Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 HAINAN JINGLIANG HOLDINGS CO., LTD. THIRD QUARTER REPORT 2019 October 2019 1 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 Part I Important Notes The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors, supervisors and senior management of Hainan Jingliang Holdings Co., 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. Li Shaoling, the Company’s legal representative, Guan Ying, the Company’s head for financial affairs, and Liu Quanli, 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 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 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 2019 31 December 2018 Change (%) Total assets (RMB) 5,132,178,541.12 4,917,148,996.28 4.37% Equity attributable to the listed 2,358,063,029.90 2,272,469,925.43 3.77% company’s shareholders (RMB) Q3 2019 YoY change (%) Q1-Q3 2019 YoY change (%) Operating revenue (RMB) 1,824,886,529.92 -3.94% 5,108,164,255.31 -7.79% Net profit attributable to the listed 33,840,967.80 -20.08% 85,351,872.21 -16.54% company’s shareholders (RMB) Net profit attributable to the listed company’s shareholders before 28,276,307.45 -34.00% 69,470,781.04 -30.00% exceptional items (RMB) Net cash generated from/used in -- -- 446,745,732.08 6.47% operating activities (RMB) Basic earnings per share (RMB/share) 0.05 -16.67% 0.12 -20.00% Diluted earnings per share 0.05 -16.67% 0.12 -20.00% (RMB/share) Weighted average return on equity 1.48% -26.00% 3.69% -22.00% (%) Exceptional gains and losses: √ Applicable □ Not applicable Unit: RMB Item Q1-Q3 2019 Note Gain or loss on disposal of non-current assets (inclusive of impairment 11,265,753.65 allowance write-offs) Government subsidies recognized in the current period, except for those acquired in the ordinary course of business or granted at certain quotas or 3,058,788.87 amounts according to the government’s unified standards Gains/Losses on fair value changes of trading financial assets and liabilities & investment income from disposal of trading financial assets and 7,948,330.08 liabilities as well as financial assets available for sale (exclusive of 3 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 effective hedges related to normal business operations of the Company) Non-operating income and expense other than above 889,800.28 Project confirmed with the definition of non-recurring gains and losses and -122,538.24 losses Less: Income tax effects 5,760,033.66 Non-controlling interests effects (net of tax) 1,399,009.81 Total 15,881,091.17 -- Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in the Explanatory 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 2019 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 38,631 shareholders with resumed 0 voting rights (if any) Top 10 shareholders Shares in pledge or Nature of Shareholding Number of Restricted Name of shareholder frozen shareholder percentage shares shares Status Shares State-owned BEIJING GRAIN GROUP CO., LTD. 42.06% 288,439,561 164,877,598 legal person BEIJING STATE-OWNED CAPITAL State-owned OPERATION AND MANAGEMENT 7.07% 48,510,460 48,510,460 legal person CENTER CHINA DEVELOPMENT BANK State-owned 2.97% 20,393,051 0 CAPITAL CO., LTD. legal person Foreign natural LI SHERYN ZHAN MING 2.54% 17,425,400 0 person GOLD BUFFALO RUNYING (TIANJIN) EQUITY INVESTMENT Other 2.20% 15,116,472 0 FUND MANAGEMENT CO., 4 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 LTD.—GOLD BUFFALO RUNYING (TIANJIN) EQUITY INVESTMENT FUND (L.P.) Domestic MEI JIANYING 0.38% 2,604,203 0 natural person Domestic HU TIANGAO 0.34% 2,356,052 0 natural person Domestic ZHANG XIAOXIA 0.28% 1,949,250 0 natural person Domestic WANG XIAOXING 0.25% 1,742,700 0 natural person Domestic LIN LI 0.24% 1,669,600 0 natural person Top 10 unrestricted shareholders Shares by type Name of shareholder Unrestricted shares Type Shares RMB-denominate BEIJING GRAIN GROUP CO., LTD. 123,561,963 123,561,963 d ordinary stock RMB-denominate CHINA DEVELOPMENT BANK CAPITAL CO., LTD. 20,393,051 20,393,051 d ordinary stock Domestically LI SHERYN ZHAN MING 17,425,400 listed foreign 17,425,400 stock GOLD BUFFALO RUNYING (TIANJIN) EQUITY INVESTMENT FUND MANAGEMENT CO., RMB-denominate 15,116,472 15,116,472 LTD.—GOLD BUFFALO RUNYING (TIANJIN) d ordinary stock EQUITY INVESTMENT FUND (L.P.) RMB-denominate MEI JIANYING 2,604,203 2,604,203 d ordinary stock RMB-denominate HU TIANGAO 2,356,052 2,356,052 d ordinary stock Domestically ZHANG XIAOXIA 1,949,250 listed foreign 1,949,250 stock RMB-denominate WANG XIAOXING 1,742,700 1,742,700 d ordinary stock RMB-denominate LIN LI 1,669,600 1,669,600 d ordinary stock CHEN OUQIN 1,652,679 RMB-denominate 1,652,679 5 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 d ordinary stock Beijing State-Owned Capital Operation And Management Center owns 100% of Beijing Grain Group Co., Ltd., and Beijing Grain Group Co., Related or acting-in-concert parties among shareholders Ltd. is a shareholder of the Company (a 42.06% holding). Apart from above that, the Company does not know whether there are any other related parties or acting-in-concert parties among the top 10 shareholders. 1. Shareholder Wang Xiaoxing holds 1,742,700 shares in the Company through his account of collateral securities for margin trading in Soochow Securities Co., Ltd. Top 10 ordinary shareholders involved in securities 2. Shareholder Hu Tiangao holds 338,000 shares in the Company margin trading (if any) through his account of collateral securities for margin trading in Zheshang Securities Co., Ltd. and 2,018,052 shares in the Company through his common account. 