Hisense Home Appliances : ▪ CORRECTION OF ACCOUNTING ERROR...

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HISENSE HOME APPLIANCES GROUP CO., LTD.

海信家電集團股份有限公司

(A joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 00921)

ANNOUNCEMENT

REVISION OF PUBLISHED FINIANCIAL STATEMENTS AND REPORTS

CORRECTION OF ACCOUNTING ERRORS

I.Overview of the correction of accounting errors

The board of directors (the "Board") of Hisense Home Appliances Group Co., Ltd. (the "Company") hereby announces that in the first meeting in 2019 which was held on 28 March 2019, the tenth session of the Board has considered and passed the "Resolution on correction of and retrospective adjustment to accounting errors in prior periods". The Company found the following accounting errors corrections after comparison with the "Case Analysis of Listed Companies Implementing Accounting Standards for Business Enterprises (2017)" *. The accounting errors of the Company in prior periods are corrected and relevant financial information is adjusted retrospectively in accordance with the relevant provisions and requirements promulgated by the China Securities Regulatory Commission ("CSRC") including "Accounting Standards for Business Enterprises No. 28 - Changes in Accounting Policies and Accounting Estimates and Correction of Errors" and "Standards for the Contents and Formats of Information Disclosure by Companies Offering Securities to the Public No. 19 - Correction of Financial Information and Relevant Disclosure".

II. Reasons for the correction of accounting errors

The Company holds the 12.67% equity interests of Qingdao Hisense International Co., Ltd.*青島海

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信國際營銷股份有限公司 ("Hisense International"). Pursuant to the Articles of Association of Hisense International, the board of directors of Hisense International shall have nine directors and the Company can appoint two directors.

Pursuant to the "Explanation on Accounting Standards for Business Enterprises 2010" promulgated by the Accounting Department of the Ministry of Finance, "significant influence" is the power to participate in the decision-making for financial and operating policies of an enterprise, but not to control or jointly control the formulation of such policies together with other parties. In practice, the common example of significant influence is that there is/are designated representative(s) in the board of directors or similar organ of power of the investee, so that significant influence can be exercised through the right to speak during the decision-making process for the financial and operating policies of the investee. When the investor directly or indirectly holds more than 20% but less than 50% voting rights of the investee, it is generally considered as having "significant influence" over the investee, unless there is concrete evidence showing there are guidelines for circumstances under which no participation in decision-making for the operating policies of an investee is allowed and no "significant influence" is formed. The Company classified its equity interests in Hisense International as "having no significant influence", and adopted the cost method for accounting treatment pursuant to the provisions under "Accounting Standards for Business Enterprises No. 2 - Long-term Equity Investments" (the "Accounting Standards for Business Enterprises No. 2") and "Accounting Standards for Business Enterprises No. 22 - Financial Instrument Recognition and Measurement" (the "Accounting Standards for Business Enterprises No. 22").

After careful comparison with the standards of determining "significant influence" under "Case Analysis of Listed Companies Implementing Accounting Standards for Business Enterprises (2017)"* promulgated by the CSRC, it was discovered that the Original Interpretation was unclear. The determination standards for "significant influence" under "Case Analysis of Listed Companies Implementing Accounting Standards for Business Enterprises (2017)"* are: "the company has the power to designate directors in the investee, that is, the core of determination should be whether the investor has the power to participate and exercise significant influence; whether or not the investor is actually exercising such power is not the key of determination. In order to further standardize the accounting treatment and improve the quality of disclosure of accounting information, the Company will make correction of accounting errors related to the accounting policies of the Accounting Standards for Business Enterprises No. 2 implemented by the Company, the equity method will be adopted as accounting treatment for the equity interests of Hisense International held by the Company.

