The Third Quarterly Report 2016 Chongqing Jianshe Motorcycle Co., Ltd. The Third Quarterly Report 2016 2016-069 October 2016 1 The Third Quarterly Report 2016 1 Important notes The Board of Directors,the Supervisory Committee, the directors, the supervisors, and executives of the Company guarantee that there are no significant omissions, fictitious or misleading statements carried in the Quarterly Report and we will accept individual and joint responsibilities for the truthfulness, accuracy and completeness of the Quarterly Report. All of the directors presented the board meeting at which this Quarterly Report was examined. Mr. Lv Hongxian, The Company Leader, Mr. Xue Gangyi , Chief financial officer and the Mr.Niu Yanli, the person in charge of the accounting department (the person in charge of the accounting )hereby confirm the authenticity and completeness of the financial report enclosed in the report. 2 The Third Quarterly Report 2016 II.Main financial data and changes of shareholders I.Main accounting data and financial Index Whether it has retroactive adjustment or re-statement on previous accounting data for accounting policy changed and accounting error correction or not. □ Yes √ No As at the end of the reporting Changed (%)over end of As at the end of last year period prev. year Gross assets(RMB) 1,520,304,198.03 1,550,615,831.44 -1.95% Net assets attributable to the shareholders of the listed company 268,932,994.54 256,116,085.51 5.00% (RMB) Increase/decrease over Between beginning of Changed (%)over Reporting period the same period of last the year to the end of end of prev. year year(%) the report period Operating income(RMB) 222,817,415.03 -26.70% 690,994,706.91 -32.49% Net profit attributable to the shareholders of the listed company 4,314,063.61 -106.65% 12,816,909.03 -109.44% (RMB) Net profit after deducting of non-recurring gain/loss attributable 5,164,583.47 -107.13% 13,526,390.29 -109.38% to the shareholders of listed company(RMB) Cash flow generated by business -- -- 96,516,647.75 -13,380.65% operation, net(RMB) Basic earning per 0.0361 58.00% 0.1074 124.50% share(RMB/Share) Diluted gains per 0.0361 58.00% 0.1074 124.50% share(RMB/Share)(RMB/Share) Weighted average income/asset 1.64% -126.70% 4.88% -263.61% ratio(%) In RMB Amount (Year-beginning to Items Notes the end of the report period.) Government subsidy recognized in current gain and loss(excluding those closely related to the Company’s business 509,200.00 and granted under the state’s policies) Other non-business income and expenditures other than the above -1,218,681.26 3 The Third Quarterly Report 2016 Total -709,481.26 -- For the Company’s non-recurring gain/loss items as defined in the Explanatory Announcement No.1 on information disclosure for Companies Offering their Securities to the Public-Non-recurring Gains and Losses and its non-recurring gain/loss items as illustrated in the Explanatory Announcement No.1 on information Disclosure for Companies offering their securities to the public-non-recurring Gains and losses which have been defined as recurring gains and losses, it is necessary to explain the reason. □ Applicable√ Not applicable None of Non-recurring gain /loss items recognized as recurring gain /loss/items as defined by the information disclosure explanatory Announcement No.1- Non –recurring gain/loss in the report period. II.Total Shareholders and Shares Held by Top Ten Shareholders at the End of the Reporting Period 1. About Total Common Shareholders, Total Preference Shareholders with the Voting Power Recovered and the Shares Held by Top Ten Common Shareholders In shares Total preference shareholders Total number of common with the voting power 8,376 0 shareholders at the period-end recovered at the end of the reporting period(if any) Shares held by the top 10 shareholders Amount of Pledging or Properties of Share tradable shares freezing Shareholder name Quantity shareholder proportion % with Conditional Status of Quantit held the shares y Chongqing Jianshe Mechanical and State-owned legal 71.13% 84,906,250 84,906,250 Electric Co., Ltd person Domestic natural Gu Zuocheng 1.86% 2,218,750 2,218,750 person Domestic Anhui Hengsheng Economic non-state-owned 1.47% 1,750,000 1,750,000 Development Group Co., Ltd. legal person Domestic natural Feng Yonghui 0.42% 500,000 500,000 person Domestic natural Liu Dan 0.88% 1,054,001 0 person Overseas natural Yu Lingfeng 0.52% 620,621 0 person Domestic natural Chen Xinqiang 0.51% 612,400 0 person Domestic natural Xu Yuanhui 0.51% 610,789 0 person Xie Qingjun Domestic natural 0.51% 606,650 0 4 The Third Quarterly Report 2016 person GUOTAI JUNAN Overseas legal SECURITIES(HONGKONG) 0.45% 538,988 0 person LIMITED Shares held by the Top 10 Shareholders of Non-restricted shares Number of the non-restricted Share type Shareholders’ Names shares held Share type Quantity Foreign shares Liu Dan 1,054,001 placed in domestic 1,054,001 exchange Foreign shares Yu Lingfeng 