GOME Electrical Appliances Holding Limited announces unaudited interim results for the six-month period ended 30 June 2016

Hong Kong, 2016-Aug-30 — /EPR Retail News/ — GOME Electrical Appliances Holding Limited (HKSE: 493, “GOME” or the “Company,” together with its subsidiaries, the “Group”) today (29 August, 2016) announced its unaudited interim results for the six-month period ended 30 June 2016 (the “Reporting Period”).

Steady Sales Growth with Larger Contribution from GOME Online
In the first half of 2016, the Group remained committed to its strategic transformation towards “Omni-channel, New scenario and Strong linkage” and rolled out a series of targeted investments and renovations. The Group cultivated younger generation consumer groups while maintaining its leading position in existing client base and buying traffic, which laid a solid foundation for rolling out its long term strategic imperatives.

During the Reporting Period, total sales revenue of the Group reached RMB35.31 billion, up 11.4% YoY. Online direct sales revenue of GOME Online grew by 63.0%. The consolidated gross profit margin stood at 16.4%. The operating expense ratio slightly increased by 0.8 percentage point to 16.3%, mainly due to store renovations. Profit attributable to owners of the parent was RMB124 million, down 82% YoY. The Group’s financial position remained solid with RMB11.33 billion of cash and cash equivalents recorded at the end of the period.

As at the end of the Reporting Period, post-March closed transactions and consolidated store numbers stood at 941 stores in first tier market, which recorded 7.6% sales revenue growth and 786 stores in second tier market which recorded 24.9% sales revenue growth.

The Group’s GMV grew 22% to RMB50.2 billion, while GMV generated by GOME Online reached RMB13.3 billion, up 101.2% YoY. GMV generated by mobile applications increased 206% YoY, accounting for 65% of total GMV generated by GOME Online. The GMV generated by after-sales services grew 63% while GMV generated by overseas e-commerce platforms grew 160%.

A New Retail Ecosystem is Building upon a Steady Roll-out of Total Retail Ecosystem Strategy
Rolling out its total retail ecosystem strategy revealed the strategic imperativeness of the Group to cope with a rapidly changing competitive landscape and consumer behavior in retail markets. The Group continued to grow its GMV and customer traffic attracted by building themed retailing platforms with focuses on providing a better customer experience and leveraging on its advantages in supply chain management. Looking ahead, the Group remains committed to pushing forward its strategic transformation steadily and forging its value proposition of becoming an integrated home solutions provider with online and offline channels.

Building New Scenario Ecosystem with New Traffic Attraction Initiatives
Based on a six-scenario strategic business building plan, namely: “Leisure & Entertainment, Lifestyle & Gourmet, Home Furnishing & Design, Internet-TV, Internet of Things & Smart Devices, and E-commerce,” the Group remains focused on building a total retail ecosystem designed to satisfy customer needs of improving quality of life. By carrying out initiatives in five different areas, including entertainment, kitchen & lifestyle, online game tournaments, Internet-TV, and home furnishing & design, the Group intends to organically merge its online and office traffic attraction portals, cover a wider range of retail consumers while cultivating consumption patterns of younger-generation consumers, which eventually will drive sales growth with growing customer traffic.

By vertically partnering with high quality content providers and manufacturers in the value chain, as an all-channel distributor, the Group will push forward the launch of Internet-TV system strategies and seize opportunities to build its presence in “living room economies,” which is crucial to attract younger generations of consumers. The Group targets to realize the whole sales of TV product by 2018 are Internet-TVs.

Internet of Things and smart devices are channels to extend product distribution to the after-sales services market. The Group’s real time monitoring “Smart Cloud” platform is built upon these channels and is aimed at enabling retailers to better understand consumption patterns through data mining and analysis. In addition to the rapid growth of after-sales services platforms and encouraging re-purchase behaviors, the Group’s targeted information push and marketing tools are also designed to cover the full life cycle of customer consumption patterns.

By leveraging on its open supply chain platforms and full and complete process controllable IT software systems, the Group will further integrate the prime resources of its ecosystem partners, both online and offline. The Group also strengthens its value proposition as an integrated home solutions provider by partnering and resource sharing with different types of household name retailers, including Amazon and Feiniu.com. These partnerships also attract consumer traffic by extending customer coverage and supplementing low frequency products with high frequency ones.

