Konka Group Co., Ltd. Third Quarter Report 2019 KONKA GROUP CO., LTD. THIRD QUARTER REPORT 2019 2019-102 October 2019 1 Konka Group 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 Konka Group 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. Liu Fengxi, the Company’s legal representative, Li Chunlei, the Company’s Chief Financial Officer (CFO), and Feng Junxiu, 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 Konka Group 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) 41,668,497,548.19 32,985,061,889.03 26.33% Equity attributable to the listed 8,334,866,038.71 8,104,736,790.53 2.84% company’s shareholders (RMB) Q3 2019 YoY change (%) Q1-Q3 2019 YoY change (%) Operating revenue (RMB) 15,644,806,446.79 28.91% 41,681,249,260.63 40.05% Net profit attributable to the listed 97,725,667.63 11.00% 450,492,688.36 4.81% company’s shareholders (RMB) Net profit attributable to the listed company’s shareholders before -423,396,028.22 -109.27% -1,046,307,661.79 -107.94% exceptional items (RMB) Net cash generated from/used in -- -- -2,572,579,841.94 11.20% operating activities (RMB) Basic earnings per share (RMB/share) 0.0406 10.93% 0.1871 4.82% Diluted earnings per share 0.0406 10.93% 0.1871 4.82% (RMB/share) Weighted average return on equity (%) 1.20% 0.10% 5.40% 0.16% Exceptional gains and losses: √ Applicable □ Not applicable Unit: RMB Item Q1-Q3 2019 Note Gain/Loss arising from disposal of non-current assets (inclusive of impairment allowance 676,642,041.23 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 amounts according to the government’s unified 616,080,972.15 standards Gain/Loss on entrusting others with investments or asset management 134,559,649.39 Gain/Loss on changes in fair value arising from holding of trading financial assets and liabilities and investment income from disposal of trading financial assets, financial liabilities and -13,291,264.69 available-for-sale financial assets other than effective hedge business related to the Company’s normal operating businesses 3 Konka Group Co., Ltd. Third Quarter Report 2019 Gain/loss on entrustment loans 1,459,119.47 Other non-operating income and expense other than the above 55,926,248.85 Other gains and losses that meet definition of exceptional gain/loss 240,824,796.53 Less: Income tax effects 98,385,181.09 Non-controlling interests effects (net of tax) 117,016,031.69 Total -- 1,496,800,350.15 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 Item Amount (RMB) Reason Tax rebates on Recurrent government subsidies given in the Company’s ordinary course of business at 29,365,991.65 software fixed quotas or amounts as per government’s uniform standards 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 ordinary shareholders 94,131 Number of preferred shareholders with resumed voting rights (if any) 0 Top 10 shareholders Shares in pledge Shareholdin Number of Restricte Name of shareholder Nature of shareholder or frozen g percentage shares d shares Status Shares OVERSEAS CHINESE TOWN State-owned legal person 21.75% 523,746,932 0 ENTERPRISES CO., LTD CITIC SECURITIES BROKERAGE (HONG KONG) Foreign legal person 7.56% 182,100,202 0 CO., LTD. HOLY TIME GROUP LIMITED Foreign legal person 2.33% 56,139,100 0 GUOYUAN SECURITIES Foreign legal person 2.25% 54,203,779 0 BROKER (HK) CO., LTD. GAOLING FUND,L.P. Foreign legal person 2.19% 52,801,250 0 HONG KONG SECURITIES Foreign legal person 0.99% 23,763,169 0 CLEARING COMPANY LTD. CHINA MERCHANTS State-owned legal person 0.96% 23,060,224 0 SECURITIES (HK) LIMITED NAM NGAI Foreign natural person 0.88% 21,207,340 0 NATIONAL SOCIAL SECURITY Other 0.88% 21,099,537 0 FUND NO. 118 PORTFOLIO 4 Konka Group Co., Ltd. Third Quarter Report 2019 CHEN WEIQIN Domestic natural person 0.69% 16,656,822 0 Top 10 unrestricted shareholders Shares by type Name of shareholder Unrestricted shares Type Shares OVERSEAS CHINESE TOWN 523,746,932 RMB-denominated ordinary stock 523,746,932 ENTERPRISES CO., LTD CITIC SECURITIES BROKERAGE 182,100,202 Domestically listed foreign stock 182,100,202 (HONG KONG) CO., LTD. HOLY TIME GROUP LIMITED 56,139,100 Domestically listed foreign stock 56,139,100 GUOYUAN SECURITIES BROKER 54,203,779 Domestically listed foreign stock 54,203,779 (HK) CO., LTD. GAOLING FUND,L.P. 52,801,250 Domestically listed foreign stock 52,801,250 HONG KONG SECURITIES 23,763,169 RMB-denominated ordinary stock 23,763,169 CLEARING COMPANY LTD. CHINA MERCHANTS SECURITIES 23,060,224 Domestically listed foreign stock 23,060,224 (HK) LIMITED NAM NGAI 21,207,340 Domestically listed foreign stock 21,207,340 NATIONAL SOCIAL SECURITY 21,099,537 RMB-denominated ordinary stock 21,099,537 FUND NO. 118 PORTFOLIO CHEN WEIQIN 16,656,822 RMB-denominated ordinary stock 16,656,822 Jialong Investment Limited, a wholly-funded subsidiary of the Company’s first majority shareholder Overseas Chinese Town Enterprises Co. (“OCT Group” for short), holds Related or acting-in-concert 180,001,110 and 18,360,000 common shares in the Company respectively through CITIC parties among shareholders Securities Brokerage (Hong Kong) Co., Ltd. and China Merchants Securities (HK) Limited. above Jialong Investment Limited and Overseas Chinese Town Enterprises Co. are parties acting in concert. Other than that, it is unknown whether the other shareholders are related parties or acting-in-concert parties or not. Top 10 ordinary shareholders Chen Weiqin holds 16,656,822 A-shares in the Company through his account of collateral involved in securities margin securities for margin trading in CITIC Securities Company Limited. trading (if any) 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. □ Yes √ No No such cases in the Reporting Period. 2. Number of Preferred Shareholders and Shareholdings of Top 10 of Them □ Applicable √ Not applicable 5 Konka Group 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 (I) In the Reporting Period, the Company carried on with its long-term development strategy of “Technology + Industry + Park”, accelerating its strategic transformation and upgrade with respect to “One Centric Orientation, Two Development Paths, Three Development Strategies and Four Business Groups” and achieved the following fruits. 