The Third Quarterly Report 2016 Guangdong Provincial Expressway Development Co.,Ltd. The Third Quarterly Report 2016 October 2016 1 The Third Quarterly Report 2016 I. Important Notice The Board of Directors and the Supervisory Committee of the Company and its directors, supervisors and senior executives should guarantee the reality, accuracy and completion of the quarterly report, there are no any fictitious statements, misleading statements or important omissions carried in this report , and shall take legal responsibilities, individual and /or joint. All of the directors presented the board meeting at which this Quarterly Report was examined. Mr. Zheng Renfa, Person in charge of the Company, Mr.Wang Chunhua ,General Manager, Mr. Fang Zhi, Chief of the accounting work, Ms.Zhou Fang, Chief of the accounting organ (chief of accounting ) hereby confirm the authenticity and completeness of the financial report enclosed in this report. II. Main financial data and changes of shareholders I. Main financial 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 Changes of this period over same As at the end of the As at the end of last year period of last year reporting period (%) Before adjustment After adjustment After adjustment Gross assets(RMB) 16,342,858,120.71 12,110,281,652.65 15,126,912,516.70 8.04% Net assets attributable to the shareholders of the listed 8,056,958,981.93 5,048,500,361.61 5,855,404,300.43 37.60% company(RMB) Increase/decrease Between beginning over the same of the year to the Changed (%)over Reporting period period of last year end of the report end of prev. year (%) period Operating income(RMB) 741,459,581.99 3.82% 2,074,951,761.76 5.63% Net profit attributable to the shareholders of the listed 291,476,074.93 26.15% 797,375,219.22 39.91% company(RMB) Net profit after deducting of 290,837,468.16 31.89% 647,719,183.00 44.40% 2 The Third Quarterly Report 2016 non-recurring gain/loss attributable to the shareholders of listed company(RMB) Cash flow generated by business operation, net -- -- 1,476,195,616.68 10.88% (RMB) Basic earning per 0.14 7.69% 0.43 30.30% share(RMB/Share) Diluted gains per share(RMB/Share)(RMB/Sha 0.14 7.69% 0.43 30.30% re) Weighted average 3.53% -0.74% 11.92% 1.62% income/asset ratio(%) Note 1. On the table over the same period last year (before adjusting) performance for the company implementation of a major reorganization of assets before the third Quarterly report 2016 semi annual report to disclose data; over the same period last year (adjusted) data of the Department of the company a major reorganization of assets, according to enterprises under the same control combined with related standards on the same period last year financial data retrospective restatement data. Note 2.The company during the reporting period, the implementation of the issuance of shares to buy assets of matters, over the same period last year (before adjusting) basic earnings per share to total share capital 1,257,117,748 shares is estimated; over the same period last year (adjusted) basic earnings per share to the company non public offering of shares weighted average equity 1,723,442,768 estimates; newspaper report that the basic earnings per share of the company non - public offering of shares weighted average equity1,849,603,361 estimates. The causes of changes in accounting policies and the information about accounting error correction Due to the implementation of major asset restructuring in the reporting period, the financial data of the same period of last year was retraced and restated with in accordance with the relevant standards of corporate merge under common control. In RMB Amount (Year-beginning Items to the end of the report Notes period.) Non-current asset disposal gain/loss(including the write-off part for which assets impairment provision is -25,439.50 made) Govemment subsidy recognized in current gain and loss(excluding those closely related to the Company’s 61,444,645.87 business and granted under the state’s policies) Current net gains and losses occurred from period-begin 102,025,476.76 to combination day by subsidiaries resulting from 3 The Third Quarterly Report 2016 business combination under common control Other non-business income and expenditures other than 2,530,662.38 the above Less:Amount of influence of income tax 15,987,467.19 Influence on minority shareholders’ equity (after tax) 331,842.10 Total 149,656,036.22 -- 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. 4 The Third Quarterly Report 2016 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 with the Total number of common 69,125 voting power recovered at 0 shareholders at the period-end the end of the reporting period(if any) Shares held by the top 10 shareholders Amount of Pledging or freezing Share tradable Properties of Status of Shareholder name proportion Quantity shares with shareholder the Quantity % Conditional shares held Guangdong State-owned Communication Group Co., 24.55% 513,356,893 409,977,151 legal person Ltd. Guangdong Highway State-owned 22.30% 466,325,020 466,325,020 Construction Co., Ltd. legal person Domestic non Yadong Fuxing Yalian State-owned 9.68% 202,429,149 202,429,149 Pledge 202,429,000 Investment Co., Ltd. Legal person Domestic non Tibet Yingyue Investment State-owned 4.84% 101,214,574 101,214,574 Management Co., Ltd. Legal person Guangdong Expressway State-owned 2.53% 52,937,491 52,937,491 Co., Ltd legal person Domestic non Guangfa Securities Co., State-owned 1.45% 30,364,372 30,364,372 Ltd. Legal person Domestic Feng Wuchu 1.06% 22,139,197 Natural person Domestic non Haerbin Hali Industry Co., State-owned 0.71% 14,850,682 Ltd Legal person Overseas legal Xinyue Co., Ltd. 0.63% 13,201,086 person GUOTAI JUNAN Overseas legal 0.61% 12,815,182 SECURITIES(HONGKON person 5 The Third Quarterly Report 2016 G) LIMITED Shares held by the Top 10 Shareholders of Non-restricted shares Share type Shareholders’ Names Number of the non-restricted shares held Share type Quantity Guangdong Communication RMB Common 103,379,742 103,379,742 Group Co., Ltd. shares RMB Common 20,207,609 shares Foreign shares