Advantages of Integrated Supply Chain Establish Higher Entry Barriers for Retailers
The Group maintains its competitive advantages in the retail industry by adopting flexible and innovative merchandise procurement models and the operation of differentiated products with pricing power controls. The Group also forges a better cloud warehouse model on the top of extending its distribution channels to lower tiers markets. The logistics services alliance that was built upon an open supply chain and resources sharing with Haier and other partners in the ecosystem enables the Group to optimize backbone logistic lines, storage capacity and overall operational efficiency. In addition, GOME establishes a global merchandise platform specializing in importing overseas supply chain resources to the domestic market gradually in the future, the Group also proactively seeks opportunities to expand its presence in global supply chains by exporting domestic resources to overseas markets.

Smart Cloud Platform to Enhance Customer Ties
With the Group’s “Smart Cloud” platform, “GOME House Manager” is an O2O resources sharing platform with an aim of forging with the open smartness, as well as provide a full range of home and residential services with a focus of home appliances, creating a closed loop of the home appliance life cycle of “Purchase – Clean – Maintain – Recycle – Repurchase.” This important portal is aimed at enabling the Group to create new service markets and further strengthen its market-leading position as a full range integrated after-sales services provider, with higher customer loyalty and stronger bonding with consumers.

In addition, the Group also connects its potential customers with GOME TOGO Micro shops, which supplements merchandise distribution with brand building through wholly word of mouth marketing. The number of Micro shops already exceeded 110,000 at the end of the Reporting Period.

Mr. Wang Junzhou, President of GOME, said: “It’s crucial for retailers to satisfy ever-changing consumer appetites and integrate prime resources alongside industry value chain. By integrating supplementary prime resources and forging new scenario and various traffic entries, GOME is building a multi-format and comprehensive product range retailing ecosystem. Relying on the vertically integrated value chain to strengthen our supply chain advantages, GOME is able to lift its own efficiency while providing highly cost-effective logistics services to the entire industry value chain, which eventually delivers high quality products to consumers at reasonable prices. And this ecosystem’s overall profitability should be able to increase with differentiated products, which are designed to satisfy consumer’s diversified needs and pursuit of higher quality of life. Meanwhile, by leveraging GOME’s brand awareness established over the years, GOME is able to rapidly plunge into consumer service market with home appliance related services as a breakthrough point. Benefited from stronger customer ties built upon our cloud platform, which is designed for data collection and analysis of consumer behavior, we should be able to encourage repurchase while closing consumer service cycle.

Looking ahead, GOME remains proactive in integration of prime resources, attracting customer traffic, and building strong linkage with its customers. Meanwhile, GOME is also committed to upgrading and emerging as a leading retailer transformed from the old fashioned retailing business toward a more enterprising, open-minded firm embracing new ideas and technologies, which the management of the Company believes would eventually create value for shareholders, the society and most importantly – consumers.”

About GOME Electrical Appliances Holding Limited
GOME Electrical Appliances Holding Limited has been listed on The Hong Kong Stock Exchange since July 2004 (HKSE: 00493). The GOME Group was founded in China in 1987 and is engaged in the retail business of electrical appliances and consumer electronics in China. It is the leading retail chain of electrical appliances and consumer electronics and the leading retail chain enterprise in China.

Please visit our website for more information: www.gome.com.hk

Investors and Media Inquiry:
Hong Kong
Financial PR (HK) Limited
James Lo
jameslo@financialpr.hk

Alex Wang
alexwang@financialpr.hk
Tel: (852) 2610-0846

Beijing
GOME Electrical Appliances Holding Limited
Maggie Zhang
Tel: (86) 010 5928-8178
Email: zhangyuan-cw@GOME.com.cn

Source: GOME Electrical Appliances Holding Limited

GOME announces its unaudited results for the three-month period ended 31 March 2016

  • Sales Revenue reached RMB15.2 billion, up 5.2% y-o-y, with B2C direct sales revenue of e-commerce business grew by 91.6%
  • Total gross merchandise volume (“GMV”) for both online and offline grew by 12.7% y-o-y, with GOME Online GMV up 105.3% y-o-y
  • Consolidated gross profit margin was 17.0%, remained at a relatively high level

HONG KONG, 2016-May-31 — /EPR Retail News/ — GOME Electrical Appliances Holding Limited (HKSE: 493, “GOME” or the “Company”, together with its subsidiaries, the “Group”) today announced the Group’s unaudited results for the three-month period ended 31 March 2016 (the “Reporting Period”).

