital of the Company amounting to 1,044,597,881shares withordinary shares in full. Among which, 881,733,881 shares of A-share accounting 84.41% in total shareswhile B-share with 162,864,000 shares accounting 15.59% in total shares. Detail share capital as:

Type of stockQuantityProportion
(I)Restricted shares10,553,7701.01%
1. State-owned shares
2. State-owned legal person‘s shares915,9870.09%
3. Other domestic shares8,370,3630.80%
Including: Domestic legal person‘s shares4,716,0770.45%
Domestic natural person‘s shares3,654,2860.35%
4. Foreign shares1,267,4200.12%
Including: Overseas legal person‘s shares
Overseas natural person‘s shares1,267,4200.12%
(II)Unrestricted shares1,034,044,11198.99%
1. RMB Ordinary shares872,447,53183.52%
2. Domestically listed foreign shares161,596,58015.47%
3. Overseas listed foreign shares
4. Others
Total shares1,044,597,881100.00%

The Company belongs to the manufacture of light industry, and engaged in the production and sale ofrefrigerator, freezer and air-conditioner. Unified social credit code of the Company: 9134000014918555XK;Address: No.2163, Lianhua Road, Economy and Technology Development Zone, Hefei City; LegalRepresentative: Li Wei; register capital (paid-in capital): RMB 1,044,597,881; type of company: limitedliability company(joint venture and listed of Taiwan, Hong Kong and Macao) Business Scope: R&D,manufacture and sales of cooling apparatus, air-conditioner, washing machine, water heater, kitchenware,home decoration, bathroom, lamps & lanterns, household & similar appliance, injection plastic machine ofcomputer controlling, plastic products, metalwork, packaging products and decorations as well as theinstallation and technical consultant services. Business of self-produced products, technology export andimport-export of the raw& auxiliary materials, machinery equipment, instrument and technology; departmentsales and transportation (Excluding dangerous chemicals), computer network system integration, intelligentproduct system integration, software development and technical information services, development,production, sales and service of automation equipment and electronic products, sales services of cold chaintransport vehicles and refrigerator and freezer van, development, production, sales and service of cold chaininsulation boxes, research and development, production, sales and service of cold storage, commercialfreezer chain display cabinets, commercial cold chain products. (Projects that require approval in accordance

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

with the law can only be operated after approval by relevant departments)

II. Scope of consolidated financial statementIn the reporting period, the consolidated financial statements of the Company cover 38 subsidiaries,including Sichuan Changhong Air-conditioner Co., Ltd, Zhongshan Changhong Electric Co., Ltd. AndZhongke Meiling Cryogenic Technology Co., Ltd. etc. Compared with the previous year, during the reportingperiod two enterprises are included in the consolidate scope, that is Hefei Meiling Wulian Technology Co.,Ltd and Anhui Tuoxing Science and Technology Co., Ltd. And the subsidiary Nanchang Xiangyou ElectronicAppliance Marketing Co., Ltd, Changsha Meizlai Electronic Appliance Marketing Co., Ltd and ZhongshanHongling Trading Co., Ltd are out of the scope for clearing off.Found more in ―VII. Changes in the scope of merger‖ and ―VIII. Equity in other entities‖ carry in theNote

III. Basis for preparation of financial statement

1. Basis for preparation

The financial statements of the Company were prepared in accordance with the actual transactions andproceedings, and relevant regulation of Accounting Standards for Enterprise released by the Ministry ofFinance, and was on the basis of sustainable operation, and the accounting policy and estimation stated in the―IV. Significant Accounting Policy and Accounting Estimation‖

2.Continuous operation

The Company recently has a history of profitability operation and has financial resources supporting, andprepared the financial statement on basis of going concern is reasonable.

IV. Significant Accounting Policy and accounting Estimation

1. Statement on observation of accounting standards for enterprise

The financial statement prepared by the Company applies with the requirements of Accounting Standard forEnterprise, and reflects the financial condition, operational achievements and cash flow of the Companyeffectively and completely.

2. Accounting period

The accounting period of the Company is the calendar date from 1 January to 31 December.

3. Operation cycle

Operation cycle of the Company was 12 months, and it is the standard of flow classification for assets andliabilities.

Annotations to Financial Statements of Changhong Meiling Co., Ltd.

From 1 January 2019 to 31 December 2019

(Unless otherwise specified. RMB for record in the statement)

4. Standard currency for accounting

The Company takes RMB as the standard currency for accounting.

5. Accountant arrangement method of business combination under common control and not under commoncontrolAs acquirer, the Company measures the assets and liabilities acquired through business combination undercommon control at their carrying values as reflected in the consolidated financial statement of the ultimatecontroller as of the combination date. Capital reserve shall be adjusted in respect of any difference betweencarrying value of the net assets acquired and carrying value of the combination consideration paid. In casethat capital reserve is insufficient to offset, the Company would adjust retained earnings.

The acquiree‘s net identifiable assets, liabilities or contingent liabilities acquired through businesscombination not under common control shall be measured at fair value as of the acquisition date. The cost ofcombination represents the fair value of the cash or non-cash assets paid, liabilities issued or committed andequity securities issued by the Company as at the date of combination in consideration for acquiring thecontrolling power in the acquiree, together with the sum of any directly related expenses occurred duringbusiness combination(in case of such business combination as gradually realized through varioustransactions, the combination cost refers to the sum of each cost of respective separate transaction). Wherethe cost of the combination exceeds the acquirer‘s interest in the fair value of the acquirer‘s identifiable netassets acquired, the difference is recognized as goodwill; where the cost of combination is lower than theacquirer‘s interest in the fair value of the acquiree‘s identifiable net assets, the Company shall firstly makefurther review on the fair values of the net identifiable assets, liabilities or contingent liabilities acquired aswell as the fair value of the non-cash assets portion of combination consideration or the equity securitiesissued by the Company. In case that the Company finds the cost of combination is still lower than theacquirer‘s interest in the fair value of the acquiree‘s identifiable net assets after such further review, thedifference is recognized in non-operating income for the current period when combination occurs.

6. Measures on Preparation of Consolidated Financial Statements

The Company shall put all the subsidiaries controlled and main body structured into consolidated financialstatements.

Any difference arising from the inconformity of accounting year or accounting policies between thesubsidiaries and the Company shall be adjusted in the consolidated financial statements.

All the material inter-company transactions, non-extraordinary items and unrealized profit within thecombination scope are written-off when preparing consolidated financial statement. Owners‘ equity ofsubsidiary not attributable to parent company and current net gains and losses, other comprehensive income

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

and total comprehensive income attributable to minority shareholders are recognized as non-controllinginterests, minority interests, other comprehensive income attributable to minority shareholders and totalcomprehensive income attributable to minority shareholders in consolidated financial statement respectively.

As for subsidiary acquired through business combination under common control, its operating results andcash flow will be included in consolidated financial statement since the beginning of the period whencombination occurs. When preparing comparative consolidated financial statement, the relevant items inprevious years financial statement shall be adjusted as if the reporting entity formed upon combination hasbeen existing since the ultimate controller commenced relevant control.

As for equity interests of the investee under common control acquired through various transactions whicheventually formed business combination, the Company shall supplement disclosure of the accountingtreatment in consolidated financial statement in the reporting period when controlling power is obtained. Forexample, as for equity interests of the investee under common control acquired through various transactionswhich eventually formed business combination, adjustments shall be made as if the current status had beenexisting when the ultimate controller commenced control in connection of preparing consolidated financialstatement; in connection with preparing comparative statement, the Company shall consolidate the relevantassets and liabilities of the acquiree into the Company‘s comparative consolidated financial statement to theextent not earlier than the timing when the Company and the acquiree are all under control of the ultimatecontroller, and the net assets increased due to combination shall be used to adjust relevant items underowners‘ equity in comparative statement. In order to prevent double computation of the value of theacquiree‘s net assets, the relevant profits and losses, other comprehensive income and change of other netassets recognized during the period from the date when the Company acquires original equity interests andthe date when the Company and the acquiree are all under ultimate control of the same party (whichever islater) to the date of combination in respect of the long-term equity investment held by the Company beforesatisfaction of combination shall be utilized to offset the beginning retained earnings and current gains andlosses in the period as the comparative financial statement involves, respectively.

As for subsidiary acquired through business combination not under common control, its operating results andcash flow will be included in consolidated financial statement since the Company obtains controlling power.When preparing consolidated financial statement, the Company shall adjust the subsidiary‘s financialstatement based on the fair value of the various identifiable assets, liabilities or contingent liabilitiesrecognized as of the acquisition date.

As for equity interests of the investee not under common control acquired through various transactions whicheventually formed business combination, the Company shall supplement disclosure of the accountingtreatment in consolidated financial statement in the reporting period when controlling power is obtained. Forexample, as for equity interests of the investee not under common control acquired through varioustransactions which eventually formed business combination, when preparing consolidated financial statement,

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019

(Unless otherwise specified. RMB for record in the statement)

the Company would re-measure the equity interests held in the acquiree before acquisition date at their fairvalue as of the acquisition date, and any difference between the fair value and carrying value is included incurrent investment income. in case that the equity interests in acquiree held by the Company before therelevant acquisition date involves other comprehensive income at equity method and change of other owners‘equity (other than net gains and losses, other comprehensive income and profit distribution), then the equityinterests would transfer to investment gains and losses for the period which the acquisition date falls upon.The other comprehensive income arising from change of the net liabilities or net assets under establishedbenefit scheme as acquiree‘s re-measured such scheme is excluded.

The transaction with non-controlling interest to dispose long-term equity investment in a subsidiary withoutlosing control rights over the subsidiary, the difference between the proceeds from disposal of interests andthe decrease of the shared net assets of the subsidiary is adjusted to capital premium (share premium). In casecapital reserve is not sufficient to offset the difference, retained earnings will be adjusted.