Feng Wuchu 22,139,197 placed in 1,931,588 domestic exchange RMB Common Haerbin Hali Industry Co., Ltd 14,850,682 14,850,682 shares Foreign shares placed in Xinyue Co., Ltd. 13,201,086 13,201,086 domestic exchange Foreign shares GUOTAI JUNAN placed in SECURITIES(HONGKONG) 12,815,182 12,815,182 domestic LIMITED exchange Bank of Communications- Hybrid securities investment RMB Common 12,636,870 12,636,870 fund in Huaan strategy shares optimizatio Foreign shares placed in PERSHING LLC 12,363,377 12,363,377 domestic exchange Foreign shares MATTHEWS CHINA placed in 7,026,181 7,026,181 DIVIDEND FUND domestic exchange Foreign shares BBH A/C VANGUARD placed in EMERGING MARKETS 6,541,331 6,541,331 domestic STOCK INDEX FUND exchange RMB Common Li Zhuo 6,417,090 6,417,090 shares 6 The Third Quarterly Report 2016 Guangdong Communication Group Co., Ltd. is the parent company of Guangdong Highway Construction Co., Ltd.,Guangdong Expressway Co., Ltd. Explanation on associated and Xinyue Co., Ltd.. It is unknown whether there is relationship between other relationship or concerted action shareholders and whether they are persons taking concerted action specified in of the above shareholders the Regulations on Disclosure of Information about Change in Shareholding of Shareholders of Listed Companies. Harbin Hali Industry Co., Ltd. holds 14,849,774 A shares of the Company Participation of top 10 through stock account with credit transaction and guarantee and holds 908 A unconditional common share shares through ordinary stock account. hold 14,850,682 shares of the Company's shareholders in securities stock totally;Li Zhuo holds 6,321,109 A shares of the Company through stock margin trading (if any) account with credit transaction and guarantee and holds95,981 A shares through ordinary stock account, hold6,417,.90 shares of the Company's stock totally. 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 III. Significant Events I. Particular about large-margin change of main accounting statement item and financial index and its reason. √ Applicable □ Not applicable (I)Items of balance sheet as compared with the beginning of this year. 1.Monetary capital Increased by RMB 1892.72 million and 157.78% over the beginning of the year, mainly due to net cash inflow of RMB 1476.20 million from operating activities, net cash inflow of RMB 1531.72 million from investing activities and net cash outflow of RMB 1948.77 billion from financing activities. 2.Inventory increased by RMB 0.38 million and 47.98% over the beginning of the year, Mainly due to the increase in the inventory materials for the electromechanical project of Guangdong Provincial Expressway Technology Investment Co., Ltd. 3.Construction in process increased by RMB 8.98 million and 38.02% over the beginning of the year, Mainly due to the up-front fees of the expansion project of southern section of Fokai Expressway occurred in the current period. 4. Deferred income tax assets Increased by RMB 7.64 million and 1702.93% over the beginning of the year, The main reason for the increase is:Due to the difference between the accounting method and the method of the tax law in calculating the road assets depreciation of Guangfo Expressway Company, the deferred income tax is recognized. 7 The Third Quarterly Report 2016 5.Interest payable Increased by RMB 90.94 million and 392.96% over the beginning of the year, The main reason for the increase is: The parent company made a provision of RMB 50.92 million for the payable interests of medium-term notes in the first three quarters, Jingzhu Expressway Guangzhu Section Co.,Ltd made a provision of RMB 37.37 million for the January-to-June payable interests of entrusted loans of its original shareholder- Guangdong Provincial Highway Construction Co. Ltd 6.Long-term Payable decreased by RMB 967.90 million and 99.79% over the beginning of the year, The reason is that the parent company purchased the creditor’s rights of Jingzhu Expressway Guangzhu Section Co.,Ltd in June 2016, thus to be offset in the consolidated statements. 7. Paid-up capital Increased by RMB 833.69 million and 66.32% over the beginning of the year, The reason is due to the share issuance during the current reporting period. 8. Capital reserve Increased by RMB 864.92 million and 52.63% over the beginning of the year. (II) Items of profit statement as compared with the same period of the previous year 1.Operating income increased by RMB 110.61 million and 5.63% year on year, The main reason is that Guangfo Expressway Co., Ltd , Fokai Expressway Co., Ltd. And Jingzhu Expressway Guangzhu Section Co., Ltd. have increased their incomes of toll due to the natural increase of traffic volume. 2. Operating cost increased by RMB 23.60 million and 2.81% year on year, Mainly caused by that Guangfo Expressway Co., Ltd. Guangdong Fokai Expressway Co., Ltd and Jingzhu Expressway Guangzhu Section Co., Ltd. were influenced by the increase of traffic flow, which resulted in an increase in depreciation funds. 3.Business tax and surcharge decreased by RMB33.53million and 48.94% year on year, The main reason for the decrease is: As the full implementation on replacing the BT with VAT from May 1, 2016, the company pays VAT instead of business tax for the company’s toll revenue and its relevant revenue, but VAT is not calculated in this accounting item. 4.Administrative expense decreased by RMB 5.90 million and 4.72% year on year, Mainly for that the Company increased revenue and reduced expenditure, which resulted in a decrease in administrative expense. 5.Financial expenses decreased by RMB 103.23 million and 27.46% year on year, Mainly due to the combined impact of the lower interest rate and the repayment of the interest-bearing debt led to a decrease in the total debt amount 6.Investment income increased by RMB 20.14 million and 6.37% year on year, The main reason for the increase is: (1)As the traffic flow naturally grows, the toll revenue of Guangdong Guanghui Expressway Co. Ltd, Zhaoqing Yuezhao Highway Co. Ltd and Ganzhou Kangda Expressway Co. Ltd increased, thus leading to the increase in the profits, so the investment income has a year-on-year increase of RMB 44.80 million; (2) As Shenzhen Huiyan Expressway Co. Ltd transferred Yantianao tunnel in the same period of last year, which led to an increase in the net profits of the same period last year, but there is no such factor in the current reporting period, so the investment income decreased RMB 22.08 million. 