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 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 Part III Significant Events I Changes in Selected Consolidated Financial Statement Line Items and Explanation of why √ Applicable □ Not applicable 1. The decrease of monetary capital primarily driven by the repayment of bank borrowings and purchase of income receipts regarding cash management of raised funds during the Reporting Period. 2. The increase of prepayments primarily driven by the increase of prepayments to suppliers arising from increase of procurement out of necessity of production and operation during the Reporting Period. 3. The increase of other receivables primarily driven because the charge of warehouse service for Q3 2019 has not been received yet as at 30 September 2019. 4. The increase of other current assets primarily because the purchase of income receipts regarding cash management of raised funds during the Reporting Period has not expired yet as at 30 September 2019. 5. The decrease of construction in progress primarily driven by the transfer of some construction in progress into fixed assets due to completion during the Reporting Period. 6. The increase of other non-current assets primarily driven by the increase of fixed time deposits of more than one year during the Reporting Period. 7. The increase of notes payable and accounts payable primarily driven by the increase of debts to suppliers arising from increase of procurement out of necessity of production and operation. 8. The decrease of payroll payable primarily driven by the payment in the Reporting Period of the 2018 annual performance pay that had been set aside in 2018. 9. The increase of asset disposal income primarily driven by the net income from demolition of some courtyard walls of the Company located at Luhe, Tongzhou District, Beijing for the eastern expansion of Guangqu Road in 2019. 10. The increase of net cash generated from financing activities primarily driven by bank loan repayment in 2019 out of necessity of production and operation plans. 11. The decrease of net profit attributable to the listed company’s shareholders before exceptional items is primarily driven by the negative effects on the Sino-US trade friction and the increase of the raw material cost and others. 7 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 II Progress, Influence and Solutions Associated with Significant Events √ Applicable □ Not applicable Overview of significant events Disclosure date Announcement index The Company and its wholly-owned Cninfo: Announcement of Hainan Jingliang Holdings Co., Ltd. on subsidiary Beijing Jingliang Food 13 July 2019 Suspension of Trading of the Company’s Stocks for Plan of Asset Co., Ltd. intend to purchase 25.1149% Purchase via Cash Payment and Share Offering (2019-045) of equity interests in Zhejiang Cninfo: Indicative Announcement of Hainan Jingliang Holdings Xiaowangzi Food Share Co, Ltd. Co., Ltd. on Plan of Asset Purchase via Cash Payment and Share collectively held by six natural 22 July 2019 Offering and Related-party Transactions and Resumption of persons via cash payment and share Trading of the Company’s Stocks (2019-046) offering. The six natural persons are Cninfo: Announcement of Hainan Jingliang Holdings Co., Ltd. on Wang Yuecheng, Qiu Xiaobin, Hong Progress of Plan of Asset Purchase via Cash Payment and Share Muqiang, Zhu Yanjun, Yao Zishan 21 August 2019 Offering and Related-party Transactions after Disclosure thereof and Shuai Yiwu. The Company held (2019-056) the board meeting on 19 July 2019, on which the Proposal on Plan of Asset Purchase via Cash Payment and Cninfo: Announcement of Hainan Jingliang Holdings Co., Ltd. on Share Offering by Hainan Jingliang Progress of Plan of Asset Purchase via Cash Payment and Share Holdings Co., Ltd. and its Summary 21 September 2019 Offering and Related-party Transactions after Disclosure thereof and proposals in relation to this (2019-065) transaction were reviewed and approved. The 8th Board of Directors and the 8th Cninfo: Announcement of Hainan Jingliang Holdings Co., Ltd. on 24 September 2019 Supervisory Committee expired in Changing Directors and Supervisors (2019-067) September 2019. Then, the Company Cninfo: Announcement of Hainan Jingliang Holdings Co., Ltd. on held the 3rd Extraordinary General 27 September 2019 Resolutions of the 1st Meeting of the 9th Board of Directors Meeting of 2019 on 23 September (2019-068) 2019 and approved all proposals in relation to the general election of the Board of Directors and the Supervisory Committee via cumulative voting and held the 1st Meeting of the 9th Board of Directors and the 1st Meeting of the 9th Cninfo: Announcement of Hainan Jingliang Holdings Co., Ltd. on Supervisory Committee on 26 27 September 2019 Resolutions of the 1st Meeting of the 9th Supervisory Committee September 2019, on which the (2019-069) Chairman of the Board, the Chairman of the Supervisory Committee and members of all special committees were elected and the senior management were engaged. Progress on any share repurchases: 8 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 □ Applicable √ Not applicable Progress on reducing the repurchased shares by means of centralized bidding: □ Applicable √ Not applicable 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 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 20,647, 20,647, Cost 2,070,7 Self-rais Other 204001 GC001 200,000 200,000 Other method 48.08 ed .00 .00 Cost 300,000 300,000 74,650. Self-rais Other 204004 GC004 Other method ,000.00 ,000.00 83 ed Cost 120,200 120,200 119,991. Self-rais Other 204007 GC007 Other method ,000.00 ,000.00 46 ed Cost 100,300 100,300 98,005. Self-rais Other 204014 GC014 Other method ,000.00 ,000.00 90 ed 21,167, 21,167, 2,363,3 Total 0.00 -- 0.00 0.00 0.00 700,000 700,000 0.00 -- -- 96.27 .00 .00 Disclosure date of announcement on Board’s 21 February 2019 consent for securities investments Disclosure date of N/A announcement on general 9 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 meeting’s consent for securities investments (if any) V Wealth Management Entrustment √ Applicable □ Not applicable Unit: RMB’0,000 (in RMB ten thousand yuan) Type of wealth Outstanding amount Funding source Principal Overdue amount management before maturity Wealth management product purchased from Idle raised 38,700 38,700 0 securities trader Wealth management product purchased from Self-funded 9,030 3,430 0 bank Total 47,730 42,130 0 High-risk wealth management entrustments with amounts that are individually significant, or with low security, low liquidity, or no protection of the principal: √ Applicable □ Not applicable Unit: RMB’0,000 (in RMB ten thousand yuan) Overv Collec iew tion/pa Throu Type Refere Expect Actual Any and Invest yment Impair gh of Way nce ed gain/lo plan index Type Fundi ment of ment prescri Truste wealth Princi Start End of annual earnin ss in for to of ng with gain/lo allowa bed e manag pal date date payba ized gs Report further more trustee source princi ss in nce (if proced ement ck return (if ing entrust infor pal Report any) ure or product (%) any) Period ment matio ing not n (if Period any) Pay the www. Agree princi CITIC Securit Certific 14 cninfo Idle ment pal SECU ies ation 4 July Octob Unred .com.c 38,700 raised of and 2.70% 0 Yes Yes RITIE compa of trust 2019 er eemed n: capital contra earnin S ny receipt 2019 2019- ct gs at 044 the maturi 10 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 ty date of invest ment Total 38,700 -- -- -- -- -- -- 0 0 -- -- -- -- Wealth management entrustments with possible impairments including an expectedly unrecoverable principal: □ Applicable √ Not applicable VI Investments in Derivative Financial Instruments √ Applicable □ Not applicable Unit: RMB’0,000 (in RMB ten thousand yuan) Ending investment Actual Ending as % of the gain/loss in Type of derivative Start date End date investment Company’s ending net Reporting assets Period Agricultural product future 1 January 2019 30 September 2019 7,532.71 3.19% -4,955.39 contract Foreign exchange forwards 1 January 2019 30 September 2019 23 0.01% 376.1 Total -- -- 7,555.71 3.20% -4,579.29 Funding source Self-funded Legal matters involved (if N/A applicable) Disclosure date of board 21 February 2019 announcement approving 30 March 2019 derivative investment (if any) Disclosure date of general 9 March 2019 meeting announcement approving derivative 20 April 2019 investment (if any) The Company’s conduction of hedging business is not aimed at speculation, but mainly to Analysis of risks and control effectively avoid the impact of raw material price fluctuation on the Company. However, there will measures associated with be certain risks: 1. Price fluctuation risk: price fluctuation risk may be generated when the futures derivative investments held in market changes greatly, resulting in transaction losses; 2. Capital risk: capital risk may be Reporting Period (including correspondingly brought because the futures trading adopts margin and marking-to-market system; but not limited to market risk, 3. Internal control risk: there may be risks due to imperfect internal control system for the high liquidity risk, credit risk, expertise and complexity of futures trading; 4. Technical risk: there may be technical risks due to operational risk, legal risk, incomplete computer systems. The Company adopts following risk control measures: 1. Matching etc.) the hedging business with the Company’s production and operation so as to maximally reduce the price fluctuation risk; 2. The Company will reasonably dispatch its own funds for hedging business, 11 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 strictly control the hedging fund scale and reasonably plan and use margins; 3. Management System of Commodity Futures Trading is formulated at the Company and subsidiaries levels respectively based on actual situation of the Company and pursuant to governing stipulations of Guidelines for Standard Operation of Companies Listed in Shenzhen Stock Exchange which have made clearly stipulations about the amount, variety scope, approval authority, internal approval procedures, responsible departments and persons, information isolation measures, internal risk report and related solution process, information disclosure, etc. regarding hedging business. The Company will strictly control all sectors in accordance with the management system formulated; 4. Establishing qualified systems for transaction, communication and information services so as to guarantee the normal operation of the transaction system and smooth proceeding of transactions. When a wrong order occurs, corresponding measures should be timely taken to reduce losses. Changes in market prices or fair value of derivative investments in Reporting The value of the Company’s future contracts changed according to the contract prices declared by Period (fair value analysis the future exchange, which were broadly representative. And the fair value of the Company’s future should include measurement contracts was executed in strict compliance with the future exchange’s settlement methods. method and related assumptions and parameters) Major changes in accounting policies and specific accounting principles adopted N/A for derivative investments in Reporting Period compared to last reporting period The relevant decision-making procedures for the Company and its majority-owned subsidiaries to conduct foreign exchange derivatives trading business are in compliance with relevant national laws, regulations and the governing provisions of the Articles of Association after verification. Opinion of independent Based on normal production and operation, the Company uses foreign exchange derivatives directors on derivative instruments to reduce exchange rate risks and finance costs, and control business risks. There is no investments and risk control harm to the interests of the Company and all other shareholders, especially minority shareholders. It is agreed that the Company and its majority-owned subsidiaries will conduct foreign exchange derivative trading business within the consideration amount, and submit to the general meeting for deliberation. 