Good Progress Made on Transformation; Consolidated Gross Profit Margin Remained at a Relatively High Level

GOME enters into the implementation stage of the transformation according to the strategy of “Omni-Channel, New Scenario, Strong Linkage” in 2016. Good progress has been made in its transformation efforts to date. During the Reporting Period, the Group’s sales revenue was approximately RMB15.2 billion, up 5.2% year-on-year, with B2C direct sales revenue of GOME Online grew by 91.6%. Overall sales revenue from comparable stores declined by 3.3% while sales revenue from comparable stores in the second-tier market recorded increase of approximately 1.2%. Benefiting from effective cost control, the Group’s adjusted operating expense ratio excluding non-operating factors dropped by 0.2 percentage point year-on-year to 16.0%. Consolidated gross profit margin remained at a relatively high level of approximately 17.0%. Adjusted net profit was RMB200 million, down 31.4% as compared with the corresponding period last year.

As at the end of the reporting period, the Group has 675 stores in the first-tier market and 516 stores in the second-tier market, with sales contribution from the first-tier and the second-tier market accounted for 74.3% and 25.7%, respectively. Meanwhile, the Group’s total GMV for both online and offline grew by 12.7% as compared with the corresponding period last year, with GMV of GOME Online recorded strong growth of 105.3%. GMV from mobile devices up 245.5% year-on-year and was accounted for 63.4% of the online GMV.

Building of New Scenario Experience with Every Effort to Establish Strong Linkages with Customers and Attract Customer Flow

In first-tier market, the Group is committed to upgrading stores with new scenario experience that integrates “food, beverage, entertainment, joy and shopping” and establishing VR showrooms, so as to fully satisfy consumers’ demand and to establish strong linkages with its customers. The upgraded stores allow customers traffics from retail, entertainment and leisure to complement each other, thus drawing in stronger customer flow and driving consumption in the stores. The ZhongTa Global Experience Store fully demonstrates the digitized smart stores of the Group. GOME will make the VR experience zone an integral part of its New Scenario establishment and implement a rapid development strategy. In view of the growing consumption demand for smart TV, and leveraging the Group’s large customer base and internet mindset, GOME is actively exploring the internet TV business model through cooperation with multiple partners, with the aim of building living-room economy for enlarging GOME’s share in internet market and establishing new lucrative business model.

GOME Online Continued to Grow Rapidly; Enhanced O2O Ecosystem with Overseas Ecommerce

During the Reporting Period, the Group’s online business GOME Online maintained strong, with self-operated GMV increasing by 91.6% y-o-y and sales revenue of telecommunication products recording a y-o-y growth of over 200%. For cross-border e-commerce, GOME has successfully built up overseas e-commerce supply chain to enhance its O2O overseas ecommerce platform. The Group is also planning to successively launch Australia Shop and Korea Shop, and to explore opportunities to collaborate with Amazon.cn on overseas supply chains.

Continued Effort in Launching Smart Products and Developing the Third-party Logistics Services

In terms of diversification of product mix, GOME has been expanding product mix with more innovative smart products as potential new growth driver. The new smart products, including VR equipment, drone and smart robot, will help to attract new source of customers by satisfying different demand and optimizing shopping experience of different customer groups. In terms of logistic services, as the leading logistics service provider for large and medium-sized items, the Group continued the development of the second-tier market through its wider footprint of physical stores and its broader logistics geographic coverage to achieve the integrated penetration of its logistic network. In addition, it vigorously developed third-party logistics services. As of 31 March 2016, a total of 582 merchants offering third-party logistics services had joined third-party partnerships with the Group, with 247 new merchants joining in first quarter of 2016.