7.Non-operating income increased by RMB 39.12million and 147.74% year on year, The main reason of increase is:Guangdong Provincial Fokai Expressway Co., Ltd received the second compensation of RMB 60.77 million in the current period due to the early termination of toll charge of Jiujiang Bridge of National Highway 325, and last year received RMB 20 million. 8.Income tax expenses increased by RMB 58.27million and 31.12% year on year, Mainly due to the increase in total profits of Guangfo Expressway Co., Ltd, Guangdong Provincial Fokai Expressway Co., Ltd and Jingzhu Section Expressway Co.,Ltd. 9.The net profit for the owners of the parent company increased by RMB 227.48 million and 39.91% year on year due to the combined influence of the above factors. (III) Notes of main items of cash flow statement 8 The Third Quarterly Report 2016 1. Cash received from returns on investment decreased by RMB 40.55 million year on year while no increase occurred last period. 2 Cash paid for investment increased by RMB 803.50 million year on year, included the cash payment for purchasing the 25% stake of Guangdong Provincial Fokai Expressway Co., Ltd held by Guangdong Provincial Expressway Co., Ltd. 3. Payment of other cash related to investment activities increased by RMB 987.90 million year on year,paying cash to purchase the creditor’s rights of Jingzhu Expressway Guangzhu Section Co.,Ltd possessed by Guangdong Provincial Highway Construction Co., Ltd. 4. Cash received from investment increased by RMB 1633.50 million year on year, All because the company’s major asset restructuring, The cash of the raised matching funds after deducting issuance cost 5.The cash received from obtaining loans increased by RMB 960.10 million and 92.50% year on year, Mainly due to the company's current borrowing increase. 6 Other financing –related Cash received increased by RMB 51.73 million and 100% year on year, The divident income of fractional shares II. The progress of significant events and influence, as well as the analysis and explanation on resolving proposal. √Applicable □Not applicable (1)The related transaction and the issuance of shares and paying cash to purchase the assets and raise matching funds The 18th Meeting of the Seventh Board of Directors (provisional) meeting, 20th (provisional) meeting, the 23rd (provisional) meeting and 25th (provisional) meetings and on 2015 the second provisional General Meeting by the issue of shares and cash to buy assets and raise matching funds connected transaction matters. The transaction is divided into issue of shares and payment of cash to buy assets and raise matching funds of two parts. (1)Issue of Share and Cash to Buy Asset The Company planned to purchase the 25% stock rights of Fokai Co., Ltd. which is held by Guangdong Provincial Expressway Co., Ltd.(hereinafter referred to as ―Provincial Expressway‖) with issue of A shares and cash to buy ; The Company planned to purchase the 100% stock rights of Guangzhu Co., Ltd. which is held by Guangdong Provincial Highway Construction Co., Ltd.(hereinafter referred to as ―Construction Company‖) with issue of A shares and cash to buy, and planned to purchase the creditor’s rights of Guangzhu East Co., Ltd. from the Construction Company with cash to buy. (2)Raise of Matching Funds On Asian Union Investment Co., Ltd., Tibet Yingyue Investment and Management Co., Ltd., and GF Securities Co., Ltd. to raise matching funds which is to used for the payment of this transaction’s partial cash consideration and transaction tax as well as supplementing the cash flow of listed company, of which the raised matching funds’ amount shall not be over 1650 million RMB and 100% transaction price of the asset planned to buy On January 14, 2016, the Company received the notice from CSRC. After being examined by the 4th working conference in 2016 of Merger and Reorganization Committee held by Merger and Reorganization Audit Committee for Listed Companies of CRSC on January 14, 2016, the Company’s issue of shares and cash to buy assets and raise matching funds and related transactions was adopted conditionally. The company received the China Securities Regulatory Commission, "the approval of Guangdong Provincial Expressway Development Co., Ltd. issued shares to Guangdong Expressway Co., Ltd. to buy assets and raise matching funds of approval" on February 5, 2016 (Commission license [2016 ] No. 230). On June 17, 2016, the Company completed the transfer procedures of the underlying assets purchased by the 9 The Third Quarterly Report 2016 Company in this major asset reorganization. On July 8, 2016, the Company completed the issuance of new shares and the going public work in this major asset reorganization. On June 17, 2016, the Company completed the transfer procedures of the underlying assets (II)The progress about the expansion project of southern section of Fokai Expressway The National Development and Reform Commission recently disclosed its Approval to Guangdong Provincial Sanbao-Shuikou Expressway Section Rebuilding and Expansion Project (No.1874-2016-NDRC Infrastructure Document) on its website, agreed with the implementation of the Guangdong Provincial Sanbao-Shuikou Expressway Section Rebuilding and Expansion Project., the company received the Approval to Guangdong Provincial Sanbao-Shuikou Expressway Section Rebuilding and Expansion Project by The National Development and Reform Commission (No.1874-2016-NDRC Infrastructure Document) forwarded by Guangdong Provincial Development and Reform Commission. According to the article,It’s estimated that the total investment of this project is about RMB 3.513 billion (The static investment is about RMB 3.289 billion), of which the project capital is RMB 1.23 billion that accounts