As for disposal of part equity investment which leads to losing control over the investee, the Company wouldre-measure the remaining equity interests at their fair value as of the date when the Company loses controlover the investee when preparing consolidated financial statement. The sum of consideration received fromdisposal of equity interest and fair value of the remaining equity interest, less the net assets of the originalsubsidiary attributable to the Company calculated based on the original shareholding proportion since theacquisition date or the date then consolidation commences, is included in investment gains and losses for theperiod when control is lost, meanwhile to offset goodwill. Other comprehensive income related to equityinterest investment in original subsidiaries is transferred into current investment gains and losses upon lost ofcontrol.

If the disposal of the equity investment of a subsidiary is realized through multiple transactions until loss ofcontrol and is a package deal, the accounting treatment of these transactions should be dealt with as onetransaction of disposal of the subsidiary until loss of control. However, before the Company loses totalcontrol of the subsidiary, the differences between the actual disposal price and the share of the net assets ofthe subsidiary disposed of in every transaction should be recognized as other comprehensive income in theconsolidated financial statements, and transferred to profit or loss when losing control.

7. Accounting treatment for joint venture arrangement and joint controlled entityThe joint venture arrangement of the Company consists of joint controlled entity and joint venture. As forjointly controlled entity, the Company determines the assets held and liabilities assumed separately as a partyto the jointly controlled entity, recognizes such assets and liabilities according to its proportion, andrecognizes relevant income and expense separately under relevant agreement or according to its proportion.As for asset transaction relating to purchase and sales with the jointly controlled entity which does notconstitute business activity, part of the gains and losses arising from such transaction attributable to otherparticipators of the jointly controlled entity is only recognized.

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

8. Cash and cash equivalents

Cash in the cash flow statement comprises the Group‘s cash on hand and deposits that can be readilywithdrawn on demand. Cash equivalents are short-term, highly liquid investments held by the Group, thatare readily convertible to known amounts of cash and which are subject to an insignificant risk of changes invalue, including but not limited to the followings which meet the aforesaid conditions: debt investmentmatured within three months upon the acquisition date, bank time deposit which can be early withdrew byserving a notice and transferrable deposit receipt, etc. for time deposit which can not be used for payment atany time, it would be note recognized as cash; while if can be used for such purpose, it would be recognizedas cash. Guarantee deposit over three months in other monetary capital shall not be recognized as cashequivalents, and those less than three months are recognized as cash equivalents.

9. Foreign currency business and foreign currency financial statement conversion

(1) Foreign currency business

As for the foreign currency business, the Company converts the foreign currency amount into RMB amountpursuant to the spot exchange rate as of the business day. As at the balance sheet date, monetary itemsexpressed by foreign currency are converted into RMB pursuant to the spot exchange rate as of the balancesheet date. The conversion difference occurred is recorded into prevailing gains and losses, other than thedisclosure which is made according to capitalization rules for the exchange difference occurred from thespecial foreign currency borrowings borrowed for constructing and producing the assets satisfying conditionof capitalization. As for the foreign currency non-monetary items measured by fair value, the amount is thenconverted into RMB according to the spot exchange rate as of the confirmation day for fair value. And theconversion difference occurred during the procedure is recorded into prevailing gains and losses directly aschange of fair value. As for the foreign currency non-monetary items measured by historical cost, conversionis made with the spot exchange rate as of the business day, with no change in RMB amount.

(2) Conversion of foreign currency financial statement

Spot exchange rate as of the balance sheet date is adopted for conversion of assets and liabilities in foreigncurrency balance sheet; as for the items in statement of owners‘ equity except for ―Retained profit‖,conversion is made pursuant to the spot exchange rate of business day; income and expense items in incomestatement then are also converted pursuant to the spot exchange rate of transaction day. Difference arisingfrom the aforementioned conversions shall be listed separately in items of owners‘ equity. Spot exchange rateas of the occurrence date of cash flow is adopted for conversion of foreign currency cash flow. The amountof cash affected by exchange rate movement shall be listed separately in cash flow statement.

10. Financial instrument

A financial asset or liability is recognized when the group becomes a party to a financial instrument contract.The financial assets and financial liabilities are measured at fair value on initial recognition. For the financial

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019

(Unless otherwise specified. RMB for record in the statement)

assets and liabilities measured by fair value and with variation reckoned into current gains/losses, the relatedtransaction expenses are directly included in current gains or losses; for other types of financial assets andliabilities, the related transaction costs are included in the initial recognition amount.

(1) Method for determining the fair value of financial assets and financial liabilitiesFair value refers to the price that a market participant can get by selling an asset or has to pay for transferringa liability in an orderly transaction that occurs on the measurement date. For a financial instrument having anactive market, the Company uses the quoted prices in the active market to determine its fair value.Quotations in an active market refer to prices that are readily available from exchanges, brokers, industryassociations, pricing services, etc., and represent the prices of market transactions that actually occur in anarm's length transaction. If there is no active market for a financial instrument, the Company uses valuationtechniques to determine its fair value. Valuation techniques include reference to prices used in recent markettransactions by parties familiar with the situation and through voluntary trade, and reference to current fairvalues of other financial instruments that are substantially identical, discounted cash flow methods, andoption pricing models.

(2) Category and measurement on financial assets

The group divided the financial assets as the follow while initially recognized: the financial assets measuredat amortized cost; the financial assets measured at fair value and whose changes are included in othercomprehensive income; and the financial assets measured by fair value and with variation reckoned intocurrent gains/losses. The classification of financial assets depends on the business model that the Group'senterprises manage the financial assets and the cash flow characteristics of the financial assets.

1) The financial assets measured at amortized cost

Financial assets are classified as financial assets measured at amortized cost when they also meet thefollowing conditions: The group's business model for managing the financial assets is to collect contractualcash flows; the contractual terms of the financial assets stipulate that cash flow generated on a specific date isonly paid for the principal and interest based on the outstanding principal amount. For such financial assets,the effective interest method is used for subsequent measurement according to the amortized cost, and thegains or losses arising from amortization or impairment are included in current profits and losses. Suchfinancial assets mainly include monetary funds, notes receivable, accounts receivable, other receivables, debtinvestment and long-term receivables, and so on. The Group lists the debt investment and long-termreceivables due within one year (including one year) from the balance sheet date as non-current assets duewithin one year, and lists the debt investment with time limit within one year (including one year) whenacquired as other current assets.

2) Financial assets measured at fair value and whose changes are included in other comprehensiveincome

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

Financial assets are classified as financial assets measured at fair value and whose changes are included inother comprehensive income when they also meet the following conditions: The Group's business model formanaging the financial assets is targeted at both the collection of contractual cash flows and the sale offinancial assets; the contractual terms of the financial asset stipulate that the cash flow generated on aspecific date is only the payment of the principal and the interest based on the outstanding principal amount.For such financial assets, fair value is used for subsequent measurement. The discount or premium isamortized by using the effective interest method and is recognized as interest income or expenses. Except theimpairment losses and the exchange differences of foreign currency monetary financial assets are recognizedas the current profits and losses, the changes in the fair value of such financial assets are recognized as othercomprehensive income until the financial assets are derecognized, the accumulated gains or losses aretransferred to the current profits and losses. Interest income related to such financial assets is included in thecurrent profit and loss. Such financial assets are listed as other debt investments, other debt investments duewithin one year (including one year) from the balance sheet date are listed as non-current assets due withinone year; and other debt investments with time limit within one year (including one year) when acquired arelisted as other current assets.

3) Financial assets measured at fair value and whose changes are included in current gains/lossesFinancial assets except for the above-mentioned financial assets measured at amortized cost and financialassets measured at fair value and whose changes are included in other comprehensive income are classifiedas financial assets measured at fair value and whose changes are included in current profits and losses, whichadopt fair value for subsequent measurement and all changes in fair value are included in current profits andlosses. The Group classifies non-trading equity instruments as financial assets measured at fair value andwhose changes are included in current profits and losses. Such financial assets are presented as tradingfinancial assets, and those expire after more than one year and are expected to be held for more than one yearare presented as other non-current financial assets.

(3) Devaluation of financial instrument

On the basis of expected credit losses, the Group performs impairment treatment on financial assetsmeasured at amortized cost and financial assets measured at fair value and whose changes are included inother comprehensive income and recognize the provisions for loss.Credit loss refers to the difference between all contractual cash flows that the Company discounts at theoriginal actual interest rate and are receivable in accordance with contract and all cash flows expected to bereceived, that is, the present value of all cash shortages. Among them, for the purchase or source of financialassets that have suffered credit impairment, the Company discounts the financial assets at the actual interestrate adjusted by credit.The Group considers all reasonable and evidenced information, including forward-looking information,based on credit risk characteristics. When assessing the expected credit losses of receivables, they are

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

classified according to the specific credit risk characteristics as follows:

1) For receivables and contractual assets and lease receivables (including significant financing componentsand not including significant financing components), the Group measures the provisions for loss based on theamount of expected credit losses equivalent to the entire duration.

①Evaluate expected credit losses based on individual items: credit notes receivable (including acceptedletters of credit) of financial institutions in notes receivable and accounts receivable, and related partypayments (related parties under the same control and significant related parties); dividends receivable,interest receivable, reserve funds, investment loans, cash deposits (including warranty), government grants(including dismantling subsidies) in other receivables, and receivables with significant financing components(i.e. long-term receivables);

②Evaluate expected credit losses based on customer credit characteristics and ageing combinations: inaddition to evaluating expected credit losses based on individual items, the Group evaluates the expectedcredit losses of notes receivable and accounts receivable and other receivables financial instruments based oncustomer credit characteristics and ageing combinations.The Group considers all reasonable and evidenced information, including forward-looking information, whenassessing expected credit losses. When there is objective evidence that its customer credit characteristics andageing combination cannot reasonably reflect its expected credit loss, the current value of the expected futurecash flow is measured by a single item, and the cash flow shortage is directly written down the book balanceof the financial asset.

2) Assess the expected credit losses on a case-by-case basis for other assets to which the financialinstruments are impaired, such as the loan commitments and financial guarantee contracts that are notmeasured at fair value through profit or loss, financial assets measured at fair value and whose changes arerecognized in other comprehensive income; other financial assets measured at amortized cost (such as othercurrent assets, other non-current financial assets, etc.).