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. 12 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 VIII Irregularities in Provision of Guarantees for External Parties □ Applicable √ Not applicable No such cases in the Reporting Period. IX 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. 13 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 Part IV Financial Statements I Financial Statements 1. Consolidated Balance Sheet Prepared by Hainan Jingliang Holdings Co., Ltd. 30 September 2019 Unit: RMB Item 30 September 2019 31 December 2018 Current assets: Monetary capital 495,666,232.11 924,870,016.78 Settlement reserve Interbank loans granted Trading financial assets Financial assets at fair value through profit or loss Derivative financial assets 49,872,120.50 71,260,414.60 Notes receivable Accounts receivable 95,540,151.58 97,775,710.11 Accounts receivable financing Prepayments 430,689,409.61 120,181,442.89 Premiums receivable Reinsurance receivables Receivable reinsurance contract reserve Other receivables 65,460,014.32 18,256,513.93 Including: Interests receivable 483,694.45 2,400,877.51 Dividends receivable Financial assets purchased under resale agreements Inventories 992,709,551.35 1,224,186,963.07 Contractual assets Assets classified as held for sale Current portion of non-current assets 14 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 Other current assets 836,609,741.86 288,821,816.63 Total current assets 2,966,547,221.33 2,745,352,878.01 Non-current assets: Loans and advances to customers Investments in debt obligations Available-for-sale financial assets 20,000,000.00 Investments in other debt obligations Held-to-maturity investments Long-term receivables Long-term equity investments 187,325,274.16 182,827,226.11 Investments in other equity 20,000,000.00 instruments Other non-current financial assets Investment property 32,184,788.51 33,395,101.68 Fixed assets 1,241,030,763.35 1,271,803,080.56 Construction in progress 27,249,683.31 37,369,757.78 Productive living assets Oil and gas assets Right-of-use assets Intangible assets 373,516,890.08 383,382,527.68 R&D expense Goodwill 191,394,422.51 191,394,422.51 Long-term prepaid expense 23,950,504.42 34,671,018.22 Deferred income tax assets 13,978,993.45 15,330,980.14 Other non-current assets 55,000,000.00 1,622,003.59 Total non-current assets 2,165,631,319.79 2,171,796,118.27 Total assets 5,132,178,541.12 4,917,148,996.28 Current liabilities: Short-term borrowings 1,139,402,578.70 1,437,715,080.91 Borrowings from central bank Interbank loans obtained Trading financial liabilities Financial liabilities at fair value through profit or loss Derivative financial liabilities 15 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 Notes payable Accounts payable 336,251,875.67 140,564,713.11 Advances from customers 324,648,928.69 145,317,064.18 Contractual liabilities Financial assets sold under repurchase agreements Customer deposits and interbank deposits Payables for acting trading of securities Payables for underwriting of securities Payroll payable 11,003,826.95 31,494,568.05 Taxes payable 38,933,903.00 35,783,819.84 Other payables 165,377,948.13 111,288,708.99 Including: Interest payable 25,010,702.02 26,972,826.90 Dividends payable 11,013,302.88 11,197,317.01 Handling charges and commissions payable Reinsurance payable Liabilities directly associated with assets classified as held for sale Current portion of non-current liabilities Other current liabilities 11,100,915.25 Total current liabilities 2,015,619,061.14 1,913,264,870.33 Non-current liabilities: Insurance contract reserve Long-term borrowings Bonds payable Including: Preferred shares Perpetual bonds Lease liabilities Long-term payables Long-term payroll payable 40,245,406.52 40,245,406.52 Provisions 16 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 Deferred income 73,743,596.30 74,953,385.51 Deferred income tax liabilities 65,140,818.53 49,618,839.47 Other non-current liabilities Total non-current liabilities 179,129,821.35 164,817,631.50 Total liabilities 2,194,748,882.49 2,078,082,501.83 Owners’ equity: Share capital 685,790,364.00 685,790,364.00 Other equity instruments Including: Preferred shares Perpetual bonds Capital reserves 1,595,711,805.31 1,595,711,805.31 Less: Treasury stock Other comprehensive income 241,670.59 438.33 Special reserves Surplus reserves 122,122,436.98 122,122,436.98 General reserve Retained earnings -45,803,246.98 -131,155,119.19 Total equity attributable to owners of 2,358,063,029.90 2,272,469,925.43 the Company as the parent Non-controlling interests 579,366,628.73 566,596,569.02 Total owners’ equity 2,937,429,658.63 2,839,066,494.45 Total liabilities and owners’ equity 5,132,178,541.12 4,917,148,996.28 Legal representative: Li Shaoling Head for financial affairs: Guan Ying Head of the financial department: Liu Quanli 2. Balance Sheet of