620,621 placed in domestic 620,621 exchange Foreign shares Chen Xinqiang 612,400 placed in domestic 612,400 exchange Foreign shares Xu Yuanhui 610,789 placed in domestic 610,789 exchange Foreign shares Xie Qingjun 606,650 placed in domestic 606,650 exchange Foreign shares GUOTAI JUNAN SECURITIES(HONGKONG) 538,988 placed in domestic 538,988 LIMITED exchange Foreign shares Zhang Meilan 513,560 placed in domestic 513,560 exchange Foreign shares CREDIT SUISSE (HONG KONG) LIMITED 489,160 placed in domestic 489,160 exchange Foreign shares Feng Yongxia 378,575 placed in domestic 378,575 exchange Foreign shares Chen Houping 333,411 placed in domestic 333,411 exchange There isn‘t any associated relationship between the sponsoring Explanation on associated relationship among the shareholder and the other shareholders among the top-10 list. None of aforesaid shareholders them are regarded as Acting in concert‘ in accordance with The rules 5 The Third Quarterly Report 2016 of information disclosure on change of shareholding.‘ Foreign shareholders are unknown for their condition of Associated relationship‘ and Acting in concert‘. Agreed re-purchasing by the Company’s top 10 shareholders of common shares and top 10 shareholders of unconditional common shares in the report period □ Yes √ No No agreed re-purchasing is performed by the Company’s shareholders in the report period. 2.Total number of preferred shareholders and shareholding of top 10 preferred shareholders by the end of the report period □ Applicable√ Not applicable 6 The Third Quarterly Report 2016 III. Significant Issues I. Major changes of main accounting statement items and financial indicators in the reporting period, as well as reasons for the changes √ Applicable □ Not applicable Major financial indicators of the Company changed significantly with the same period of last year, mainly due to the reorganization of the Company in the year of 2015, and the consolidation scope of the current period changed (including motorcycle business in the previous period). II. The progress of significant events and influence, as well as the analysis and explanation on resolving proposal. √ Applicable □ Not applicable The progress and explanation of the debt transfer of financial institutions involved in major assets reorganization in FY2015 are detailed in point 9 of this report. III. Commitments finished in implementation by the Company, shareholders, actual controller, acquirer, directors, supervisors, senior executives or other related parties in the reporting period and commitments unfinished in implementation at the end of the reporting period √ Applicable □ Not applicable Time of Commitmen making Period of Commitment Type Contents Fulfillment t maker commitme commitment nt Commitment on share reform Commitment in the acquisition report or the report on equity changes The reason why listed companies offer external guarantee is that the conditioning company, as the subsidiary corporation of Jianshe stock , After the provided credit guarantee 186 million yuan for guarantee its parent company’ bank loan. And as the Jianshe period relevant liabilities of Jianshe stock’s motorbike Mechanical stipulated in Commitment made business has been transferred into Jianshe and October the contract Under upon the assets Mechanical and Electrical , corresponding Electrical , 20,2015 expires, the Fulfillment replacement secured party should be Jianshe Mechanical and Air-conditio above Electrical .Moreover,Jianshe Stock provided ner Co financing credit guarantee 30 million yuan for the assurance will wholly-owned subsidiary,the sales company, be lifted after this transaction, Jianshe Mechanical and Electrical ,whose’ sales company is subsidiary Jianshe Mechanical and Electrical , will be 7 The Third Quarterly Report 2016 wholly-owned subsidiaries under Military Equipment Group control.Above-mentioned the guarantees formed the external guarantees of the conditioning company, which has gained the permission from the company’s general meeting of stockholders. Jianshe stock and the conditioning company has made promise respectively on October 20, 2015,after guarantee expires in the guarantee period, above financing guarantee will be lifted . For the Jianshe stock’s guarantee for the sales company, Mechanical and Electrical has promised that it will ensure the debtor to repay its creditors to protect listed company’s legal interests, and if there are any loss for the listed company,Jianshed Mechanical and Electrical will give first dollar coverage for Jianshe stock. And Jianshe Mechanical and Electrical has presented Commitment to provide counter guarantee after the reorganization about above related-party guarantee.1, after the sales of substantial assets and the relevant matters of related-party guarantee provided by Jianshe stock, which has been approved by general meeting of stockholders of Jianshe stock the company will provide the equal counter guarantee for Jianshe