(4) Reorganization basis and measure method for transfer of financial assets

The financial assets meet one of following requirements will be terminated recognition: ① The contractrights of collecting cash flow of the financial assets is terminated; ②The financial assets has already beentransferred, and the Company has transferred almost all risks and remunerations of financial assets ownershipto the transferee; ③The financial assets has been transferred, even though the Company has neithertransferred nor kept almost all risks and remunerations of financial assets ownership, the Company has givenup controlling the financial assets.

If the enterprise has neither transferred or kept almost all risks and remunerations of financial assetsownership, nor given up controlling the financial assets, then confirm the relevant financial assets according

Annotations to Financial Statements of Changhong Meiling Co., Ltd.

From 1 January 2019 to 31 December 2019

(Unless otherwise specified. RMB for record in the statement)

to how it continues to involve into the transferred financial assets and confirm the relevant liabilitiesaccordingly. The extent of continuing involvement in the transferred financial assets refers to the level of riskarising from the changes in financial assets value faced by the enterprise.

If the entire transfer of financial assets satisfies the demand for derecognition, reckon the balancebetween the book value of the transferred financial assets and the sum of consideration received fromtransfer and fluctuation accumulated amount of fair value formerly reckoned in other consolidatedincome in the current profits and losses.

If part transfer of financial assets satisfies the demand for derecognition, apportion the integral bookvalue of the transferred financial assets between the derecognized parts and the parts not yetderecognized according to each relative fair value, and reckon the balance between the sum ofconsideration received from transfer and fluctuation accumulated amount of fair value formerlyreckoned in other consolidated income that should be apportioned to the derecognized parts and theapportioned aforementioned carrying amounts in the current profits and losses.

When the Group sells financial assets adopting the mode of recourse, or endorses and transfers its financialassets, it is necessary to ensure whether almost all the risks and rewards of ownership of the financial assetshave been transferred. If almost all the risks and rewards of ownership of the financial assets have beentransferred to the transferee, the financial assets shall be derecognized; if almost all the risks and rewards ofownership of the financial assets are retained, the financial assets shall not be derecognized; if almost all therisks and rewards of ownership of the financial assets are neither transferred nor retained, continue to judgewhether the company retains control over the assets, and conduct accounting treatment according to theprinciples described in the preceding paragraphs.

(5) Category and measurement of financial liability

Financial liability is classified into financial liability measured by fair value and with variation reckoned

into current gains/losses and other financial liability at initially measurement. Financial liability shall beinitially recognized and measured at fair value. As for the financial liability measured by fair value and withvariation reckoned into current gains/losses, relevant trading costs are directly reckoned into currentgains/losses while other financial liability shall be reckoned into the initial amount recognized.

① the financial liability measured by fair value and with variation reckoned into current gains/losses

The conditions to be classified as trading financial liabilities and as financial liabilities designated to bemeasured at fair value and whose changes are included in current profit or loss at the initial recognition areconsistent with the conditions to be classified as trading financial assets and as financial assets designated tobe measured at fair value and whose changes are included in current profit or loss at the initial recognition.Financial liabilities measured at fair value and whose changes are included in current profit or loss are

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

subsequently measured at fair value, and the gain or loss arising from changes in fair value and the dividendsand interest expense related to these financial liabilities are included in current profit or loss.

② Other financial liability

It must go through the delivery of the derivative financial liabilities settled by the equity instrument to link tothe equity instruments that are not quoted in an active market and whose fair value cannot be reliablymeasured, and the subsequent measurement is carried out in accordance with the cost. Other financialliabilities are subsequently measured at amortized cost by using the effective interest method. The gain orloss arising from derecognition or amortization is included in current profit or loss.

③Financial guarantee contract

The financial guarantee contract of a financial liability which is not designated to be measured at fair valuethrough profit or loss is initially recognized at fair value, and its subsequent measurement is carried out bythe higher one between the amount confirmed in accordance with the Accounting Standards for BusinessEnterprises No. 13 — Contingencies after initial recognition and the balance after deducting the accumulatedamortization amount determined in accordance with the principle of Accounting Standards for BusinessEnterprises No. 14—Revenue from the initial recognition amount.

(6) Termination of recognition of financial liability

The financial liability or part of it can only be terminated for recognized when all or part of the currentobligation of the financial liability has been discharged. The Group (debtor) and the creditor sign anagreement to replace the existing financial liabilities with new financial liabilities, and if the contract termsof the new financial liabilities are substantially different from the existing financial liabilities, terminated forrecognized the existing financial liabilities and at the same time recognize the new financial liabilities. If thefinancial liability is terminated for recognized in whole or in part, the difference between the carryingamount of the part that terminated for recognized and the consideration paid (including the transferrednon-cash assets or the assumed new financial liabilities) is included in current profits and losses.

(7) Balance-out between the financial assets and liabilities

As the Group has the legal right to balance out the financial liabilities by the net or liquidation of thefinancial assets, the balance-out sum between the financial assets and liabilities is listed in the balance sheet.In addition, the financial assets and liabilities are listed in the balance sheet without being balanced out.

(8) Derivatives and embedded derivatives

Derivatives are initially measured at fair value on the signing date of the relevant contract, and aresubsequently measured at fair value. Except for derivatives that are designated as hedging instruments andare highly effective in hedging, the gains or losses arising from changes in fair value will be determined

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019

(Unless otherwise specified. RMB for record in the statement)

based on the nature of the hedging relationship in accordance with the requirements of the hedge accountingand be included in the period of profit and loss, other changes in fair value of derivatives are included incurrent profits and losses. For a hybrid instrument that includes an embedded derivative, if it is notdesignated as a financial asset or financial liability measured at fair value and whose changes are included incurrent profit or loss, the embedded derivative does not have a close relationship with the main contract interms of economic characteristics and risks, and as with embedded derivatives, if the tools existing separatelyconform to the definition of the derivatives, the embedded derivatives are split from the hybrid instrumentsand are treated as separate derivative financial instruments. If it is not possible to measure the embeddedderivative separately at the time of acquisition or subsequent balance sheet date, the whole hybrid instrumentis designated as a financial asset or financial liability measured at fair value and whose changes are includedin current profits and losses.

(9) Equity instrument

The equity instrument is the contract to prove the holding of the surplus stock of the assets with thededuction of all liabilities in the Group. The Company issues (including refinancing), repurchases, sells orcancels equity instruments as movement of equity. No fair value change of equity instrument would berecognized by the Company. Transaction costs associated with equity transactions are deducted from equity.The Group's various distributions to equity instrument holders (excluding stock dividends) reduceshareholders' equity.

11. Inventory

Inventories of the Company principally include raw materials, stock goods; work in process, self-madesemi-finished product, materials consigned to precede, low-value consumption goods, goods in transit, goodsin process, mould and engineering construction etc.

Perpetual inventory system is applicable to inventories. For daily calculation, standard price is adopted forraw materials, low-value consumption goods and stock goods. Switch-back cost of the current month isadjusted by distribution price difference at the end of the month, the dispatched goods will share the costdifferences of inventory while in settlement the business income; and low-value consumption goods iscarried forward at once when being applied for use and the mould shall be amortized within one year afterreceipt.Inventory at period-end is valued by the Lower-of-value between the cost and net realizable value. Theprovision for inventory depreciation shall be drawn from the difference between the book cost of asingle inventory item and its net realizable value, and the provision for inventory depreciation shall berecorded into the current profit and loss.

12. Long-term equity investment

Long-term equity investment of the Company is mainly about investment in subsidiary, investment in

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

associates and investment in joint-ventures.For long-term equity investments acquired through business combination under common control, the initialinvestment cost shall be the acquirer‘s share of the carrying amount of net assets of the acquiree as of thecombination date as reflected in the consolidated financial statement of the ultimate controller. If the carryingamount of net assets of the acquiree as of the combination date is negative, the investment cost of long-termequity investment shall be zero. For long-term equity investment acquired through business combination notunder common control, the initial investment cost shall be the combination cost.

Excluding the long-term equity investment acquired through business combination, there is also a king oflong-term equity investment acquired through cash payment, for which the actual payment for the purchaseshall be investment cost; If Long-term equity investments are acquired by issuing equity securities, fair valueof issuing equity investment shall be investment cost; for Long-term equity investments which are investedby investors, the agreed price in investment contract or agreement shall be investment cost; and for long-termequity investment which is acquired through debt reorganization and non-monetary assets exchange,regulations of relevant accounting standards shall be referred to for confirming investment cost.The Company adopts cost method for investment in subsidiaries, makes calculation for investments injoint-ventures and associates by equity method.

When calculated by cost method, long-term equity investment is priced according to its investment cost, andcost of the investment is adjusted when making additional investment or writing off investment; Whencalculated by equity method, current investment gains and losses represent the proportion of the net gainsand losses realized by the invested unit in current year attributable to or undertaken by the investor. When theCompany is believed to enjoy proportion of net gains and losses of invested unit, gains and lossesattributable to the Company according to its shareholding ratio is to computer out according to theaccounting policy and accounting period of the Company, on the basis of the fair value of variousrecognizable assets of the invested unit as at the date of obtaining of the investment, after offset of gains andlosses arising from internal transactions with associates and joint-ventures, and finally to make confirmationafter adjustment of net profit of the invested unit. Confirmation on gains and losses from the long-termequity investment in associates and joint-ventures held by the Company prior to the first execution day, couldonly stand up with the precedent condition that debit balance of equity investment straightly amortizedaccording to its original remaining term has already been deducted, if the aforementioned balance relating tothe investment do exist.

In case that investor loses joint control or significant influence over investee due to disposal of part equityinterest investment, the remaining equity interest shall be calculated according to Accounting Standards forBusiness Enterprise No.22-Recognition and Measurement of Financial Instrument. Difference between thefair value of the remaining equity interest as of the date when loss of joint control or significant influence andthe carrying value is included in current gains and losses. Other comprehensive income recognized in respect

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

of the original equity interest investment under equity method should be treated according to the same basiswhich the investee adopts to directly dispose the relevant assets or liabilities when ceasing adoption of equitymethod calculation; and also switches to cost method for calculating the long-term equity investments whichentitles the Company to have conduct control over the invested units due to its additional investments; andswitches to equity method for calculating the long-term equity investments which entitles the Company toconduct common control or significant influence, while no control over the invested units due to itsadditional investments, or the long-term equity investments which entitles the Company with no control overthe invested units any longer while with common control or significant influence.