the Company as the Parent Unit: RMB Item 30 September 2019 31 December 2018 Current assets: Monetary capital 3,806,520.59 13,597,659.66 Trading financial assets Financial assets at fair value through profit or loss Derivative financial assets 17 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 Notes receivable Accounts receivable 74,460.00 79,986.00 Accounts receivable financing Prepayments 19,000.00 20,000.00 Other receivables 31,789,102.45 227,353.10 Including: Interest receivable Dividends receivable Inventories 4,824,035.45 4,824,035.45 Contractual assets Assets classified as held for sale Current portion of non-current assets Other current assets 2,234,896.21 1,962,371.32 Total current assets 42,748,014.70 20,711,405.53 Non-current assets: Investments in debt obligations Available-for-sale financial assets 20,000,000.00 Investments in other debt obligations Held-to-maturity investments Long-term receivables Long-term equity investments 2,377,420,527.10 2,375,639,964.05 Investments in other equity 20,000,000.00 instruments Other non-current financial assets Investment property 5,551,966.88 5,778,794.33 Fixed assets 3,232,789.18 3,260,620.04 Construction in progress Productive living assets Oil and gas assets Right-of-use assets Intangible assets 94,088.04 171,069.18 R&D expense Goodwill Long-term prepaid expense 110,062.84 180,817.60 Deferred income tax assets 18 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 Other non-current assets Total non-current assets 2,406,409,434.04 2,405,031,265.20 Total assets 2,449,157,448.74 2,425,742,670.73 Current liabilities: Short-term borrowings Trading financial liabilities Financial liabilities at fair value through profit or loss Derivative financial liabilities Notes payable Accounts payable Advances from customers 38,896.41 38,896.41 Contractual liabilities Payroll payable 376,482.76 438,195.96 Taxes payable 992,416.59 976,458.68 Other payables 509,692,210.91 449,947,050.56 Including: Interest payable 21,082,795.47 21,082,795.47 Dividends payable 3,213,302.88 3,213,302.88 Liabilities directly associated with assets classified as held for sale Current portion of non-current liabilities Other current liabilities Total current liabilities 511,100,006.67 451,400,601.61 Non-current liabilities: Long-term borrowings Bonds payable Including: Preferred shares Perpetual bonds Lease liabilities Long-term payables Long-term payroll payable Provisions Deferred income Deferred income tax liabilities 19 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 Other non-current liabilities Total non-current liabilities Total liabilities 511,100,006.67 451,400,601.61 Owners’ equity: Share capital 685,790,364.00 685,790,364.00 Other equity instruments Including: Preferred shares Perpetual bonds Capital reserves 2,173,387,468.71 2,173,387,468.71 Less: Treasury stock Other comprehensive income Special reserves Surplus reserves 109,487,064.39 109,487,064.39 Retained earnings -1,030,607,455.03 -994,322,827.98 Total owners’ equity 1,938,057,442.07 1,974,342,069.12 Total liabilities and owners’ equity 2,449,157,448.74 2,425,742,670.73 3. Consolidated Income Statement for Q3 Unit: RMB Item Q3 2019 Q3 2018 1. Revenue 1,824,886,529.92 1,899,805,985.97 Including: Operating revenue 1,824,886,529.92 1,899,805,985.97 Interest income Premium income Handling charge and commission income 2. Costs and expenses 1,764,674,515.46 1,806,906,735.47 Including: Cost of sales 1,652,610,736.57 1,703,299,548.14 Interest expense Handling charge and commission expense Surrenders Net claims paid Net amount provided as policy reserve 20 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 Expenditure on policy dividends Reinsurance premium expense Taxes and surcharges 5,490,323.70 4,706,132.09 Selling expense 50,699,252.02 48,195,311.31 Administrative expense 47,487,578.68 52,378,722.27 R&D expense 703,632.42 349,299.58 Finance costs 7,682,992.07 -2,022,277.92 Including: Interest 29,919,400.39 28,498,954.62 expense Interest 22,365,123.69 12,702,511.85 income Add: Other income 1,908,875.68 3,420,131.60 Return on investment (“-” for 1,089,429.46 5,574,816.04 loss) Including: Share of profit or loss of joint ventures and associates Derecognition income of financial assets measured at amortized cost Foreign exchange gain (“-” for loss) Net gain on exposure hedges (“-” for loss) Gain on changes in fair value (“-” -512,728.81 -36,001,451.60 for loss) Credit impairment loss (“-” for loss) Assets impairment loss (“-” for 1,193.30 -203,532.58 loss) Asset disposal income (“-” for -733,109.31 -1,607,843.98 loss) 3. Operating profit (“-” for loss) 61,965,674.78 64,081,369.98 Add: Non-operating income 539,843.22 983,957.85 Less: Non-operating expense 1,127,254.62 276,289.34 4. Profit before tax (“-” for loss) 61,378,263.38 64,789,038.49 Less: Income tax expense 15,853,529.76 9,498,223.59 5. Net profit (“-” for net loss) 45,524,733.62 55,290,814.90 21 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 5.1 By operating continuity 5.1.1 Net profit from continuing 45,524,733.62 55,290,814.90 operations (“-” for net loss) 5.1.2 Net profit from discontinued operations (“-” for net loss) 5.2 By ownership 5.2.1 Net profit attributable to 33,840,967.80 42,345,394.93 owners of the Company as the parent 5.2.2 Net profit attributable to 11,683,765.82 12,945,419.97 non-controlling interests 6. Other comprehensive income, net of 190,287.74 264,437.23 tax Attributable to owners of the Company 190,287.74 264,437.23 as the parent 6.1 Items that will not be reclassified to profit or loss 6.1.1 Changes caused by remeasurements on defined benefit pension schemes 6.