1. During the Reporting Period, the Company continued to increase its investment in R&D, thoroughly research and develop core technologies and improve competitiveness of main business. On the one hand, the Company actively made deep application of advanced technologies such as AI, 8K and 5G in product research and development and successively launched a series of core technology products such as 8K TV, panoramic AI TV and OLED TV. On the other hand, the Company further strengthened its technology layout in new display technology, new materials, energy saving and environment protection. It set up academician workstation and semi-conductor and optoelectronics research institute intending to drive high-quality development of the Company through innovations and breakthroughs in core technologies. 2. In accordance with the long-term development strategy of “Technology + Industry + Park”, during the Reporting Period, the Company successfully delisted lands used for projects of Chuzhou Minghu Health Community, Dongguan City’s New Plant, Chongqing Konka Semi-conductor Optoelectronics Industrial Park, Yantai Health Accelerator Industrial Park and Haimen Headquarters for Eastern China with smooth proceeding of other projects of industrial park. 3. Due to the rapid development of emerging businesses, for Q1~Q3 of 2019, the Company realized the operating revenue of RMB 41.68 billion with an increase of 40.05% compared with that of the same period of last year. (II) Changes in Key Financial Statement Line Items Unit: RMB’0,000 (in RMB ten thousand yuan) Item 30 September 2019 1 January 2019 Change Change (%) Main reason for change Remarkable increase in business in Prepayments 377,035.20 103,697.92 273,337.28 263.59% relation to environmental protection and supply chain management Non-current finanical Newly added investments in 154,876.44 54,823.00 100,053.44 182.50% assets opto-electronics industry fund Issue of corporate bonds of RMB5 billion Interests payable 14,989.11 2,723.06 12,266.05 450.45% in this year Increase in newly added long-term Long-term borrowings 181,269.57 44,500.00 136,769.57 307.35% borrowings of subsidiaries Item Q1~Q3 2019 Q1~Q3 2018 Change Change (%) Main reason for change 6 Konka Group Co., Ltd. Third Quarter Report 2019 YoY increase in operating revenue and Operating revenue 4,168,124.93 2,976,172.99 1,191,951.94 40.05% cost of sales regarding supply chain management business for the Reporting Period and newly added business in Cost of sales 3,960,148.07 2,806,358.27 1,153,789.80 41.11% relation to environmental protection Continuously enhancement of R&D R&D expense 31,910.23 22,674.73 9,235.50 40.73% inputs in this year Disposal of assets by subsidiaries in the Asset disposal income 29,370.58 6,357.51 23,013.07 361.98% Reporting Period Net cash generated Increase in investing of fixed assets and from/used in investing -101,394.11 -73,803.61 -27,590.50 -37.38% intangible assets in this year activities II Progress, Influence and Solutions with regard to Significant Events √ Applicable □ Not applicable 1. The lands have been obtained for projects of Chuzhou Minghu Health Community, Dongguan City’s New Plant, Chongqing Konka Semi-conductor Optoelectronics Industrial Park, Yantai Health Accelerator Industrial Park and Haimen Headquarters for Eastern China during the Reporting Period. As for Konka Smart Terminals High-Tech Industrial Park in Yibin, Konka Electronics Technology Industrial Park in Suining, Konka Smart Appliances and Equipment Industrial Park in Chuzhou and Lankao Environmental Protection Business Industrial Base, the relevant construction is under the preparation or in progress. 2. In 2018 Launch of establishing the Orient Konka Industrial M&A Fund respectively holds 11.77% of shares in Jiangxi Yahua Electronic Materials Co., Ltd., 2.75% of shares in Shenzhen Genew Technologies Co., Ltd., 3.74% of shares in Roshow Technology Co., Ltd., and 11.73% of shares in Shenzhen Gren RF Communication Co., Ltd. through investments. 3. Private placement of corporate bonds of RMB0.6 billion: The matter has been reviewed and approved in the general meeting of the Company, and the preparation for relevant declaration materials is underway. Website link to Announcement on significant event Disclosure date announcement Announcement on the Issuance Results of the Private Placement of Corporate 24 July 2019 Bonds (Phase III) in 2019 Announcement on Receiving the Notice of CSRC on the examination of the 10 September 2019 Application for Resumption of Administrative License http://www.cninfo.c Announcement on Completion of Changes in Registration for Transfer of the 51% om.cn/new/index 27 September 2019 Equity Interests in Chuzhou Kangjin Health Industrial Development Co., Ltd. The Completion of the Registration of Chongqing Konka Semiconductor 9 October 2019 Opto-electronics Research Institute Progress of any share repurchase: □ Applicable √ Not applicable 7 Konka Group Co., Ltd. Third Quarter Report 2019 Progress of any reduction of the repurchased shares through centralized bidding: □ Applicable √ Not applicable III Commitments that the Company’s Actual Controller, Shareholders, Related Parties, Acquirers, the Company Itself or Other Parties, Failed to Fulfill on Time during the Reporting Period □ Applicable √ Not applicable No such cases in the Reporting Period. IV Securities Investments □ Applicable √ Not applicable No such cases in the Reporting Period. V Wealth Management Entrustment □ Applicable √ Not applicable No such cases in the Reporting Period. VI Investments in Derivative Financial Instruments □ Applicable √ Not applicable No such cases in the Reporting Period. VII Communications with the Investment Community such as Researches, Inquiries and Interviews during the Reporting Period √ Applicable □ Not applicable Date Way of Communication Type of communication party Index to main information communicated 28 June 2019 On-site meeting Institution 3 July 2019 On-site meeting Institution 17 July 2019 On-site meeting Institution http://www.cninfo.com.cn/new/index 20 August 2019 On-site meeting Institution 11 September 2019 On-site meeting Institution VIII Irregularities in the Provision of Guarantees □ Applicable √ Not applicable No such cases in the Reporting Period. IX Occupation of the Company’s Capital by the Controlling Shareholder or Its Related Parties for Non-Operating Purposes □ Applicable √ Not applicable No such cases in the Reporting Period. 