When disposing long-term equity investment, the balance between it carrying value and effective price forobtaining shall be recorded into current investment income. When disposing long-term equity investmentwhich is calculated by equity method, the proportion originally recorded in owners‘ equity shall betransferred to current investment income according to relevant ratio, except for that other movements ofowners‘ equity excluding net gains and losses of the invested units shall be recorded into owners‘ equity.

13. Investment real estate

The investment real estate of the Company includes leased houses and buildings, and is accounted value byits cost. Cost of purchased-in investment real estate consists of payment for purchase, relevant taxes andother expenditure which is attributable to the assets directly; while cost of self-built investment real estate isformed with all necessary expenditures occurred before construction completion of the assets arriving at theestimated utilization state.Consequent measurement of investment estate shall be measured by cost method. Depreciation is providedwith average service life method pursuant to the predicted service life and net rate of salvage value. Thepredicted service life and net rate of salvage value and annual depreciation are listed as follows:

CategoryDepreciation termPredicted rate of salvage valueDepreciation rate per annual
House and buildings30-40 years4%-5%2.375%-3.20%

When investment real estate turns to be used by holders, it shall switch to fixed assets or intangible assetscommencing from the date of such turning. And when self-used real estate turns to be leased out for rental oradditional capital, the fixed assets or intangible assets shall switch to investment real estate commencingfrom the date of such turning. In situation of switch, the carrying value before the switch shall be deemed asthe credit value after the switch.

When investment real estate is disposed, or out of utilization forever and no economic benefit would bepredicted to obtain through the disposal, the Company shall terminate recognition of such investment realestate. The amount of income from disposal, transfer, discarding as scrap or damage of investment real estateafter deducting the asset‘ s carrying value and relevant taxation shall be written into current gains and losses.

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

14. Fixed assets

Fixed assets of the Company represent the tangible assets and assets package: held by the Company forpurpose of producing commodities, providing labor service, leasing or operational management, service lifeexceeds one year, and unit price exceeds RMB 2,000. Including four categories of houses and buildings,machinery equipment, transportation equipment and other equipment

Their credit value is determined on the basis of the cost taken for obtaining them. Of which, cost ofpurchased-in fixed assets include bidding price and import duty and relevant taxes, and other expenditurewhich occurs before the fixed assets arrive at the state of predicted utilization and which could be directlyattributable to the assets; while cost of self-built fixed asset is formed with all necessary expendituresoccurred before construction completion of the assets arriving at the estimated utilization state; credit valueof the fixed assets injected by investors is determined based on the agreed value of investment contracts oragreements, while as for the agreed value of investment contracts or agreements which is not fair, it shalltake its fair value as credit value; and for fixed assets which are leased in through finance leasing, creditvalue is the lower of fair value of leased assets and present value of minimized leasing payment as at thecommencing date of leasing.

Consequent expenditure related to fixed assets consists of expenditures for repair and update reform. Forthose meeting requirements for recognization of fixed assets, they would be accounted as fixed asset cost;and for the part which is replaced, recognization of its carrying value shall cease; for those not meetingrequirements for recognization of fixed assets, they shall be accounted in current gains and losses as long asthey occur. When fixed asset is disposed, or no economic benefit would be predicted to obtain throughutilization or disposal of the asset, the Company shall terminate recognization of such fixed asset. Theamount of income from disposal, transfer, discarding as scrap or damage of fixed asset after deducting theasset‘ s carrying value and relevant taxation shall be written into current gains and losses.

The Company withdraws depreciation for all fixed assets except for those which have been fully depreciatedwhile continuing to use. It adopts average service life method for withdrawing depreciation which is treatedrespectively as cost or current expense of relevant assets according to purpose of use. The depreciation term,predicted rate of salvage value and depreciation rate applied to fixed assets of the Company are as follows:

No.CategoryDepreciation termPredicted rate of salvage valueDepreciation rate per year
1House and buildings30-40 years4%-5%2.375%-3.20%
2Machinery equipment10-14 years4%-5%6.786%-9.60%
3Transport equipment5-12 years4%-5%7.92%-19.20%
4Other equipment8-12 years4%-5%7.92%-12.00%

The Company makes re-examination on predicted service life, predicted rate of salvage value anddepreciation method at each year-end. Any change will be treated as accounting estimation change.

Annotations to Financial Statements of Changhong Meiling Co., Ltd.

From 1 January 2019 to 31 December 2019

(Unless otherwise specified. RMB for record in the statement)

15. Construction in progress

Construction in progress is measured with effective cost. Self-operated constructions projects are measuredwith direct materials, direct salaries and direct construction expense; construction projects undertaken byexternal are measured with the engineering payment payable; and engineering cost (income abatement) ofequipment-installation projects is confirmed with consideration of value of the equipment, installation fee,and expenditure arising from trial operation of the projects. Borrowing expense and exchange gains andlosses which should be capitalized are also included in cost of construction in progress.

16. Borrowing expense

Borrowing expenses include interest expense, amortization of discount or premium, auxiliary expenses andexchange difference due to borrowing in foreign currency. The borrowing expense which could be directlyattributable to purchase or production of assets satisfying capitalization condition, starts capitalization whencapital expenditure and borrowing expense occur and when necessary purchase or production conducted forpromoting assets to reach the predicted available-for-use or available-for-sale state; and capitalization shallcease when purchased or produced assets satisfying capitalization condition have reached the predictedavailable-for-use or available-for-sale state. Other borrowing expense is recognized as expense during theoccurrence period.

Capitalization shall be exercised for interest expense actually occurred from special borrowings in currentperiod after deduction of the interest income arising from unutilized borrowing capital which is saved inbanks or deduction of investment income obtained from temporary investment; For recognization ofcapitalized amount of common borrowing, it equals to the weighted average of the assets whose accumulatedexpense or capital disburse is more than common borrowing times capitalization rate of occupied commonborrowing. Capitalization rate is determined according to weighted average interest rate of commonborrowing.

Assets satisfying capitalization principle generally refer to fixed assets, investment real estate and inventorieswhich can only arrive at predicted available-for-use and available-for-sale state after quite a long time(generally over one year) in purchase or production activities.

If abnormal interruption happens during purchase or production of assets satisfying capitalization principleand the interruption lasts over 3 months, the capitalization for the borrowing expense shall pause until thepurchase or production restarts.

17. Intangible assets

The Company holds intangible assets including land use right, trademark, patent technology and non-patenttechnology. Intangible assets are measured according to the effective costs paid for obtaining the assets. Forthose intangible assets purchased in by the Company, their effective cost consist of actual payment and

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019

(Unless otherwise specified. RMB for record in the statement)

relevant other expenditure; for the intangible assets input by investors, effective cost is determined accordingto the value agreed in investment contracts and agreements, while if the agreed value is not fair, theneffective value is confirmed according to fair value.

Land use right is averagely amortized according to its transfer term commencing from the sate of transfer;trademark use-rights averagely amortized by 10 years; patent technology, non-patent technology and otherintangible assets is averagely amortized according to the shortest of their predicted service life, beneficialterm concluded by contract and effective term regulated by laws. Amortization amount is recorded in assetscost and current gains and losses relevant to beneficial objectives.

Re-examination on predicted service life and amortization method of the intangible assets which have limitedservice life shall be conducted at the end of each year. If changed, it would be treated as change ofaccounting estimation. Re-examination on predicted service life of intangible assets which have uncertainservice life shall be conducted. For any evidence proving that service life of intangible assets is limited, thenthe service life shall be estimated and the Company shall make amortization within the predicted service lifeperiod.

18. Research and development

As for expenditure for research and development, the Company classifies it into expenditure on researchphase and development phase, based on nature of the expenditure and that whether the final intangible assetsformed by research & development is of great uncertainty. Expenditure arising during research should berecorded in current gains and losses upon occurrence; expenditure arising during development is confirmedas intangible assets when satisfying the following conditions:

(1) Completions of the intangible assets make it available for application or sell in technology;

(2) Equipped with plan to complete the intangible asset and apply or sell it;

(3) There is market for products produced with this intangible asset or the intangible asset itself;

(4) Have sufficient technology, financial resource and other resources to support development of the intangibleassets, and have ability to apply or sell the assets;

(5) Expenditure attributable to development of the intangible assets could be reliable measured.Expenditure arising during development not satisfying the above conditions shall be recorded in currentgains and losses upon occurrence. Development expenditure which had been recorded in gains and losses inprevious period would not be recognized as assets in later period. Expenditure arising during developmentphase which has been starting capitalization is listed in balance sheet as development expenditure, andtransferred to intangible assets since the project reaches at predicted utilization state.

19. Impairment of non-financial long-term assets

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

As at each balance sheet date, the Company has inspection on long-term equity investment, fixed assets,construction in process and intangible assets with limited service life. When the following indications appear,assets may be impaired, and the Company would have impairment test. As for goodwill and intangible assetswhich have uncertain service life, no matter there is impairment or not, impairment test shall be conducted atthe end of every year. If it is hard to make test on recoverable amount of single asset, test is expected to makeon the basis of the assets group or assets group portfolio where such asset belongs to.

After impairment test, if the carrying value exceeds the recoverable amount of the asset, the balance isrecognized as impairment loss. As long as impairment loss of the aforementioned assets is recognized, itcouldn‘t be switched back in later accounting periods. Recoverable amount of assets refers to the higher offair value of assets net disposal expense and present value of predicted cash flow of the asset.