for 35% of the total investment and such amount of the project capital will be provided by Guangdong Provincial Fokai Expressway Co., Ltd, and the rest amount of RMB 2.283 billion will be solved by using bank loans. (III)The item of the investment to subscribe the non-publicly issued A-shares by Guoyuan Securities Co.,Ltd The Proposal on the Company’s Subscription of the Non-publicly Issued A-shares by Guoyuan Securities Co.,Ltd was examined and approved in the Company’s thirty-first meeting (Provisional) of the seventh board of directors and the company’s 2016 third provisional shareholders' general meeting, agreed that the company shall not invest more than RMB 0.8 billion for the subscription of the non-publicly issued A-shares by Guoyuan Securities Co.,Ltd. Description of the website for disclosing Overview of material matters Date of disclosing provisional announcements www.cninfo.com.cn. Announcement on the Company’s Significant Asset January 15,2016 Reorganization Adopted by Mergers and Acquisitions Committee of CSRC and Trade Resumption www.cninfo.com.cn Announcement (I)The related transaction and the February 6,2016 on the acquirement of CSRC’s issuance of shares and paying cash approval for the company’s major to purchase the assets and raise asset restructuring matching funds www.cninfo.com.cn. The report of the related transaction and the February 16,2016 issuance of shares and paying cash to purchase the assets and raise matching funds(Revised) www.cninfo.com.cn . March 29,2016 Related transaction announcement June 17,2016 www.cninfo.com.cn . 10 The Third Quarterly Report 2016 Announcement regarding a major asset restructuring transfer completed www.cninfo.com.cn. Issue of shares and cash to buy assets and raise matching funds of July 7,2016 non-public issuance Report and the listing announcement of the Related Transaction ( II ) The progress about the www.cninfo.com.cn Announcement expansion project of southern October 12,2016 of major events follow-up progress section of Fokai Expressway www.cninfo.com.cn .Announcement July 8,2016 of Resolutions of the 31th Meeting (III)The item of the investment to of the Seventh Board of directors subscribe the non-publicly issued www.cninfo.com.cn. Announcement July 8,2016 A-shares by Guoyuan Securities of External Investment Co.,Ltd www.cninfo.com.cn .Announcement of Resolutions of the Third August 5,2016 provisional shareholders’ general meeting in 2016 11 The Third Quarterly Report 2016 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 Commitment Period of Commitment Type Contents making Fulfillment maker commitment commitment Commitment on share reform Commitment in the acquisition report or the report on equity changes Guangdong Expressway A shares acquired by the Company through subscription in this major asset reorganization cannot be transferred or listed for transaction within thirty-six months from the date of the completion of the shares issuance in this major asset reorganization. Upon the expiry of the lock-up period, the transfer and transaction of Guangdong The date of these shares will be made in accordance with the effective laws and regulations, and Fulfill the Highway the expiration relevant provisions of CSRS and Shenzhen Stock Exchange (SSE). Upon the completion commitment Construction June 26,2015 of the share Commitments made of this major asset reorganization, if the closing price of the A-share of Guangdong normally Co., Ltd. lock. upon the assets Expressway is below the issue price for 20 consecutive trading days within six months, replacement or at the end of six months after the completion of the transaction the closing price is below the issue price, the lock-up period of the A-share of Guangdong Expressway acquired by the Company through this major asset reorganization will be automatically extended for six months. Yadong Fuxing Guangdong Expressway A shares acquired by the Company through subscription in this The date of Fulfill the Yalian major asset reorganization cannot be transferred or listed for transaction within thirty-six the expiration June 18,2015 commitment Investment Co., months from the date of the completion of the shares issuance in this major asset of the share normally Ltd. reorganization. Upon the expiry of the lock-up period, the transfer and transaction of lock. 12 The Third Quarterly Report 2016 Time of Commitment Period of Commitment Type Contents making Fulfillment maker commitment commitment these shares will be made in accordance with the effective laws and regulations, and relevant provisions of CSRS and SSE.The company guarantees that the company and the controlling shareholder or actual controller of the company in a timely manner to provide the major asset restructuring related information, and to ensure that the information provided is true, accurate and complete. If the information provided by the existence of false records, misleading statements or material omissions, the Guangdong Expressway or investors caused losses, will be liable for compensation in accordance with law. Upon the mutual agreement by the Company and the Guangdong Provincial Highway Construction Co., Ltd., the predicted annual net profit of the Guangzhou Guangzhu Transportation Investment Management Co., Ltd. is RMB 230.3606 million in 2016, Guangdong RMB 263.2329 million in 2017, and RMB 286.5018 million in 2018. Within the term of The period of Fulfill the Highway compensation, if the cumulated net profit of Guangzhou Guangzhu Transportation August 26, compensation commitment Construction Investment Management Co., Ltd. by the end of a year is lower than the accumulated 2015 and the date of normally Co., Ltd. predicted net profit of that year, the Company will buy back the compensated shares at completion of the price of RMB 1 from the Guangzhou Guangzhu Transportation Investment the agreement. Management Co., Ltd. that should be calculated in accordance with the agreement, and deregister such shares. The commitment to avoid horizontal competition: 1. the Company and the companies This Guangdong that are under direct or indirect control of the Company, except Guangdong Expressway commitment Communication and its subsidiaries, will not use the controlling shareholders to damage the legitimate is valid from Group Co., Ltd., Fulfill the interests of the business activities of Guangdong Expressway and its medium and small the date of Guangdong commitment shareholders and its subsidiaries. 