ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 SHENZHEN PROPERTIES & RESOURCES DEVELOPMENT (GROUP) LTD. THIRD QUARTER REPORT 2018 Announcement No. 2018-36 October 2018 1 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 Part I Important Notes The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors, supervisors and senior management of ShenZhen Properties & Resources Development (Group) Ltd. (together with its consolidated subsidiaries, the “Company”, except where the context otherwise requires) hereby guarantee the factuality, accuracy and completeness of the contents of this Report and its summary, and shall be jointly and severally liable for any misrepresentations, misleading statements or material omissions therein. All the Company’s directors have attended the Board meeting for the review of this Report and its summary. Liu Shengxiang, the Company’s legal representative, Cai Lili, the Company’s head of financial affairs, and Shen Xueying, head of the Company’s financial department (equivalent to financial manager) hereby guarantee that the financial statements carried in this Report are factual, accurate and complete. This Report and its summary have been prepared in both Chinese and English. Should there be any discrepancies or misunderstandings between the two versions, the Chinese versions shall prevail. 2 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 Part II Key Corporate Information I Key Consolidated Financial Information Indicate by tick mark whether there is any retrospectively restated datum in the table below. □ Yes √ No 30 September 2018 31 December 2017 Change (%) Total assets (RMB) 4,884,498,981.18 5,393,331,548.87 -9.43% Equity attributable to the listed 2,885,240,065.59 2,921,693,794.08 -1.25% company’s shareholders (RMB) Q3 2018 YoY change (%) Q1-Q3 2018 YoY change (%) Operating revenue (RMB) 373,989,694.46 -72.00% 1,199,003,679.43 -54.80% Net profit attributable to the listed 61,216,163.81 -71.10% 144,188,691.40 -74.97% company’s shareholders (RMB) Net profit attributable to the listed company’s shareholders before 61,962,097.63 -70.64% 143,925,231.95 -75.14% exceptional items (RMB) Net cash generated from/used in -- -- 49,981,030.19 114.09% operating activities (RMB) Basic earnings per share 0.1027 -71.10% 0.2419 -74.98% (RMB/share) Diluted earnings per share 0.1027 -71.10% 0.2419 -74.98% (RMB/share) Weighted average return on equity 2.09% -5.94% 4.92% -16.92% (%) Exceptional gains and losses: √ Applicable □ Not applicable Unit: RMB Item Q1-Q3 2018 Note Gain or loss on disposal of non-current assets (inclusive of 551,874.00 impairment allowance write-offs) Non-operating income and expense other than above 274,942.21 Less: Income tax effects 563,356.76 Total 263,459.45 -- Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in the Explanatory 3 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss Items: □ Applicable √ Not applicable No such cases for the Reporting Period. II Total Number of Shareholders and Holdings of Top 10 Shareholders at 30 September 2018 1. Numbers of Ordinary Shareholders and Preferred Shareholders with Resumed Voting Rights as well as Holdings of Top 10 Shareholders Unit: share Number of preferred Number of ordinary shareholders 44,868 shareholders with resumed 0 voting rights (if any) Top 10 shareholders Name of Nature of Shareholding Shares in pledge or frozen Number of shares Restricted shares shareholder shareholder percentage Status Shares Shenzhen Construction State-owned legal Investment 54.33% 323,796,324 293,997,370 person Holdings Corporation Shenzhen Investment State-owned legal 9.49% 56,582,573 56,582,573 Management person Corporation Domestic natural Du Xinye 0.65% 3,880,800 person Domestic natural Zhou Qun 0.52% 3,115,450 person Domestic natural Du Yunfeng 0.39% 2,323,000 person Shenzhen Duty-Free Domestic Commodity non-state-owned 0.29% 1,730,300 1,730,300 Enterprises Co., legal person Ltd. Domestic natural Gao Wenren 0.25% 1,506,000 person 4 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 Domestic natural Yang Yaochu 0.24% 1,410,620 person Domestic natural Li Jing 0.20% 1,176,740 person Domestic natural Su Zhifen 0.19% 1,150,000 person Top 10 unrestricted shareholders Shares by type Name of shareholder Unrestricted shares Type Shares Shenzhen Construction Investment RMB-denominate 29,798,954 29,798,954 Holdings Corporation d ordinary stock RMB-denominate Du Xinye 3,880,800 3,880,800 d ordinary stock RMB-denominate Zhou Qun 3,115,450 3,115,450 d ordinary stock RMB-denominate Du Yunfeng 2,323,000 2,323,000 d ordinary stock RMB-denominate Gao Wenren 1,506,000 1,506,000 d ordinary stock Domestically Yang Yaochu 1,410,620 listed foreign 1,410,620 stock Domestically Li Jing 1,176,740 listed foreign 1,176,740 stock RMB-denominate Su Zhifen 1,150,000 1,150,000 d ordinary stock Domestically Mai Furong 1,130,500 listed foreign 1,130,500 stock Wuhan Xingkaiyuan Electric Power RMB-denominate 1,100,000 1,100,000 Engineering Co., Ltd d ordinary stock The first and second principal shareholders of the Company are managed by Shenzhen Related or acting-in-concert parties Investment Holding Corporation, the actual controlling shareholder of the Company. And the among shareholders above Company does not know whether there are any connected parties or acting-in-concert parties among the other 8 shareholders. Top 10 ordinary shareholders involved in securities margin trading N/A (if any) 5 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the Company conducted any promissory repo during the Reporting Period. □ Yea √ No No such cases in the Reporting Period. 