HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 HAINAN PEARL RIVER HOLDINGS CO., LTD. THIRD QUARTER REPORT 2017 October 2017 1 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 Section I Important Statements The Board of Directors, the Supervisory Committee, directors, supervisors and senior management staff of HaiNan Pearl River Holdings Co., Ltd. (hereinafter referred to as “the Company”) warrant that the information carried in this report is factual, accurate and complete, without any false record, misleading statement or material omission. And they shall be jointly and severally liable for that. Director Xue Chunlei didn’t attend the board session in person due to the cause of work, authorizing director Zhao Yinhu to attend and vote. Other directors have attended the board session for reviewing this report in person. Wang Chunli, company principal, Guan Ying, chief of the accounting work and Guan Ying, head of the accounting department (head of accounting) of the Company, hereby confirm that the Financial Report carried in this Report is factual, accurate and complete. This Report is prepared in both Chinese and English. Should there be any discrepancy between the two versions, the Chinese version shall prevail. 2 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 Section II Company Fundamentals I Key Consolidated Financail Results Indicate by tick mark whether the Company needs to retrospectively restate any of its accounting data. √Yes □No Reason: Business merger under the same control December 31, 2016 Change September 30, 2017 Before adjustment After adjustment After adjustment Total assets (RMB) 4,747,421,920.84 1,385,469,635.17 5,007,343,324.00 -5.19% Equity attributable to owners of the 1,680,315,717.61 65,088,302.88 2,032,242,890.44 -17.32% parent (RMB) January-September July-September 2017 YoY change YoY change 2017 Net sales (RMB) 2,232,700,520.70 -22.04% 5,515,262,797.63 -7.79% Net margin attributable to shareholders of the Company 42,164,080.63 14.41% 113,833,212.48 60.02% (RMB) Net margin attributable to shareholders of the Company -18,544,858.72 -148.90% 5,766,539.70 116.35% before exceptional gains and losses (RMB) Net cash from operating activities -- -- -1,071,443,766.31 -278.96% (RMB) Basic earnings per share 0.07 16.67% 0.18 63.64% (RMB/share) Diluted earnings per share 0.07 16.67% 0.18 63.64% (RMB/share) Weighted average return on equity 2.05% -0.08% 5.45% 1.38% (%) Exceptional gains and losses: √ Applicable □ Not applicable Unit: RMB Item January-September 2017 Note Capital occupation charges on non-financial enterprises that are 16,810,053.35 3 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 charged to the profit/loss for the Reporting Period Reporting Period net profit/loss of subsidiaries acquired through business mergers under the same control from period-beginnings 117,422,986.25 to merger dates Non-operating income and expense other than above -1,007,624.03 Minority interests effects (after tax) 25,158,742.79 Total 108,066,672.78 -- Explanation of why the Company classified an item as an exceptional gain/loss according to the definition in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gains and Losses, or reclassified any exceptional gain/loss item given as an example in the said explanatory announcement as a recurrent gain/loss: □ Applicable √ Not applicable No such cases in the Reporting Period. II Total Number of Shareholders and Shareholdings of Top 10 Shareholders at Period-End 1. Numbers of Common Shareholders and Preference Shareholders with Resumed Voting Rights, and Shareholdings of Top 10 Shareholders Unit: share Total number of preference shareholders Total number of common 30,806 with resumed voting rights at period-end (if 0 shareholders at period-end any) Top 10 shareholders Nature of Shareholding Total shares held Restricted shares Pledged or frozen shares Name of shareholder shareholder percentage at period-end held at period-end Status Number BEIJING GRAIN GROUP CO., State-owned 28.95% 123,561,963 LTD. corporation Foreign LI SHERYN ZHAN MING 4.99% 21,282,800 individual Domestic MEI JIANYING 0.61% 2,583,803 individual Foreign YAO LIYUAN 0.46% 1,950,000 individual Domestic ZHANG XIAOXIA 0.46% 1,949,250 individual Domestic WANG XIAOXING 0.43% 1,836,500 individual CHEN OUQIN Domestic 0.39% 1,652,679 4 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 individual Domestic WANG DAO 0.38% 1,633,300 individual Domestic ZHONG YI 0.38% 1,604,283 individual Domestic XU ZHEN 0.37% 1,595,000 individual Top 10 non-restricted shareholders Type of stock Name of shareholder Non-restricted shares held at period-end Type Number BEIJING GRAIN GROUP CO., 123,561,963 RMB common stock 123,561,963 LTD. Domestically listed stock for LI SHERYN ZHAN MING 21,282,800 21,282,800 foreign investors MEI JIANYING 2,583,803 RMB common stock 2,583,803 Domestically listed stock for YAO LIYUAN 1,950,000 1,950,000 foreign investors Domestically listed stock for ZHANG XIAOXIA 1,949,250 1,949,250 foreign investors WANG XIAOXING 1,836,500 RMB common stock 1,836,500 CHEN OUQIN 1,652,679 RMB common stock 1,652,679 WANG DAO 1,633,300 RMB common stock 1,633,300 ZHONG YI 1,604,283 RMB common stock 1,604,283 XU ZHEN 1,595,000 RMB common stock 1,595,000 Among shareholders above, there