Dear Shareholders,

2009 witnessed the most difficult period for GOME Electrical Appliances Holding Limited (the “Company”) together with its subsidiaries (collectively known as the “Group” or “GOME “) to date since its initial listing. Amid the contraction of China’s economy and the shattering of consumer confidence during the global economic crisis, an unfavorable event involving the founder of the Company unfolded as we marched into 2009. GOME was put to the test in the harshest of ways and had to prove whether the Company could survive and grow again. A year later, I am glad to say that GOME triumphed over this adversity and set out on a path of healthy development. Despite the impact this severe corporate crisis had on our Company, we moved on and passed the test with flying colors, ending up with a stronger, more professional and united management team. We also realized how many diligent and committed staff members we had in our midst, staff who worked with great integrity to forge and deepen relationships with our business partners. In response to the changing market conditions and evolving consumers’ needs, the Group adopted a transformation strategy and achieved initial success. In the course of solving the crisis, the Company successfully raised a total of more than RMB5.3 billion from new strategic investors as well as from the issuance of new shares and convertible bonds, the combination of which provided the company with sufficient working capital and an appropriate capital structure. GOME not only strengthened its fundamental capabilities and improved its operating efficiency, but also maintained its leading position in the home appliance retail industry in China, with a 34.45% growth in profit attributable to owners of the parent over the previous year. The Company has already weathered the impact of these crises and is now well-positioned to enter a phase of consistent and healthy development.

2009 BUSINESS PERFORMANCE

In response to the change in macroeconomic conditions and demand, the Company fully implemented its strategy of transformation, focusing on network rationalization and individuals to reprofitability improvement. The Company ensured that large-scale stores were opened in premium locations to accommodate large inflows of customers, while we closed down 189 under performing stores. As a result of this rationalization, the revenue of the Company for the reporting year dropped approximately 7.02% as compared to that of 2008. At the same time, however, we are pleased to note that the 532 comparable stores recorded same store sales of RMB34,816 million, an increase of 2.81% as compared to RMB33,864 million of last year.

Through a series of measures to enhance the profitability of individual stores, including differentiated product management, and provision of value-added services like extended warranty service and after-sales ser vice, our consolidated gross profit margin increased to 17.32% from 16.94% last year.

In 2009, the Group recorded a 12.35% decrease in operating profit from RMB1,944 million in 2008 to RMB1,704 million. However, the decrease in operating profit narrowed and improved on a quarterly basis thanks to the setting and achievement of precision management targets. Profit for the year attributable to owners of the parent amounted to approximately RMB1,409 million, a sharp rise of 34.45% compared to that of last year. The Basic earnings per share (“EPS”) were RMB0.103, a rise of 25.61% as compared to RMB0.082 last year.

As of 31 December 2009, cash and cash equivalents were RMB6,029 million. This satisfactory cash position and sound capital structure laid a solid foundation for our future development. However, in May 2010, the redemption rights of the 0% coupon convertible bonds due in 2014 (the “Old 2014 Convertible Bonds”) will become exercisable. We also need to prepare for potential requirements for capital to develop second tier markets and rural areas and to upgrade our internal information systems. Therefore, we recommended the board of directors of the Company (the “Board”) not to pay a final dividend for 2009.