stock 2.If the company violates the above pledge and caused any damages or negative effects for Jianshe stock, the Company will assume full financial responsibility and liability. Commitments made upon issuance Equity incentive commitment Other commitments made to minority shareholders Executed timely or not? Yes 8 The Third Quarterly Report 2016 IV.Prediction of Business performance for 2016 Estimation of accumulative net profit from the beginning of the year to the end of next report period to be loss probably or the warning of its material change compared with the corresponding period of the last year and explanation of reason. □ Applicable√ Not applicable V. Investment in securities □ Applicable √Not applicable No Securities investment in period VI. Investment in derivatives □ Applicable √Not applicable There is no derivative investment during the report period. VII. Registration form of such Activities as Reception, Research, Communication, Interview in the Reporting Period √Applicable □Not applicable Reception time Way of reception Types of visitors Basic index Q: What is the company's main business? A: After the Telephone company restructuring, the main business for the July 28,2016 Individual communication automotive air conditioning compressor production and sales. VIII. Outward Guarantee against the Regulations □ Applicable √ Not applicable The Company had no guarantee outside against the regulation in the reporting period. IX. Non-operational Occupancy of the Company’s Capital by the Controlling Shareholder and its Related Parties √ Applicable □Not applicable In RMB’0000 The total Shareholder The newly amount of Amount at Expected Expected Expected s or Time Amount at the increased reimbursem Reasons the end of repayment amount of amount of associates occupied beginning occupancy ent in the period method payment payment name amount reimbursem ent Financial Jianshe debt mechanical June restructur December 21,399.2 0 0 21,399.2 Other 21,399.2 and 30,2016 ing 31,2016 electrical process is not yet 9 The Third Quarterly Report 2016 complete d the procedure s for transferri ng formed Total 21,399.2 0 0 21,399.2 -- 21,399.2 -- The end of the latest issue of the total value of accounts audited net 80.87% assets ratio Relevant decision-making As below procedures The major assets restructuring in the company was put into practice after being reviewed and passed by the first extraordinary general meeting 2015 on November 17, 2015. The major assets restructuring stripped the major assets and debts involved in the motorcycle business off Jianshe Mechanical and Electric . and transferred them to Military Equipment Group. Wherein, the transferable financial institution debts totaled 807.50 million yuan. There were quite a big workload and a tight time schedule for the assets and debts transfer involved in this assets restructuring, and some financial institutions spent much time in approving the transfer procedure. Since so, by April 30, 2016, the debts transferred by financial institutions totaled 593.50 million yuan, and 214 million yuan of debts were still being transacted. I. The explanation on the risk of un-transferred financial institution debt was audited by Shu Lun Pan CPA Co., Ltd. By April 30, 2016, the un-transferred financial institution debt totaled 214,000,000 yuan and was processed as other receivables tentatively. According to the Add the current major shareholder Agreement on the Arrangement of Assets and Liabilities Injection signed between the and its affiliated non-operating company and Jianshe Electromechanical Co., Ltd. (as detailed in related Announcement on capital occupation reasons, the case Major Assets Restructuring disclosed on November 11, 2015 ), both parties should complete be held responsible and the Board the procedures for transferring assets and debts no later than December 31, 2016. As the has developed a description of aforementioned debts are un-matured, the company doesn’t need to pay and the financial measures taken. institution doesn’t press for payment, thus no capital flow has been formed. At the same time, there will no such circumstance where the company has to pay the debts on behalf of Jianshe Mechanical and Electric . The processing of this accounting doesn’t constitute the Chongqing Jianshe Mechanical and Electric ’s substantial possession of the company’s non-operating funds. To this end, the board of directors believes that the un-transferred financial institution debts are just a tentative processing of the company’s accounting and won’t pose any debt risk to the company. II. On top of the major assets restructuring, the company and Jianshe Mechanical and Electric . have been following the terms and conditions as set forth in Agreement on Arrangement of Assets and Liabilities Injection and carried out the assets and liabilities transfer work. The transfer of related assets and liabilities is to be completed before the expiry date December 