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method 6.1.3 Changes in the fair value of investments in other equity instruments 6.1.4 Changes in the fair value of the company’s credit risks 6.1.5 Other 6.2 Items that will be reclassified to 190,287.74 264,437.23 profit or loss 6.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method 6.2.2 Changes in the fair value of investments in other debt obligations 6.2.3 Gain/Loss on changes in the fair value of available-for-sale financial assets 6.2.4 Other comprehensive income arising from the reclassification of financial assets 6.2.5 Gain/Loss arising from the reclassification of held-to-maturity 22 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 investments to available-for-sale financial assets 6.2.6 Allowance for credit impairments in investments in other debt obligations 6.2.7 Reserve for cash flow hedges 6.2.8 Differences arising from the translation of foreign 190,287.74 264,437.23 currency-denominated financial statements 6.2.9 Other Attributable to non-controlling interests 7. Total comprehensive income 45,715,021.36 55,555,252.13 Attributable to owners of the Company 34,031,255.54 42,609,832.16 as the parent Attributable to non-controlling 11,683,765.82 12,945,419.97 interests 8. Earnings per share 8.1 Basic earnings per share 0.05 0.06 8.2 Diluted earnings per share 0.05 0.06 Where business combinations under common control occurred in the current period, the net profit achieved by the acquirees before the combinations was RMBXXX, with the amount for the same period of last year being RMBXXX. Legal representative: Li Shaoling Head for financial affairs: Guan Ying Head of the financial department: Liu Quanli 4. Income Statement of the Company as the Parent for Q3 Unit: RMB Item Q3 2019 Q3 2018 1. Operating revenue 0.00 0.00 Less: Cost of sales 0.00 75,609.15 Taxes and surcharges 33,908.40 32,242.73 Selling expense Administrative expense 10,567,161.77 8,498,118.65 R&D expense Finance costs 4,064,326.05 3,587,578.96 23 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 Including: Interest expense 4,067,234.62 3,588,242.50 Interest income 3,054.57 2,774.94 Add: Other income Return on investment (“-” for loss) Including: Share of profit or loss of joint ventures and associates Derecognition income of financial assets measured at amortized cost Net gain on exposure hedges (“-” for loss) Gain on changes in fair value (“-” for loss) Credit impairment loss (“-” for loss) Assets impairment loss (“-” for 0.00 -580.00 loss) Asset disposal income (“-” for loss) 2. Operating profit (“-” for loss) -14,665,396.22 -12,194,129.49 Add: Non-operating income Less: Non-operating expense 3. Profit before tax (“-” for loss) -14,665,396.22 -12,194,129.49 Less: Income tax expense 4. Net profit (“-” for net loss) -14,665,396.22 -12,194,129.49 4.1 Net profit from continuing -14,665,396.22 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 caused by remeasurements on defined benefit pension schemes 5.1.2 Other comprehensive income that will not be reclassified to profit or 24 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 loss under the equity method 5.1.3 Changes in the fair value of investments in other equity instruments 5.1.4 Changes in the fair value of the company’s credit risks 5.1.5 Other 5.2 Items that will be reclassified to profit or loss 5.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method 5.2.2 Changes in the fair value of investments in other debt obligations 5.2.3 Gain/Loss on changes in the fair value of available-for-sale financial assets 5.2.4 Other comprehensive income arising from the reclassification of financial assets 5.2.5 Gain/Loss arising from the reclassification of held-to-maturity investments to available-for-sale financial assets 5.2.6 Allowance for credit impairments in investments in other debt obligations 5.2.7 Reserve for cash flow hedges 5.2.8 Differences arising from the translation of foreign currency-denominated financial statements 5.2.9 Other 6. Total comprehensive income -14,665,396.22 -12,194,129.49 7. Earnings per share 7.1 Basic earnings per share 7.2 Diluted earnings per share 5. Consolidated Income Statement for Q1~Q3 Unit: RMB Item Q1~Q3 2019 Q1~Q3 2018 25 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 1. Revenue 5,108,164,255.31 5,539,431,965.38 Including: Operating revenue 5,108,164,255.31 5,539,431,965.38 Interest income Premium income Handling charge and commission income 2. Operating costs and expenses 5,018,488,742.07 5,367,776,105.45 Including: Cost of sales 4,693,289,477.71 5,038,627,672.46 Interest expense Handling charge and commission expense Surrenders Net claims paid Net amount provided as policy reserve Expenditure on policy dividends Reinsurance premium expense Taxes and surcharges 17,090,887.34 19,018,278.45 Selling expense 151,930,390.29 139,821,320.67 Administrative expense 128,785,807.05 135,753,834.87 R&D expense 1,234,698.42 1,072,960.08 Finance costs 26,157,481.26 33,482,038.92 Including: Interest 52,900,693.46 80,549,317.31 expense Interest 26,485,752.27 28,499,809.74 income Add: Other income 11,779,973.90 8,937,425.37 Investment income (“-” for loss) 10,268,731.55 16,487,429.06 Including: Share of profit or loss of joint ventures and associates Derecognition income of financial assets measured at amortized cost Foreign exchange gain (“-” for loss) Net gain on exposure hedges (“-” 26 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 for loss) Gain on changes in fair value (“-” 25,645,552.41 -22,110,484.16 for loss) Credit impairment loss (“-” for loss) Assets impairment loss (“-” for -196,502.26 278,887.16 loss) Asset disposal income (“-” for 11,264,409.09 -1,796,072.16 loss) 3. Operating profit (“-” for loss) 148,437,677.93 