exists no related-party relationship between the principal shareholder and other shareholders of the Company. Nor they are acting-in-concert parties as Related or acting-in-concert parties prescribed in the Information Disclosure Administrative Methods for Changes in among shareholders above Shareholding of Shareholders of Listed Companies. And it is unknown whether there is related-party relationship among other shareholders and whether they are prescribed parties with concerted action. Shareholder Wang Xiaoxing held 1,836,500 shares in the Company through the account of CSRC in Soochow Securities Co., Ltd. Top 10 common shareholders Shareholder Zhong Yi held 1,604,283 shares in the Company through the account of conducting securities margin trading CSRC in Eastmoney Securities Co., Ltd. (if any) Shareholder Wang Dao held 301,900 shares in the Company through his account of CSRC and held 1,331,400 shares in the Company through his common stock account in Cinda Securities Co., Ltd. 5 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 Indicate by tick mark whether any of the top 10 common shareholders or the top 10 non-restricted common shareholders of the Company conducted any promissory repo during the Reporting Period. □ Yea √ No No such cases in the Reporting Period. 2. Total Number of Preference Shareholders and Shareholdings of Top 10 of Them at Period-End □ Applicable √ Not applicable 6 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 Section III Significant Events I Changes in Key Consolidated Financial Statement Items and Reasons for Such Changes √ Applicable □ Not applicable 1. Accounts receivable on September 30, 2017 (3.68% of the net sales during the period from July to September 2017) increased by RMB0.12 billion (143.50%) from the December 31, 2016 due to RMB0.12 billion of accounts receivables recognized in September 2017 from new strategic customers in the southern markets. As of October 19, 2017, these accounts receivable had all been settled. 2. Prepayments on September 30, 2017 increased by RMB0.25 billion (187.2%) from the December 31, 2016 due primarily to the arrival at the end of September 2017 of the two shipments of soybean purchased by the subsidiary Jingliang (Tianjin) Grain & Oil Industry CO. Ltd, which has all been accepted by the end of October 2017 and is being processed for sale. 3. Interest receivable on September 30, 2017 decreased 67.83% from the December 31, 2016 due primarily to the interest receivable at the end of 2016 along with the Assets Transfer. 4. Dividends receivable on September 30, 2017 decreased 100% from the December 31, 2016 due primarily to the dividends receivable at the end of 2016 along with the Assets Transfer. 5. Other current assets on September 30, 2017 decreased 62.66% from the December 31, 2016 due primarily to decrease in bank wealth management products. 6. Available-for-sale financial assets on September 30, 2017 decreased by RMB10.82 million (35.12%) from the December 31, 2016 due primarily to the Assets Transfer. 7. Construction in progress on September 30, 2017 decreased 88.99% from the December 31, 2016 due primarily to the transfer of assets and the shift of Zhejiang Xiaowangzi Food Share Co., Ltd. (“Xiaowangzi Food”)’s completed production line to fixed assets. 8. Other non-current assets on September 30, 2017 decreased by RMB 4.52 million (100%) from the December 31, 2016 due primarily to the Assets Transfer. 9. Short-term borrowings on September 30, 2017 increased 2113.90% from the December 31, 2016 due primarily to the borrowings obtained for the purchases in the grease business line for the second half of the year according to production needs and the market situation. 10. Notes payable on September 30, 2017 increased 66.87% from the December 31, 2016 due primarily to more letters of credit issued for the more imports’. 11. Accounts payable on September 30, 2017 decreased 84.92% from the December 31, 2016 due primarily to a decrease of approximately RMB80 million in accounts payable along with the transfer of the related assets, as well as caused by RMB0.31 billion of accounts payable to suppliers. 12. Advances received on September 30, 2017 decreased 47.01% from the December 31, 2016 amount due primarily to the Assets Transfer. 13. Payroll payable on September 30, 2017 decreased 90.65% from the December 31, 2016 due primarily to a decrease in payroll payable along with the Assets Replacement, as well as the payment of last year’s annual performance salaries in the current year. 14. Taxes payable on September 30, 2017 decreased 96.64% from the December 31, 2016 amount due primarily to payment of taxes in the current year. 15. Non-current liabilities due within one year on September 30, 2017 decreased 100% from the December 31, 7 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 2016 due primarily to repayment of due long-term bank loans. 16. Long-term borrowings on September 30, 2017 decreased 100% from the December 31, 2016 due primarily to the early repayment of long-term bank loans. 