31, 2016. During the period, if the creditor requires the company to pay off the debts, Jianshe Mechanical and Electric . shall pay the creditor directly or through 10 The Third Quarterly Report 2016 the company. If it must be performed by the company, Jianshe Mechanical and Electric shall bear all losses arising from the company’s paying the debts. Upon expiration, if the aforementioned debts are not transferred yet, Jianshe Mechanical and Electric will pay the company the un-transferred but due debts. Failed to explain measures planned liquidation of non-operating capital occupation reasons, conditions and Not applicable accountability of the Board of Directors proposed action Disclosure date for specific approval opinion on fund April 30,2016 occupation from CPA Disclosure index for specific Refer to www.cninfo.com.cn on April 30, 2016, Announcement No. 2016-041 ,Chongqing approval opinion on fund Jianshe Motorcycle Co., Ltd. the Statement of Special Auditing on Capital Appropriation by occupation from CPA Holding Shareholder or Related Parties 11 The Third Quarterly Report 2016 IV. Financial Statement I. Financial statement 1. Consolidated balance sheet Prepared by: Chongqing Jianshe Motorcycle Co., Ltd. September 30,2016 In RMB Items At the end of term Beginning of term Current asset: Monetary fund 308,003,344.06 302,660,758.76 Settlement provision Outgoing call loan Financial assets measured at fair value with variations accounted into current income account Derivative financial assets Bill receivable 37,741,056.54 47,008,704.63 Account receivable 233,195,292.87 217,759,208.43 Prepayments 28,731,478.56 9,309,626.86 Insurance receivable Reinsurance receivable Provisions of Reinsurance contracts receivable Interest receivable Dividend receivable Other account receivable 194,490,945.43 257,809,644.42 Repurchasing of financial assets Inventories 157,977,305.16 146,350,934.34 Assets held for sales Non-current asset due in 1 year Other current asset 963,125.94 5,430,548.06 Total of current assets 961,102,548.56 986,329,425.50 Non-current assets: Loans and payment on other’s behalf disbursed Disposable financial asset Expired investment in possess Long-term receivable 12 The Third Quarterly Report 2016 Long term share equity investment 82,290,861.72 83,381,316.13 Property investment Fixed assets 417,773,650.11 395,975,005.27 Construction in progress 2,438,832.43 40,435,429.90 Engineering material Fixed asset disposal 3,646.70 Production physical assets Gas & petrol Intangible assets 27,722,617.54 28,270,393.63 R & D petrol Goodwill Long-germ expenses to be amortized 2,835,214.45 3,926,091.85 Deferred income tax asset 1,819,643.46 1,819,643.46 Other non-current asset 24,317,183.06 10,478,525.70 Total of non-current assets 559,201,649.47 564,286,405.94 Total of assets 1,520,304,198.03 1,550,615,831.44 Current liabilities Short-term loans 182,000,000.00 217,000,000.00 Loan from Central Bank Deposit received and hold for others Call loan received Financial liabilities measured at fair value with variations accounted into current income account Derivative financial liabilities Bill payable 718,560,000.00 760,555,000.00 Account payable 188,162,123.00 75,885,325.83 Advance payment 2,813,654.20 1,401,319.97 Selling of repurchased financial assets Fees and commissions receivable Employees’ wage payable 4,584,422.52 1,654,497.94 Tax payable 17,234,089.22 16,857,642.89 Interest payable Dividend payable Other account payable 49,786,225.43 16,874,326.53 13 The Third Quarterly Report 2016 Reinsurance fee payable Insurance contract provision Entrusted trading of securities Entrusted selling of securities Liabilities held for sales Non-current liability due in 1 year 11,100,000.00 75,000,000.00 Other current liability Total of current liability 1,174,240,514.37 1,165,228,113.16 Non-current liabilities: Long-term loan 75,890,000.00 128,490,000.00 Bond payable Including:preferred stock Sustainable debt Long-term payable Long-term payable employees’s remuneration Special payable Expected liabilities Deferred income Deferred income tax liability Other non-current liabilities Total non-current liabilities 75,890,000.00 128,490,000.00 Total of liability 1,250,130,514.37 1,293,718,113.16 Owners’ equity Share capital 119,375,000.00 119,375,000.00 Other equity instrument Including:preferred stock Sustainable debt Capital reserves 958,575,094.29 958,575,094.29 Less:Shares in stock Other comprehensive income Special reserves Surplus reserves 125,686,000.00 125,686,000.00 Common risk provision Undistributed profit -934,703,099.75 -947,520,008.78 14 The Third Quarterly Report 2016 Total of owner’s equity belong to the parent company 268,932,994.54 256,116,085.51 Minority shareholders’ equity 1,240,689.12 781,632.77 Total of owners’ equity 270,173,683.66 256,897,718.28 Total of liabilities and owners’ equity 1,520,304,198.03 1,550,615,831.44 Legal Representative: Li Huaguang Person in charge of accounting:Xue Gangyi