Indications for impairment are as follows:

(1) Market value of asset drops a lot in current period, the drop scope is obviously greater than the predicteddrop due to move-on of times or normal utilization;

(2) Economy, technology or law environment where enterprise operates or market where asset is located willhave significant change in current or recent periods, which brings negative influence to enterprise;

(3) Market interest rate or returning rate of other market investments have risen in current period, whichbrings influence in calculating discount rate of present value of predicted future cash flow of assets, whichleads to a great drop in recoverable amount of such assets;

(4) Evidence proving that asset is obsolete and out of time or its entity has been damaged;

(5) Asset has been or will be keep aside, terminating utilization or disposed advance;

(6) Internal report of enterprise shows that economic performance of asset has been or will be lower thanprediction, such as that net cash flow created by asset or operation profit (or loss) realized by asset is greatlylower (or higher) than the predicted amount;

(7) Other indications showing possible impairment of assets

20. Goodwill

Goodwill represents balance between equity investment cost or business combination cost under no commoncontrol exceeding the attributable part or fair value of recognizable net assets of party invested or purchased(obtained through business combination) as of acquisition day or purchase day.

Goodwill relating to subsidiaries is separately listed in consolidated financial statement. And goodwillrelating to associates and joint-ventures is included in carrying value of long-term equity investment.

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019

(Unless otherwise specified. RMB for record in the statement)

21. Long-term deferred expenses

Long-term deferred expenses of the Company refer to the expense which has been paid out while should beamortized from the current period and periods thereafter, with amortization term over one year (excludingone year). Such expense is averagely amortized during the beneficial period. If such long-term deferredexpense could not bring benefit to following accounting periods, the unamortized value of the item shall befully transferred to current gains and losses.

22. Staff remuneration

Employee benefits mainly include all kinds of remuneration incurred in exchange for services rendered byemployees or compensation to the termination of employment relationship such as short-term wages,post-employment benefits, compensation for the termination of employment relationship and other long-termemployee welfare.

Short-term remuneration includes: staff salary, bonus, allowances and subsidies, staff benefits, socialinsurances like medical insurance, work-related injury insurance and maternity insurance, housing fund,labor union funds and staff education funds, short-term paid absence of duty, short-term profit sharingscheme, and non-monetary benefits as well as other short-term remuneration. During the accounting periodwhen staff provides services, the short-term remuneration actually occurred is recognized as liabilities andshall be included in current gains and losses or related asset costs according to the beneficial items.

Retirement benefits mainly consist of basic pension insurance, unemployment insurance and early-retirementbenefits, etc. retirement benefit scheme represents the agreement reached by the Company and its employees inrespect of retirement benefits, or the rules or regulations established by the Company for providing retirementbenefits to employees. In particular, defined contribution plan means a retirement benefit plan, pursuant to which,the Company makes fixed contribution to independent fund, upon which, and it is not obliged to make furtherpayment. Defined benefit plan refers to retirement benefit scheme other than defined contribution plan.

The early retirement policy for staff and workers of the Company is the compensation for encouraging staffand workers to accept the reduction voluntarily. The employees make applications voluntarily, the twoparties sign the compensation agreement after approved by the Company and calculate the compensationamount according to the compensation standard passed by the staff representative conference, and theCompany confirms it as dismiss welfare and reckons it in current profits and losses. As the Companypromises to adjust the treatment for early retiring staff and workers with the increase of social basic cost ofliving allowances, the discount elements will not be considered for calculating the dismiss welfare.

23.Accrual liability

If the business in connection with such contingencies as a security involving a foreign party, commercialacceptance bill discount, pending litigation or arbitration, product quality assurance, etc. meets all of thefollowing conditions, the Company will confirm the aforesaid as liabilities: the obligation is an existingobligation of the Company; performance of the obligation is likely to cause economic benefits to flow out of

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

the enterprise; the amount of the obligation is reliably measurable.

24. Principle of recognition of revenue and measurement method

The Company‘s sales revenue is mainly comprised of revenue from sale of goods, labor providing incomeand revenue from assignment of asset use rights. The principle of recognition of such revenue is as follows:

(1) Revenue from the sale of goods shall be recognized when the Company has transferred to the buyer thesignificant risks and rewards of ownership of the goods; the Company retains neither continuing managerialinvolvement to the degree usually associated with ownership nor effective control over the goods sold; theamount of revenue can be measured reliably; it is probable that the associated economic benefits will flowinto the Company; The export business is recognized when the packing list is received; and the associatedcosts incurred or to be incurred can be measured reliably. Air-conditioner OEM/ODM will recognize revenuewhile notes issued after commodity transferring to the shipping space that appointed by the client.

(2) The Company confirms the realization of service income when the gross income and total cost of laborservice cab be unfailingly calculated, the economic benefits related to labor service are likely to flow into theGroup, and the progress of labor service can be confirmed reliably. On balance sheet date, with regard tothose with results provided for labor service transactions can be estimated reliably, confirm the relevantservice income according to percentage of completion method and determine the percentage-of-completionmethod by the proportion of the occurred cost in the estimated total cost; as for those with results providedfor labor service transactions can‘t be estimated reliably and with occurred labor cost predicted to be able toget compensation, confirm to provide service income according to labor cost amount occurred and capable ofgetting compensation, and carry over the occurred labor costs; for those with results provided for laborservice transactions can‘t be estimated reliably and with occurred labor cost predicted to be not able to getcompensation, reckon the occurred labor cost in the current profits and losses, but not confirm to provideservice income.

(3) The economy benefits of use-right of transfer assets probably wills inflow to the Company, if the incomecan be measure accountability, than use-right income of transfer assets recognized.

25. Government subsidy

The government subsidy shall be recognized when the Company is able to meet the conditions attached andis able to receive it. The Government subsidy, other than fiscal subsidy, received by the Company shall beaccounted on an aggregate basis. In particular, the Government subsidies relating to ordinary activities wouldbe included in other income; the Government subsidies not relating to ordinary activities would be includedin non-operating income.When the Government subsidy is in the form of monetary assets, it is measured at the actual amount received.The subsidy allocated according to fixed quota standards shall be measured by the amount receivable; When

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

the Government subsidy is in the form of non-monetary assets, it is measured at fair value, and measured atthe nominal value of RMB 1.00 in case of failure to obtain reliable fair value.

(1) Basis of determination and accounting of Government subsidy relating to assetsGovernment subsidy relating to assets refers to that obtained by the Company for the purpose of acquiring orotherwise formation of long-term assets. Government subsidy relating to assets is deemed as that relating toordinary activities in principle and recognized as deferred income upon receipt. The Government subsidyshall be allocated averagely over the life of use of relevant assets and accounted in other income.

(2) Basis of determination and accounting of Government subsidy relating to incomeGovernment subsidy relating to income refers to the Government subsidy other than that relating to assets.Government subsidy relating to income shall be recognized as deferred income if the grant is used tocompensate the Company‘s expenses or losses for subsequent periods, and shall be accounted in profit orloss for the period during the period in which the relevant expense is recognized. Those grants relating to ourordinary activities are recorded in other income in the period in which the relevant expenses or losses arerecognized. Those grants not relating to our ordinary activities are recorded in non-operating income in theperiod in which the relevant expenses or losses are recognized. Government subsidies used to compensatethe relevant costs or losses incurred by the Company and relating to our ordinary activities shall be accountedin other income directly upon receipt of the grant, and accounted in non-operating income directly uponreceipt if it is not related to our ordinary activities.With respect to Government subsidy comprising both portions relating to assets and income, it shall beaccounted separately based on different portions, and it shall be aggregated as that relating to income if it isdifficult to distinguish the two portions.

(3) The policy-related preferential loan received by the Company shall be accounted separately in thefollowing two manners:

In case that government‘s appropriation of interest subsidy is made to the lending bank, the Company shallaccount for the relevant loan based on the actual amount of loan received by it, and calculate the borrowingexpense based on the principal of the borrowing and the policy-related preferential interest rate.In case that government‘s appropriation of interest subsidy is made to the Company, the Company appliedthe relevant interest subsidy to offset borrowing expense.

26. Deferred Income Tax Assets and Deferred Income Tax Liabilities

A deferred tax asset and deferred tax liability shall be determined by a difference (temporary difference)between the carrying amount of an asset or liability and its tax base. The deferred tax asset shall berecognized for the carry forward of unused deductible losses that it is probable that future taxable profits will

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

be available against which the deductible losses can be utilized. For temporary difference arising from initialrecognition of goodwill, no corresponding deferred income tax liabilities will be recognized. For temporarydifference arising from initial recognition of assets and liabilities occurred in the transaction related tonon-business combination which neither affect accounting profit nor taxable income (or deductible losses),no corresponding deferred income tax assets and deferred income tax liabilities will be recognized. As of thebalance sheet date, deferred income tax assets and deferred income tax liabilities are measured at theeffective tax rate applicable to the period when recovery of assets or settlement of liabilities occur.

The Company recognizes deferred income tax assets to the extent of future taxable income tax which islikely to be obtained to offset deductible temporary difference, deductible losses and tax credits.

27. Lease

The Company categorizes the lease into the financial leasing and the operating leasing.The financial leasing is the lease in which all risks and returns related to the ownership of assets aretransferred in substance. The Company as a lease holder, on the date of lease, the financial lease isrecognized as the fixed asset at lower cost of fair value of the rental asset and the NPV of minimum paymentof leasing. The minimum payment of leasing is recognized as long-term payable and the difference isaccounted into unrecognized financing expense.The operating lease is the lease apart from the financial leasing. The Company, as a lease holder, accounts therents into current period by straight line method during the term of the lease. The Company, as a leaser, accountsthe rental income into current period by straight line method during the term of the lease.

28. Held-for-sale

(1)The Company classifies non-current assets or disposal groups that meet all of the following conditions asheld-for-sale: 1) according to the practice of selling this type of assets or disposal groups in a similartransaction, the non-current assets or disposal group can be sold immediately at its current condition; 2) Thesale is likely to occur, that is, the Company has made resolution on the selling plan and obtained definitepurchase commitment, the selling is estimated to be completed within one year. Those assets whose disposalis subject to approval from relevant authority or supervisory department under relevant requirements aresubject to that approval. Prior to the preliminary classification of non-current assets or disposal group as thecategory of held-for-sale, the Company measures the carrying value of the respective assets and liabilitieswithin the non-current assets or disposal group under relevant accounting standards. For non-current asset ordisposal group held for sale, for which it is found that the carrying value is higher than its fair value lessdisposal expense during the initial measurement or re-measurement on the balance sheet date, the carryingvalue shall be deducted to the net amount of fair value less disposal expense, and the reduced amount shallbe recognized as impairment loss in profit or loss for the period, and provision of impairment of assets heldfor sale shall be provided for accordingly.