2. The Company and the companies that are under June 26,2015 signing this Highway normally direct or indirect control of the Company, except Guangdong Expressway and its letter of Construction subsidiaries, will not use the information acquired from Guangdong Expressway and its commitment Co., Ltd. subsidiaries to engage in core business which competes with Guangdong Expressway to the date on and its subsidiaries and will not conduct any activity that damages or may damage the which the 13 The Third Quarterly Report 2016 Time of Commitment Period of Commitment Type Contents making Fulfillment maker commitment commitment legitimate interests of Guangdong Expressway and its medium and small shareholders shares of and its subsidiaries. 3. As for the transfer of toll roads, bridges, tunnels and related Company is ancillary facilities or equity invested, constructed or managed by the Company or no longer companies, that are under direct or indirect control of the Company, except Guangdong controlled by Expressway and its subsidiaries to the Company or any company that is under direct or the controlling indirect control of the company, unless it is a transferee expressly designated by the shareholder of relevant government departments, to the extent permitted by relevant laws and the regulations, Guangdong Expressway has the right of preemption under the same Guangdong conditions. 4. In the future, if the Company and the companies that are under direct or Expressway. indirect control of the Company, except Guangdong Expressway and its subsidiaries, invest and construct a parallel highway or a highway in the same direction on either side of the Highway within 20 km, to the extent permitted by relevant laws and regulations, except in the project whose investors have been expressly specified by the relevant government departments, Guangdong Expressway has the priority right to invest ahead of the Company and the companies that are under direct or indirect control of the Company, except Guangdong Expressway and its subsidiaries,. This commitment, when signed, constitutes the irrevocable legal obligations of the Company. If the circumstances arise that cause damage to Guangdong Expressway because of the Company’s breach of the commitment, the Company will bear the corresponding liability according to laws. The commitment to reduce and regulate the connected transactions: 1. After the completion of this major asset reorganization, the Company and the companies that are under direct or indirect control of the Company, except Guangdong Expressway and its subsidiaries, and other related parties will try to avoid the connected transaction with Guangdong Expressway and its subsidiaries; the necessary and unavoidable connected transactions shall be conducted in accordance with the principles of fairness and compensation of equal value, the transaction prices shall be determined according to the reasonable market price, the transaction approval procedures 14 The Third Quarterly Report 2016 Time of Commitment Period of Commitment Type Contents making Fulfillment maker commitment commitment and the disclosure obligations should be conducted in accordance with relevant laws, regulations and regulatory documents, to effectively protect the interests of medium and small shareholders of Guangdong Expressway . 2. The Company guarantees to be in strict accordance with relevant laws and regulations, the regulations and regulatory documents promulgated by CSRC, the business rules promulgated by Shenzhen Stock Exchange (SSE) and the rules of the system such as the Articles of Association of Guangdong Provincial Expressway Development Co., Ltd., exercise the shareholder rights and fulfill the obligations of shareholders according to laws, without using controlling shareholders’ holding position to seek improper interests, without damage to the legitimate rights and interests of Guangdong Expressway and its medium and small shareholders. Once in violation of the above-stated commitment, the company conducts a transaction with Guangdong Expressway and its subsidiaries, causing damages to them, it shall bear the liability for compensation according to laws. (1) The commitment to the authenticity, accuracy and completeness of the information disclosure and application documents: The Company guarantees that there is no false, misleading statement or major omission in the information disclosure and application documents for the major asset reorganization, and it bears the legal liability for the Guangdong authenticity, accuracy and completeness of the above-mentioned information disclosure Provincial No Fulfill the and application documents. (2) The commitment of Guangdong Expressway to not Expressway commitment commitment violate Article 39 of the Administrative Measures for the Issuance of Securities by Listed June 26,2015 Development period. normally Companies. The Company confirms and warrants that there is no violation of the Co., ltd. following matters regulated by the Article 39 of the Administrative Measures for the Issuance of Securities by Listed Companies: 1. The issuance application documents have false, misleading statements or major omissions; 2. The interests of the Company are seriously damaged by the controlling shareholders or the actual controller, and such damages have not been eliminated; 3. The Company and its subsidiaries illegally provide 15 The Third Quarterly Report 2016 Time of Commitment Period of Commitment Type Contents making Fulfillment maker commitment commitment external guarantees and such guarantees have not been eliminated; 4. The Board of Directors or senior management have recently been subject to administrative penalty by CSRC within thirty-six months, or within 12 months have