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III.Impact of the correction on the Company's financial position and operation results

Impacts of correction of accounting errors in the prior periods on the financial information in the Annual Report 2017 and the Interim Report 2018 for the six months ended 30 June 2018 and the Third Quarterly Report 2018 for the 9 months ended 30 September 2018 (unit: RMB) are as follows:-

（I）Impact on the balance sheets

1. Items in the consolidated balance sheets

Periods	As at 31 December 2017				As at 30 June 2018		As at 30 September 2018
Items in the	Amount Before	Corrected	Amount After	Amount Before	Corrected	Amount After	Amount Before	Adjusted	Amount After
report	Correction	Amount	Correction	Correction	Amount	Correction	Adjustment	Amount	Adjustment
Financial assets
available-for-	3,900,000.00	-3,800,000.00	100,000.00
sale
Other equity
instrument				3,900,000.00	-3,800,000.00	100,000.00	3,900,000.00	-3,800,000.00	100,000.00
investments
Long-term
equity	2,372,045,624.57	137,585,563.62	2,509,631,188.19	2,750,603,129.03	124,656,761.42	2,875,259,890.45	2,978,502,012.17	117,377,710.02	3,095,879,722.19
investments
Total assets	21,473,666,822.72	133,785,563.62	21,607,452,386.34	24,476,959,925.22	120,856,761.42	24,597,816,686.64	21,532,035,209.67	113,577,710.02	21,645,612,919.69
Capital reserves	2,088,891,556.36	-10,771,716.66	2,078,119,839.70	2,088,891,556.36	-10,771,716.66	2,078,119,839.70	2,088,891,556.36	-10,771,716.66	2,078,119,839.70
Other
comprehensive	7,370,127.86	6,020,567.73	13,390,695.59	7,334,789.26	4,415,249.03	11,750,038.29	11,934,483.74	9,445,451.25	21,379,934.99
income
Surplus	460,339,686.31	18,310,028.60	478,649,714.91	460,339,686.31	18,310,028.60	478,649,714.91	460,339,686.31	18,310,028.60	478,649,714.91
reserves
Undistributed	2,525,976,933.34	120,226,683.95	2,646,203,617.29	2,729,335,784.39	108,903,200.45	2,838,238,984.84	3,096,900,771.78	96,593,946.83	3,193,494,718.61
profit

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Total equity
attributable to	6,445,303,673.87	133,785,563.62	6,579,089,237.49	6,648,627,186.32	120,856,761.42	6,769,483,947.74	7,020,791,868.19	113,577,710.02	7,134,369,578.21
shareholders of
the parent
Total
liabilities and	21,473,666,822.72	133,785,563.62	21,607,452,386.34	24,476,959,925.22	120,856,761.42	24,597,816,686.64	21,532,035,209.67	113,577,710.02	21,645,612,919.69
shareholders'
equity

2. Items in the balance sheets of the parent company

Periods		As at 31 December 2017					As at 30 June 2018				As at 30 September 2018
Items in the report	Amount Before		Corrected		Amount After	Amount Before		Corrected		Amount After	Amount Before	Corrected	Amount After
	Correction		Amount		Correction	Correction		Amount		Correction	Correction	Amount	Correction
Available-for- sale	3,900,000.00		-3,800,000.00		100,000.00
financial assets
Other equity
instrument						3,900,000.00		-3,800,000.00		100,000.00	3,900,000.00	-3,800,000.00	100,000.00
investments
Long-term equity	4,824,775,461.60		137,585,563.62		4,962,361,025.22	5,203,962,436.72		124,656,761.42		5,328,619,198.14	5,432,131,511.02	117,377,710.02	5,549,509,221.04
investments
Total assets	7,174,328,292.19		133,785,563.62		7,308,113,855.81	7,649,212,445.40		120,856,761.42		7,770,069,206.82	7,193,595,290.25	113,577,710.02	7,307,173,000.27
Capital reserves	2,273,807,969.86		-10,771,716.66		2,263,036,253.20	2,273,807,969.86		-10,771,716.66		2,263,036,253.20	2,273,807,969.86	-10,771,716.66	2,263,036,253.20
Other
comprehensive			6,020,567.73		6,020,567.73	136,340.26		4,415,249.03		4,551,589.29	284,886.16	9,445,451.25	9,730,337.41
income
Surplus reserves	429,731,061.32		18,310,028.60		448,041,089.92	429,731,061.32		18,310,028.60		448,041,089.92	429,731,061.32	18,310,028.60	448,041,089.92
Undistributed profit	1,905,015,732.02		120,226,683.95		2,025,242,415.97	1,710,892,329.15		108,903,200.45		1,819,795,529.60	1,933,046,624.80	96,593,946.83	2,029,640,571.63
Total shareholders'	5,971,280,133.20		133,785,563.62		6,105,065,696.82	5,777,293,070.59		120,856,761.42		5,898,149,832.01	5,999,595,912.14	113,577,710.02	6,113,173,622.16
equity
Total liabilities
and shareholders'	7,174,328,292.19		133,785,563.62		7,308,113,855.81	7,649,212,445.40		120,856,761.42		7,770,069,206.82	7,193,595,290.25	113,577,710.02	7,307,173,000.27
equity