8 Konka Group Co., Ltd. Third Quarter Report 2019 Part IV Financial Statements I Financial Statements 1. Consolidated Balance Sheet Prepared by Konka Group Co., Ltd. 30 September 2019 Unit: RMB Item 30 September 2019 31 December 2018 Current assets: Monetary capital 6,994,794,669.87 4,348,144,129.53 Settlement reserve Interbank loans granted Trading financial assets 61,494,666.97 Financial assets at fair value through profit or loss 5,464,984.92 Derivative financial assets Notes receivable 1,822,756,223.18 3,329,711,954.15 Accounts receivable 5,384,468,569.95 4,458,053,586.42 Accounts receivable financing 30,428,416.44 Prepayments 3,770,352,017.29 1,036,979,167.56 Premiums receivable Reinsurance receivables Receivable reinsurance contract reserve Other receivables 1,177,221,079.26 410,804,180.50 Including: Interests receivable 5,833,162.55 4,059,682.40 Dividends receivable 547,848.62 547,848.62 Financial assets purchased under resale agreements Inventories 6,471,061,158.11 5,487,605,227.05 Contractual assets Assets classified as held for sale Current portion of non-current assets 51,791,485.91 22,318,208.13 Other current assets 1,524,910,157.61 2,744,216,141.98 Total current assets 27,289,278,444.59 21,843,297,580.24 Non-current assets: 9 Konka Group Co., Ltd. Third Quarter Report 2019 Loans and advances to customers Investments in debt obligations Available-for-sale financial assets 633,664,881.33 Investments in other debt obligations Held-to-maturity investments Long-term receivables 412,670,698.02 390,793,038.05 Long-term equity investments 2,964,002,398.80 2,637,780,825.53 Investments in other equity instruments 19,140,214.36 Other non-current financial assets 1,548,764,400.00 Investment property 206,600,900.02 210,824,355.72 Fixed assets 2,556,567,268.89 2,410,226,495.81 Construction in progress 3,136,285,379.56 2,176,871,530.80 Productive living assets Oil and gas assets Right-of-use assets Intangible assets 1,181,935,439.32 737,776,686.34 R&D expense Goodwill 855,691,423.75 855,691,423.75 Long-term prepaid expense 106,941,419.03 111,223,426.77 Deferred income tax assets 870,066,949.65 639,433,954.30 Other non-current assets 520,552,612.20 337,477,690.39 Total non-current assets 14,379,219,103.60 11,141,764,308.79 Total assets 41,668,497,548.19 32,985,061,889.03 Current liabilities: Short-term borrowings 13,813,454,740.84 13,884,132,931.63 Borrowings from central bank Interbank loans obtained Trading financial liabilities Financial liabilities at fair value through profit or loss 2,459,603.25 Derivative financial liabilities Notes payable 1,110,673,136.13 862,330,689.47 Accounts payable 5,197,990,516.38 4,362,723,050.33 Advances from customers 1,180,010,394.07 723,227,529.20 Contractual liabilities 10 Konka Group Co., Ltd. Third Quarter Report 2019 Financial assets sold under repurchase agreements Customer deposits and interbank deposits Payables for acting trading of securities Payables for underwriting of securities Payroll payable 230,972,629.89 376,506,567.71 Taxes payable 381,795,313.44 288,004,192.44 Other payables 2,230,692,538.75 2,024,657,277.74 Including: Interest payable 149,891,095.43 27,230,631.41 Dividends payable Handling charges and commissions payable Reinsurance payables Liabilities directly associated with assets classified as held for sale Current portion of non-current liabilities 1,353,399.25 151,792,404.13 Other current liabilities Total current liabilities 24,146,942,668.75 22,675,834,245.90 Non-current liabilities: Insurance contract reserve Long-term borrowings 1,812,695,729.90 445,000,000.00 Bonds payable 4,986,333,857.47 Including: Preferred shares Perpetual bonds Lease liabilities Long-term payables 342,932,515.78 128,374,597.41 Long-term payroll payable 5,617,330.28 8,792,614.98 Provisions 1,597,591.51 21,772,898.37 Deferred income 139,556,366.01 112,899,128.24 Deferred income tax liabilities 140,317,722.60 141,020,093.34 Other non-current liabilities Total non-current liabilities 7,429,051,113.55 857,859,332.34 Total liabilities 31,575,993,782.30 23,533,693,578.24 Owners’ equity: Share capital 2,407,945,408.00 2,407,945,408.00 Other equity instruments Including: Preferred shares 11 Konka Group Co., Ltd. Third Quarter Report 2019 Perpetual bonds Capital reserves 237,761,961.98 208,356,624.21 Less: Treasury stock Other comprehensive income -16,738,417.62 -10,538,219.08 Special reserves 110,216.01 Surplus reserves 1,227,564,785.19 1,227,564,785.19 General reserve Retained earnings 4,478,222,085.15 4,271,408,192.21 Total equity attributable to owners of the Company as the 8,334,866,038.71 8,104,736,790.53 parent Non-controlling interests 1,757,637,727.18 1,346,631,520.26 Total owners’ equity 10,092,503,765.89 9,451,368,310.79 Total liabilities and owners’ equity 41,668,497,548.19 32,985,061,889.03 Legal representative: Liu Fengxi CFO: Li Chunlei Head of the financial department: Feng Junxiu 2. Balance Sheet of the Company as the Parent Unit: RMB Item 30 September 2019 31 December 2018 Current assets: Monetary capital 2,851,530,664.06 2,124,335,536.69 Trading financial assets 61,494,666.97 Financial assets at fair value through profit or loss 5,464,984.92 Derivative