Accounting Dept Leader:Niu Yanli 2.Parent Company Balance Sheet In RMB Items Year-end balance Year-beginning balance Current asset: Monetary fund 94,398,778.22 47,345,832.30 Financial assets measured at fair value with variations accounted into current income account Derivative financial assets Bill receivable 0.00 2,000,000.00 Account receivable 514,369.84 527,570.36 Prepayments 24,340,733.54 Interest receivable Dividend receivable Other account receivable 177,605,598.09 253,605,619.11 Inventories Assets held for sales Non-current asset due in 1 year Other current asset Total of current assets 296,859,479.69 303,479,021.77 Non-current assets: Disposable financial asset Expired investment in possess Long-term receivable Long term share equity investment 250,450,861.72 251,541,316.13 Property investment Fixed assets 174,471,138.07 183,278,272.00 Construction in progress Engineering material 15 The Third Quarterly Report 2016 Fixed asset disposal 3,646.70 Production physical assets Gas & petrol Intangible assets 15,948,231.58 16,261,765.57 R & D petrol Goodwill Long-germ expenses to be amortized Differed income tax asset Other non-current asset Total of non-current assets 440,873,878.07 451,081,353.70 Total of assets 737,733,357.76 754,560,375.47 Current liabilities Short-term loans 25,000,000.00 Financial liabilities measured at fair value with variations accounted into current income account Derivative financial liabilities Bill payable 142,850,000.00 152,850,000.00 Account payable 136,224,291.97 42,646,214.18 Advance payment 688,915.52 220,124.53 Employees’ wage payable 46,526.80 58,886.32 Tax payable 16,043,369.00 15,268,307.65 Interest payable Dividend payable Other account payable 249,604,987.53 216,034,017.49 Liabilities held for sales Non-current liability due in 1 year 67,000,000.00 Other current liability Total of current liability 545,458,090.82 519,077,550.17 Non-current liabilities: Long-term loan 47,000,000.00 Bond payable Including:preferred stock Sustainable debt Long-term payable 16 The Third Quarterly Report 2016 Employees’ wage Long-term payable Special payable Expected liabilities Differed income Differed income tax liability Other non-current liabilities Total of Non-current liabilities 47,000,000.00 Total of liability 545,458,090.82 566,077,550.17 Owners’ equity Share capital 119,375,000.00 119,375,000.00 Other equity instrument Including:preferred stock Sustainable debt Capital reserves 958,575,094.29 958,575,094.29 Less:Shares in stock Other comprehensive income Special reserves Surplus reserves 125,686,000.00 125,686,000.00 Undistributed profit -1,011,360,827.35 -1,015,153,268.99 Total of owners’ equity 192,275,266.94 188,482,825.30 Total of liabilities and owners’ equity 737,733,357.76 754,560,375.47 3.Consolidated Profit statement of the Report period In RMB Items Amount in this period Amount in last period I. Income from the key business 222,817,415.03 303,960,771.84 Incl:Business income 222,817,415.03 303,960,771.84 Interest income Insurance fee earned Fee and commission received II. Total business cost 218,422,951.76 385,173,101.80 Incl:Business cost 183,064,974.53 316,739,370.82 Interest expense 17 The Third Quarterly Report 2016 Fee and commission paid Insurance discharge payment Net claim amount paid Insurance policy dividend paid Insurance policy dividend paid Reinsurance expenses Business tax and surcharge 1,085,900.55 931,709.29 Sales expense 5,799,954.26 13,015,778.80 Administrative expense 18,872,595.80 30,827,522.19 Financial expenses 9,619,526.62 14,734,547.63 Asset impairment loss -20,000.00 8,924,173.07 Add:Gains from change of fir value (“-”for loss) Investment gain(“-”for loss) 1,093,108.89 10,717,367.10 Incl: investment gains from affiliates 1,093,108.89 10,717,367.10 Gains from currency exchange(“-”for loss) III. Operational profit(“-”for loss 5,487,572.16 -70,494,962.86 Add:Non-business income 68,550.00 7,595,741.57 Incl:Gains from disposal of non-current assets Less:Non business expenses 919,069.86 29,752.43 Incl:Loss from disposal of non-current assets 0.00 181,477.86 IV.Total profit(“-”for loss) 4,637,052.30 -62,928,973.72 Less:Income tax expenses 141,278.43 1,900,237.21 V. Net profit(“-”for net loss 4,495,773.87 -64,829,210.93 Net profit attributable to the owners of parent company 4,314,063.61 -64,918,870.00 Minority shareholders’ equity 181,710.26 89,659.07 VI. Net after-tax of Other comprehensive income Net after-tax of other comprehensive income attributable to owners o f the parent company. (I)Other comprehensive income items that will not be reclassified into gains/losses in the subsequent accounting period 1.Re-measurement of defined benefit plans of changes i n net debt or net assets 2.Other comprehensive income under the equity method 18 The Third Quarterly Report 2016 investee can not be reclassified into profit or loss. (II) Other comprehensive income that will be reclassified in to profit or loss. 1.Other comprehensive income under