2. Number of Preferred Shareholders and Shareholdings of Top 10 of Them □ Applicable √ Not applicable 6 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 Part III Significant Events I Changes in Key Consolidated Financial Statement Line Items and Explanation of why √ Applicable □ Not applicable 1. Accounts receivable rose 90.37% from the amount as at 31 December 2017 to RMB88,089,246.66 as at 30 September 2018, primarily driven by larger amounts due from homeowners to property management subsidiaries. 2. Prepayments rose 51.16% from the amount as at 31 December 2017 to RMB42,552,532.47 as at 30 September 2018, primarily driven by the increase in prepaid taxes. 3. Other receivables declined 79.28% from the amount as at 31 December 2017 to RMB18,925,116.21 as at 30 September 2018, primarily driven by the collection of the final payment from the share transfer of two taxi service subsidiaries. 4. Inventories declined 24.18% from the amount as at 31 December 2017 to RMB1,403,219,359.96 as at 30 September 2018, primarily driven by the sale and settlement of properties. 5. Long-term prepaid expense rose 151.77% from the amount as at 31 December 2017 to RMB2,395,293.07 as at 30 September 2018, primarily driven by higher prepaid decoration expenses. 6. Taxes payable declined 35.99% from the amount as at 31 December 2017 to RMB763,324,955.45 as at 30 September 2018, primarily driven by the payment of land value added tax, corporate income tax and the like. 7. Other comprehensive income declined 44.96% from the amount as at 31 December 2017 to RMB-5,960,279.43 as at 30 September 2018, primarily driven by lower income from translation of foreign currency-denominated financial statements caused by exchange rate fluctuations. 8. The year-on-year decreases of 72.00% and 54.80% in operating revenue to RMB373,989,694.46 and RMB1,199,003,679.43 during Q3 2018 and Q1~Q3 2018, respectively, primarily resulted from lower property sales revenue caused by a significantly smaller floor area sold and settled. 9. The year-on-year decreases of 72.00% and 54.80% in operating costs and expenses to RMB220,059,287.49 and RMB909,246,628.59 during Q3 2018 and Q1~Q3 2018, respectively, primarily resulted from lower costs and expenses in the property sales business caused by a significantly smaller floor area sold and settled. 10. The year-on-year decreases of 45.70% and 86.31% in taxes and surcharges to RMB55,644,770.75 and RMB62,944,209.41 during Q3 2018 and Q1~Q3 2018, respectively, primarily resulted from lower land value added tax and the like due to lower property sales revenue. 11. The year-on-year decreases of 38.54% and 25.30% in selling expense to RMB5,511,547.16 and RMB14,808,076.92 during Q3 2018 and Q1~Q3 2018, respectively, primarily resulted from the decrease in sales agent fees and service charges. 12. The year-on-year increases of 168.00% and 76.34% in finance costs (negative figures represent income) to RMB-10,838,996.25 and RMB-38,456,220.90 during Q3 2018 and Q1~Q3 2018, respectively, primarily resulted from higher interest income. 13. Asset impairment loss stood at RMB-4,797,271.69 during Q1~Q3 2018 with reversal down 91.36% year-on-year, primarily resulted from the fact that certain previous valuation allowances on the Banshan Yujing (Xuzhou) project and the Hupan Yujing (Yangzhou) project had been reversed in the same period of last year due to rising prices, while the current period saw less such reversal. 7 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 14. Investment income stood at RMB1,348,773.97 during Q3 2018, up 181.29% year-on-year, and was RMB1,398,021.17 during Q1~Q3 2018, down 26.13% year-on-year, primarily resulted from changes in contributions from joint ventures. 15. The net amount of non-operating income and expense stood at RMB206,685.38 during Q1~Q3 2018 with such net expense down 104.39% year-on-year, primarily resulted from higher confiscated income and fewer payments for legal matters. 16. The year-on-year decreases of 72.95% and 73.79% in income tax expense to RMB18,351,487.77 and RMB44,938,831.33 during Q3 2018 and Q1~Q3 2018, respectively, primarily resulted from a lower profit. 17. Operating profit, profit before tax and net profit (attributable to the Company as the parent) stood at RMB80,582,782.78, RMB79,567,651.58 and RMB61,216,163.81 during Q3 2018, down 71.13%, 71.55% and 71.10% respectively year-on-year, and was RMB188,920,837.35, RMB189,127,522.73 and RMB144,188,691.40 during Q1~Q3 2018, down 74.89%, 74.70% and 74.97% respectively year-on-year, primarily resulted from less property sales revenue and a lower gross profit margin of sold and settled floor areas. 18. The year-on-year decreases of 304.04% and 312.41% in other comprehensive income, net of tax to RMB-2,264,052.37 and RMB-1,848,692.29 during Q3 2018 and Q1~Q3 2018, respectively, primarily resulted from changes in income from translation of foreign currency-denominated financial statements caused by exchange rate fluctuations. 19. The year-on-year increase of 114.09% in net cash generated from/used in operating activities to RMB49,981,030.19 during Q1~Q3 2018 primarily resulted from more payments collected from homebuyers and the decrease in taxes paid during the current period. 20. The year-on-year decrease of 19.86% in net cash generated from/used in investing activities to RMB76,167,830.64 during Q1~Q3 2018 primarily resulted from a lower payment received in the current period for the share transfer of two taxi service subsidiaries. 