Proactive Development in Home Appliance After-Sales Services Market to Achieve Transformation from Low Frequency Consumption to High Frequency Consumption

As the integral part of “Omni-channel, New Scenario, Strong Linkage”, GOME extended its home appliances segment from products retail to service market. In April, GOME launched “GOME House Manager”, an online after-sales service platform with the core functions of Ewarranty card, E-manual, door-to-door service appointment, and the visualization of delivery and installation information. With the after-sales service as an entry point, GOME established a “self-operated + third-party” platform as a one-stop O2O model to enhance its strong linkage with customers, thus promoting repeat purchase and achieving transformation from low frequency consumption to high frequency consumption. GOME built up the “closed-loop” system covering the home appliance lifecycle of “purchasing – cleaning – repairing – recycling – repurchasing”, and enhancing the profitability of the after-sales services.

Establishment of GOME Self-media Ecosystem through GOME TOGO (國美來購); A Relatively Low Cost Portal the Generates Rapid Growth in GMV

GOME launched its micro shop brand “GOME TOGO” at the end of 2015. Through the strong communication and linkage with customers via WeChat Moments (朋友圈) run by GOME employees, the Company is to bring the best products all over the world to its consumer and build up the GOME self-media community ecosystem to affect a larger audience. This low cost portal will in turn generate rapid growth in GMV. In the first half 2016, the number of GOME micro shops is expected to reach over 100,000.

Mr. Wang Junzhou, President of GOME, concluded, “The internet era is a time to realize personalized demand. The commercial value is to be re-defined. Traditional operating business model will further shift its focus from products to customers. The existing customer relationship that based on transaction will focus more on the linkage with and among customers. In view of the upgrading and evolution of the industry, GOME implemented the transformation strategy of “Omni-channel, New Scenario, Strong Linkage” that is customerflow driven, and is expected to result in an improvement of the Group’s results upon completion. Leveraging the solid interface platform as customer traffic portals, GOME establishes strong linkages with its customers through the operation of membership, and we believe that it will in turn translate into sustainable growth in total GMV. Looking forward, GOME will open up our strong supply chain platform to serve the community, and shift our focus to customer traffic and customer linkage. We believe that this transformation strategy will support the sustainable development of GOME total retail strategy, thus laying solid foundations for future rapid growth and creating greater value for shareholders.

-END

About GOME Electrical Appliances Holding Limited
GOME Electrical Appliances Holding Limited has been listed on The Hong Kong Stock Exchange since July 2004 (HKSE: 00493). The GOME Group was founded in China in 1987 and is engaged in the retail business of electrical appliances and consumer electronics in China. It is the leading retail chain of electrical appliances and consumer electronics and the leading retail chain enterprise in China.

Please visit our website for more information: www.gome.com.hk

For further enquiries, please contact:

Hong Kong
Hill+Knowlton Strategies Asia
Linda Pui
Tel: (852) 2894 6378 / 9700 0178
Email: linda.pui@hkstrategies.com

Queenie Hung
Tel: (852) 2894 6262 / 6932 2584
Email: queenie.hung@hkstrategies.com

Beijing
Maggie Zhang
Tel: (86) 010 5928 8178
Email: zhangyuan-cw@GOME.com.cn

GOME Electrical Appliances Holding Limited to acquire the entire issued capital of Artway Development Limited for HK$11,268,000,000

Pushing ahead development of total retail ecosystem on all fronts

Hong Kong, 2015-7-28 — /EPR Retail News/ — GOME Electrical Appliances Holding Limited (HKSE stock code: 493; “GOME” or the “Listed Company”, together with its subsidiaries, “the Group”), a leading electrical appliances and consumer electronics retailer in China, today announced its proposed acquisition (the “Acquisition”) of the entire issued capital of Artway Development Limited (the “Target Company”), a company wholly-owned by the Group’s controlling shareholder. The total consideration for the acquisition stands at HK$11,268,000,000. The acquisition move underscores the controlling shareholder’s commitment years earlier in undertaking quality asset injections, and confidence in the development of the Listed Company. Upon completion of the Acquisition, the Listed Company will successfully complete the nationwide deployment of its O2M “Total Retail” network and its supply value chain covering procurement, logistics and after-sales services, putting GOME’s “Total Retail” strategy in full gear to accelerate the realization of the “building another GOME” goal by 2017.