17. The year-over-year decrease of 7.79% in net sales during the period,primarily because the net sales during the corresponding period of last year had included combined revenue of RMB1.997 billion from 14 trade subsidiaries, which were all transferred in the current period. Regardless of the effects of the said trade subsidiaries, net sales increased by RMB1.530 billion (38.46%) during the period January through September 2017 compared to the same period of last year. 18. The year-over-year increase of 97.25% in taxes and surtaxes during the period primarily resulted from the reclassification of taxes under “administrative expense” as “taxes and surtaxes” according to the Notice of the Ministry of Finance (Financial Accounting [2016] No. 22) on Printing and Issuing of VAT Accounting Rules. 19. The year-over-year decrease of 71.11% in finance costs compared to the same period of last year primarily resulted from significantly decreased loan interest as a result of the repayment of loans with high interest rates. 20. The year-over-year increase of RMB21.90 million (1356.34%) in asset impairment losses during the period January through September 2017 primarily resulted from the bad-debt provisions made, out of prudence, for the creditor’s rights associated with the assets transferred by the Company during the transition period, as well as the reversal into capital reserve at the time of the Asset Transfer. 21. The year-over-year decrease of 86.79% in investment income during the period January through September 2017 primarily resulted from the transfer of equity interests in Heilongjiang Longshi Pearl River Media Co., Ltd. by the Company and the transfer of 14 trade subsidiaries by BGG Food in last year. 22. The year-over-year decrease of 66.27% in non-operating income during the period January through September 2017 primarily resulted from last year’s relocation compensation income. 23. The year-over-year decrease of 70.66% in non-operating expense during the period January through September 2017 primarily resulted from last year’s relocation expense. 24. The year-over-year decrease of 278.96% in net cash from operating activities during the period January through September 2017 primarily resulted from the cash used for the purchases in the grease business line for the second half of the year according to production needs and the market situation. 25. The year-over-year increase of 52.42% in net cash from investing activities during the period January through September 2017 primarily resulted from BGG Food’s acquisition of a 19% stake in Xiaowangzi Food. 26. The year-over-year increase of 250.43% in net cash from financing activities during the period January through September 2017 primarily resulted from the borrowings obtained from bank for the purchases in the grease business line for the second half of the year according to production needs and the market situation. II Progress, Influence and Solutions Associated with Significant Events √ Applicable □ Not applicable Announcement of significant event Disclosure date Disclosure website The major assets restructuring of the Company got Reply from China Securities Regulatory Commission to HaiNan Pearl Announcement No. 2017-047 on 08/01/2017 River Holdings Co., Ltd.’s Issuing Shares, www.cninfo.com.cn Purchasing Assets and Raising Supporting Funds to Beijing Grain Group Co., Ltd. 8 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 etc. on July 28, 2017. On September 14, 2017, Beijing Grain Food Co., Ltd. became the wholly-owned subsidiary of the Company after completing the transfer procedures of assets planned to be put in in the major assets restructuring. As of September 30, 2017, the delivery of assets planned to be Announcement No. 2017-059 on 09/30/2017 put out excluding a small number of assets www.cninfo.com.cn whose transfer procedures are still in progress has been finished. The total amount of assets that have been settled (including liabilities) accounts for 93.46% of that of assets (including liabilities) planned to be put out at this time. III Commitments that the Company’s Actual Controller, Shareholders, Related Parties and Acquirers, as well as the Company and Other Commitment Makers, Failed to Fulfill on Time during Reporting Period □ Applicable √ Not applicable No such cases in the Reporting Period. IV Forecast of 2017 Annual Operating Results Warning of a possible loss on or a significant year-over-year change in accumulative net margin during the period the beginning of the current year through the end of the next reporting period, as well as the reasons: □ Applicable √ Not applicable V Securities Investments □ Applicable √ Not applicable No such cases in the Reporting Period. VI Investments in Derivative Financial Instruments √ Applicable □ Not applicable Unit: RMB'0,000 9 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 Proportion of closing Actual Closing investment amount in the gain/loss in Type of derivative investment Beginning date Ending date investment Company’s closing net assets Reporting amount (%) Period Futures of agricultural products 01/01/2017 09/30/2017 30,241.88 18.00% 7,161.1 Capital source for derivative Self-raised funds investment Lawsuit (if applicable) Naught Analysis on risks and control In the Reporting Period, the Company possessed the cash for hedging in futures. All cash has measures of derivative products held the physical correspondence which is distributed in forward contracts with good liquidity. The in the Reporting Period (including credit risk is low and there will be no default risk. In addition, there will be no risk concerning but not limited to market risk, operation and laws because of regulated transactions, rigorous decisions on futures and strict liquidity risk, credit risk, operation operation process. risk, law risk, etc.) Changes of market prices or fair values in the Reporting Period of the The value of futures contracts held by the Company is changing with the price of the futures invested derivatives. And the analysis exchange. The price of the futures exchange is broadly representative. And the fair value of on the fair value of the derivatives futures contracts will be measured in strict accordance with the settlement methods issued by should include the specific use the exchange. methods and the relevant assumptions and parameters. VII Visits Paid to the Company for Purposes of Research, Communication, Interview, etc. during Reporting Period □ Applicable √ Not applicable No such cases in the Reporting Period. VIII Irregularities Arising from Provision of Guarantees for Third Parties □ Applicable √ Not applicable No such cases in the Reporting Period. IX Occupation of the Company’s Funds by Its Controlling Shareholder or Related Parties for Non-Operating Purposes □ Applicable √ Not applicable No such cases in the Reporting Period. 10 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 X Targeted Measures Taken to Help People Lift Themselves out of Poverty The Company did not take such measures in the third quarter of the year and has no such plans for now. 11 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 Section IV Financial Statements I Financial Statements 1. Consolidated Balance Sheet Prepared by HaiNan Pearl River Holdings Co., Ltd. September 30, 2017 Unit: RMB Item September 30, 2017 December 31, 2016 Current assets: Cash on hand and at bank 602,618,963.22 652,870,239.91 Settlement reserve Interbank lendings Financial assets at fair value through 66,667,426.60 gains/losses Derivative financial assets Notes receivable Accounts receivable 203,373,667.83 83,520,131.60 Prepayments 382,711,901.44 132,969,364.73 Premiums receivable Reinsurance premiums receivable Receivable reinsurance contract reserve Interest receivable 1,344,210.00 4,178,348.79 Dividends receivable 260,015.00 Other accounts receivable 387,323,095.97 357,055,607.58 Financial assets purchased under agreements to resell Inventories 942,254,413.97 775,376,454.78 Assets held for sale Non-current assets due within one year Other current assets 158,625,668.06 424,782,623.76 Total current assets 2,678,251,920.49 2,497,680,212.75 Non-current assets: Loans and advances to customers 12 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 Available-for-sale financial assets 20,000,000.00 30,824,994.90 Held-to-maturity investments Long-term accounts receivable Long-term equity investments 143,673,669.92 171,465,314.90 Investment property 35,387,907.81 49,490,079.75 Fixed assets 1,249,470,889.94 1,508,710,556.28 Construction in progress 12,046,080.75 109,410,883.57 Engineering materials Disposal of fixed assets Productive living assets Oil-gas assets Intangible assets 385,249,713.38 403,202,499.05 R&D expense Goodwill 191,394,422.51 191,394,422.51 Long-term deferred expense 28,910,630.29 29,082,767.56 Deferred income tax assets 3,036,685.75 11,562,156.93 Other non-current assets 4,519,435.80 Total non-current assets 2,069,170,000.35 2,509,663,111.25 Total assets 4,747,421,920.84 5,007,343,324.00 Current liabilities: Short-term borrowings 1,387,702,144.26 62,681,281.00 Borrowings from Central Bank Money deposits accepted and inter-bank deposits Interbank borrowings Financial liabilities at fair value through gains/losses Derivative financial liabilities Notes payable 59,004,073.80 35,358,929.55 Accounts payable 69,579,932.09 461,294,581.74 Advances received 310,980,168.69 586,907,614.36 Financial assets sold for repurchase Fees and commissions payable Payroll payable 4,166,463.40 44,574,235.79 Taxes payable 4,373,517.40 130,157,235.63 13 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 Interest payable 82,740,158.36 90,011,566.90 Dividends payable 3,397,317.01 3,397,317.01 Other accounts payable 523,664,156.33 680,347,428.44 Reinsurance premiums payable Insurance contract reserve Payables for acting trading of securities Payables for acting underwriting of securities Liabilities held for sale Non-current liabilities due within one 117,210,181.59 year Other current liabilities Total current liabilities 2,445,607,931.34 2,211,940,372.01 Non-current liabilities: Long-term borrowings 73,666,666.66 Bonds payable Of which: Preference shares Perpetual bonds Long-term accounts payable Long-term payroll payable 14,310,251.15 14,310,251.15 Special payables 1,067,530.32 1,153,176.66 Provisions Deferred income 81,063,077.48 Deferred income tax liabilities 64,819,485.96 67,598,052.00 Other non-current liabilities 78,848,539.08 Total non-current liabilities 159,045,806.51 237,791,223.95 Total liabilities 2,604,653,737.85 2,449,731,595.96 Owners’ equity: Share capital 426,745,404.00 426,745,404.00 Other equity instruments Of which: Preference shares Perpetual bonds Capital reserve 2,146,453,884.65 2,603,034,269.96 Less: Treasury shares Other comprehensive