21. Net cash generated from/used in financing activities stood at RMB-177,787,631.06 during Q1~Q3 2018, with such net cash used up 65.77% from the same period of last year, primarily resulted from the increase in dividends paid during the current period. 22. Net increase in cash and cash equivalents stood at RMB-48,981,405.13 during Q1~Q3 2018, with such net decrease down 86.75% from the same period of last year, primarily resulted from more payments collected from homebuyers and the decrease in taxes paid during the current period. II Progress, Influence and Solutions Associated with Significant Events √ Applicable □ Not applicable In order to continuously optimize the Company's industrial layout and asset structure, actively respond to the call for the resource integration of municipal state-owned taxi enterprises and for strengthening strategic synergetic development of state-owned enterprises and follow the trend of the industrial reform, the Company intended to transfer the whole shares in its subsidiaries Shenzhen International Trade Center Car Industry Co., Ltd. and Shenzhen Shenxin Taxi Co., Ltd. to Shenzhen Bus Group Co., Ltd. (hereinafter referred to as “Shenzhen Bus”) with price not less than the asset evaluation result of RMB189.533 million. This share transfer was approved by the 17th Meeting of the 8th Board of Directors held on 30 June 2017 and the 1 st Extraordinary General Meeting of 2017 held on 17 July 2017 with independent and professional opinions from independent directors. In addition, the share transfer was also approved by the Shenzhen State-owned Assets Supervision and Administration Commission (hereinafter referred to as “Shenzhen SASAC”), and the evaluation report of the target company regarding this equity transfer has completed the filing 8 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 procedure of Shenzhen SASAC. Under the share transfer agreement, the Company received the basic transfer price of the share transfer from Shenzhen Bus respectively on 30 August 2017 and 29 March 2018. During the Reporting Period, the Company obtained the profit or loss of relevant period paid by Shenzhen Bus. So far, the rights and obligations involved in the above-mentioned transaction have been totally performed, and this share transfer deal was closed. Under the general deployment by the government in Shenzhen for the adjustment of state-owned assets management system, Shenzhen SASAC issued SZSASAC [2004] No. 223 on 29 September 2004 in which it decided to set up Shenzhen Investment Holdings Co., Ltd (hereinafter referred to as “SZIH”) taking the form of merger by new establishment. The merged parties involved in are Shenzhen Investment Management Co., Ltd. (hereinafter referred to as “SIM”), Shenzhen Construction Investment Holdings Corporation (hereinafter referred to as “SCIHC”) and Shenzhen Business Investment Holdings Corporation (hereinafter referred to as “SBIHC”). SCIHC held 323,796,324 shares of SZPRD and SIM held 56,582,573 shares of SZPRD, which totally accounted for 63.82% of the total shares of SZPRD. After the issuing of the decision by Shenzhen SASAC on setting up SZIH taking the form of merger by new establishment, the Company keeps introducing this situation under the item of Shareholders’ Profile in annual reports since 2004 (including 2004) and showed investors that the Company’s actual controlling shareholder is SZIH and that the Company’s actual controller is Shenzhen SASAC. SZIH received the Reply on the Consent for the Exemption of Shenzhen Investment Holdings Co., Ltd. from the Tender Offer of Shenzhen Properties & Resources Development (Group) Ltd. (ZJXK <2018>No. 1408) issued by China Securities Regulatory Commission on 5 September 2018. For more details, please refer to the Company’s relevant announcements. Announcement of significant Disclosure date Disclosure website event No. 2017-28 Announcement on Resolution of the 17th Meeting of the 8th 1 July 2017 Board Directors on www.cninfo.com.cn No. 2017-30 Announcement on Transfer of Total Shares in Two Taxi 1 July 2017 Companies under the Control of the Company to Shenzhen Bus Group Co., Ltd. on www.cninfo.com.cn The total share transfer of two No. 2017-32 Announcement on Resolution of the 1st Extraordinary taxi companies under the 18 July 2017 General Meeting of 2017 on www.cninfo.com.cn control of the Company No. 2017-47 Announcement on the Progress of the Transfer of Total 8 December 2017 Shares in Two Taxi Companies under the Control of the Company to Shenzhen Bus Group Co., Ltd. on www.cninfo.com.cn No. 2018-26 Announcement on the Progress of the Transfer of Total 27 July 2018 Shares in Two Taxi Companies under the Control of the Company to Shenzhen Bus Group Co., Ltd. on www.cninfo.com.cn No. 2004-15 Indicative Announcement on the Company’s State-owned 4 November 2004 Equity Management on www.cninfo.com.cn No. 2016-20 Announcement on the Progress of the Company’s 15 October 2016 Management of state-owned State-owned Equity Management on www.cninfo.com.cn shares held by the Company No. 2018-32 Announcement on Reception of Reply on Consent for the Exemption of Shenzhen Investment Holdings Co., Ltd. from the Tender 5 September 2018 Offer Obligation Issued by China Securities Regulatory Commission on www.cninfo.com.cn 9 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 III Commitments that the Company’s Actual Controller, Shareholders, Related Parties and Acquirers, as well as the Company Itself and Other Parties, Failed to Fulfill on Time during Reporting Period □ Applicable √ Not applicable No such cases in the Reporting Period. IV 2018 Annual Operating Performance Forecast Warning of a forecast loss on or a forecast