the equity method investee can be reclassified into profit or loss. 2.Gains and losses from changes in fair value available for sale financial assets 3.Held-to-maturity investments reclassified to gains and losses of available for sale financial assets 4.The effective portion of cash flow hedges and losses 5.Translation differences in currency financial statemen ts 6.Other Net after-tax of other comprehensive income attributable to Minority shareholders’ equity VII. Total comprehensive income 4,495,773.87 -64,829,210.93 Total comprehensive income attributable to the owner 4,314,063.61 -64,918,870.00 of the parent company Total comprehensive income attributable minority 181,710.26 89,659.07 shareholders VIII. Earnings per share (I)Basic earnings per share 0.0361 -0.5438 (II)Diluted earnings per share 0.0361 -0.5438 The current business combination under common control, the net profits of the combined party before achieved net profit of RMB 0, last period the combined party realized RMB 0. Legal Representative: Li Huaguang Person in charge of accounting:Xue Gangyi Accounting Dept Leader:Niu Yanli In RMB Items Amount in this period Amount in last period I. Income from the key business 147,553,938.73 253,400,150.07 Incl:Business cost 141,127,285.79 273,182,721.40 Business tax and surcharge 173,473.33 Sales expense 0.00 2,331,938.33 Administrative expense 5,335,796.83 19,375,786.54 Financial expenses 6,722,965.25 12,165,490.62 19 The Third Quarterly Report 2016 Asset impairment loss -6,659.35 Add:Gains from change of fir value (“-”for loss) Investment gain(“-”for loss) 1,093,108.89 10,717,367.10 Incl: investment gains from affiliates 1,093,108.89 10,717,367.10 II. Operational profit(“-”for loss -4,712,473.58 -42,931,760.37 Add:Non-business income 0.00 3,860,227.05 Incl:Gains from disposal of non-current assets Less:Non business expenses 206,980.01 -36,843.81 Incl:Loss from disposal of non-current assets -3,983.84 143,592.74 III.Total profit(“-”for loss) -4,919,453.59 -39,034,689.51 Less:Income tax expenses IV. Net profit(“-”for net loss) -4,919,453.59 -39,034,689.51 V. Net after-tax of Other comprehensive income (I)Other comprehensive income items that will not be reclassified into gains/losses in the subsequent accounting period 1.Re-measurement of defined benefit plans of changes i n net debt or net assets 2.Other comprehensive income under the equity method investee can not be reclassified into profit or loss. (II) Other comprehensive income that will be reclassified in to profit or loss. 1.Other comprehensive income under the equity method investee can be reclassified into profit or loss. 2.Gains and losses from changes in fair value available for sale financial assets 3.Held-to-maturity investments reclassified to gains and losses of available for sale financial assets 4.The effective portion of cash flow hedges and losses 5.Translation differences in currency financial statemen ts 6.Other VI. Total comprehensive income -4,919,453.59 -39,034,689.51 VII. Earnings per share: (I)Basic earnings per share -0.0412 -0.3270 20 The Third Quarterly Report 2016 (II)Diluted earnings per share -0.0412 -0.3270 5. Consolidated income statement between the beginning of the year and end of the report period In RMB Items Amount in this period Amount in last period I. Total operating income 690,994,706.91 1,023,616,474.31 Including:Operating income 690,994,706.91 1,023,616,474.31 Interest income Insurance gained Commission charge and commission income II. Total operating cost 678,877,033.77 1,186,848,835.77 Including:Operating cost 577,517,121.86 952,851,489.63 Interest expense Commission chare and commission expense Cash surrender value Net amount of expense of compensation Net amount of withdrawal of insurance contract reserve Bonus expense of guarantee slip Reinsurance expense Operating tax and extras 2,585,384.56 2,668,741.97 Sales expenses 18,091,358.50 53,340,548.64 Administration expenses 55,317,550.82 102,376,126.30 Financial expenses 25,640,619.02 66,663,376.39 Losses of devaluation of assets -275,000.99 8,948,552.84 Add :Changing income of fair value Investment income 2,309,545.59 22,440,125.11 Including:Investment income on affiliate company and 2,309,545.59 22,440,125.11 joint venture Exchange income III. Operating profit 14,427,218.73 -140,792,236.35 Add :Non-operating income 528,059.47 8,838,065.55 Including :Disposal Gains of non-current assets Less:Non-operating expense 1,237,540.73 398,217.99 Including :Disposal loss of non-current assets 21 The Third Quarterly Report 2016 IV. Total profit 13,717,737.47 -132,352,388.79 Less:Income tax 441,772.09 3,235,847.30 V. Net profit(“-”for net loss 13,275,965.38 -135,588,236.09 Net profit attributable to the owners of parent company 12,816,909.03 -135,807,558.67 Minority shareholders’ equity 459,056.35 219,322.58 VI. Net after-tax of Other comprehensive income Net after-tax of other comprehensive income attributable to owners of t he parent