The consideration will be satisfied in cash, new shares as well as warrants. These include HK$2.2 billion in cash, 6.2 billion new shares allotted and issued at a price of HK$1.39 per share, as well as warrants exercisable into 2.5 billion underlying shares at an initial exercise price of HK$2.15 per underlying share. The cash portion of the consideration will be funded from internal resources. The Acquisition is conditional on the Target Company and the controlling shareholder being granted the Whitewash Waiver and the approval from independent shareholders.

Create synergies to expand business on a national scale and accelerate penetration into fast growing regional markets, fortifying further GOME’s leading position in the industry GOME’s leadership in the electrical appliances and consumer electronic products retail market in the PRC will be strengthened further upon the Acquisition. With the injection of quality retail stores and creation of synergies in supply chain, GOME will take advantage of the growth potential offered by both the online and offline platforms to bring forth better total retail experience to consumers. The increase in economies of scale in supply chain and optimization of capital structure will create greater value and opportunities for shareholders. GOME also expects the acquisition to reap synergies from the integration and sharing of resources in retail sales operations, procurement, logistics, after-sales services, warehousing, information technology infrastructure and human resources. Other benefits include facilitating a more flexible fulfilment management, as well as cost savings in warehousing and distribution. These are vindicated primarily in the areas detailed as below:

1. Retail stores with Target Company are highly complementary; complete nationwide coverage of “Total Retail Ecosystem” Following the completion of the Acquisition, GOME will be able to realize its nationwide network coverage deployment, significantly extending its retail store network from 269 cities to 436 cities. The newly-added stores are primarily located in fast-growing second and thirdtier cities, which are highly complementary to the Group’s existing retail store network. Concurrently, the empowerment of the retail store network will accelerate the Group’s ecommerce development, promoting full integration online and offline. The Group will spearhead the creation of a “Total Retail Ecosystem” with comprehensive shopping scenarios and services for consumers, advancing the implementation of its “Total Retail” strategy.

The Target Company notably offers high-quality assets with immense growth potential, boasting a network of 578 stores located across 181 cities in the PRC. Most of them are located in Central and Western China, Bohai Bay and the Beijing-Tianjin-Hebei region forming part of China’s Economic Zones with significant governmental support. The latter includes the Silk Road Economic Belt, Greater Northeast Economic Area, Yangtze River Economic Belt and Beibu Gulf Economic Zone. Benefiting from the PRC’s macroeconomic growth and national policies such as the “One Belt, One Road”, “Western Development” and “Northeast China Revitalization”, the numerous stores under the Target Company are strongly positioned to seize the opportunities ahead to achieve rapid development, and deliver a new growth engine to the Group.

2. Total integration of logistics platform nationwide; being one of the largest socialized logistics network platforms for home appliances in the PRC The completion of the Acquisition will also enable GOME to upgrade its existing logistics network which covers 21 regional and 407 city distribution centers, by bringing together the listed and non-listed logistics arms. With the support of its 1,714 retail stores, the Group is poised to successfully complete its national logistics coverage deployment, forming a multidimensional logistics network with regional and city warehousing as well as national last-mile distribution coverage spanning more than 600 cities, 2,500 counties and 45,000 towns that can enjoy localized distribution and installation. The establishment of a comprehensive national logistics network encompassing “points to lines to planes” allows the Group to enhance its logistics services standard and efficiency, and expand further into third-party logistics services to create one of the largest socialized logistics network platforms for home appliances in the PRC. This will put the Group’s “Total Retail” strategy in full swing.

3. Rapid expansion of after-sales network at national level; ascend to become one of the biggest after-sales services network platforms for home appliances in the PRC With an after-sales service platform offering over 2,000 outlets across 400-odd mainland cities, GOME is currently the leading air-conditioner and television installation service provider in the PRC. It provides full process of after-sale services from installation, extended warranty, maintenance to home appliance recycling, with “24-hour turnaround guarantee”. The completion of the Acquisition will give the Group a first-mover advantage into the network of the newly-added retail stores, and let it leverage the market opportunities to fully develop its after-sales service network at a national level. GOME will hence be able to become one of the largest after-sales services platforms for home appliances in the PRC.