significant year-on-year change in net profit for year 2018, as well as explanation of why: □ Applicable √ Not applicable V Securities Investments √ Applicable □ Not applicable Unit: RMB Gain/Lo Accumu ss on lated fair-valu Purchas Gain/los Initial Beginni fair-valu Sold in Security Security Security Measure e ed in s in Ending Account Funding ng e Reporti investm ment changes Reporti Reporti carrying type code name carrying changes ng method in ng ng amount ing title source ent cost amount charged Period Reporti Period Period to ng equity Period Obtaine Domesti Availabl Gintian d in cally/Ov 400016 Fair e-for-sal A, 3,565,8 3,591,2 3,598,7 Gintian’ erseas 、 value e Gintian 56.06 09.20 65.93 s debt listed 420016 method financia B restructu stock l assets ring 3,565,8 3,591,2 3,598,7 Total -- 0.00 0.00 0.00 0.00 0.00 -- -- 56.06 09.20 65.93 Disclosure date of announcement on Board’s consent for securities investments Disclosure date of announcement on general meeting’s consent for securities investments (if any) 10 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 VI Wealth Management Entrustment □ Applicable √ Not applicable No such cases in the Reporting Period. VII Investments in Derivative Financial Instruments □ Applicable √ Not applicable No such cases in the Reporting Period. VIII Visits Paid to the Company for Purposes of Research, Communication, Interview, etc. during Reporting Period √ Applicable □ Not applicable Date of visit Way of visit Type of visitor About Inquired of the progress of Golden 2 July 2018 SZSE EasyIR Individual Collar’s Resort Project Inquired of situations of shareholders of 3 July 2018 SZSE EasyIR Individual the Company Inquired of the following operation of 17 July 2018 SZSE EasyIR Individual Golden Collar’s Resort Project Inquired of the profile of Golden 20 July 2018 SZSE EasyIR Individual Collar’s Resort Project Inquired of the presale of Golden 20 July 2018 SZSE EasyIR Individual Collar’s Resort Project Inquired of the situation of pilot 14 August 2018 SZSE EasyIR Individual State-owned enterprises in Shenzhen Inquired of the disclosure of the Interim 21 August 2018 SZSE EasyIR Individual Report Inquired of the cooperation with foreign 4 September 2018 SZSE EasyIR Individual counterparts Inquired of the key corporate 4 September 2018 SZSE EasyIR Individual information Inquired of the performance of the 4 September 2018 SZSE EasyIR Individual Company in Guangdong-Hong Kong-Macao Bay Area Inquired of the Company’s leasing 4 September 2018 SZSE EasyIR Individual business Inquired of situations of shareholders of 8 September 2018 SZSE EasyIR Individual the Company 11 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 IX Irregularities in Provision of Guarantees for External Parties □ Applicable √ Not applicable No such cases in the Reporting Period. X Occupation of the Company’s Capital by Controlling Shareholder or Its Related Parties for Non-Operating Purposes □ Applicable √ Not applicable No such cases in the Reporting Period. 12 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 Part IV Financial Statements I Financial Statements 1. Consolidated Balance Sheet Prepared by Shenzhen Properties & Resources Development (Group) Ltd. 30 September 2018 Unit: RMB Item 30 September 2018 31 December 2017 Current assets: Monetary capital 2,428,047,410.08 2,477,028,815.21 Settlement reserve Interbank loans granted Financial assets at fair value through profit or loss Derivative financial assets Notes and accounts receivable 88,089,246.66 46,272,600.86 Including: Notes receivable Accounts receivable 88,089,246.66 46,272,600.86 Prepayments 42,552,532.47 28,149,956.60 Premiums receivable Reinsurance receivables Receivable reinsurance contract reserve Other receivables 18,925,116.21 91,345,782.84 Financial assets purchased under resale agreements Inventories 1,403,219,359.96 1,850,672,044.36 Assets classified as held for sale Current portion of non-current assets Other current assets 10,623,577.72 12,370,820.97 Total current assets 3,991,457,243.10 4,505,840,020.84 Non-current assets: Loans and advances to customers Available-for-sale financial assets 3,598,765.93 3,591,209.20 13 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 Held-to-maturity investments Long-term receivables Long-term equity investments 39,508,283.30 38,730,392.96 Investment property 410,323,327.36 426,849,558.05 Fixed assets 30,435,985.04 29,346,901.33 Construction in progress Productive living assets Oil and gas assets Intangible assets R&D expense Goodwill Long-term prepaid expense 2,395,293.07 951,368.85 Deferred income tax assets 406,780,083.38 388,022,097.64 Other non-current assets Total non-current assets 893,041,738.08 887,491,528.03 Total assets 4,884,498,981.18 5,393,331,548.87 Current liabilities: Short-term borrowings Borrowings from central bank Customer deposits and interbank deposits Interbank loans obtained Financial liabilities at fair value through profit or loss Derivative financial liabilities Notes and accounts payable 430,496,683.12 491,963,303.62 Advances from customers 524,845,793.05 516,984,711.11 Financial assets sold under repurchase agreements Handling charges and commissions payable Payroll payable 94,037,599.86 92,066,474.54 Taxes payable 763,324,955.45 1,192,587,256.66 Other payables 126,654,539.93 122,622,000.38 Reinsurance payables Insurance contract reserve 14 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 Payables for acting trading of securities Payables for underwriting of securities Liabilities directly associated with assets classified as held for sale Current portion of non-current