financial assets Notes receivable 1,296,842,782.41 2,181,466,683.90 Accounts receivable 9,790,478,715.40 7,427,246,429.42 Accounts receivable financing Prepayments 1,555,701,408.42 1,019,335,571.49 Other receivables 8,754,780,182.80 6,667,463,126.57 Including: Interest receivable 4,496,389.55 5,769,663.24 Dividends receivable Inventories 328,176,805.47 254,225,716.41 Contractual assets Assets classified as held for sale Current portion of non-current assets Other current assets 98,176,190.78 77,249,216.99 Total current assets 24,737,181,416.31 19,756,787,266.39 12 Konka Group Co., Ltd. Third Quarter Report 2019 Non-current assets: Investments in debt obligations Available-for-sale financial assets 326,164,881.33 Investments in other debt obligations Held-to-maturity investments Long-term receivables Long-term equity investments 6,841,301,700.53 6,182,962,034.71 Investments in other equity instruments 14,440,214.36 Other non-current financial assets 250,230,000.00 Investment property 206,600,900.02 210,824,355.72 Fixed assets 448,222,683.16 462,721,018.30 Construction in progress 232,303,682.48 157,356,696.30 Productive living assets Oil and gas assets Right-of-use assets Intangible assets 80,820,208.46 83,593,959.11 R&D expense Goodwill Long-term prepaid expense 66,565,616.18 80,388,949.97 Deferred income tax assets 757,082,868.26 516,879,201.66 Other non-current assets 20,000,000.00 20,000,000.00 Total non-current assets 8,917,567,873.45 8,040,891,097.10 Total assets 33,654,749,289.76 27,797,678,363.49 Current liabilities: Short-term borrowings 9,193,116,148.28 8,179,564,987.70 Trading financial liabilities Financial liabilities at fair value through profit or loss 2,459,603.25 Derivative financial liabilities Notes payable 1,854,390,903.32 3,513,157,955.43 Accounts payable 8,326,957,968.42 6,477,055,955.65 Advances from customers 367,080,069.26 306,650,717.69 Contractual liabilities Payroll payable 75,048,950.85 146,199,496.44 Taxes payable 1,850,089.08 10,913,871.30 13 Konka Group Co., Ltd. Third Quarter Report 2019 Other payables 2,625,799,680.02 2,011,494,378.65 Including: Interest payable 146,784,607.53 24,158,666.48 Dividends payable Liabilities directly associated with assets classified as held for sale Current portion of non-current liabilities 40,000,000.00 Other current liabilities Total current liabilities 22,444,243,809.23 20,687,496,966.11 Non-current liabilities: Long-term borrowings 346,995,729.90 245,000,000.00 Bonds payable 4,986,333,857.47 Including: Preferred shares Perpetual bonds Lease liabilities Long-term payables Long-term payroll payable Provisions 206,591.51 206,591.51 Deferred income 69,127,582.04 75,705,476.93 Deferred income tax liabilities 751,345.42 Other non-current liabilities Total non-current liabilities 5,402,663,760.92 321,663,413.86 Total liabilities 27,846,907,570.15 21,009,160,379.97 Owners’ equity: Share capital 2,407,945,408.00 2,407,945,408.00 Other equity instruments Including: Preferred shares Perpetual bonds Capital reserves 114,018,066.79 114,018,066.79 Less: Treasury stock Other comprehensive income -1,182,217.31 -1,182,217.31 Special reserves Surplus reserves 1,227,564,785.19 1,227,564,785.19 Retained earnings 2,059,495,676.94 3,040,171,940.85 Total owners’ equity 5,807,841,719.61 6,788,517,983.52 Total liabilities and owners’ equity 33,654,749,289.76 27,797,678,363.49 14 Konka Group Co., Ltd. Third Quarter Report 2019 3. Consolidated Income Statement for Q3 Unit: RMB Item Q3 2019 Q3 2018 1. Revenue 15,644,806,446.79 12,136,315,129.29 Including: Operating revenue 15,644,806,446.79 12,136,315,129.29 Interest income Premium income Handling charge and commission income 2. Costs and expenses 16,025,188,376.66 12,507,069,794.98 Including: Cost of sales 14,927,438,285.30 11,621,326,279.61 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 18,882,712.84 22,256,789.30 Selling expense 537,449,008.46 511,335,968.05 Administrative expense 214,581,564.94 194,171,683.61 R&D expense 161,891,918.04 89,738,422.31 Finance costs 164,944,887.08 68,240,652.10 Including: Interest expense 286,311,826.27 266,966,287.29 Interest income 28,365,849.61 98,892,687.14 Add: Other income 298,288,604.77 141,693,252.31 Return on investment (“-” for loss) 236,696,834.29 270,593,341.32 Including: Share of profit or loss of joint ventures -17,103,633.76 7,581,610.96 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 (“-” for loss) 10,085,276.33 Credit impairment loss (“-” for loss) -39,670,359.96 Assets impairment loss (“-” for loss) 2,261,331.07 -6,112,105.62 15 Konka Group Co., Ltd. Third Quarter Report 2019 Asset disposal income (“-” for loss) -147,012.51 3. Operating profit (“-” for loss) 117,194,480.30 45,358,086.14 Add: Non-operating income 41,224,843.98 15,634,997.65 Less: Non-operating expense 1,809,247.39 5,920,162.45 4. Profit before tax (“-” for loss) 156,610,076.89 55,072,921.34 Less: Income tax expense 4,284,277.99 -115,426,383.66 5. Net profit (“-” for net loss) 152,325,798.90 170,499,305.00 5.1 By operating continuity 5.1.1 Net profit from continuing operations (“-” for net 152,325,798.90 170,499,305.00 loss) 5.1.2 Net profit from discontinued operations (“-” for net loss) 5.2 By ownership 5.2.1 Net profit attributable to owners of the Company 97,725,667.63 88,041,649.48 as the parent 5.2.1 Net profit attributable to non-controlling interests 54,600,131.27 82,457,655.52 6. Other comprehensive income, net of tax -757,628.66 -12,097,422.41 Attributable to owners of the Company as the parent -2,540,311.85 -13,373,312.59 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 profit or loss -2,540,311.85 -13,373,312.59 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 investments to available-for-sale financial 16 Konka Group Co., Ltd. Third Quarter Report 2019 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 -2,540,311.85 -13,373,312.59 foreign currency-denominated financial statements 6.2.9 Other Attributable