4. Hundreds of billions capacity of procurement platform; move to become one of the largest home appliances procurement platforms 3 On the procurement front, with the economies of scale achieved post-Acquisition, GOME will continue to increase product diversity and sharpen the competitive edge and bargaining power enjoyed by its procurement platform, through stronger synergies with suppliers. This will help lead to the formation of a mega home appliances procurement platform with hundreds of billions of capacity, making it the largest of its kind in the PRC with the provision of full range of services in terms of product types and prices. At the same time, the Group will strive to raise the proportion of its differentiated products in the portfolio with an aim to increase its overall margin level, further demonstrating the merits of its product differentiation strategy.

All in all, with the support of the fully integrated procurement platform, logistics platform and after-sales services platform post-Acquisition, GOME is destined to strive ahead and fulfil its highest service standard of “three deliveries/day, precise delivery, installation upon delivery” set for the industry in over 400 cities in the PRC, solidifying its three benchmarking pillars – low-price benchmark, service benchmark and IT benchmark – to heighten customer experience, satisfaction and loyalty in an all-round way.

Moreover, the Target Company will become a wholly-owned subsidiary of the Group upon the completion of the Acquisition. As such, the management service and purchasing service arrangements will be terminated and the Group’s number of connected transactions reduced, thereby streamlining its corporate governance. In addition, the Group is expected to benefit from potential savings in interest and tax expenses through more favourable financing terms, and the optimization of its capital structure.

Mr. Wang Junzhou, CEO of GOME, said, “The acquisition marks an important milestone in the history of GOME. As the retail store network of the Target Company and GOME are highly complementary, it is envisaged that the acquisition will further strengthen GOME’s total retail value chain and fuel its expansion in second and third-tier markets, and e-commerce development in particular.”

“With its far-sighted leadership of Board of Directors and the management, as well as under the national strategy of ‘Internet Plus’, GOME will continue to focus on data mining and bigdata driven targeted marketing and foster the integration of its online + offline + mobile terminal platforms. This will facilitate GOME to fortify its three benchmarking standards set for the home appliances retail market and provide consumers with the most comprehensive and the highest standard of services. The acceleration of the implementation of the ‘Total Retail’ strategy allows GOME to advance ahead towards its ‘building another GOME’ goal by 2017, creating greater value for shareholders.”

The operations of the Target Company are already being carried out by the Listed Company under relevant management arrangements, subject to payment of management fees to the Listed Company.

-End-

About GOME Electrical Appliances Holding Limited
GOME Electrical Appliances Holding Limited has been listed on The Hong Kong Stock Exchange since July 2004 (HKSE: 00493). The GOME Group was founded in China in 1987 and is engaged in the retail business of electrical appliances and consumer electronics in China. It is the leading retail chain of electrical appliances and consumer electronics and the leading retail chain enterprise in China.

Please visit our website for more information: www.gome.com.hk

For further enquiries, please contact:

Hong Kong
Hill+Knowlton Strategies Asia
Elisa Fong
Tel: (852) 2894 6224 / 9528 9627
Email: elisa.fong@hkstrategies.com

Samantha Wang
Tel: (852) 2894 6266 / 9418 0271
Email: samantha.wang@hkstrategies.com

Beijing
Maggie Zhang
Tel: (86 10) 5928 8178
Email: zhangyuan-cw@gome.com.cn

 

GOME Electrical Appliances Holding Limited announces the Group’s audited consolidated results for the year ended 31 December 2014

Core Financial Indicators Exceed Industry Average for Eight Consecutive Quarters E-commerce Business Grew Rapidly with GMV Doubled in Q4 Business Model Upgrade to Total Retail Company to Build Another GOME by 2017

• GOME achieved industry leading results with core financial indicators for eight consecutive quarters:

1. 2014 Sales revenue up 7.0% y-o-y to RMB60.36 billion with second-tier markets sales up 15.0% y-o-y
2. Same store sales growth (SSSG) reached 4.8%, second-tier market recorded SSSG of 9.3%
3. Sales revenue per sq.m. sustained an upward trend for eight consecutive quarters to RMB3,943 in 2014 Q4
4. Operating expense ratio continued to improve and fell 0.3 percentage point y-o-y to 16.3%
5. Profitability stayed solid: Consolidated gross profit margin achieved 18.5%; Net profit margin amounted to 2.1%
6. Online GMV increased 84.4% y-o-y, of which number of new mobile terminal users grew by 97.2% y-o-y