liabilities Other current liabilities Total current liabilities 1,939,359,571.41 2,416,223,746.31 Non-current liabilities: Long-term borrowings 1,000,000.00 Bonds payable Including: Preferred shares Perpetual bonds Long-term payables Long-term payroll payable Provisions Deferred income Deferred income tax liabilities 5,995.66 8,668.15 Other non-current liabilities 58,031,261.46 54,543,253.27 Total non-current liabilities 59,037,257.12 54,551,921.42 Total liabilities 1,998,396,828.53 2,470,775,667.73 Owners’ equity: Share capital 595,979,092.00 595,979,092.00 Other equity instruments Including: Preferred shares Perpetual bonds Capital reserves 118,938,132.89 118,938,132.89 Less: Treasury stock Other comprehensive income -5,960,279.43 -4,111,587.14 Specific reserve Surplus reserves 299,569,569.96 299,569,569.96 General reserve Retained earnings 1,876,713,550.17 1,911,318,586.37 Total equity attributable to owners of the 2,885,240,065.59 2,921,693,794.08 Company as the parent Non-controlling interests 862,087.06 862,087.06 15 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 Total owners’ equity 2,886,102,152.65 2,922,555,881.14 Total liabilities and owners’ equity 4,884,498,981.18 5,393,331,548.87 Legal representative: Liu Shengxiang Head of financial affairs: Cai Lili Head of financial department: Shen Xueying 2. Balance Sheet of the Company as the Parent Unit: RMB Item 30 September 2018 31 December 2017 Current assets: Monetary capital 1,727,788,187.09 1,754,272,751.45 Financial assets at fair value through profit or loss Derivative financial assets Notes and accounts receivable 3,240,329.54 479,462.50 Including: Notes receivable Accounts receivable 3,240,329.54 479,462.50 Prepayments 8,657,789.41 496,729.09 Other receivables 1,092,996,638.89 1,128,977,669.02 Inventories 301,175,480.71 303,797,408.60 Assets classified as held for sale Current portion of non-current assets Other current assets 6,491,867.11 85,558.19 Total current assets 3,140,350,292.75 3,188,109,578.85 Non-current assets: Available-for-sale financial assets 3,829,265.93 3,821,709.20 Held-to-maturity investments Long-term receivables Long-term equity investments 290,742,348.29 250,613,065.89 Investment property 323,224,696.55 336,964,573.31 Fixed assets 7,731,774.87 8,163,838.55 Construction in progress Productive living assets Oil and gas assets Intangible assets R&D expense 16 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 Goodwill Long-term prepaid expense 821,636.64 951,368.85 Deferred income tax assets 208,207,062.37 191,632,218.83 Other non-current assets Total non-current assets 834,556,784.65 792,146,774.63 Total assets 3,974,907,077.40 3,980,256,353.48 Current liabilities: Short-term borrowings Financial liabilities at fair value through profit or loss Derivative financial liabilities Notes and accounts payable 115,481,336.78 119,489,366.28 Advances from customers 311,759,480.00 5,127,871.19 Payroll payable 30,953,753.28 34,296,032.66 Taxes payable 677,425,495.17 704,897,740.79 Other payables 72,712,827.77 206,906,599.52 Liabilities directly associated with assets classified as held for sale Current portion of non-current liabilities Other current liabilities Total current liabilities 1,208,332,893.00 1,070,717,610.44 Non-current liabilities: Long-term borrowings Bonds payable Including: Preferred shares Perpetual bonds Long-term payables Long-term payroll payable Provisions Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities 1,208,332,893.00 1,070,717,610.44 Owners’ equity: 17 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 Share capital 595,979,092.00 595,979,092.00 Other equity instruments Including: Preferred shares Perpetual bonds Capital reserves 94,057,859.68 94,057,859.68 Less: Treasury stock Other comprehensive income Specific reserve Surplus reserves 298,912,759.52 298,912,759.52 Retained earnings 1,777,624,473.20 1,920,589,031.84 Total owners’ equity 2,766,574,184.40 2,909,538,743.04 Total liabilities and owners’ equity 3,974,907,077.40 3,980,256,353.48 3. Consolidated Income Statement for Q3 Unit: RMB Item Q3 2018 Q3 2017 1. Revenue 373,989,694.46 1,335,581,077.17 Including: Operating revenue 373,989,694.46 1,335,581,077.17 Interest income Premium income Handling charge and commission income 2. Operating costs and expenses 294,755,685.65 1,056,984,447.26 Including: Cost of sales 220,059,287.49 921,480,304.17 Interest expense Handling charge and commission expense Surrenders Net claims paid Net amount provided as insurance contract reserve Expenditure on policy dividends Reinsurance premium expense Taxes and surcharges 55,644,770.75 102,469,953.31 18 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 Selling expense 5,511,547.16 8,967,303.36 Administrative expense 24,418,997.27 28,008,041.78 R&D expense Finance costs -10,838,996.25 -4,044,473.36 Including: Interest expense Interest -10,947,746.57 -4,183,271.61 income Asset impairment loss -39,920.77 103,318.00 Add: Other income Investment income (“-” for loss) 1,348,773.97 479,674.64 Including: Share of profit or 728,643.14 479,674.64 loss of joint ventures and associates Gain on changes in fair value (“-” for loss) Foreign exchange gain (“-” for loss) Asset disposal income (“-” for loss) 3. Operating profit (“-” for loss) 80,582,782.78 279,076,304.55 Add: Non-operating income 1,525,042.96 668,130.40 Less: Non-operating expense 2,540,174.16 83,355.58 4. Profit before tax (“-” for loss) 79,567,651.58 279,661,079.37 Less: Income tax expense 18,351,487.77 67,850,203.05 5. Net profit (“-” for net loss) 61,216,163.81 211,810,876.32 5.1 Net profit from continuing 