company. (I)Other comprehensive income items that will not be reclassified into gains/losses in the subsequent accounting period 1.Re-measurement of defined benefit plans of changes i n net debt or net assets 2.Other comprehensive income under the equity method investee can not be reclassified into profit or loss. (II) Other comprehensive income that will be reclassified in to profit or loss. 1.Other comprehensive income under the equity method investee can be reclassified into profit or loss. 2.Gains and losses from changes in fair value available for sale financial assets 3.Held-to-maturity investments reclassified to gains and losses of available for sale financial assets 4.The effective portion of cash flow hedges and losses 5.Translation differences in currency financial statemen ts 6.Other Net after-tax of other comprehensive income attributable to Minority shareholders’ equity VII. Total comprehensive income 13,275,965.38 -135,588,236.09 Total comprehensive income attributable to the owner 12,816,909.03 -135,807,558.67 of the parent company Total comprehensive income attributable minority 459,056.35 219,322.58 shareholders 22 The Third Quarterly Report 2016 VIII. Earnings per share (I)Basic earnings per share 0.1074 -1.1377 (II)Diluted earnings per share 0.1074 -1.1377 The current business combination under common control, the net profits of the combined party before achieved net profit of RMB 0, last period the combined party realized RMB 0. 6.Income Statement of the Parent Between the Beginning of the Year and End of the Report Period In RMB Items Amount in this period Amount in last period I. Business income 484,378,257.16 808,197,594.02 Less:Business cost 454,677,557.06 816,874,207.57 Business tax and surcharge 415,033.77 139,356.48 Sales expense 0.00 8,010,371.37 Administrative expense 15,932,494.52 69,040,427.91 Financial expenses 11,636,598.79 39,216,626.81 Asset impairment loss 0.00 Add:Gains from change of fir value (“-”for loss) Investment gain(“-”for loss) 2,309,545.59 22,440,125.11 Incl: investment gains from affiliates 2,309,545.59 22,440,125.11 II. Operational profit 4,026,118.61 -102,643,271.01 Add:Non-business income 0.00 4,004,486.74 Incl:Gains from disposal of non-current assets Less:Non business expenses 233,676.97 253,118.79 Incl:Loss from disposal of non-current assets III.Total profit 3,792,441.64 -98,891,903.06 Less:Income tax expenses IV. Net profit) 3,792,441.64 -98,891,903.06 V. Net after-tax of Other comprehensive income (I)Other comprehensive income items that will not be reclassified into gains/losses in the subsequent accounting period 1.Re-measurement of defined benefit plans of changes i n net debt or net assets 2.Other comprehensive income under the equity method investee can not be reclassified into profit or loss. 23 The Third Quarterly Report 2016 (II) Other comprehensive income that will be reclassified in to profit or loss. 1.Other comprehensive income under the equity method investee can be reclassified into profit or loss. 2.Gains and losses from changes in fair value available for sale financial assets 3.Held-to-maturity investments reclassified to gains and losses of available for sale financial assets 4.The effective portion of cash flow hedges and losses 5.Translation differences in currency financial statemen ts 6.Other VI. Total comprehensive income 3,792,441.64 -98,891,903.06 VII. Earnings per share (I)Basic earnings per share 0.0318 -0.8284 (II)Diluted earnings per share 0.0318 -0.8284 7. Consolidated Cash Flow Statement Between the Beginning of the Year and End of the Report Period In RMB Items Amount in this period Amount in last period I.Cash flows from operating activities Cash received from sales of goods or rending of 386,715,875.32 598,068,277.35 services Net increase of customer deposits and capital kept for brother company Net increase of loans from central bank Net increase of inter-bank loans from other financial bodies Cash received against original insurance contract Net cash received from reinsurance business Net increase of client deposit and investment Net increase of trade financial asset disposal Cash received as interest, processing fee and commission Net increase of inter-bank fund received 24 The Third Quarterly Report 2016 Net increase of repurchasing business Tax returned 4,096,213.49 3,780,048.68 Other cash received from business operation 5,462,940.88 6,318,009.31 Sub-total of cash inflow 396,275,029.69 608,166,335.34 Cash paid for purchasing of merchandise and services 225,140,843.26 401,330,262.17 Net increase of client trade and advance Net increase of savings n central bank and brother company Cash paid for original contract claim Cash paid for interest, processing fee and commission Cash paid for policy dividend Cash paid to staffs or paid for staffs 41,620,535.78 121,917,568.87 Taxes paid 18,094,732.14 29,581,259.34 Other cash paid for business activities 14,902,270.76 56,063,991.47 Sub-total of cash outflow from