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（II）Impact on the income statements

1. Items in the consolidated income statements

Periods	For the year ended 31 December 2017			For the 6 months ended 30 June 2018			For the 9 months ended 30 September 2018
	Amount Before	Corrected	Amount After	Amount	Corrected	Amount After	Amount Before	Corrected	Amount After
Items in the report				Before
	Correction	Amount	Correction		Amount	Correction	Correction	Amount	Correction
				Correction
Investment income	1,562,397,646.46	20,582,862.10	1,582,980,508.56	418,752,839.9	-11,323,483.50	407,429,356.48	657,050,300.04	-23,632,737.12	633,417,562.92
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Including: Share of profit of				380,821,164.2
associates and jointly controlled	735,944,911.05	33,810,662.10	769,755,573.15		-1,181,283.50	379,639,880.70	608,571,501.45	-13,490,537.12	595,080,964.33
				0
entities
Net profits	2,051,224,253.16	20,582,862.10	2,071,807,115.26	829,889,945.1	-11,323,483.50	818,566,461.60	1,205,558,720.20	-23,632,737.12	1,181,925,983.08
				0
Net profit attributable to	1,997,530,073.54	20,582,862.10	2,018,112,935.64	802,958,013.8	-11,323,483.50	791,634,530.35	1,170,523,001.24	-23,632,737.12	1,146,890,264.12
shareholders of the parent				5
Other comprehensive income after tax
attributable to the owners of the	-6,904,578.31	-4,588,457.44	-11,493,035.75	-35,338.60	-1,605,318.70	-1,640,657.30	4,564,355.88	3,424,883.52	7,989,239.40
parent，net
Other comprehensive income that can
be reclassified into profit or loss		-4,588,457.44	-4,588,457.44	136340.26	-1,605,318.70	-1,468,978.44	284,886.16	3,424,883.52	3,709,769.68
under the equity method
Total comprehensive income				802,922,675.2
attributable to shareholders of the	1,990,625,495.23	15,994,404.66	2,006,619,899.89		-12,928,802.20	789,993,873.05	1,175,087,357.12	-20,207,853.60	1,154,879,503.52
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parent

2. Items in the consolidated income statements of the parent company

Periods	For the year ended 31 December 2017			For the 6 months ended 30 June 2018			For the 9 months ended 30		September 2018
Items in the report	Amount Before	Corrected	Amount Before	Corrected	Amount After	Amount After	Corrected	Amount After		Amount After
	Correction	Amount	Correction	Amount	Correction	Correction	Amount	Correction		Correction
Investment income	1,475,347,678.70	20,582,862.10	1,495,930,540.80	442,496,172.56	-11,323,483.50	431,172,689.06	677,234,372.20	-23,632,737.12		653,601,635.08

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