61,216,163.81 211,372,603.08 operations (“-” for net loss) 5.2 Net profit from discontinued 438,273.24 operations (“-” for net loss) Net profit attributable to owners of 61,216,163.81 211,810,876.32 the Company as the parent Net profit attributable to non-controlling interests 6. Other comprehensive income, net of -2,264,052.37 1,109,596.95 tax Attributable to owners of the -2,264,052.37 1,109,596.95 Company as the parent 6.1 Items that will not be reclassified to profit or loss 19 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 6.1.1 Changes in net liabilities or assets caused by remeasurements on defined benefit pension schemes 6.1.2 Share of other comprehensive income of investees that will not be reclassified to profit or loss under equity method 6.2 Items that may subsequently be -2,264,052.37 1,109,596.95 reclassified to profit or loss 6.2.1 Share of other comprehensive income of investees that will be reclassified to profit or loss under equity method 6.2.2 Gain/Loss on changes in fair value of available-for-sale financial assets 6.2.3 Gain/Loss arising from reclassification of held-to-maturity investments to available-for-sale financial assets 6.2.4 Effective gain/loss on cash flow hedges 6.2.5 Differences arising from translation of foreign -2,264,052.37 1,109,596.95 currency-denominated financial statements 6.2.6 Other Attributable to non-controlling interests 7. Total comprehensive income 58,952,111.44 212,920,473.27 Attributable to owners of the 58,952,111.44 212,920,473.27 Company as the parent Attributable to non-controlling interests 8. Earnings per share 8.1 Basic earnings per share 0.1027 0.3554 8.2 Diluted earnings per share 0.1027 0.3554 Where business combinations under common control occurred in the current period, the net profit achieved by the acquirees before the combinations was RMB0.00, with the amount for the same period of last year being RMB0.00. Legal representative: Liu Shengxiang Head of financial affairs: Cai Lili Head of financial department: Shen Xueying 20 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 4. Income Statement of the Company as the Parent for Q3 Unit: RMB Item Q3 2018 Q3 2017 1. Operating revenue 35,290,132.14 17,291,326.51 Less: Cost of sales 9,681,055.22 6,097,177.33 Taxes and surcharges 8,310,210.12 1,135,062.22 Selling expense 1,287,861.40 259,359.00 Administrative expense 8,738,044.03 9,209,839.24 R&D expense Finance costs -9,607,684.41 -2,437,908.35 Including: Interest expense Interest income -9,614,088.74 -2,440,106.09 Asset impairment loss -40,000.00 Add: Other income Investment income (“-” for loss) 1,294,275.43 479,674.64 Including: Share of profit or 728,643.14 479,674.64 loss of joint ventures and associates Gain on changes in fair value (“-” for loss) Asset disposal income (“-” for loss) 2. Operating profit (“-” for loss) 18,214,921.21 3,507,471.71 Add: Non-operating income 54,791.03 85,064.00 Less: Non-operating expense 701,868.96 37,705.54 3. Profit before tax (“-” for loss) 17,567,843.28 3,554,830.17 Less: Income tax expense 4,236,800.97 840,255.24 4. Net profit (“-” for net loss) 13,331,042.31 2,714,574.93 4.1 Net profit from continuing 13,331,042.31 2,714,574.93 operations (“-” for net loss) 4.2 Net profit from discontinued operations (“-” for net loss) 5. Other comprehensive income, net of tax 5.1 Items that will not be reclassified to profit or loss 5.1.1 Changes in net liabilities or assets caused by remeasurements on 21 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 defined benefit pension schemes 5.1.2 Share of other comprehensive income of investees that will not be reclassified to profit or loss under equity method 5.2 Items that may subsequently be reclassified to profit or loss 5.2.1 Share of other comprehensive income of investees that will be reclassified to profit or loss under equity method 5.2.2 Gain/Loss on changes in fair value of available-for-sale financial assets 5.2.3 Gain/Loss arising from reclassification of held-to-maturity investments to available-for-sale financial assets 5.2.4 Effective gain/loss on cash flow hedges 5.2.5 Differences arising from translation of foreign currency-denominated financial statements 5.2.6 Other 6. Total comprehensive income 13,331,042.31 2,714,574.93 7. Earnings per share 7.1 Basic earnings per share 0.0224 0.0046 7.2 Diluted earnings per share 0.0224 0.0046 5. Consolidated Income Statement for Q1~Q3 Unit: RMB Item Q1~Q3 2018 Q1~Q3 2017 1. Revenue 1,199,003,679.43 2,652,727,809.60 Including: Operating revenue 1,199,003,679.43 2,652,727,809.60 Interest income Premium income Handling charge and commission income 2. Operating costs and expenses 1,011,480,863.25 1,902,269,315.24 22 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 Including: Cost of sales 909,246,628.59 1,420,061,473.10 Interest expense Handling charge and commission expense Surrenders Net claims paid Net amount provided as insurance contract reserve Expenditure on policy dividends Reinsurance premium expense Taxes and surcharges 62,944,209.41 459,639,976.26 Selling expense 14,808,076.92 19,823,652.31 Administrative expense 67,735,440.92 80,080,322.63 R&D expense Finance costs -38,456,220.90 -21,808,246.88 Including: Interest expense Interest -39,320,642.15 -22,576,622.69 income Asset impairment loss -4,797,271.69 -55,527,862.18 Add: Other income Investment income (“-” for loss) 1,398,021.17 1,892,487.55 Including: Share of profit or 777,890.34 1,892,487.55 loss of joint ventures and associates Gain on changes in fair value (“-” for loss) Foreign exchange gain (“-” for loss) Asset disposal income (“-” for loss) 3. Operating