been publicly condemned by the Stock Exchange; 5. The current Board of Directors and senior management of the Company are suspected of a crime and investigated by the judiciary authorities or suspected of breaking the laws or the regulations and investigated by CSRC; 6. In the financial report of the most recent year or period, the CPA issues an audit report with qualified opinion, adverse opinion or disclaimer of opinion, except that the significant impact of matters concerning the qualified opinion, adverse opinion and disclaimer of opinion has been eliminated or that the issue relates to the major reorganization; 7. Other cases seriously damaging the legitimate interests of investors and the public interests. (3) Other commitments: urge Fokai Expressway Co., Ltd. to transfer the Xiebian Office to Guangfo Expressway Co., Ltd. (1) The commitment to the authenticity, accuracy and completeness of the information (1) a promise provided: The Company guarantees that there is no false, misleading statement or major without a omission in the information disclosure and application documents for the major asset commitment reorganization. If it is suspected that there is false, misleading statement or major period. omission in the information disclosed or provided for the major asset reorganization, and (2) the date of Guangdong Fulfill the it is investigated by the judiciary authorities or by CSRC, before the clear conclusion of the validity of Communication commitment the case is reached, the Company will suspend the transfer of shares of Guangdong June 18,2015 the term Group Co., Ltd. normally Expressway held by the Company, and within two business days upon receipt of the commitment notice of filing a case and inspection, the written application for suspending the transfer from the date and the stock account should be submitted to the Board of Directors of Guangdong of this letter of Expressway, and the Board of Directors of Guangdong Expressway, shall, on behalf of commitment the Company, apply for the lockout towards Shenzhen Securities Exchange (SSE) and to the date of Registration and Clearing Company; if the application for the lockout is not submitted the company 16 The Third Quarterly Report 2016 Time of Commitment Period of Commitment Type Contents making Fulfillment maker commitment commitment within two business days, after verification the Board of Directors authorized by the no longer is Company will directly submits the Company’s identity and account information to the the date of the Registration and Clearing Company and apply for the lockout; if the Board of Directors controlling fails to do so, the Securities Exchange and the Registration and Clearing Company will shareholder of be authorized to directly lock the related shares. If it is found that the Company has guangdong. illegal circumstances, the Company promises that the lockout shares should be (3) the date of automatically used for the compensation for the relevant investors. (2) The commitment the validity of to maintain the independence of the listed company. The Company and the companies, the term that are under direct or indirect control of the Company, except Guangdong Expressway commitment and its subsidiaries, have increased their shares of Guangdong Expressway after the to the completion of the major asset reorganization; however they will not damage the completion of independence of Guangdong Expressway. They will continue to be separated from the Guangdong Expressway in assets, personnel, finance, organization and business and completion of strictly abide by the relevant provisions on the independence of listed companies of the CSRC. They will not illegally use Guangdong Expressway to provide guarantee, or completion of occupy its capital, and they will keep and maintain the its independence and safeguard the major the legitimate rights and interests of other shareholders of it. (3)The company confirmed asset and guaranteed: 1, the company set up and effectively exist in accordance with the law of restructuring. the enterprise, the company has an independent legal personality, independent of the ability to assume legal responsibility. 2, as the commitment letter issued by the Japanese, the company does not exist in the listed company acquisition management approach "the provisions of Article 6 of the acquisition of a listed company may not be under any of the following circumstances: (1) bears a relatively large amount of debt, due and outstanding, and in persistent state; (2) in recent 3 years, have major violations or suspected of major violations; (3) in recent 3 years, have severe stock market acts of dishonesty; (4) the laws, administrative regulations and recognized by the CSRC shall not purchase of Listed Companies in other circumstances. This commitment is issued to 17 The Third Quarterly Report 2016 Time of Commitment Period of Commitment Type Contents making Fulfillment maker commitment commitment the completion of the reorganization before, if the company does not conform to the fact that these commitments, the company that will be occurring in the facts, from within 3 days notice of Guangdong expressway, otherwise it will bear incurred in the full legal responsibility. (1) The commitment to the authenticity, accuracy and completeness of the information (1) a promise provided: 1. The Company guarantees to provide the information related to the major without a asset reorganization for Guangdong Expressway and ensures its authenticity, accuracy commitment and completeness; if there is false, misleading statement or major omission in the period. information provided, which causes losses to Guangdong Expressway or the investors, (2) the date of the Company will assume the compensation liabilities in accordance with laws. If it is the validity of suspected that there is false, misleading statement or major omission in the information the term disclosed or provided for the major asset reorganization, and it is investigated by the commitment judiciary authorities or by CSRC, before the clear conclusion of the case is reached, the Guangdong from