• Omni-channel strategy continued to create value for shareholders with earnings per share amounted to RMB7.6 fen. The Board proposed a final dividend of HK$1.80 cents per ordinary share

Hong Kong, 2015-3-24 — /EPR Retail News/ — GOME Electrical Appliances Holding Limited (HKSE stock code: 493, “GOME” or “The Company”, together with its subsidiaries, “The Group”) today announced the Group’s audited consolidated results for the year ended 31 December 2014 (“the Reporting Period”). In 2014, GOME spared no effort to pursue its strategic goal of becoming an “Open Omni-channel Retailer”. By optimizing its open supply chain platform, driving further improvements in the areas of procurement, logistics, information system and financial services, as well as building an open omni-channel platform encompassing “online + offline + mobile terminal + other socialized channels”, the Group has managed to provide cross-regional and cross-channel full services to consumers as a whole. The launch of this strategic transformation, supported by the low-cost highly-efficient open supply chain, has enabled the Group to achieve year-on-year growth in key financial indicators for eight consecutive quarters and increase its operating efficiency. During the reporting period, profit attributable to the owners of the parent company surged 43.5% to RMB1.28 billion. The Group’s differentiated products rose significantly from 1.2% of total revenue in 2009 to 33% in 2014.

In 2014, the Group continued its store renovation initiative and expanded its reach to secondtier markets, strengthened its joint operations with supermarkets and department stores, and promoted its e-commerce development. During the reporting period, the Group completed renovation in 100 smart stores, and opened 145 new stores of which 78 were located in second-tier markets. Additionally, the Group launched a full strategic alliance with department stores and supermarkets with 154 newly-opened joint operation stores, leading to a 67% q-o-q increment in the segment’s sales revenue in the fourth quarter.

Under e-commerce development, GOME Online greatly increased the level of unique visits and customer loyalty. This was done through online and offline integration of its supply chain covering procurement, logistics, information system and financial services platforms, and by focusing on the expansion of all product types, price competiveness and the analysis and application of big data. In 2014, the total gross merchandise value (GMV) of the online channel increased 84.4% over the previous year and increased 117.3% in the fourth quarter over the corresponding period the previous year. At the same time, the unique visits (UV) for 2014 was up 85.3% over the previous year and up 149.5% in the fourth quarter from the corresponding period the previous year. Moreover, the Group has been actively developing mobile applications. Measures such as products with pre-installed applications drove mobile terminal membership sign-ups for GOME Online. The number of new mobile terminal users increased 97.2% over the previous year. Mobile GMV accounted for 19.4% of online GMV in 2014 and 35.1% in the fourth quarter.

Business Model Upgrades to Total Retail to Build “Another GOME” in 2017

With the onset of the mobile Internet era, the development of consumer behavior is trending towards a focus on the individual, with fragmented consumption time, diversified shopping setting, and less distinction between channels. With the change in consumption behavior and demand, GOME is destined to upgrade the “omni-channel experience” in both online and offline to “total retail experience” emerging from the integrated online and offline channels, allowing consumers to move freely between online, offline, mobile terminals and jointoperating channels. The Group will focus on the development of Mobile Micro Shops (「微 店」) on the front-end interface platform, connecting online and offline. Meanwhile, the Group will enhance the value of the supply chain with a focus on the back-end big data infrastructure to build a total retail community with more than 100 million customers.

Through GOME’s total retail shopping process, consumers from different entrances will enjoy more product choices than ever, diversified services including shopping assistance, queries, payment, installation, after-sales, reviews and feedbacks etc. Meanwhile, the Group will also conduct targeted marketing and promote repeat purchases by transferring real-time customer behavior data to the front-end in a timely manner using the big data terminal.