to non-controlling interests 1,782,683.19 1,275,890.18 7. Total comprehensive income 151,568,170.24 158,401,882.59 Attributable to owners of the Company as the parent 95,185,355.78 74,668,336.89 Attributable to non-controlling interests 56,382,814.46 83,733,545.70 8. Earnings per share 8.1 Basic earnings per share 0.0406 0.0366 8.2 Diluted earnings per share 0.0406 0.0366 Legal representative: Liu Fengxi CFO: Li Chunlei Head of the financial department: Feng Junxiu 4. Income Statement of the Company as the Parent for Q3 Unit: RMB Item Q3 2019 Q3 2018 1. Operating revenue 3,420,624,874.36 4,440,642,646.78 Less: Cost of sales 3,398,476,539.34 4,461,216,408.91 Taxes and surcharges 2,196,972.53 3,290,938.91 Selling expense 289,700,691.74 318,949,025.34 Administrative expense 97,690,345.27 116,016,183.63 R&D expense 11,583,116.72 26,533,247.55 Finance costs 51,277,210.40 42,077,470.06 Including: Interest expense 221,815,070.42 157,525,819.04 Interest income 107,028,598.07 47,340,463.92 Add: Other income 16,519,680.07 37,349,655.22 Return on investment (“-” for loss) 151,953,623.56 282,414,798.36 Including: Share of profit or loss of joint ventures -7,857,057.42 -7,560,003.70 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) 10,085,276.33 Credit impairment loss (“-” for loss) -20,000,000.00 17 Konka Group Co., Ltd. Third Quarter Report 2019 Assets impairment loss (“-” for loss) Asset disposal income (“-” for loss) 607.74 2. Operating profit (“-” for loss) -281,826,698.01 -197,590,289.97 Add: Non-operating income 185,713.17 966,927.34 Less: Non-operating expense 169,334.48 285,098.31 3. Profit before tax (“-” for loss) -281,810,319.32 -196,908,460.94 Less: Income tax expense -65,507,220.62 -77,096,924.08 4. Net profit (“-” for net loss) -216,303,098.70 -119,811,536.86 4.1 Net profit from continuing operations (“-” for net -216,303,098.70 -119,811,536.86 loss) 4.2 Net profit from discontinued operations (“-” for net loss) 5. Other comprehensive income, net of tax 5,222,526.42 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 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 5,222,526.42 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 4,296,185.76 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 926,340.66 currency-denominated financial statements 18 Konka Group Co., Ltd. Third Quarter Report 2019 5.2.9 Other 6. Total comprehensive income -216,303,098.70 -114,589,010.44 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 1. Revenue 41,681,249,260.63 29,761,729,899.11 Including: Operating revenue 41,681,249,260.63 29,761,729,899.11 Interest income Premium income Handling charge and commission income 2. Operating costs and expenses 42,723,961,198.82 30,481,274,468.11 Including: Cost of sales 39,601,480,656.43 28,063,582,724.87 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 56,271,805.11 49,903,363.92 Selling expense 1,605,394,922.82 1,614,517,042.56 Administrative expense 562,506,207.37 421,990,456.18 R&D expense 319,102,256.98 226,747,319.07 Finance costs 579,205,350.11 104,533,561.51 Including: Interest expense 815,995,662.79 495,028,664.94 Interest income 147,039,381.38 238,028,339.28 Add: Other income 642,173,576.13 264,719,535.81 Investment income (“-” for loss) 795,857,862.21 802,351,913.03 Including: Share of profit or loss of joint ventures -8,562,359.20 13,656,793.55 and associates Derecognition income of financial assets measured at amortized cost 19 Konka Group Co., Ltd. Third Quarter Report 2019 Foreign exchange gain (“-” for loss) Net gain on exposure hedges (“-” for loss) Gain on changes in fair value (“-” for loss) -3,005,381.67 69,940,688.81 Credit impairment loss (“-” for loss) -89,146,583.72 Assets impairment loss (“-” for loss) -9,456,436.22 -65,664,206.03 Asset disposal income (“-” for loss) 293,705,840.64 63,575,092.87 3. Operating profit (“-” for loss) 587,416,939.18 415,378,455.49 Add: Non-operating income 63,494,286.07 42,852,490.62 Less: Non-operating expense 5,278,988.90 11,871,912.02 4. Profit before tax (“-” for loss) 645,632,236.35 446,359,034.09 Less: Income tax expense 14,595,671.18 -132,872,432.79 5. Net profit (“-” for net loss) 631,036,565.17 579,231,466.88 5.1 By operating continuity (“-” for net loss) 5.1.1 Net profit from continuing operations (“-” for net 631,036,565.17 579,231,466.88 loss) 5.1.2 Net profit from discontinued operations (“-” for net loss) 5.2 By ownership 5.2.1 Net profit attributable to owners of the Company 450,492,688.36 429,834,688.51 as the parent 5.2 2. Net profit attributable to non-controlling 180,543,876.81 149,396,778.37 interests 6. Other comprehensive income, net of tax -3,865,740.99 -16,498,381.12 Attributable to owners of the Company as the parent -6,200,198.54 -18,225,153.33 6.1 Items that will not be reclassified to profit or loss -4,800,000.00 6.1.1 Changes in net liabilities or assets caused by remeasurements on defined benefit pension schemes 6.1.2 Share of other comprehensive income of investees that will not be reclassified to profit or loss under equity method 6.1.3 Changes in the fair value of investments in -4,800,000.00 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 reclassified to -1,400,198.54 -18,225,153.33 profit or loss 20 Konka Group Co., Ltd. Third Quarter Report 2019 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 -31,342.08 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 -1,400,198.54 -18,193,811.25 currency-denominated financial statements 6.2.9 Other Attributable to non-controlling interests 2,334,457.55 1,726,772.21 7. Total comprehensive income 627,170,824.18 562,733,085.76 Attributable to owners of the Company as the parent 444,292,489.82 411,609,535.18 Attributable to non-controlling interests 182,878,334.36 151,123,550.58 8. Earnings per share 8.1 Basic earnings per share 0.1871 0.1785 8.2 Diluted earnings per share 0.1871 0.1785 Legal representative: Liu Fengxi CFO: Li Chunlei Head of the financial department: Feng Junxiu 6. Income Statement of the Company as the Parent for Q1~Q3 Unit: RMB Item Q1~Q3 2019 Q1~Q3 2018 1. Operating revenue 8,788,646,584.76 10,997,211,162.08 Less: Cost of sales 8,662,626,032.49 10,419,241,341.62 Taxes and surcharges 5,247,218.40 13,586,744.27 Selling expense 892,638,143.13 1,115,535,743.30 Administrative expense 214,332,248.59 241,930,804.62 R&D expense 33,467,367.19 128,379,273.19 Finance costs 315,092,491.81 188,923,238.66 Including: Interest expense 706,461,849.17 445,544,643.70 21 Konka Group Co., Ltd. Third Quarter Report 2019 Interest income 332,427,396.10 160,404,469.05 Add: Other income 42,403,642.65 79,741,765.34 Investment income (“-” for loss) 337,929,362.44 1,441,862,076.64 Including: Share of profit or loss of joint ventures -3,928,528.71 5,680,179.60 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) -3,005,381.67 69,940,688.81 Credit impairment loss (“-” for loss) -26,660,947.01 Assets impairment loss (“-” for loss) -3,172,282.22 -36,873,991.62 Asset disposal income (“-” for loss) 200.00 19,557.06 2. Operating profit (“-” for loss) -987,262,322.66 444,304,112.65 Add: Non-operating income 1,708,572.98 14,841,432.79 Less: Non-operating expense 1,126,692.02 5,725,462.45 3. Profit before tax (“-” for loss) -986,680,441.70 453,420,082.99 Less: Income tax expense -240,955,012.03 -164,010,095.13 4. Net profit (“-” for net loss) -745,725,429.67 617,430,178.12 4.1 Net profit from continuing operations (“-” for net -745,725,429.67 617,430,178.12 loss) 4.2 Net profit from discontinued operations (“-” for net loss) 5. Other comprehensive income, net of tax 5,546,547.44 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 equity instruments 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 5,546,547.44 or loss 5.2.1 Share of other comprehensive income of 22 Konka Group Co., Ltd. Third Quarter Report 2019 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 4,296,185.76 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 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 1,250,361.68 currency-denominated financial statements 5.2.9 Other 6. Total comprehensive income -745,725,429.67 622,976,725.56 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 and rendering of 41,460,695,427.76 24,472,986,972.47 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 obtained Net increase in proceeds from repurchase transactions Net proceeds from acting trading of securities 23 Konka Group Co., Ltd. Third Quarter Report 2019 Tax rebates 596,940,645.18 312,128,742.81 Cash generated from other operating activities 2,810,409,063.92 2,865,828,267.19 Subtotal of cash generated from operating activities 44,868,045,136.86 27,650,943,982.47 Payments for commodities and services 42,633,289,918.22 24,117,693,794.31 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 1,354,791,311.98 1,235,221,504.02 Taxes paid 604,891,331.46 1,593,043,900.48 Cash used in other operating activities 2,847,652,417.14 3,601,969,084.22 Subtotal of cash used in operating activities 47,440,624,978.80 30,547,928,283.03 Net cash generated from/used in operating activities -2,572,579,841.94 -2,896,984,300.56 2. Cash flows from investing activities: Proceeds from disinvestment 222,405,975.50 45,531,154.28 Investment income 109,794,038.16 100,982,942.46 Net proceeds from disposal of fixed assets, intangible 123,083,476.75 1,851,025.13 assets and other long-lived assets Net proceeds from disposal of subsidiaries or other 90,801,480.11 141,294,742.26 business units Cash generated from other investing activities 1,757,416,878.42 1,392,285,000.00 Subtotal of cash generated from investing activities 2,303,501,848.94 1,681,944,864.13 Payments for acquisition of fixed assets, intangible assets 1,280,750,151.25 267,022,282.19 and other long-lived assets Payments for investments 1,236,659,360.00 450,546,156.00 Net increase in pledged loans granted Net payments for acquisition of subsidiaries and other 927,532,476.11 business units Cash used in other investing activities 800,033,420.00 774,880,000.00 Subtotal of cash used in investing activities 3,317,442,931.25 2,419,980,914.30 Net cash generated from/used in investing activities -1,013,941,082.31 -738,036,050.17 3. Cash flows from financing activities: Capital contributions received 316,350,268.17 189,790,594.60 24 Konka Group Co., Ltd. Third Quarter Report 2019 Including: Capital contributions by non-controlling 316,350,268.17 189,790,594.60 interests to subsidiaries Increase in borrowings obtained 21,816,836,119.64 11,340,498,767.13 Cash generated from other financing activities 662,446,627.50 1,023,076.93 Subtotal of cash generated from financing activities 22,795,633,015.31 11,531,312,438.66 Repayment of borrowings 15,301,413,298.24 6,369,248,011.05 Payments for interest and dividends 674,111,965.45 668,095,998.12 Including: Dividends paid by subsidiaries to 33,607,322.95 1,629,621.25 non-controlling interests Cash used in other financing activities 534,292,325.64 77,087,550.43 Subtotal of cash used in financing activities 16,509,817,589.33 7,114,431,559.60 Net cash generated from/used in financing activities 6,285,815,425.98 4,416,880,879.06 4. Effect of foreign exchange rate changes on cash and cash 7,020,688.15 22,282,446.23 equivalents 5. Net increase in cash and cash equivalents 2,706,315,189.88 804,142,974.56 Add: Cash and cash equivalents, beginning of the period 3,434,149,481.72 3,097,899,703.76 6. Cash and cash equivalents, end of the period 6,140,464,671.60 3,902,042,678.32 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 15,276,237,884.82 12,987,769,338.60 services Tax rebates 48,371,777.09 130,863,528.45 Cash generated from other operating activities 9,241,152,305.86 2,759,126,679.00 Subtotal of cash generated from operating activities 24,565,761,967.77 15,877,759,546.05 Payments for commodities and services 13,228,154,713.94 11,185,702,814.55 Cash paid to and for employees 538,054,123.81 713,115,942.78 