(2)The non-current assets or disposal group that the Company has acquired specially for resale are classified

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

as held for sale on the acquisition date when they meet the condition that ―the selling is estimated to becompleted within one year‖ on the acquisition date, and are likely to satisfy other conditions of beingclassified as the type of held for sale in a short-term (usually being 3 months). Non-current assets or disposalgroup classified as held for sale are measured at the lower of their initial measurement amount and the netamount after their fair value less the selling expenses based on the assumption that such non-current assets ordisposal group are not classified as held for sale at the time of initial measurement. Except for thenon-current assets or disposal group acquired in a business combination, the difference arising fromconsidering the net amount of such non-current assets or disposal group after their fair value less the sellingexpenses as the initial measurement amount is recorded in the current profit or loss.

(3)In case of loss of control over the subsidiaries due to the sales of investment in subsidiaries, no matterwhether the Company retains part of the equity investment after selling investment in subsidiaries, theinvestment in subsidiaries shall be classified as held for sale on an aggregate basis in the separate financialstatements of the parent company when the investment in subsidiaries proposed to be sold satisfies theconditions for being classified as held for sale; and all the assets and liabilities of the subsidiary shall beclassified as held for sale in the consolidated financial statements.

(4)If the net amount of fair value of non-current assets held for sale less sales expense on subsequent balancesheet date increases, the amount previously reduced for accounting shall be recovered and reverted from theimpairment loss recognized after the asset is classified under the category of held for sale, with the amountreverted recorded in profit or loss for the period. Impairment loss recognized before the asset is classifiedunder the category of held for sale shall not be reverted.

(5)For the amount of impairment loss on assets, the carrying value of disposal group‘s goodwill shall beoffset against first, and then offset against the book value of non-current assets according to the proportion ofbook value of non-current assets.If the net amount of fair value of the disposal group held for sale on the subsequent balance sheet date lesssales expenses increases, the amount reduced for accounting in previous periods shall be restored, and shallbe reverted in the impairment loss recognized in respect of the non-current assets which are applicable torelevant measurement provisions after classification into the category of held for sale, with the revertedamount charged in profit or loss for the current period. The written-off carrying value of goodwill andimpairment loss of non-current assets which is recognized prior to classification into the category of held forsale shall not be reverted.The subsequent reversed amount in respect of the impairment loss on assets recognized in the disposal groupheld for sale will increase the book value in proportion of the book value of each non-current asset (otherthan goodwill) in the disposal group.

(6) The non-current assets in the non-current assets or disposal group held for sale is not depreciated oramortized, and the debt interests and other fees in the disposal group held for sale continue to be recognized.

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019

(Unless otherwise specified. RMB for record in the statement)

(7)If the non-current assets or disposal group are no longer classified as held for sale since they no longermeet the condition of being classified as held for sale or the non-current assets are removed from the disposalgroup held for sale, they will be measured at the lower of the following: 1) the amount after their book valuebefore they are classified as held for sale is adjusted based on the depreciation, amortization or impairmentthat should have been recognized given they are not classified as held for sale; 2) the recoverable amount.

(8) The unrecognized profits or loss will be recorded in the current profits or loss when derecognizing thenon-current assets or disposal group held for sale.

29. Discontinued operation

A discontinued operation is a separately identified component of the Group that either has been disposed ofor is classified as held for sale, and satisfies one of the following conditions: (1) represents a separate majorline of business or geographical area of operations; (2) is part of a single co-ordinate plan to dispose of aseparate major line of business or geographical area of operations; and (3) is a subsidiary acquiredexclusively with a view to resale.

30. Income tax accounting

The Company accounted the income tax in a method of debit in balance sheet. The income tax expensesinclude income tax in the current year and deferred income tax. The income tax associated with the eventsand transactions directly included in the owners‘ equity shall be included in the owners‘ equity; and thedeferred income tax derived from business combination shall be included in the carrying amount of goodwill,except for that above, the income tax expense shall be included in the profit or loss in the current period.

The income tax expense in the current year refers to the tax payable, which is calculated according to the taxlaws on the events and transactions incurred in the current period. The deferred income tax refers to thedifference between the carrying amount and the deferred tax assets and deferred tax liabilities at CurrentYear-end recognized in the method of debit in the balance sheet.

31. Segment information

Business segment was the major reporting form of the Company, which divided into five parts:

air-conditioning, refrigerator & freezer & washing machine, marketing, small home appliance and others.The transfer price among the segments will recognize based on the market price, common costs willallocated by income proportion between segments except for the parts that without reasonable allocation.

32. Explanation on significant accounting estimation

The management of the Company needs to apply estimation and assumption when preparing financialstatement which will affect the application of accounting policy and amounts of assets, liabilities, income andexpense. The actual condition may differ from the estimation. Constant evaluation is conducted by the

Annotations to Financial Statements of Changhong Meiling Co., Ltd.

From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

management in respect of the key assumption involved in the estimation and judgment of uncertainties.Effect resulting from change of accounting estimation is recognized in the period the change occurs andfuture periods.The following accounting estimation and key assumption may result in material adjustment to the book valueof assets and liabilities in future period.

(1) Inventory impairment provision

The Company provides impairment provision according to the type of finished products and goods deliveredunder fixed proportion, and estimates the realizable net value of inventories by reference to the projectedselling price of similar inventories less sales expenses and related taxes on a regular basis, so as to evaluatethe rationality of the provision proportion. If the actual selling price or expense differs from the previousestimation, the management will make corresponding adjustment to the proportion. The estimation resultsbased on existing experiences may differ from the latter actual results, which may result in adjustment to thebook value of inventories in the balance sheet and affect over the gains and losses of the period when theestimation changes.

(2) Accounting estimation on long-term assets impairment provision

The Company makes impairment test on fixed assets such as buildings, machine and equipment which haveimpairment indication and long-term assets such as goodwill as at the balance sheet date. The recoverableamount of relevant assets and assets group shall be the present value of the projected future cash flow whichshall be calculated with accounting estimation.If the management amends the gross profit margin and discount rate adopted in calculation of future cashflow of assets and assets group and the amended gross profit margin is lower than the currently adopted oneor the amended discount rate is higher than the currently adopted one, the Company needs to increaseprovision of impairment provision. If the actual gross profit margin is higher (or the discount rate is lower)than the estimation of management, the Company can not transfer back the long term assets impairmentprovision provided already.

(3) Accounting estimation on realization of deferred income tax assets

Estimation on deferred income tax assets needs estimation on the taxable income and applicable tax rate foreach future year. Realization of deferred income tax assets depends on whether a company is able to obtainsufficient taxable income in future. Change of future tax rate and switch back of temporary difference couldaffect the balance of income tax expense (gains) and deferred income tax. Change of the aforesaid estimationmay result in material adjustment to deferred income tax.

(4) Usable term and residual value rate of fixed assets and intangible assets

The Company, at least at the end of each accounting year, reviews the projected usable life and residual valuerate of fixed assets and intangible assets. The projected usable life and residual value rate are determined by

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

the management based on the historical experiences of similar assets by reference to the estimation generallyused by the same industry with consideration on projected technical upgrade. If material change occurs toprevious estimation, the Company shall accordingly adjust the depreciation expenses and amortizationexpenses for future period.

(5) Projected liabilities arising from product quality guarantee

The Company commits to repair the major spare parts of refrigerators sold through go-to-countrysidepromotion activity for free for ten years. As to the maintenance expenses that may be increased arising fromsuch commitment, the Company has provided projected liabilities.

Taking into account the various uncertainties during the ten years, the Company considers no discount factorof such projected liabilities. Instead, the Company reviews the parameters (probility, proportion, maintenanceexpense per single set) based on the actual occurrence of maintenance expenses as of each balance sheet date.If obvious change is found, the Company will adjust the projected liabilities according to the latestparameters so as to reflect the best estimation.

33. Other comprehensive income

Other comprehensive income represents various gains and losses not recognized in current gains and lossesaccording to other accounting rules.Other comprehensive income items shall be reported in the following two classes under other relevantaccounting rules:

(1) Other comprehensive income items that can not be reclassified into gains and losses in future accountingperiods, mainly including changes arising from re-measurement of net liabilities or net assets under definedbenefit plan and interest in investee‘s other comprehensive income which are measured under equity methodand which can not be reclassified into gains and losses in future accounting periods;

(2) Other comprehensive income items that will be reclassified into gains and losses in future accountingperiods upon satisfaction of required conditions, mainly includes the share of other comprehensive incomethat is reclassified into profit and loss when the investee‘s subsequent accounting periods are accounted for inaccordance with the equity method and meet the specified conditions, the fair value changes occurred by thedebt investment that is measured at fair value and whose changes are included in other comprehensiveincome, the difference between the original book value included in other comprehensive income and the fairvalue when a financial asset measured at amortized cost is reclassified as a financial asset measured at fairvalue and its changes are included in other comprehensive income, the loss provisions for financial assetsmeasured at fair value and whose changes are included in other comprehensive income, the gains or lossesgenerated from cash flow hedging instruments are part of effective hedging, and the differences inconversion of foreign currency financial statements.

Annotations to Financial Statements of Changhong Meiling Co., Ltd.