income 14 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 Special reserve Surplus reserve 109,487,064.39 109,487,064.39 Provisions for general risks Retained earnings -1,002,370,635.43 -1,107,023,847.91 Equity attributable to owners of the parent 1,680,315,717.61 2,032,242,890.44 Minority interests 462,452,465.38 525,368,837.60 Total owners’ equity 2,142,768,182.99 2,557,611,728.04 Total liabilities and owners’ equity 4,747,421,920.84 5,007,343,324.00 Legal representative: Wang Chunli Accounting head for this Report: Guan Ying Head of the accounting department: Guan Ying 2. Parent Company Balance Sheet Unit: RMB Item September 30, 2017 December 31, 2016 Current assets: Cash on hand and at bank 3,881,807.77 33,952,786.37 Financial assets at fair value through gains/losses Derivative financial assets Notes receivable Accounts receivable 116,589.00 1,032,085.83 Prepayments 50,000,000.00 Interest receivable Dividends receivable 260,015.00 Other accounts receivable 137,306,365.25 591,785,222.60 Inventories 4,824,035.45 4,824,035.45 Assets held for sale Non-current assets due within one year Other current assets Total current assets 146,128,797.47 681,854,145.25 Non-current assets: Available-for-sale financial assets 20,000,000.00 30,824,994.90 Held-to-maturity investments Long-term accounts receivable 15 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 Long-term equity investments 1,970,192,364.05 101,713,800.55 Investment property 6,131,637.03 6,383,667.53 Fixed assets 3,692,597.07 4,019,513.64 Construction in progress Engineering materials Disposal of fixed assets Productive living assets Oil-gas assets Intangible assets R&D expense Goodwill Long-term deferred expense 278,707.32 Deferred income tax assets Other non-current assets Total non-current assets 2,000,016,598.15 143,220,683.94 Total assets 2,146,145,395.62 825,074,829.19 Current liabilities: Short-term borrowings Financial liabilities at fair value through gains/losses Derivative financial liabilities Notes payable Accounts payable 2,667,949.70 2,482,949.70 Advances received 38,896.41 38,896.41 Payroll payable 1,767,581.53 1,224,801.48 Taxes payable 1,847,136.15 27,537,449.60 Interest payable 82,468,756.03 82,468,756.03 Dividends payable 3,213,302.88 3,213,302.88 Other accounts payable 406,070,656.80 650,471,361.88 Liabilities held for sale Non-current liabilities due within one year Other current liabilities Total current liabilities 498,074,279.50 767,437,517.98 Non-current liabilities: Long-term borrowings 16 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 Bonds payable Of which: Preference shares Perpetual bonds Long-term payables Long-term payroll payable Special payables Provisions Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities 498,074,279.50 767,437,517.98 Owners’ equity: Share capital 426,745,404.00 426,745,404.00 Other equity instruments Of which: Preference shares Perpetual bonds Capital reserve 2,156,922,331.37 546,201,098.01 Less: Treasury shares Other comprehensive income Special reserve Surplus reserve 109,487,064.39 109,487,064.39 Retained earnings -1,045,083,683.64 -1,024,796,255.19 Total owners’ equity 1,648,071,116.12 57,637,311.21 Total liabilities and owners’ equity 2,146,145,395.62 825,074,829.19 3. Consolidated Income Statement for July-September Unit: RMB Item July-September 2017 July-September 2016 1. Operating revenue 2,232,700,520.70 2,863,928,558.65 Including: Net sales 2,232,700,520.70 2,863,928,558.65 Interest revenue Premium revenue Fee and commission revenue 17 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 2. Operating expenses 2,168,695,816.83 2,782,480,015.75 Including: Cost of sales 2,038,177,137.96 2,609,442,165.66 Interest expense Fee and commission expense Surrenders Net claims paid Net amount provided as insurance contract reserve Expenditure on policy dividends Reinsurance premium expense Taxes and surtaxes 14,277,726.11 5,338,188.59 Selling expense 40,680,538.06 64,393,822.04 Administrative expense 35,096,382.98 78,498,045.30 Finance costs 11,712,245.37 23,738,739.51 Asset impairment losses 28,751,786.35 1,069,054.65 Add: Gains on fair value changes (“-” -5,151,289.48 -45,057,864.31 for losses) Investment income (“-” for losses) 2,267,152.41 12,817,603.17 Including: Share of gains/losses of -73,625,389.08 8,035,851.80 associates and joint ventures Exchange gains (“-” for losses) Other income 3. Operating margin (“-” for losses) 61,120,566.80 49,208,281.76 Add: Non-operating income 13,045,293.27 54,739,174.77 Including: Gains on disposal of 719.40 non-current assets Less: Non-operating expense 2,050,620.48 12,329,081.87 Including: Losses on disposal of 63,322.91 3,316,449.88 non-current assets 4. Gross margin (“-” for losses) 72,115,239.59 91,618,374.66 Less: Income tax expense 16,165,559.76 35,095,731.39 5. Net margin (“-” for losses) 55,949,679.83 56,522,643.27 Attributable to owners of the 42,164,080.63 36,853,580.57 parent Attributable to minority interests 13,785,599.20 19,669,062.70 6. Other comprehensive income, net of 346,332.92 tax 18 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 Other comprehensive income, net of tax attributable to owners of the 346,332.92 parent 6.1 Other comprehensive income that will not be reclassified into gains/losses 6.1.1 Changes in net