Haier Electronics : OPERATIONAL UPDATE FOR THE THIRD QUARTER ENDED 30 SEPTEMBER 2019

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HAIER ELECTRONICS GROUP CO., LTD.

海 爾 電 器 集 團 有 限 公 司*

(Incorporated in Bermuda with Limited Liability)

(Stock Code: 1169)

OPERATIONAL UPDATE FOR

THE THIRD QUARTER ENDED 30 SEPTEMBER 2019

This is an announcement issued by Haier Electronics Group Co., Ltd. (the ''Company'', together with its subsidiaries, the ''Group'') and is being released for information purpose and pursuant to the Inside Information Provisions (as defined under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ''Listing Rules'')) under Part XIVA of the Securities and Futures Ordinance (Chapter 571, Laws of Hong Kong) and Rule 13.09(2)(a) of the Listing Rules.

On or about 30 October 2019, the Company's controlling shareholder, Haier Smart Home Co., Ltd. (海爾智家股份有限公司) (''Haier Smart Home'', formerly known as Qingdao Haier Co., Ltd. (青島海爾股份有限公司)), a company listed on the Shanghai Stock Exchange (''SSE'') (under stock code: 600690.SH) in the People's Republic of China (''PRC''), released its financial results for the third quarter ended 30 September 2019 (''Haier Smart Home Results Announcement''). Pursuant to the relevant rules of the SSE, Haier Smart Home shall file the quarterly and annual reports, including quarterly and annual financial information and certain operating statistics, respectively, with the SSE.

As at the date of this announcement, Haier Smart Home, the controlling shareholder of the Company, is beneficially interested in approximately 45.87% of the issued and outstanding share capital of the Company.

• For identification purposes only

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The following are the operational updates of the Group which reflect certain operating statistics for the nine months ended 30 September 2019 :

	For the 9 months ended
	30 September
	2019	2018	Changes in %
	RMB million	RMB million
	(Unaudited)	(Unaudited)
		(Restated)
Group's revenue (before intersegment
elimination)
Washing machine business	16,523	15,540	6.3%
Water heater and water purifier
business#	6,014	5,663	6.2%
Channel services business	48,848	51,557	-5.3%
Group's consolidated revenue	55,450	57,737	-4.0%
Group's net profit##	6,262	2,875	117.8%
Profit attributable to owners of the
Company##	6,111	2,706	125.8%

• water purifier business was acquired through the asset swap transaction in July 2019.

• including the one-offnon-cash disposal gain of approximately RMB3.16 billion from the asset swap transaction (see below).

In July 2019, the asset swap transaction between the Group and Haier Electric International Co., Ltd. (''Haier International''), a subsidiary of Haier Group Corporation, was completed. The financial results of Bingji (Shanghai) Enterprise Management Co., Ltd. (''Bingji''), a wholly-owned subsidiary of the Group, and Qingdao Gooday Logistics Co., Ltd. (''Gooday Logistics''), a company indirectly controlled by Bingji and mainly constituting the Group's logistics segment, are no longer consolidated into those of the Group and Bingji and Gooday Logistics have become associated companies of the Group.

In accordance with the relevant requirements of the International Financial Reporting Standards, the logistics business is presented as a discontinued operation in the Group's consolidated financial statements after the completion of the above asset swap transaction. The above Group's consolidated revenue for the nine months ended 30 September 2019 and its comparative period no longer includes the revenue from logistics business. However, the net profit from logistics business attributable to the Group is included in the profit attributable to owners of the Company in current and comparative periods.

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The acquisition of equity interest of Qingdao Haishi Water Equipment Co., Ltd. (''Qingdao Haishi'') by the Group under the above asset swap transaction constitutes a business combination under common control and was accounted for using the principles of merger accounting by the Group as if the Group had always held the equity interest of Qingdao Haishi. Therefore, the Group's revenue and net profit for the nine months ended 30 September 2019 and its comparative period have included the results of operations of Qingdao Haishi.

The one-offnon-cash disposal gain of approximately RMB3.16 billion from the asset swap transaction was determined as the difference between the sum of the total consideration for the disposal and the fair value of the remaining equity interest, and the carrying amount of the equity interest of Bingji and its subsidiaries (the carrying amount of the equity interest as at the date of disposal, net of the amount attributable to the non-controlling shareholders of the subsidiaries of Bingji), net of income tax.

The connected transaction relating to subscription of equity interest in Haier's industrial internet entity and disposal of Foshan Shunde Haier Intelligence Electronics Limited* announced by the Company on 2 July 2019 has not been completed as of 30 September 2019, and does not have any impact on the results announced in this announcement.

The Haier Smart Home Results Announcement prepared by Haier Smart Home is accessible at SSE's website: http://www.sse.com.cn and Haier Smart Home's company website: http://www.haier.net.

Shareholders and potential investors of the Company should note that (i) the financial results disclosed in the Haier Smart Home Results Announcement are unaudited and (ii) the financial results of Haier Smart Home and its consolidated subsidiaries, including those contained in the Haier Smart Home Results Announcement, have been prepared in accordance with PRC generally accepted accounting principles (''PRC GAAP''), which are different from the International Financial Reporting Standards that the Company adopts to prepare and present the Company's financial results and related financial information.

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The information disclosed in this announcement is prepared by the management of the Company based on the Company's internal information which has not been confirmed or reviewed by the auditors of the Company, and may differ from figures to be disclosed in the audited or unaudited consolidated financial statements to be published by the Company on an annual or semi-annual basis as applicable. Therefore, such information is provided to shareholders and potential investors as interim information for reference only. Shareholders and potential investors in the Company's securities are advised not to rely unduly on such information, to consult their own professional advisers in this regard and exercise caution in dealing in the Company's securities.

By Order of the Board of

Haier Electronics Group Co., Ltd.

Zhou Yun Jie

Chairman

Hong Kong, 30 October 2019

This announcement is for information purpose and does not constitute an offer or an invitation to acquire or dispose of any securities or investment advice in any jurisdiction.

This announcement may contain or refer to forward-looking statements. All statements other than statements of historical fact included, or refer to, in this announcement may involve, without limitation, a number of risks, uncertainties or other factors beyond the Company's control, which may cause material differences in actual results, performance or other expectations. These factors include, but are not limited to, general economic conditions, competition, new ventures, government regulations, interest rates, future terrorist acts, influenza, insurance, risks and/or factors detailed in the annual report of the Company for the year ended 31 December 2018, and other risks relating to our industry and business. The Company is under no obligation to (and expressly disclaim any such obligation to) update the forward-looking statements as a result of new information, future events or otherwise.

No statement in this announcement is intended to be a profit forecast and no statement in this announcement should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company.

As at the date of this announcement, the executive Directors are Mr. Zhou Yunjie (Chairman), Mr. Xie Ju Zhi and Mr. Li Hua Gang; the non-executive Directors are Mr. Liang Haishan and Mr. Yang Guang; the independent non-executive Directors are Mr. Yu Hon To, David, Mrs. Eva Cheng Li Kam Fun, Mr. Gong Shao Lin and Dr. John Changzheng Ma.

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