From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

34. Change of significant accounting policies and accounting estimates

(1) Change of significant accounting policy

Content and reasonsApproval procedureNote
On 31 March 2017, the Ministry of Finance revised the Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments, Accounting Standards for Business Enterprises No. 23 - Transfer of Financial Assets, Accounting Standards for Business Enterprises No. 24 - Hedge Accounting, and the Accounting Standards for Business Enterprises No. 37 – Financial Instruments Presentation, and implemented since 1 Jan. 2019.Approved by 21st session of 9th BODFound below as details
Revised the format of financial statement according to the Notice of the Ministry of Finance on Revising and Printing the Format of Financial Statements for General Enterprises in 2019 (CK [2019] No.6) issued by Ministry of Finance on 30 April 2019Approved by management levelFound below as details

New financial instrument standards are implemented by the Company and its subsidiaries for the first time in the period, andaccording to the regulation of Accounting Division of the Ministry of Finance CK[2019] No.6, impacts on balance sheet atperiod-begin of the consolidate and parent company from change of the above mentioned accounting policies are as:

Item affectedConsolidated balance sheetBalance sheet of parent company
31 December 2018 (Before adjustment)Amount adjusted1 Jan. 2019 (Amount adjusted)31 December 2018 (Before adjustment)Amount adjusted1 Jan. 2019 (Amount adjusted)
Financial assets measured at fair value and whose changes are included in current gains/losses9,253,635.59-9,253,635.599,253,635.59-9,253,635.59
Trading financial assets9,253,635.599,253,635.599,253,635.599,253,635.59
Note receivable2,387,830,887.74-17,262,634.102,370,568,253.642,433,243,946.64-13,500,000.002,419,743,946.64
Account receivable1,670,988,644.762,373,491.531,673,362,136.291,050,282,023.37-2,512,900.061,047,769,123.31
Other account receivable62,129,574.171,063,166.7663,192,740.93182,744,033.5297,297.68182,841,331.20
Financial assets available for sale45,000,000.00-45,000,000.0045,000,000.00-45,000,000.00

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

Item affectedConsolidated balance sheetBalance sheet of parent company
31 December 2018 (Before adjustment)Amount adjusted1 Jan. 2019 (Amount adjusted)31 December 2018 (Before adjustment)Amount adjusted1 Jan. 2019 (Amount adjusted)
Other non-current financial assets45,000,000.0045,000,000.0045,000,000.0045,000,000.00
Long-term equity investment61,869,440.555,683,101.2367,552,541.781,731,109,903.705,683,101.231,736,793,004.93
Financial liabilities measured at fair value and whose changes are included in current gains/losses55,586,666.70-55,586,666.7019,893,875.00-19,893,875.00
Trading financial liability55,586,666.7055,586,666.7019,893,875.0019,893,875.00
Surplus reserves400,673,993.50-1,023,250.12399,650,743.38400,455,827.82-1,023,250.12399,432,577.70
Retained profit904,232,582.87-2,734,328.91901,498,253.96917,567,933.94-9,209,251.03908,358,682.91
Minority's interest119,819,558.59-4,385,295.55115,434,263.04

The financial statement of 2019 was prepared according to the regulation of financial statement format CK [2019] No.6 by theCompany and its subsidiaries and the retroactive adjustment was used to change the presentation of relevant financialstatements. Impacts on balance sheet at period-begin of the consolidate and parent company from adjustment are as:

Item affectedConsolidate balance sheetBalance sheet of parent company
31 December 2018 (Before adjustment)Amount adjusted1 Jan. 2019 (Amount adjusted)31 December 2018 (Before adjustment)Amount adjusted1 Jan. 2019 (Amount adjusted)
Account receivable and Note receivable4,043,930,389.93-4,043,930,389.933,467,513,069.95-3,467,513,069.95-
Account receivable2,370,568,253.642,370,568,253.642,419,743,946.642,419,743,946.64
Note receivable1,673,362,136.291,673,362,136.291,047,769,123.311,047,769,123.31

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

Account payable and note payable6,009,929,380.98-6,009,929,380.98-4,013,263,630.45-4,013,263,630.45-
Account payable3,727,754,399.603,727,754,399.602,001,442,110.632,001,442,110.63
Note payable2,282,174,981.382,282,174,981.382,011,821,519.822,011,821,519.82

(2) Change of significant accounting estimates

The Company had no change of significant accounting estimates in Current Year.

V. Taxation

1. Major taxes (expenses) and tax rates

Tax(expenses)Tax baseTax rate
VATIncome from sales of goods and from processing16%/13%, 10%/9%, 6%, 5%
Urban maintenance and construction taxTurnover tax5% or 7%
Education surchargeTurnover tax3%
Local education surchargeTurnover tax2%
Corporate income taxTaxable income15% or 25%
House Property TaxOriginal Book value of house property×(1-30%)or annual rent income1.2% or 12%
Land use taxActual land area used1 Yuan/M2 to 15 Yuan /M2

2. Preferential tax and approval documents

The Company and its subsidiary Zhongke Meiling Cryogenic Technology Co., Ltd. has passed the review forhigh-tech enterprise certification on 20 July 2017, and continuous to enjoy 15% rate for the income tax forState Hi-Tech Enterprise for three years term.The subsidiary Zhongshan Changhong Electric Co., Ltd. has passed the review for high-tech enterprisecertification on 9 November 2017, and continuous to enjoy 15% rate for the income tax for State Hi-TechEnterprise for three years term.The subsidiary Sichuan Hongmei Intelligent Technology Co., Ltd. has passed the qualification of high-techenterprise certification on 3 December 2018, and enjoys 15% rate for the income tax for State Hi-TechEnterprise for three years term.Subsidiary Mianyang Meiling Refrigeration Co., Ltd. pass the review of Reply [Chuan JX Industrial H(2014)No.408] from Sichuan Commission of Information on 9 May 2014, and the enterprise belongs to the

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

encourage industry listed in Directories of Industrial Structure Adjustment (2011) Revised (State LawReform Committee No. 21 Order); which enjoys the preferential tax policy of income tax for the westerndevelopment enterprise. And file in tax bureau with 15% rate for enterprise income tax since 2014 withseven years term.The subsidiary Guangdong Changhong Ridian Technology Co., Ltd. has passed the qualification of high-techenterprise certification on 2 December 2019, and enjoys 15% rate for the income tax for State Hi-TechEnterprise for three years term.The subsidiary Hongyuan Ground Energy Heat Pump Tech. (Zhongshan) Co., Ltd. has passed thequalification of high-tech enterprise certification on 2 December 2019, and enjoys 15% rate for the incometax for State Hi-Tech Enterprise for three years term.The subsidiary Hefei Meiling Nonferrous Metal Products Co., Ltd. has passed the qualification of high-techenterprise certification on 26 October 2018, and enjoys 15% rate for the income tax for State Hi-TechEnterprise for three years term.The subsidiary Jiangxi Meiling Electric Appliance Co., Ltd. has passed the qualification of high-techenterprise certification on 16 September 2019, and enjoys 15% rate for the income tax for State Hi-TechEnterprise for three years term.VI. Notes to the major items in the consolidated financial statements

With respect to the financial statements figures disclosed below, unless otherwise specified, ―year-beginning‖refers to Jan. 1, 2019; ―year-end‖ refers to Dec. 31, 2019; ―Current Year‖ refers to Jan. 1 to Dec. 31, 2019;―the last year‖ refers to Jan. 1 to Dec. 31, 2018; the currency is RMB.

1. Monetary fund

ItemBalance at year-endBalance at year-begin
Cash44,818.0728,650.21
Bank deposit4,771,094,609.774,029,892,318.85
Other Monetary fund728,461,602.80566,156,588.34
Total5,499,601,030.644,596,077,557.40
Including: total amount deposited in overseas25,326,137.4913,722,335.29

Other monetary fund:

ItemAmount at year-end
Cash deposit725,366,572.06
Account of foreign currency for verification1,691,803.84
Union Pay online857,441.03
Taobao account545,785.87
Total728,461,602.80

Cash deposit which serves as non cash and cash equivalents refers to the banking acceptance draft deposit

Annotations to Financial Statements of Changhong Meiling Co., Ltd.

From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

with a term of over three months, amounting to 88,809,556.95 yuan, the amount restricted for used inmanaged account was 1,501,998.18 yuan, balance of the loan guarantee for loans from overseas subsidiaryamounted as 23,232,000.00 yuan. China Union Pay, Taobao account and Ten Pay are all third party paymentplatforms. Except for the deposit of 250,000.00 yuan, utilization of other balance is not subject to anyrestriction.Pars of the goods payment denominated in foreign currency should be transferred to reviewing accountswhich may not be used temporarily. Upon approval of such review, those payments may be transferred togeneral accounts. Due to the relatively short time for reviewing foreign exchange, balance of the reviewingaccounts is not limited on utilization.

2. Tradable financial assets

ItemBalance at year-endBalance at year-begin
Financial assets measured at fair value and whose changes are included in current gains/losses7,730,268.929,253,635.59
Including: Derivative financial assets7,730,268.929,253,635.59

Tradable financial assets refers to the RMB forward exchange fund in Current Year

3. Note receivable

(1) Category of note receivable

ItemBalance at year-endBalance at year-begin
Bank acceptance1,676,718,999.502,143,384,546.78
Trade acceptance190,350,000.00244,446,340.96
Total1,867,068,999.502,387,830,887.74
Less: bad debt provision1,903,500.0017,262,634.10
Book value1,865,165,499.502,370,568,253.64

(2) Notes receivable already pledged by the Company at the end of year

ItemAmount pledge at year-end
Bank acceptance436,428,439.50

Note: with purpose of improving the note utilization, the Company draw up bank acceptance by pledge partsof the outstanding notes receivable to the bank. Pledge of the note receivable found more in 54. Assets withownership or the right to use restricted in VI.