profit (“-” for loss) 188,920,837.35 752,350,981.91 Add: Non-operating income 3,058,534.39 1,276,286.37 Less: Non-operating expense 2,851,849.01 5,987,104.80 4. Profit before tax (“-” for loss) 189,127,522.73 747,640,163.48 Less: Income tax expense 44,938,831.33 171,473,516.73 5. Net profit (“-” for net loss) 144,188,691.40 576,166,646.75 23 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 5.1 Net profit from continuing 144,188,691.40 573,653,357.03 operations (“-” for net loss) 5.2 Net profit from discontinued 2,513,289.72 operations (“-” for net loss) Net profit attributable to owners of 144,188,691.40 576,166,646.75 the Company as the parent Net profit attributable to non-controlling interests 6. Other comprehensive income, net of -1,848,692.29 -448,261.61 tax Attributable to owners of the -1,848,692.29 -448,261.61 Company as the parent 6.1 Items that will not be reclassified to profit or loss 6.1.1 Changes in net liabilities or assets caused by remeasurements on defined benefit pension schemes 6.1.2 Share of other comprehensive income of investees that will not be reclassified to profit or loss under equity method 6.2 Items that may subsequently be -1,848,692.29 -448,261.61 reclassified to profit or loss 6.2.1 Share of other comprehensive income of investees that will be reclassified to profit or loss under equity method 6.2.2 Gain/Loss on changes in fair value of available-for-sale financial assets 6.2.3 Gain/Loss arising from reclassification of held-to-maturity investments to available-for-sale financial assets 6.2.4 Effective gain/loss on cash flow hedges 6.2.5 Differences arising from translation of foreign -1,848,692.29 -448,261.61 currency-denominated financial statements 6.2.6 Other Attributable to non-controlling interests 24 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 7. Total comprehensive income 142,339,999.11 575,718,385.14 Attributable to owners of the 142,339,999.11 575,718,385.14 Company as the parent Attributable to non-controlling interests 8. Earnings per share 8.1 Basic earnings per share 0.2419 0.9668 8.2 Diluted earnings per share 0.2419 0.9668 Where business combinations under common control occurred in the current period, the net profit achieved by the acquirees before the combinations was RMB0.00, with the amount for the same period of last year being RMB0.00. 6. Income Statement of the Company as the Parent for Q1~Q3 Unit: RMB Item Q1~Q3 2018 Q1~Q3 2017 1. Operating revenue 68,745,923.98 958,287,224.60 Less: Cost of sales 21,473,707.25 184,949,760.26 Taxes and surcharges 10,347,227.32 354,526,244.41 Selling expense 2,200,695.62 2,270,308.91 Administrative expense 23,762,826.83 28,040,113.83 R&D expense Finance costs -36,100,159.33 -12,207,197.73 Including: Interest expense Interest income -35,840,623.26 -15,340,929.95 Asset impairment loss -2,286,956.93 -654,008.70 Add: Other income Investment income (“-” for loss) 1,343,522.63 450,267,789.82 Including: Share of profit or 777,890.34 1,892,487.55 loss of joint ventures and associates Gain on changes in fair value (“-” for loss) Asset disposal income (“-” for loss) 2. Operating profit (“-” for loss) 50,692,105.85 851,629,793.44 Add: Non-operating income 172,307.70 222,418.81 Less: Non-operating expense 711,102.23 5,567,710.31 3. Profit before tax (“-” for loss) 50,153,311.32 846,284,501.94 25 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 Less: Income tax expense 14,324,142.36 99,002,966.40 4. Net profit (“-” for net loss) 35,829,168.96 747,281,535.54 4.1 Net profit from continuing 35,829,168.96 732,203,569.62 operations (“-” for net loss) 4.2 Net profit from discontinued 15,077,965.92 operations (“-” for net loss) 5. Other comprehensive income, net of tax 5.1 Items that will not be reclassified to profit or loss 5.1.1 Changes in net liabilities or assets caused by remeasurements on defined benefit pension schemes 5.1.2 Share of other comprehensive income of investees that will not be reclassified to profit or loss under equity method 5.2 Items that may subsequently be reclassified to profit or loss 5.2.1 Share of other comprehensive income of investees that will be reclassified to profit or loss under equity method 5.2.2 Gain/Loss on changes in fair value of available-for-sale financial assets 5.2.3 Gain/Loss arising from reclassification of held-to-maturity investments to available-for-sale financial assets 5.2.4 Effective gain/loss on cash flow hedges 5.2.5 Differences arising from translation of foreign currency-denominated financial statements 5.2.6 Other 6. Total comprehensive income 35,829,168.96 747,281,535.54 7. Earnings per share 7.1 Basic earnings per share 0.0601 1.2539 7.2 Diluted earnings per share 0.0601 1.2539 26 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 7. Consolidated Cash Flow Statement for Q1~Q3 Unit: RMB Item Q1~Q3 2018 Q1~Q3 2017 1. Cash flows from operating activities: Proceeds from sale of commodities 1,295,693,553.75 1,035,129,398.47 and rendering of services Net increase in customer deposits and interbank deposits Net increase in borrowings from central bank Net increase in loans from other financial institutions Premiums received on original insurance contracts Net proceeds from reinsurance Net increase in deposits and investments of policy holders Net increase in proceeds from disposal of financial assets at fair value through profit or loss Interest, handling charges and commissions received Net increase in interbank loans obtained Net increase in proceeds from repurchase transactions Tax rebates Cash generated from other operating 54,362,412.15 27,585,392.87 activities Subtotal of cash