liabilities or assets with a defined benefit plan upon re-measurement 6.1.2 Share of other comprehensive income of investees that cannot be reclassified into gains/losses under equity method 6.2 Other comprehensive income to be subsequently reclassified 346,332.92 into gains/losses 6.2.1 Share of other comprehensive income of investees that will be reclassified into gains/losses under equity method 6.2.2 Gains/Losses on fair value changes of available-for-sale 437,582.65 financial assets 6.2.3 Gains/Losses on reclassifying held-to-maturity investments into available-for-sale financial assets 6.2.4 Effective gains/losses on cash flow hedges 6.2.5 Currency translation -91,249.73 differences 6.2.6 Other Other comprehensive income, net of tax attributable to minority interests 7. Total comprehensive income 55,949,679.83 56,868,976.19 Attributable to owners of the 42,164,080.63 37,199,913.49 parent Attributable to minority interests 13,785,599.20 19,669,062.70 8. Earnings per share 8.1 Basic earnings per share 0.07 0.06 8.2 Diluted earnings per share 0.07 0.06 Where business mergers under the same control occurred in the current period, the net margin achieved by the merged parties before 19 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 the business mergers was RMB0.00, with the amount for the same period of last year being RMB0.00. Legal representative: Wang Chunli Accounting head for this Report: Guan Ying Head of the accounting department: Guan Ying 4. Parent Company Income Statement for July-September Unit: RMB Item July-September 2017 July-September 2016 1. Operating revenue 0.00 268,164.10 Less: Operating expenses 100,812.20 75,609.15 Taxes and surtaxes 145,225.03 1,923.11 Selling expense Administrative expense 2,984,720.67 9,051,260.88 Finance costs -10,284,711.37 6,925,259.20 Asset impairment losses 96,843,906.63 165,475,341.33 Add: Gains on fair value changes (“-” for losses) Investment income (“-” for loss) -141,966.40 -44,174.66 Including: Share of gains/losses of 2,205,283.12 -44,174.66 associates and joint ventures Other income 2. Operating margin (“-” for losses) -89,931,919.56 -181,305,404.23 Add: Non-operating income 11,405,419.77 Including: Gains on disposal of non-current assets Less: Non-operating expense 2,868,139.65 Including: Losses on disposal of 1,296,383.08 non-current assets 3. Gross margin (“-” for losses) -89,931,919.56 -172,768,124.11 Less: Income tax expense 4. Net margin (“-” for losses) -89,931,919.56 -172,768,124.11 5. Other comprehensive income, net of tax 5.1 Other comprehensive income that will not be reclassified into gains and losses 5.1.1 Changes in net liabilities or 20 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 assets with a defined benefit plan upon re-measurement 5.1.2 Share of other comprehensive income of investees that cannot be reclassified into gains/losses under equity method 5.2 Other comprehensive income to be subsequently reclassified into gains/losses 5.2.1 Share of other comprehensive income of investees that will be reclassified into gains/losses under equity method 5.2.2 Gains/Losses on fair value changes of available-for-sale financial assets 5.2.3 Gains/Losses on reclassifying held-to-maturity investments into available-for-sale financial assets 5.2.4 Effective gains/losses on cash flow hedges 5.2.5 Currency translation differences 5.2.6 Other 6. Total comprehensive income -89,931,919.56 -172,768,124.11 7. Earnings per share 7.1 Basic earnings per share 7.2 Diluted earnings per share 5. Consolidated Income Statement for January-September Unit: RMB Item January-September 2017 January-September 2016 1. Operating revenue 5,515,262,797.63 5,981,423,571.13 Including: Net sales 5,515,262,797.63 5,981,423,571.13 Interest revenue Premium revenue Fee and commission revenue 2. Operating expenses 5,325,251,308.02 5,969,251,567.71 21 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 Including: Cost of sales 4,946,577,567.18 5,505,312,355.60 Interest expense Fee and commission expense Surrenders Net claims paid Net amount provided as insurance contract reserve Expenditure on policy dividends Reinsurance premium expense Taxes and surtaxes 40,345,029.56 20,453,582.16 Selling expense 133,704,147.54 153,077,792.48 Administrative expense 157,738,308.36 207,877,201.35 Finance costs 23,373,101.68 80,916,103.90 Asset impairment losses 23,513,153.70 1,614,532.22 Add: Gains on fair value changes (“-” -13,904,516.93 17,929,229.68 for losses) Investment income (“-” for losses) 11,766,061.71 89,067,706.12 Including: Share of gains/losses of -74,720,761.50 7,800,927.54 associates and joint ventures Exchange gains (“-” for losses) Other income 3. Operating margin (“-” for losses) 187,873,034.39 119,168,939.22 Add: Non-operating income 21,928,324.60 65,009,590.71 Including: Gains on disposal of 186,159.87 2,603,384.48 non-current assets Less: Non-operating expense 5,739,675.20 19,561,963.96 Including: Losses on disposal of 211,359.46 4,237,010.38 non-current assets 4. Gross margin (“-” for losses) 204,061,683.79 164,616,565.97 Less: Income tax expense 57,511,192.19 56,511,639.74 5. Net margin (“-” for losses) 146,550,491.60 108,104,926.23 Attributable to owners of the 113,833,212.48 71,134,987.70 parent Attributable to minority interests 32,717,279.12 36,969,938.53 