(3) Notes endorsement or discount and undue on balance sheet date

ItemAmount derecognition at year-endAmount without derecognition at year-end

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

ItemAmount derecognition at year-endAmount without derecognition at year-end
Bank acceptance807,689,943.50
Trade acceptance211,513,079.75
Total1,019,203,023.25

(4) Notes transfer to account receivable due for failure implementation by drawer at year-end

(5) By accrual of bad debt provision

CategoryAmount at year-end
Book balanceBad debt provisionBook value
AmountRatioAmountRatio
With bad debt provision accrual on single item1,676,718,999.5089.80%1,676,718,999.50
Including: bank acceptance1,676,718,999.5089.80%1,676,718,999.50
with bad debt provision accrual on portfolio190,350,000.0010.20%1,903,500.001.00%188,446,500.00
Including: trade acceptance190,350,000.0010.20%1,903,500.001.00%188,446,500.00
Total1,867,068,999.50100.00%1,903,500.000.10%1,865,165,499.50

(Continued)

CategoryAmount at year-begin
Book balanceBad debt provisionBook value
AmountRatioAmountRatio
With bad debt provision accrual on single item2,143,384,546.7889.76%2,143,384,546.78
Including: bank acceptance2,143,384,546.7889.76%2,143,384,546.78
with bad debt provision accrual on portfolio244,446,340.9610.24%17,262,634.107.06%227,183,706.86
Including: trade acceptance244,446,340.9610.24%17,262,634.107.06%227,183,706.86
Total2,387,830,887.74100.00%17,262,634.100.72%2,370,568,253.64

1) Note receivable withdrawal bad debt provision by combination

Account ageBalance at year-end
Note receivableBad debt provisionProvision ratio
Within 3 months (3 months included)190,350,000.001,903,500.001.00%

(6) Provision and reversed in this year

Bad debt provision has 15,359,134.10 Yuan reversed and no collection for accounts charge off previous year

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019

(Unless otherwise specified. RMB for record in the statement)

(7) No note receivable actually written off in this year.

4. Account receivable

(1) Category of account receivable

CategoryAmount at year-end
Book balanceBad debt provisionBook value
AmountRatioAmountRatio
Account receivable that withdrawal bad debt provision by single item746,199,837.6451.49%26,519,983.663.55%719,679,853.98
Including: current payment with related party614,612,878.9342.41%614,612,878.93
Account receivable with letter of credit52,306,821.663.61%52,306,821.66
Account receivable with single minor amount but withdrawal single item bad debt provision79,280,137.055.47%26,519,983.6633.45%52,760,153.39
Account receivable withdrawal bad debt provision by portfolio703,054,274.2148.51%34,772,146.534.95%668,282,127.68
Including: account receivable of engineering customers141,637,042.889.77%3,940,749.052.78%137,696,293.83
Receivables other than engineering customers561,417,231.3338.74%30,831,397.485.49%530,585,833.85
Total1,449,254,111.85100.00%61,292,130.194.23%1,387,961,981.66

(Continued)

CategoryAmount at year-begin
Book balanceBad debt provisionBook value
AmountRatioAmountRatio
Account receivable that withdrawal bad debt provision by single item785,323,787.3145.15%22,978,942.602.93%762,344,844.71
Including: current payment with related party693,467,089.5739.87%693,467,089.57
Account receivable with letter of credit59,799,506.833.44%59,799,506.83
Account receivable with single minor amount but withdrawal single item bad debt provision32,057,190.911.84%22,978,942.6071.68%9,078,248.31
Account receivable withdrawal bad debt provision by portfolio953,897,180.8654.85%42,879,889.284.50%911,017,291.58
Including: account receivable of108,819,204.376.26%5,580,667.365.13%103,238,537.01

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

CategoryAmount at year-begin
Book balanceBad debt provisionBook value
AmountRatioAmountRatio
engineering customers
Receivables other than engineering customers845,077,976.4948.59%37,299,221.924.41%807,778,754.57
Total1,739,220,968.17100.00%65,858,831.883.79%1,673,362,136.29

1) Account receivable with single minor amount but withdrawal bad debt provision singly, refers to the minorsingle receivables, and withdrawal bad debt provision by combination shows no risk characteristic of thereceivables, 111 clients involved.

2) Account receivable withdrawal bad debt provision by portfolio

A. Account receivable of engineering customers

Account ageBalance at year-end
Account receivableBad debt provisionProvision ratio
Within 3 months (3 months included)76,229,630.55
Over 3 months and within 6 months (6 months included)8,914,775.64
Over 6 months and within one year (One year included)38,785,066.51
Over one year - within 2 years (2 years included)16,376,786.833,275,357.3720.00%
Over 2 years - within 3 years (3 years included)1,330,783.35665,391.6850.00%
Over 3 years
Total141,637,042.883,940,749.05

B. Receivables other than engineering customers

Account ageBalance at year-end
Account receivableBad debt provisionProvision ratio
Within 3 months (3 months included)445,907,638.104,459,076.381.00%
Over 3 months and within 6 months (6 months included)47,385,616.834,738,561.6810.00%
Over 6 months and within one year (One year included)45,260,325.639,052,065.1320.00%
Over one year - within 2 years (2 years19,449,642.729,724,821.3650.00%

Annotations to Financial Statements of Changhong Meiling Co., Ltd.

From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

Account ageBalance at year-end
Account receivableBad debt provisionProvision ratio
included)
Over 2 years - within 3 years (3 years included)2,785,675.622,228,540.5080.00%
Over 3 years628,332.43628,332.43100.00%
Total561,417,231.3330,831,397.48

(2) By account age

ItemBalance at year-end
Within 3 months (3 months included)1,079,751,025.93
Over 3 months and within 6 months (6 months included)127,558,018.61
Over 6 months and within one year (One year included)160,010,922.40
Over one year - within 2 years (2 years included)53,738,854.36
Over 2 years - within 3 years (3 years included)14,995,538.09
Over 3 years13,199,752.46
Total1,449,254,111.85

(3) Account receivable bad debt reserves

Bad debt provision has 9,974,772.23 Yuan accrual in Current Year; bad debt provision of 1,936,952.67 Yuanis switch-back; no trade receivables written-off in previous year was recovered this year.

(4) Account receivable actually written-off in Current Year

ItemWritten-off amount
Account receivable written-off12,604,521.25

(5) Pledge of the account receivable at year-end can be found in 54. Assets with ownership or the right to userestricted in VI.

(6) In Current Year, top five receivables collected by arrears party amounting to 641,239,275.10 yuan in total,accounted for 44.25% of the receivables at balance of Current Year-end, the bad debt provision accrualcorrespondingly amounting to 4,615,488.10 yuan at year-end balance.

(7) Account receivable terminated recognization due to the transfer of financial assets: nil

(8) No assets and liability transfer Account receivable and continues to involve at year-end.

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

5. Accounts paid in advance

(1) Age of account paid in advance

ItemAmount at year-endAmount at year-begin
AmountRatioAmountRatio
Within one year23,665,135.7293.65%77,433,864.5489.85%
1-2 years945,375.383.74%4,345,186.025.05%
2-3 years331,164.451.31%2,115,459.142.45%
Over 3 years328,730.821.30%2,285,949.562.65%
Total25,270,406.37100.00%86,180,459.26100.00%

(2) Top 5 of account paid in advance in balance at year-end amounting to 7,429,423.33 yuan, accounted for

29.40% of the account.

6. Other account receivable

ItemBalance at year-endBalance at year-begin
Interest receivable9,510,208.632,653,712.36
Dividend receivable661,434.48
Other account receivable87,070,251.6960,539,028.57
Total97,241,894.8063,192,740.93

6.1 Interest receivable

(1) Category of interest receivable

ItemBalance at year-endBalance at year-begin
Interest receivable from time deposit9,510,208.631,892,948.46
Income receivable from financial products760,763.90
Total9,510,208.632,653,712.36

(2) Major overdue interest: nil

6.2 Dividend receivable

(1) Category of dividend receivable

ItemBalance at year-endBalance at year-begin
Huishang Bank Corporation Limited661,434.48

(2) Major dividends receivable with account age over 1 year: Nil

6.3 Other account receivable

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

(1) Category of other account receivable

NatureBook balance at year-endBook balance at year-begin
Export rebate21,650,454.6112,524,216.47
Cash deposit49,470,316.1832,292,605.75
Loans of employee‘s pretty cash16,863,753.2816,248,265.59
Related party not in consolidation statement1,163,963.531,470,228.16
Advance money temporary332,896.32553,705.11
Other2,645,856.291,278,050.57
Total92,127,240.2164,367,071.65

(2) Other account receivable bad debt reserves

Bad debt reservesFirst stageSecond stageThird stageTotal
Expected credit loss in next 12 monthsExpected credit loss for the whole duration (no credit impairment)Expected credit loss for the whole duration (credit impairment has occurred)
Balance as at 1 Jan. 20193,798,043.0830,000.003,828,043.08
Book balance of Other account receivable in Current Year as at 1 Jan. 2019
--Transfer to the second stage
-- Transfer to the third stage
-- Reversal to the second stage
-- Reversal to the first stage
Provision in Current Year1,206,945.4422,000.001,228,945.44
Reversal in Current Year
Conversion in Current Year
Write off in Current Year
Other change
Balance as at 31 Dec. 20195,004,988.5252,000.005,056,988.52

(3) By account age

Account ageBalance at year-end
Within 3 months (3 months included)49,979,610.12
Over 3 months and within 6 months (6 months included)6,227,315.96
Over 6 months and within one year (One year included)13,471,367.20

Annotations to Financial Statements of Changhong Meiling Co., Ltd.From 1 January 2019 to 31 December 2019(Unless otherwise specified. RMB for record in the statement)

Account ageBalance at year-end
over one year-within two years (2 years included)14,685,221.16
Over 2 years - within 3 years (3 years included)4,603,153.94
Over 3 years3,160,571.83
Total92,127,240.21

(4) No actual verification of other receivables in Current Year

(5) Top 5 other receivables collected by arrears party at balance of year-end:

NameNatureBalance at year-endAccount ageProportion in total other receivables at year-endBalance at year-end of bad debt provision
SAT of Hefei Economic & Technological Development ZoneTax rebate21,650,454.61within 3 months23.50%
Office of the lading group for construction of new socialist countryside in Shunyi DistrictMargin8,780,849.406 months to 1 year9.53%
Development & Reform Bureau of Wangdu CountyMargin8,500,000.001-2 year9.23%1,700,000.00
Development & Reform Bureau of Qingyuan District, Baoding CityMargin5,100,000.003-6 months & 6 months to 1 year5.54%
Office of the Beijing Pinggu District New Socialist Countryside ConstructionMargin2,148,000.006 months to 1 year & over 3 years2.33%500,000.00
Total46,179,304.0150.13%2,200,000.00

(6) No other account receivable involved government subsidies at year-end.

(7) No other receivables terminated recognization due to the transfer of financial assets at year-end.

(8) No assets and liability transfer other receivables and continues to involve at year-end.

7. Inventories

(1) Classification of inventories