generated from 1,350,055,965.90 1,062,714,791.34 operating activities Payments for commodities and 346,412,905.78 385,275,049.38 services Net increase in loans and advances to customers Net increase in deposits in central bank and in interbank loans granted Payments for claims on original insurance contracts Interest, handling charges and commissions paid 27 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 Policy dividends paid Cash paid to and for employees 257,504,612.76 247,670,285.31 Taxes paid 635,718,764.52 725,099,736.70 Cash used in other operating 60,438,652.65 59,452,567.32 activities Subtotal of cash used in operating 1,300,074,935.71 1,417,497,638.71 activities Net cash generated from/used in 49,981,030.19 -354,782,847.37 operating activities 2. Cash flows from investing activities: Proceeds from disinvestment Investment income Net proceeds from disposal of fixed assets, intangible assets and other 86,935.08 3,198.63 long-lived assets Net proceeds from disposal of 79,901,686.57 96,661,830.00 subsidiaries or other business units Cash generated from other investing activities Subtotal of cash generated from 79,988,621.65 96,665,028.63 investing activities Payments for acquisition of fixed assets, intangible assets and other 3,820,791.01 1,617,463.02 long-lived assets Payments for investments Net increase in pledged loans granted Net payments for acquisition of subsidiaries and other business units Cash used in other investing activities Subtotal of cash used in investing 3,820,791.01 1,617,463.02 activities Net cash generated from/used in 76,167,830.64 95,047,565.61 investing activities 3. Cash flows from financing activities: Capital contributions received Including: Capital contributions by non-controlling interests to subsidiaries Increase in borrowings obtained 1,000,000.00 Net proceeds from issuance of bonds 28 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 Cash generated from other financing activities Subtotal of cash generated from 1,000,000.00 financing activities Repayment of borrowings Payments for interest and dividends 178,787,631.06 107,246,594.16 Including: Dividends paid by subsidiaries to non-controlling interests Cash used in other financing activities Subtotal of cash used in financing 178,787,631.06 107,246,594.16 activities Net cash generated from/used in -177,787,631.06 -107,246,594.16 financing activities 4. Effect of foreign exchange rate 2,657,365.10 -2,708,821.96 changes on cash and cash equivalents 5. Net increase in cash and cash -48,981,405.13 -369,690,697.88 equivalents Add: Cash and cash equivalents, 2,464,626,655.21 2,857,353,056.85 beginning of the period 6. Cash and cash equivalents, end of the 2,415,645,250.08 2,487,662,358.97 period 8. Cash Flow Statement of the Company as the Parent for Q1~Q3 Unit: RMB Item Q1~Q3 2018 Q1~Q3 2017 1. Cash flows from operating activities: Proceeds from sale of commodities 375,845,935.24 47,725,759.96 and rendering of services Tax rebates Cash generated from other operating 189,133,015.29 851,270,259.53 activities Subtotal of cash generated from 564,978,950.53 898,996,019.49 operating activities Payments for commodities and 6,799,103.87 43,280,298.00 services Cash paid to and for employees 16,595,230.41 14,505,987.13 Taxes paid 89,575,754.41 336,350,943.00 Cash used in other operating 332,877,876.21 1,042,608,255.74 activities 29 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 Subtotal of cash used in operating 445,847,964.90 1,436,745,483.87 activities Net cash generated from/used in 119,130,985.63 -537,749,464.38 operating activities 2. Cash flows from investing activities: Proceeds from disinvestment Investment income 798,375,302.27 Net proceeds from disposal of fixed assets, intangible assets and other 12,657.70 1,320.00 long-lived assets Net proceeds from disposal of 73,001,849.11 88,010,664.30 subsidiaries or other business units Cash generated from other investing activities Subtotal of cash generated from 73,014,506.81 886,387,286.57 investing activities Payments for acquisition of fixed assets, intangible assets and other 503,316.94 166,352.55 long-lived assets Payments for investments 39,351,392.06 1,000,000.00 Net payments for acquisition of subsidiaries and other business units Cash used in other investing activities Subtotal of cash used in investing 39,854,709.00 1,166,352.55 activities Net cash generated from/used in 33,159,797.81 885,220,934.02 investing activities 3. Cash flows from financing activities: Capital contributions received Increase in borrowings obtained Net proceeds from issuance of bonds Cash generated from other financing activities Subtotal of cash generated from financing activities Repayment of borrowings Payments for interest and dividends 178,778,071.68 107,246,594.16 Cash used in other financing activities Sub-total of cash used in financing 178,778,071.68 107,246,594.16 30 ShenZhen Properties & Resources Development (Group) Ltd. Third Quarter Report 2018 activities Net cash generated from/used in -178,778,071.68 -107,246,594.16 financing activities 4. Effect of foreign exchange rate 2,723.88 -4,238.11 changes on cash and cash equivalents 5. Net increase in cash and cash -26,484,564.36 240,220,637.37 equivalents Add: Cash and cash equivalents, 1,754,272,751.45 1,566,655,340.88 beginning of the period 6. Cash and cash equivalents, end of the 1,727,788,187.09 1,806,875,978.25 period II Independent Auditor’s Report Indicate by tick mark whether the financial statements above have been audited by an independent auditor. □Yes √ No These financial statements have not been audited by such an auditor. 31