Key tasks in 2015 include:

• Total Retail Interface Platforms: (1) Mobile micro shops: Loyal fans are the consumers with the most potential. Anchored by the micro shops, GOME will connect offline, online and data terminal to create a superb consumer experience. Leveraging social media which focuses on one-to-one information sharing through a network of connections, GOME will launch and share enormous products, achieving crosscategories, cross-brands and round-the-clock sales, transcending the boundaries of time and space and offering exclusive customized services to consumers. The Group currently owns 130 million members + 12,000 suppliers + 10,000 vendors + 100,000 employees (including non-listed Gome group). The Group will establish more than Page 3 of 4 100,000 mobile micro shops in 2015, and double the number of its fans by 2017. (2) Smart stores: By expediting the digitization of its physical stores; increasing product variety, introducing a sophisticated product experience and new technology, the Group will allow consumers to actually purchase while shopping and playing; (3) Second-tier market: GOME will accelerate the expansion of store networks to further cover different counties and towns, while expecting to enter 100 new cities in the next three years; (4) GOME On-line: The Group will further develop direct sales of electrical appliance categories and marketplace sales of non-electrical appliances. GOME aims to achieve a CAGR of 100% in GMV and number of mobile terminal users in the coming three years, by accelerating the development of the mobile terminal and e-commerce business, becoming China’s leading e-commerce platform.

• Total Retail Value Platforms: (1) Big Data terminal: The Group will make use of its massive transaction data to build a big data terminal. By capturing customers’ behavior through cloud computing and data analysis, the Group will be able to conduct targeted marketing, creating total retail interface platforms which allow boundless shopping experience and thorough penetration. Furthermore, the Group will leverage the data to boost collaboration between value platforms including procurement, logistics, after-sales, financial services and information. Recently, The Group has successfully created a big event ‘13th Mar Black Friday’ in 400+ cities in China through targeted marketing with its Big Data terminal. (2) Procurement: With the new procurement model driven by data and synergies with suppliers, GOME will maintain its low price benchmark and increase its pace to achieve the target of raising the proportion of differentiated products to 50% by 2017. (3) Logistics: GOME is committed to building China’s biggest socialized logistics network platform for home appliances. With its strong infrastructure and supporting resources and 1,688 chain stores nationwide (including the stores under the non-listed GOME group), GOME will continue to establish the highest service standard of “Three deliveries/day, precise delivery, installation on delivery”. (4) After-sales services: GOME has already become China’s biggest air-conditioner and television installation service provider. By offering the whole process after-sales service within the product validity period including installation, extended warranty, maintenance and home appliances recycling, and the promise of “Deal with the problem within 24-hours”, GOME aims to become China’s largest platform for home appliances after-sales services by 2017. (5) Information system: GOME will build the GOME cloud platform and establish the data cloud, logistics cloud, after-sales cloud, product cloud, corporate resources cloud and finance cloud etc., achieving the sharing between logistics, data and capital resources. (6) Financial services: GOME has successfully launched many internet finance products, such as Mei Tong prepaid card, Mei Ying Bao and other services; and will focus on the development of factoring finance and business loans. This will let it offer better and more targeted financial products and services to customers and suppliers, enhancing loyalty to GOME supply chain.

Mr. Wang Junzhou, CEO of GOME, concluded: “The infrastructure under GOME’s ‘open omnichannel retailer’ strategy has been completed which in turn paved the way for the Group’s remarkable results. In 2015, with Internet Plus becoming the national strategy, and with the development of mobile terminals and social media, GOME will perform in-depth data mining and carry out targeted marketing with the aid of big data terminal. It will accelerate the integration and interaction between its online, offline and mobile terminals, and strive to build a “GOME ecosystem” covering consumer groups of all ages, channels and markets. This will support the Group build China’s best total retail platform and achieve the target of “building another GOME” by 2017, thus creating greater value for shareholders, suppliers and consumers.”

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About GOME Electrical Appliances Holding Limited
GOME Electrical Appliances Holding Limited was listed on The Hong Kong Stock Exchange in July 2004 (HKSE: 00493). The GOME Group was founded in China in 1987 and is engaged in the retail business of electrical appliances and consumer electronics in China. It is the leading retail chain of electrical appliances and consumer electronics and the leading retail chain enterprise in China.

Please visit our website for more information: www.gome.com.hk

For further enquiries, please contact:

Hong Kong

Hill+Knowlton Strategies Asia
Celia Fong
Tel: (852) 2894 6349 / 9842 8809
Email: celia.fong@hkstrategies.com

Elisa Fong
Tel: (852) 2894 6224 / 9528 9627
Email: elisa.fong@hkstrategies.com

Beijing
Helen Song
Tel: (86 10) 5928 8815
Email: songjie6@gome.com.cn