the date Company will suspend the transfer of shares of Guangdong Expressway held by the Fulfill the Highway of this letter of Company, and within two business days upon receipt of the notice of filing a case and commitment Construction June 26,2015 commitment inspection, the written application for suspending the transfer and the stock account normally Co., Ltd. to the date of should be submitted to the Board of Directors of Guangdong Expressway , and the Board the company of Directors of Guangdong Expressway , shall, on behalf of the Company apply for the no longer is lockout towards Shenzhen Securities Exchange (SSE) and Registration and Clearing the date of the Company; if the application for the lockout is not submitted in two business days, after controlling verification the Board of Directors authorized by the Company will directly submits the shareholder of Company’s identity and account information to the Registration and Clearing Company guangdong. and apply for the lockout; if the Board of Directors fails to do so, the Securities (3) the date of Exchange and the Registration and Clearing Company will be authorized to directly lock the validity of the related shares. If it is found that the Company has illegal circumstances, the company the term promises that the lockout shares should be automatically used for the compensation for 18 The Third Quarterly Report 2016 Time of Commitment Period of Commitment Type Contents making Fulfillment maker commitment commitment the relevant investors. (2) The commitment to maintain the independence of the listed commitment company. The Company and the companies, that are under direct or indirect control of to the the Company, except Guangdong Expressway and its holding subsidiaries, have completion of increased their shares of Guangdong Expressway after the completion of the major asset the reorganization; however they will not damage the independence of Guangdong completion of Expressway . They will continue to be separated from Guangdong Expressway in assets, the personnel, finance, organization and business and strictly abide by the relevant completion of provisions on the independence of listed companies of CSRC. They don’t illegally use the major Guangdong Expressway to provide guarantee, or occupy its capital so as to keep and asset maintain its independence and safeguard the legitimate rights and interests of other restructuring. shareholders of Guangdong Expressway . All losses will be borne by the Company if it breaks the above commitments and causes losses to Guangdong Expressway . Guangdong Communication Group Co., Ltd. and Guangzhu Section of Jingzhu Guangdong Expressway , Ltd. commit: within 10 working days after the closing of the transferred Communication equities of the Guangzhou Guangzhu Investment Management Co., Ltd., the cash Group Co., Ltd. pooling of the Guangzhu Section of Jingzhu Expressway Co., Ltd will be dispersed Jingzhu ( including: Guangdong Transportation Group Co., Ltd., Guangzhu Section of Jingzhu August Completed Expressway Expressway Co., Ltd., and Industrial and Commercial Bank of China agree to terminate June 24,2016 26,2015 Guangzhu the Settlement Agreement on the Group Account Fund , Guangdong Transportation Section Co., Group Co., Ltd. and Guangzhu Section of Jingzhu Expressway Co., Ltd. agree to Ltd. terminate the Agreement on Settlement and Credit Management System Service of Guangdong Transportation Group Co., Ltd. ). Guangdong Guangdong Expressway Co., Ltd. and Guangdong Fokai Expressway Co., Ltd commit: December January Completed Expressway Co., within 30 working days after the effective date of the agreement (December 7, 2015), the 7,2015 18,2016 19 The Third Quarterly Report 2016 Time of Commitment Period of Commitment Type Contents making Fulfillment maker commitment commitment Ltd., application for transfer procedures of the ownership of Heshan hostel shall be submitted Guangdong to the relevant departments. Fokai Expressway Co., Ltd. Guangdong Communication Group Co., Ltd. commits: within 3 years from the date of completion of the reorganized underlying asset transfer, in which Guangzhu Section of Jingzhu Highway Co., Ltd. shall hire professional organizations to sort out and prepare Guangdong Fulfill the the documents needed for the ownership registration and complete the ownership Communication January commitment registration procedures within 1 year for the relevant lands or real estates in Guangzhou June 14,2019 Group Co., Ltd. 19,2016 normally and Zhuhai city for which the Guangdong Fokai Expressway Co., Ltd and Guangzhu Section of Jingzhu Expressway Co., Ltd. have not gone through the procedures of ownership registration. Related Guangdong Communication Group Co., Ltd. commits: for the lands, real estates and land, real allocated lands for which the Guangdong Fokai Expressway Co., Ltd. and Guangzhu estate Guangdong Section of Jingzhu Expressway Co., Ltd. have not gone through the procedures of manageme Fulfill the Communication ownership registration (1) the property rights of the above-mentioned lands are clear, and nt commitment January Group Co., Ltd. can be legally used by the target company; (2) assist or ask the Guangdong Highway Co., authority normally 19,2016 Ltd. and Guangdong Highway Construction Co., Ltd to assist in conducting the certificate ownership registration of the real estates; (3) the land can continue to be used unscathed or related before the ownership registration; (4) once losses arise, bear the losses of Guangdong land to Expressway according to its shareholding ratio. complete the 20 The Third Quarterly Report 2016 Time of Commitment Period of Commitment Type Contents making Fulfillment maker commitment commitment transfer procedures of the day. The company submitted to the Guangdong China Highway Securities Constrution Co., Guangdong Highway Construction Co., Ltd. transfers its shareholder loans from Regulatory Ltd. Jingzhu Guangzhu Section of Jingzhu Expressway Co., Ltd. into entrusted loans. August Commissi Completed Expressway 26,2015 on before Guangzhu a major Section Co., asset Ltd. restructuri ng application documents . Commitments make in initial public offering or re-financing Equity incentive commitment Other commitments for medium and small 21 The Third Quarterly Report 2016 Time of Commitment Period of Commitment Type Contents making Fulfillment maker commitment commitment shareholders Completed on Yes time(Y/N) 22 The Third Quarterly Report 2016 IV.Prediction of Business performance for 2016. Alert of loss or significant change in net profit from the beginning of year to the end of next report period or comparing with the same period of last year, and statement of causations. □ 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 1. The main content of research:1. the daily operation; 2. the company's financial data August 23,2016 Telephone Organization analysis;3. development strategy; 4. analysis on the industry. 