business activities 299,758,381.94 608,893,081.85 Cash flow generated by business operation, net 96,516,647.75 -726,746.51 II.Cash flow generated by investing Cash received from investment retrieving Cash received as investment gains 3,400,000.00 34,500,000.00 Net cash retrieved from disposal of fixed assets, 1,745,492.45 intangible assets, and other long-term assets Net cash received from disposal of subsidiaries or other operational units Other investment-related cash received Sub-total of cash inflow due to investment activities 3,400,000.00 36,245,492.45 Cash paid for construction of fixed assets, intangible assets 18,303,266.82 36,266,477.05 and other long-term assets Cash paid as investment Net increase of loan against pledge Net cash received from subsidiaries and other operational units Other cash paid for investment activities Sub-total of cash outflow due to investment activities 18,303,266.82 36,266,477.05 Net cash flow generated by investment -14,903,266.82 -20,984.60 25 The Third Quarterly Report 2016 III.Cash flow generated by financing Cash received as investment Incl: Cash received as investment from minor shareholders Cash received as loans 222,500,000.00 676,790,000.00 Cash received from bond placing Other financing –related ash received 2,594,748,014.83 1,086,760,170.89 Sub-total of cash inflow from financing activities 2,817,248,014.83 1,763,550,170.89 Cash to repay debts 563,422,250.00 896,493,777.77 Cash paid as dividend, profit, or interests 48,675,476.70 74,235,157.05 Incl: Dividend and profit paid by subsidiaries to minor shareholders Other cash paid for financing activities 2,243,004,944.31 765,421,153.45 Sub-total of cash outflow due to financing activities 2,855,102,671.01 1,736,150,088.27 Net cash flow generated by financing -37,854,656.18 27,400,082.62 IV. Influence of exchange rate alternation on cash and 658,789.32 cash equivalents V.Net increase of cash and cash equivalents 43,758,724.75 27,311,140.83 Add: balance of cash and cash equivalents at the 23,643,515.81 35,555,585.06 beginning of term VI ..Balance of cash and cash equivalents at the end of 67,402,240.56 62,866,725.89 term 8. Cash Flow Statement of the Parent Between the Beginning of the Year and End of the Report Period In RMB Items Amount in this period Amount in last period I.Cash flows from operating activities Cash received from sales of goods or rending of 266,304,552.60 344,290,602.23 services Tax returned 1,694,201.68 Other cash received from business operation 212,255.47 1,644,115.23 Sub-total of cash inflow 266,516,808.07 347,628,919.14 Cash paid for purchasing of merchandise and services 141,139,796.29 388,155,888.23 Cash paid to staffs or paid for staffs 20,744,394.23 100,882,686.82 Taxes paid 9,134,547.24 4,250,158.05 26 The Third Quarterly Report 2016 Other cash paid for business activities 1,352,716.36 14,880,600.89 Sub-total of cash outflow from business activities 172,371,454.12 508,169,333.99 Cash flow generated by business operation, net 94,145,353.95 -160,540,414.85 II.Cash flow generated by investing Cash received from investment retrieving Cash received as investment gains 3,400,000.00 34,500,000.00 Net cash retrieved from disposal of fixed assets, 98,316.45 intangible assets, and other long-term assets Net cash received from disposal of subsidiaries or other operational units Other investment-related cash received Sub-total of cash inflow due to investment activities 3,400,000.00 34,598,316.45 Cash paid for construction of fixed assets, intangible assets 450,000.00 3,089,458.19 and other long-term assets Cash paid as investment Net cash received from subsidiaries and other operational units Other cash paid for investment activities Sub-total of cash outflow due to investment activities 450,000.00 3,089,458.19 Net cash flow generated by investment 2,950,000.00 31,508,858.26 III.Cash flow generated by financing Cash received as investment Cash received as loans 202,500,000.00 487,300,000.00 Cash received from bond placing Other financing –related ash received 2,240,343,234.49 1,611,596,145.98 Sub-total of cash inflow from financing activities 2,442,843,234.49 2,098,896,145.98 Cash to repay debts 468,800,000.00 587,000,000.00 Cash paid as dividend, profit, or interests 33,720,624.57 44,687,461.87 Other cash paid for financing activities 1,990,368,105.00 1,352,193,593.00 Sub-total of cash outflow due to financing activities 2,492,888,729.57 1,983,881,054.87 Net cash flow generated by financing -50,045,495.08 115,015,091.11 IV. Influence of exchange rate alternation on cash and 0.00 cash equivalents V.Net increase of cash and cash equivalents 47,049,858.87 -14,016,465.48 27 The Third Quarterly Report 2016 Add: balance of cash and cash equivalents at the 4,486,524.01 22,292,965.15 beginning of term VI ..Balance of cash and cash equivalents at the end of 51,536,382.88 8,276,499.67 term II. Auditor‘s report Whether the Q3 report is audited □ Yes √ No The Q3 Report is not audited. 28