173,453,045.20 Add: Non-operating income 2,256,286.81 10,781,378.60 Less: Non-operating expense 1,949,673.24 9,896,461.65 4. Profit before tax (“-” for loss) 148,744,291.50 174,337,962.15 Less: Income tax expense 37,975,305.88 44,488,495.00 5. Net profit (“-” for net loss) 110,768,985.62 129,849,467.15 5.1 By operating continuity (“-” for net loss) 5.1.1 Net profit from continuing 110,768,985.62 129,849,467.15 operations (“-” for net loss) 5.1.2 Net profit from discontinued operations (“-” for net loss) 5.2 By ownership 5.2.1 Net profit attributable to 85,351,872.21 102,264,390.61 owners of the Company as the parent 5.2 2. Net profit attributable to 25,417,113.41 27,585,076.54 non-controlling interests 6. Other comprehensive income, net of 241,232.26 449,844.98 tax Attributable to owners of the Company 241,232.26 449,844.98 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 27 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 6.1.3 Changes in the fair value of investments in other equity instruments 6.1.4 Changes in the fair value of the company’s credit risks 6.1.5 Other 6.2 Items that may subsequently be 241,232.26 449,844.98 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 Changes in the fair value of investments in other debt obligations 6.2.3 Gain/Loss on changes in fair value of available-for-sale financial assets 6.2.4. Other comprehensive income arising from the reclassification of financial assets 6.2.5 Gain/Loss arising from reclassification of held-to-maturity investments to available-for-sale financial assets 6.2.6 Allowance for credit impairments in investments in other debt obligations 6.2.7 Reserve for cash flow hedges 6.2.8 Differences arising from translation of foreign 241,232.26 449,844.98 currency-denominated financial statements 6.2.9 Other Attributable to non-controlling interests 7. Total comprehensive income 111,010,217.88 130,299,312.13 Attributable to owners of the Company 85,593,104.47 102,714,235.59 as the parent Attributable to non-controlling 25,417,113.41 27,585,076.54 interests 8. Earnings per share 28 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 8.1 Basic earnings per share 0.12 0.15 8.2 Diluted earnings per share 0.12 0.15 Where business combinations under common control occurred in the current period, the net profit achieved by the acquirees before the combinations was RMBXXX, with the amount for the same period of last year being RMBXXX. Legal representative: Li Shaoling Head for financial affairs: Guan Ying Head of the financial department: Liu Quanli 6. Income Statement of the Company as the Parent for Q1~Q3 Unit: RMB Item Q1~Q3 2019 Q1~Q3 2018 1. Operating revenue 0.00 0.00 Less: Cost of sales 0.00 226,827.45 Taxes and surcharges 102,985.20 1,046,593.89 Selling expense Administrative expense 24,078,567.37 14,511,777.95 R&D expense Finance costs 11,629,290.32 9,982,985.70 Including: Interest expense 11,638,818.11 10,929,291.28 Interest income 14,138.40 954,302.98 Add: Other income Investment income (“-” for loss) Including: Share of profit or loss of joint ventures and associates Derecognition income of financial assets measured at amortized cost Net gain on exposure hedges (“-” for loss) Gain on changes in fair value (“-” for loss) Credit impairment loss (“-” for loss) Assets impairment loss (“-” for -4,344.16 98,668.41 loss) Asset disposal income (“-” for 29 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 loss) 2. Operating profit (“-” for loss) -35,815,187.05 -25,669,516.58 Add: Non-operating income Less: Non-operating expense 469,440.00 100.00 3. Profit before tax (“-” for loss) -36,284,627.05 -25,669,616.58 Less: Income tax expense 4. Net profit (“-” for net loss) -36,284,627.05 -25,669,616.58 4.1 Net profit from continuing -36,284,627.05 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 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 5.1.3 Changes in the fair value of investments in other debt obligations 5.1.4 Changes in the fair value of the company’s credit risks 5.1.5 Other 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 Changes in the fair value of investments in other debt obligations 5.2.3 Gain/Loss on changes in fair value of available-for-sale financial assets 5.2.4 Other comprehensive income arising from the reclassification of 30 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 financial assets 5.2.5 Gain/Loss arising from reclassification of held-to-maturity investments to available-for-sale financial assets 5.2.6 Allowance for credit impairments in investments in other debt obligations 5.2.7 Reserve for cash flow hedges 5.2.8 Differences arising from translation of foreign currency-denominated financial statements 5.2.9 Other 6. Total comprehensive income -36,284,627.05 -25,669,616.58 7. Earnings per share 7.1 Basic earnings per share 7.2 Diluted earnings per share 7. Consolidated Cash Flow Statement for Q1~Q3 Unit: RMB Item Q1~Q3 2019 Q1~Q3 2018 1. Cash flows from operating activities: Proceeds from sale of commodities 5,561,175,595.39 6,089,990,408.11 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 Interest, handling charges and commissions received Net increase in interbank loans 31 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 obtained Net increase in proceeds from repurchase transactions Net proceeds from acting trading of securities Tax rebates 8,511,133.41 11,907,624.39 Cash generated from other operating 1,018,233,943.12 1,766,762,056.68 activities Subtotal of cash generated from 6,587,920,671.92 7,868,660,089.18 operating activities Payments for commodities and 4,955,576,528.87 5,488,803,432.64 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 Net increase in interbank loans granted