Taxes paid 44,781,446.37 1,158,672,182.51 Cash used in other operating activities 10,978,851,545.86 3,967,958,429.50 Subtotal of cash used in operating activities 24,789,841,829.98 17,025,449,369.34 Net cash generated from/used in operating activities -224,079,862.21 -1,147,689,823.29 2. Cash flows from investing activities: Proceeds from disinvestment 166,685,882.00 224,007,998.00 Investment income 96,058,958.81 111,276,583.85 Net proceeds from disposal of fixed assets, intangible 255,200.79 172,255.79 25 Konka Group Co., Ltd. Third Quarter Report 2019 assets and other long-lived assets Net proceeds from disposal of subsidiaries or other business units Cash generated from other investing activities 777,615,551.82 1,564,279,083.79 Subtotal of cash generated from investing activities 1,040,615,593.42 1,899,735,921.43 Payments for acquisition of fixed assets, intangible assets 59,662,429.02 72,123,850.33 and other long-lived assets Payments for investments 703,450,000.00 2,022,767,387.50 Net payments for acquisition of subsidiaries and other business units Cash used in other investing activities 5,137,623,500.00 922,780,798.39 Subtotal of cash used in investing activities 5,900,735,929.02 3,017,672,036.22 Net cash generated from/used in investing activities -4,860,120,335.60 -1,117,936,114.79 3. Cash flows from financing activities: Capital contributions received Increase in borrowings obtained 11,517,566,793.66 4,899,799,364.16 Cash generated from other financing activities 2,500,000.00 Subtotal of cash generated from financing activities 11,520,066,793.66 4,899,799,364.16 Repayment of borrowings 4,960,897,423.76 1,502,962,221.73 Payments for interest and dividends 561,130,301.68 640,026,892.15 Cash used in other financing activities 10,922,037.42 435,233,291.92 Subtotal of cash used in financing activities 5,532,949,762.86 2,578,222,405.80 Net cash generated from/used in financing activities 5,987,117,030.80 2,321,576,958.36 4. Effect of foreign exchange rate changes on cash and cash -10,762,185.92 -41,200,286.25 equivalents 5. Net increase in cash and cash equivalents 892,154,647.07 14,750,734.03 Add: Cash and cash equivalents, beginning of the period 1,497,794,555.85 1,743,269,944.67 6. Cash and cash equivalents, end of the period 2,389,949,202.92 1,758,020,678.70 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 Consolidated Balance Sheet Unit: RMB Item 31 December 2018 1 January 2019 Adjusted Current assets: 26 Konka Group Co., Ltd. Third Quarter Report 2019 Monetary capital 4,348,144,129.53 4,348,144,129.53 Trading financial assets Inapplicable 66,959,651.89 66,959,651.89 Financial assets at fair value through 5,464,984.92 Inapplicable -5,464,984.92 profit or loss Notes receivable 3,329,711,954.15 3,136,050,327.88 -193,661,626.27 Accounts receivable 4,458,053,586.42 4,457,458,904.32 -594,682.10 Accounts receivable financing Inapplicable 193,661,626.27 193,661,626.27 Prepayments 1,036,979,167.56 1,036,979,167.56 Other receivables 410,804,180.50 408,514,607.98 -2,289,572.52 Including: Interest receivable 4,059,682.40 4,059,682.40 Dividends receivable 547,848.62 547,848.62 Inventories 5,487,605,227.05 5,487,605,227.05 Current portion of non-current assets 22,318,208.13 22,318,208.13 Other current assets 2,744,216,141.98 2,744,216,141.98 Total current assets 21,843,297,580.24 21,901,907,992.59 58,610,412.35 Non-current assets: Available-for-sale financial assets 633,664,881.33 Inapplicable -633,664,881.33 Long-term receivables 390,793,038.05 390,793,038.05 Long-term equity investments 2,637,780,825.53 2,637,780,825.53 Investments in other equity Inapplicable 23,940,214.36 23,940,214.36 instruments Other non-current financial assets Inapplicable 548,230,000.00 548,230,000.00 Investment property 210,824,355.72 210,824,355.72 Fixed assets 2,410,226,495.81 2,410,226,495.81 Construction in progress 2,176,871,530.80 2,176,871,530.80 Intangible assets 737,776,686.34 737,776,686.34 Goodwill 855,691,423.75 855,691,423.75 Long-term prepaid expense 111,223,426.77 111,223,426.77 Deferred income tax assets 639,433,954.30 639,433,954.30 Other non-current assets 337,477,690.39 337,477,690.39 Total non-current assets 11,141,764,308.79 11,080,269,641.82 -61,494,666.97 Total assets 32,985,061,889.03 32,982,177,634.41 -2,884,254.62 Current liabilities: Short-term borrowings 13,884,132,931.63 13,884,132,931.63 Trading financial liabilities Inapplicable 2,459,603.25 2,459,603.25 27 Konka Group Co., Ltd. Third Quarter Report 2019 Financial liabilities at fair value 2,459,603.25 Inapplicable -2,459,603.25 through profit or loss Notes payable 862,330,689.47 862,330,689.47 Accounts payable 4,362,723,050.33 4,362,723,050.33 Advances from customers 723,227,529.20 723,227,529.20 Payroll payable 376,506,567.71 376,506,567.71 Taxes payable 288,004,192.44 288,004,192.44 Other payables 2,024,657,277.74 2,024,657,277.74 Including: Interest payable 27,230,631.41 27,230,631.41 Current portion of non-current 151,792,404.13 151,792,404.13 liabilities Total current liabilities 22,675,834,245.90 22,675,834,245.90 Non-current liabilities: Long-term borrowings 445,000,000.00 445,000,000.00 Long-term payables 128,374,597.41 128,374,597.41 Long-term payroll payable 8,792,614.98 8,792,614.98 Provisions 21,772,898.37 21,772,898.37 Deferred income 112,899,128.24 112,899,128.24 Deferred income tax liabilities 141,020,093.34 141,020,093.34 Total non-current liabilities 857,859,332.34 857,859,332.34 Total liabilities 23,533,693,578.24 23,533,693,578.24 Owners’ equity: Share capital 2,407,945,408.00 2,407,945,408.00 Capital reserves 208,356,624.21 208,356,624.21 Other comprehensive income -10,538,219.08 -10,538,219.08 Surplus reserves 1,227,564,785.19 1,227,564,785.19 Retained earnings 4,271,408,192.21 4,268,523,937.59 -2,884,254.62 Total equity attributable to owners of the 8,104,736,790.53 8,101,852,535.91 -2,884,254.62 Company as the parent Non-controlling interests 1,346,631,520.26 