6. Other comprehensive income, net of 346,332.92 tax Other comprehensive income, net 346,332.92 of tax attributable to owners of the 22 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 parent 6.1 Other comprehensive income that will not be reclassified into gains/losses 6.1.1 Changes in net liabilities or assets with a defined benefit plan upon re-measurement 6.1.2 Share of other comprehensive income of investees that cannot be reclassified into gains/losses under equity method 6.2 Other comprehensive income to be subsequently reclassified 346,332.92 into gains/losses 6.2.1 Share of other comprehensive income of investees that will be reclassified into gains/losses under equity method 6.2.2 Gains/Losses on fair value changes of available-for-sale 437,582.65 financial assets 6.2.3 Gains/Losses on reclassifying held-to-maturity investments into available-for-sale financial assets 6.2.4 Effective gains/losses on cash flow hedges 6.2.5 Currency translation -91,249.73 differences 6.2.6 Other Other comprehensive income, net of tax attributable to minority interests 7. Total comprehensive income 146,550,491.60 108,451,259.15 Attributable to owners of the 113,833,212.48 71,481,320.62 parent Attributable to minority interests 32,717,279.12 36,969,938.53 8. Earnings per share 8.1 Basic earnings per share 0.18 0.11 8.2 Diluted earnings per share 0.18 0.11 Where business mergers under the same control occurred in the current period, the net margin achieved by the merged parties before the business mergers was RMB0.00, with the amount for the same period of last year being RMB0.00. 23 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 6. Parent Company Income Statement for January-September Unit: RMB Item January-September 2017 January-September 2016 1. Operating revenue 2,857.14 889,099.69 Less: Operating expenses 252,030.50 248,976.20 Taxes and surtaxes 212,753.35 4,205,152.57 Selling expense Administrative expense 10,807,855.19 17,301,260.86 Finance costs -8,270,296.34 45,574,350.57 Asset impairment losses 91,226,030.51 165,502,220.51 Add: Gains on fair value changes (“-” for losses) Investment income (“-” for loss) 74,749,139.55 -203,430.18 Including: Share of gains/losses of 1,276,389.07 -203,430.18 associates and joint ventures Other income 2. Operating margin (“-” for losses) -19,476,376.52 -232,146,291.20 Add: Non-operating income 920.00 13,861,534.38 Including: Gains on disposal of 2,456,114.61 non-current assets Less: Non-operating expense 811,971.93 4,670,182.35 Including: Losses on disposal of 1,296,383.08 non-current assets 3. Gross margin (“-” for losses) -20,287,428.45 -222,954,939.17 Less: Income tax expense 4. Net margin (“-” for losses) -20,287,428.45 -222,954,939.17 5. Other comprehensive income, net of tax 5.1 Other comprehensive income that will not be reclassified into gains and losses 5.1.1 Changes in net liabilities or assets with a defined benefit plan upon re-measurement 5.1.2 Share of other comprehensive income of investees that cannot be reclassified into gains/losses under equity method 24 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 5.2 Other comprehensive income to be subsequently reclassified into gains/losses 5.2.1 Share of other comprehensive income of investees that will be reclassified into gains/losses under equity method 5.2.2 Gains/Losses on fair value changes of available-for-sale financial assets 5.2.3 Gains/Losses on reclassifying held-to-maturity investments into available-for-sale financial assets 5.2.4 Effective gains/losses on cash flow hedges 5.2.5 Currency translation differences 5.2.6 Other 6. Total comprehensive income -20,287,428.45 -222,954,939.17 7. Earnings per share 7.1 Basic earnings per share 7.2 Diluted earnings per share 7. Consolidated Cash Flow Statement for January-September Unit: RMB Item January-September 2017 January-September 2016 1. Cash generated by or used in operating activities: Cash generated by sale of 5,822,570,435.19 7,358,401,555.49 commodities and rendering of service Net increase in money deposits from customers and interbank placements Net increase in loans from Central Bank Net increase in funds borrowed from other financial institutions Cash received as premiums of original insurance contracts Net cash generated by reinsurance business 25 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 Net increase in deposits of policy holders and investment fund Net increase in disposal of financial assets at fair value through gains/losses Interest, fees and commissions received Net increase in interbank borrowings Net increase in funds in repurchase business Tax rebates received 9,136,150.48 8,368,786.75 Cash generated by other operating 6,245,333,510.27 724,710,800.94 activities Subtotal of cash generated by operating 12,077,040,095.94 8,091,481,143.18 activities Cash paid for goods and services 6,237,205,329.97 6,072,636,338.20 Net increase in loans and advances to customers Net increase in funds deposited in Central Bank and interbank placements Cash paid for claims of original insurance contracts Interest, fees and commissions paid Cash paid as policy dividends Cash paid to and for employees 316,577,321.67 346,943,686.55 Taxes paid 250,975,642.80 206,074,416.24 Cash used in other operating 6,343,725,567.81 867,125,230.39 