Interest, handling charges and commissions paid Policy dividends paid Cash paid to and for employees 225,542,724.31 215,823,143.63 Taxes paid 113,872,002.20 149,429,869.38 Cash used in other operating 846,183,684.46 1,595,019,949.04 activities Subtotal of cash used in operating 6,141,174,939.84 7,449,076,394.69 activities Net cash generated from/used in 446,745,732.08 419,583,694.49 operating activities 2. Cash flows from investing activities: Proceeds from disinvestment 1,451,236,691.57 1,647,338,090.45 Return on investment 24,608,980.29 22,660,696.79 Net proceeds from the disposal of fixed assets, intangible assets and other 69,211.68 624,362.84 long-lived assets Net proceeds from the disposal of subsidiaries and other business units Cash generated from other investing 94,375,000.00 activities 32 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 Subtotal of cash generated from 1,475,914,883.54 1,764,998,150.08 investing activities Payments for the acquisition of fixed assets, intangible assets and other 41,645,608.65 44,298,838.25 long-lived assets Payments for investments 1,921,580,563.05 1,944,330,000.00 Net increase in pledged loans granted Net payments for the acquisition of 47,954,985.00 subsidiaries and other business units Cash used in other investing 752.21 289,112,694.38 activities Subtotal of cash used in investing 1,963,226,923.91 2,325,696,517.63 activities Net cash generated from/used in -487,312,040.37 -560,698,367.55 investing activities 3. Cash flows from financing activities: Capital contributions received 126,553,500.00 Including: Capital contributions by non-controlling interests to subsidiaries Borrowings obtained 1,633,175,871.20 1,705,500,818.73 Cash generated from other financing 4,857,675,313.61 activities Subtotal of cash generated from 1,633,175,871.20 6,689,729,632.34 financing activities Repayments of borrowings 1,929,842,758.45 1,917,644,873.55 Payments for interest and dividends 75,821,378.17 98,022,459.14 Including: Dividends paid by subsidiaries to non-controlling interests Cash used in other financing 4,891,136,552.93 activities Subtotal of cash used in financing 2,005,664,136.62 6,906,803,885.62 activities Net cash generated from/used in -372,488,265.42 -217,074,253.28 financing activities 4. Effect of foreign exchange rate 3,782,563.49 19,414,338.66 changes on cash and cash equivalents 5. Net increase in cash and cash -409,272,010.22 -338,774,587.68 equivalents Add: Cash and cash equivalents, 867,870,016.78 1,014,438,663.43 beginning of the period 6. Cash and cash equivalents, end of the 458,598,006.56 675,664,075.75 period 33 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 8. Cash Flow Statement of the Company as the Parent for Q1~Q3 Unit: RMB Item Q1~Q3 2019 Q1~Q3 2018 1. Cash flows from operating activities: Proceeds from sale of commodities and rendering of services Tax rebates 1,800.00 750.00 Cash generated from other operating 33,566,371.69 58,581,113.47 activities Subtotal of cash generated from 33,568,171.69 58,581,863.47 operating activities Payments for commodities and 25,453.09 87,700.45 services Cash paid to and for employees 17,908,969.70 12,261,894.85 Taxes paid 105,317.14 5,670,439.48 Cash used in other operating 52,051,442.98 57,497,384.43 activities Subtotal of cash used in operating 70,091,182.91 75,517,419.21 activities Net cash generated from/used in -36,523,011.22 -16,935,555.74 operating activities 2. Cash flows from investing activities: Proceeds from disinvestment Return on investment Net proceeds from the disposal of fixed assets, intangible assets and other -34,427.35 long-lived assets Net proceeds from the disposal of subsidiaries and other business units Cash generated from other investing activities Subtotal of cash generated from 0.00 -34,427.35 investing activities Payments for the acquisition of fixed assets, intangible assets and other 187,564.80 214,550.26 long-lived assets Payments for investments 1,780,563.05 39,000,000.00 Net payments for the acquisition of subsidiaries and other business units Cash used in other investing 34 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 activities Subtotal of cash used in investing 1,968,127.85 39,214,550.26 activities Net cash generated from/used in -1,968,127.85 -39,248,977.61 investing activities 3. Cash flows from financing activities: Capital contributions received Borrowings obtained 28,700,000.00 75,900,000.00 Cash generated from other financing activities Subtotal of cash generated from 28,700,000.00 75,900,000.00 financing activities Repayments of borrowings 16,000,000.00 Payments for interest and dividends 3,649,220.00 Cash used in other financing activities Subtotal of cash used in financing 0.00 19,649,220.00 activities Net cash generated from/used in 28,700,000.00 56,250,780.00 financing activities 4. Effect of foreign exchange rate changes on cash and cash equivalents 5. Net increase in cash and cash -9,791,139.07 66,246.65 equivalents Add: Cash and cash equivalents, 13,597,659.66 15,360,177.32 beginning of the period 6. Cash and cash equivalents, end of the 3,806,520.59 15,426,423.97 period II Adjustments to the Financial Statements 1. Adjustments to the Financial Statements at the Beginning of the Execution of any New Standards Governing Financial Instruments, Revenue or Leases from 2019 □ Applicable √ Not applicable 2. Retrospective Restatement of Previous Comparative Data due to the Execution of any New Standards Governing Financial Instruments or Leases from 2019 □ Applicable √ Not applicable 35 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2019 III 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. Hainan Jingliang Holdings Co., Ltd. 19 October 2019 36