1,346,631,520.26 Total owners’ equity 9,451,368,310.79 9,448,484,056.17 -2,884,254.62 Total liabilities and owners’ equity 32,985,061,889.03 32,982,177,634.41 -2,884,254.62 Notes for adjustment The Company has implemented the New Financial Instrument Standard since January 1, 2019, respectively measured “financial assets at fair value through profit or loss” as “financial assets held for trading”, measured “available-for-sale financial assets” as 28 Konka Group Co., Ltd. Third Quarter Report 2019 “financial assets held for trading” , “other non-current financial assets” and “other equity instrument”, measured “notes measured at the fair value with its changes included into other comprehensive income” as “accounts receivable financing”, measured “financial liabilities at fair value through profit or loss” as “trading financial liabilities”. According to the convergence rules of the New Financial Instrument Standards, the Company does not need to restate the previous comparables, and the information presented in the financial statements is not inconsistent with the requirements of the new standard. The difference between the original book value of the financial instrument and the new book value on the date of implementation of the standard is included in the retained earnings at the beginning of 2019. Balance Sheet of the Company as the Parent Unit: RMB Item 31 December 2018 1 January 2019 Adjusted Current assets: Monetary capital 2,124,335,536.69 2,124,335,536.69 Trading financial assets Inapplicable 66,959,651.89 66,959,651.89 Financial assets at fair value through 5,464,984.92 Inapplicable -5,464,984.92 profit or loss Notes receivable 2,181,466,683.90 2,181,166,683.90 -300,000.00 Accounts receivable 7,427,246,429.42 7,426,742,836.53 -503,592.89 Accounts receivable financing Inapplicable 300,000.00 300,000.00 Prepayments 1,019,335,571.49 1,019,335,571.49 Other receivables 6,667,463,126.57 6,665,839,214.30 -1,623,912.27 Including: Interest receivable 5,769,663.24 5,769,663.24 Inventories 254,225,716.41 254,225,716.41 Other current assets 77,249,216.99 77,249,216.99 Total current assets 19,756,787,266.39 19,816,154,428.20 59,367,161.81 Non-current assets: Available-for-sale financial assets 326,164,881.33 Inapplicable -326,164,881.33 Long-term equity investments 6,182,962,034.71 6,182,962,034.71 Investments in other equity Inapplicable 14,440,214.36 14,440,214.36 instruments Other non-current financial assets Inapplicable 250,230,000.00 250,230,000.00 Investment property 210,824,355.72 210,824,355.72 Fixed assets 462,721,018.30 462,721,018.30 29 Konka Group Co., Ltd. Third Quarter Report 2019 Construction in progress 157,356,696.30 157,356,696.30 Intangible assets 83,593,959.11 83,593,959.11 Long-term prepaid expense 80,388,949.97 80,388,949.97 Deferred income tax assets 516,879,201.66 516,879,201.66 Other non-current assets 20,000,000.00 20,000,000.00 Total non-current assets 8,040,891,097.10 7,979,396,430.13 -61,494,666.97 Total assets 27,797,678,363.49 27,795,550,858.33 -2,127,505.16 Current liabilities: Short-term borrowings 8,179,564,987.70 8,179,564,987.70 Trading financial liabilities Inapplicable 2,459,603.25 2,459,603.25 Financial liabilities at fair value 2,459,603.25 Inapplicable -2,459,603.25 through profit or loss Notes payable 3,513,157,955.43 3,513,157,955.43 Accounts payable 6,477,055,955.65 6,477,055,955.65 Advances from customers 306,650,717.69 306,650,717.69 Payroll payable 146,199,496.44 146,199,496.44 Taxes payable 10,913,871.30 10,913,871.30 Other payables 2,011,494,378.65 2,011,494,378.65 Including: Interest payable 24,158,666.48 24,158,666.48 Current portion of non-current 40,000,000.00 40,000,000.00 liabilities Total current liabilities 20,687,496,966.11 20,687,496,966.11 Non-current liabilities: Long-term borrowings 245,000,000.00 245,000,000.00 Provisions 206,591.51 206,591.51 Deferred income 75,705,476.93 75,705,476.93 Deferred income tax liabilities 751,345.42 751,345.42 Total non-current liabilities 321,663,413.86 321,663,413.86 Total liabilities 21,009,160,379.97 21,009,160,379.97 Owners’ equity: Share capital 2,407,945,408.00 2,407,945,408.00 Capital reserves 114,018,066.79 114,018,066.79 Other comprehensive income -1,182,217.31 -1,182,217.31 Surplus reserves 1,227,564,785.19 1,227,564,785.19 Retained earnings 3,040,171,940.85 3,038,044,435.69 -2,127,505.16 30 Konka Group Co., Ltd. Third Quarter Report 2019 Total owners’ equity 6,788,517,983.52 6,786,390,478.36 -2,127,505.16 Total liabilities and owners’ equity 27,797,678,363.49 27,795,550,858.33 -2,127,505.16 Notes for adjustment The Company has implemented the New Financial Instrument Standard since January 1, 2019, respectively measured “financial assets at fair value through profit or loss” as “financial assets held for trading”, measured “available-for-sale financial assets” as “financial assets held for trading” , “other non-current financial assets” and “other equity instrument”, measured “notes measured at the fair value with its changes included into other comprehensive income” as “accounts receivable financing”, measured “financial liabilities at fair value through profit or loss” as “trading financial liabilities”. According to the convergence rules of the New Financial Instrument Standards, the Company does not need to restate the previous comparables, and the information presented in the financial statements is not inconsistent with the requirements of the new standard. The difference between the original book value of the financial instrument and the new book value on the date of implementation of the standard is included in the retained earnings at the beginning of 2019. 2. Retrospective Restatement of Previous Comparative Data due to the First of any New Standards Governing Financial Instruments or Leases from 2019 □ Applicable √ Not applicable 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. The Board of Directors Konka Group Co., Ltd. 30 October 2019 31