activities Subtotal of cash used in operating 13,148,483,862.25 7,492,779,671.38 activities Net cash from operating activities -1,071,443,766.31 598,701,471.80 2. Cash generated by or used in investing activities: Cash generated by disinvestments 342,702,070.16 508,850,000.00 Cash received as investment income 19,125,768.85 1,691,359.10 Net cash generated by disposal of fixed assets, intangible assets and other 43,621,239.95 5,246,170.07 long-term assets Net cash generated by disposal of 125,845,729.40 subsidiaries or other business units Cash generated by other investing 603,828,188.53 activities 26 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 Subtotal of cash generated by investing 1,009,277,267.49 641,633,258.57 activities Cash paid to acquire fixed assets, intangible assets and other long-term 29,376,357.42 72,614,758.26 assets Cash paid for investments 461,400,000.00 713,237,056.00 Net increase in pledged loans Net cash paid to acquire subsidiaries 212,344,900.00 and other business units Cash used in other investing 529,501,870.94 2,317,462.49 activities Subtotal of cash used in investing 1,232,623,128.36 788,169,276.75 activities Net cash from investing activities -223,345,860.87 -146,536,018.18 3. Cash generated by or used in financing activities: Cash received as capital 9,553,070.16 contributions Including: Cash received from minority shareholder investments by subsidiaries Cash received as borrowings 1,630,729,869.53 857,454,158.45 Cash generated by issuance of bonds Cash generated by other financing 6,783,876,765.24 998,490,709.57 activities Subtotal of cash generated by financing 8,424,159,704.93 1,855,944,868.02 activities Repayment of borrowings 375,954,732.20 2,476,309,399.34 Cash paid for interest expenses and 63,040,361.51 56,483,231.02 distribution of dividends or profit Including: dividends or profit paid by subsidiaries to minority interests Cash used in other financing 6,735,878,759.62 153,645,262.99 activities Sub-total of cash used in financing 7,174,873,853.33 2,686,437,893.35 activities Net cash from financing activities 1,249,285,851.60 -830,493,025.33 4. Effect of foreign exchange rate 252,498.89 534,997.51 changes on cash and cash equivalents 5. Net increase in cash and cash -45,251,276.69 -377,792,574.20 equivalents 27 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 Add: Opening balance of cash and 647,870,239.91 893,327,088.78 cash equivalents 6. Closing balance of cash and cash 602,618,963.22 515,534,514.58 equivalents 8. Parent Company Cash Flow Statement for January-September Unit: RMB Item January-September 2017 January-September 2016 1. Cash generated by or used in operating activities: Cash generated by sale of 14,040,000.00 commodities and rendering of service Tax rebates received Cash generated by other operating 15,215,693.63 177,503,106.64 activities Subtotal of cash generated by operating 15,215,693.63 191,543,106.64 activities Cash paid for goods and services 130,565,200.00 Cash paid to and for employees 3,898,308.75 6,081,680.56 Taxes paid 27,309,480.98 13,640,381.33 Cash used in other operating 8,470,741.08 20,724,434.92 activities Subtotal of cash used in operating 39,678,530.81 171,011,696.81 activities Net cash from operating activities -24,462,837.18 20,531,409.83 2. Cash generated by or used in investing activities: Cash generated by disinvestments 10,000,000.00 8,000,000.00 Cash received as investment income Net cash generated by disposal of fixed assets, intangible assets and other 35,000,000.00 3,060,360.00 long-term assets Net cash generated by disposal of subsidiaries or other business units Cash generated by other investing 240,582.60 activities Subtotal of cash generated by investing 45,240,582.60 11,060,360.00 activities Cash paid to acquire fixed assets, 26,549.00 intangible assets and other long-term 28 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 assets Cash paid for investments 39,196,600.00 Net cash paid to acquire subsidiaries and other business units Cash used in other investing activities Subtotal of cash used in investing 39,223,149.00 activities Net cash from investing activities 45,240,582.60 -28,162,789.00 3. Cash generated by or used in financing activities: Cash received as capital contributions Cash received as borrowings 29,000,000.00 103,215,780.73 Cash generated by issuance of bonds Cash generated by other financing activities Subtotal of cash generated by financing 29,000,000.00 103,215,780.73 activities Repayment of borrowings 76,469,598.52 84,282,856.00 Cash paid for interest expenses and 1,659,125.50 7,857,686.85 distribution of dividends or profit Cash used in other financing 1,720,000.00 587,864.64 activities Sub-total of cash used in financing 79,848,724.02 92,728,407.49 activities Net cash from financing activities -50,848,724.02 10,487,373.24 4. Effect of foreign exchange rate changes on cash and cash equivalents 5. Net increase in cash and cash -30,070,978.60 2,855,994.07 equivalents Add: Opening balance of cash and 33,952,786.37 479,720.71 cash equivalents 6. Closing balance of cash and cash 3,881,807.77 3,335,714.78 equivalents II Auditor’s Report These financial statements are unaudited. 29 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 HaiNan Pearl River Holdings Co., Ltd. October 31, 2017 30