2.Primary data investigation: Public information company regularly reports 1. The main content of research:1. the daily operation; 2. the company's financial data August 23,2016 Telephone Organization analysis;3. development strategy; 4. analysis on the industry. 2.Primary data investigation: Public information company regularly reports 1. The main content of research:1. the daily operation; 2. the company's financial data Onsite August 25,2016 Organization analysis;3. development strategy; 4. analysis on investigation the industry. 2.Primary data investigation: Public information company regularly reports 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 The Company had no non-operational fund occupation from controlling shareholders and its related party. 23 The Third Quarterly Report 2016 IV. Financial Statement I. Financial statement 1. Consolidated balance sheet Prepared by:Guangdong Provincial Expressway Development Co., Ltd. September 30,2016 In RMB Items At the end of term Beginning of term Current asset: Monetary fund 3,092,347,803.12 1,199,629,276.85 Settlement provision Outgoing call loan Financial assets measured at fair value with variations accounted into current income account Derivative financial assets Bill receivable Account receivable 90,273,234.71 77,396,705.54 Prepayments 3,655,794.38 7,390,264.97 Insurance receivable Reinsurance receivable Provisions of Reinsurance contracts receivable Interest receivable Dividend receivable Other account receivable 19,984,735.07 18,265,472.13 Repurchasing of financial assets Inventories 1,178,127.02 800,998.80 Assets held for sales Non-current asset due in 1 year 55,744.14 Other current asset Total of current assets 3,207,495,438.44 1,303,482,718.29 Non-current assets: Loans and payment on other’s behalf disbursed 24 The Third Quarterly Report 2016 Disposable financial asset 1,690,191,339.49 1,796,056,064.29 Expired investment in possess Long-term receivable Long term share equity investment 2,294,234,652.57 2,250,314,577.89 Property investment 3,336,024.43 3,684,184.48 Fixed assets 9,095,623,286.90 9,733,198,359.00 Construction in progress 32,605,195.26 23,624,279.71 Engineering material 1,549,556.00 1,549,556.00 Fixed asset disposal Production physical assets Gas & petrol Intangible assets 5,795,204.14 8,634,141.79 R & D petrol Goodwill Long-germ expenses to be amortized 2,217,217.08 3,576,970.11 Deferred income tax asset 8,084,273.43 448,397.20 Other non-current asset 1,725,932.97 2,343,267.94 Total of non-current assets 13,135,362,682.27 13,823,429,798.41 Total of assets 16,342,858,120.71 15,126,912,516.70 Current liabilities Short-term loans 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 Account payable 140,529,599.84 173,079,084.60 Advance payment 39,446,553.05 35,079,806.09 Selling of repurchased financial assets Fees and commissions receivable Employees’ wage payable 9,717,148.16 6,616,356.87 Tax payable 115,068,540.36 90,711,647.65 25 The Third Quarterly Report 2016 Interest payable 114,087,872.74 23,143,564.41 Dividend payable 12,506,777.92 11,681,423.74 Other account payable 138,902,836.42 192,607,238.67 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 1,670,680,000.00 1,379,080,000.00 Other current liability Total of current liability 2,240,939,328.49 1,911,999,122.03 Non-current liabilities: Long-term loan 5,233,760,000.00 4,830,760,000.00 Bond payable Including:preferred stock Sustainable debt Long-term payable 2,022,210.11 969,925,895.09 Long-term payable employees’s remuneration Special payable Expected liabilities Deferred income Deferred income tax liability 284,284,683.90 297,540,718.21 Other non-current liabilities Total non-current liabilities 5,520,066,894.01 6,098,226,613.30 Total of liability 7,761,006,222.50 8,010,225,735.33 Owners’ equity Share capital 2,090,806,126.00 1,257,117,748.00 Other equity instrument Including:preferred stock Sustainable debt Capital reserves 2,508,408,342.98 1,643,484,871.70 Less:Shares in stock Other comprehensive income 374,055,360.96 479,920,085.76 26 The Third Quarterly Report 2016 Special reserves Surplus reserves 295,642,270.96 295,642,270.96 Common risk provision Undistributed profit 2,788,046,881.03 2,179,239,324.01 Total of owner’s equity belong to the 8,056,958,981.93 5,855,404,300.43 parent company Minority shareholders’ equity 524,892,916.28 1,261,282,480.94 Total of owners’ equity 8,581,851,898.21 7,116,686,781.37 Total of liabilities and owners’ equity 16,342,858,120.71 15,126,912,516.70 Legal Representative: Zheng Renfa Person in charge of accounting:Fang Zhi Accounting Dept Leader: Zhou Fang 2.Parent Company Balance Sheet In RMB Items At the end of term Beginning of term Current asset: Monetary fund 2,146,163,143.56 822,286,507.11 Financial assets measured at fair value with variations accounted into current income account Derivative financial assets Bill receivable Account receivable Prepayments 971,698.09 1,994,822.56 Interest receivable 21,403,966.59 137,958.34 Dividend receivable Other account receivable 4,087,699.86 2,256,822.99 Inventories Assets held for sales Non-current asset due in 1 year 60,000,000.00 Other current asset Total of current assets 2,232,626,508.10 826,676,111.00 Non-current assets: Disposable financial asset 1,690,191,339.49 1,796,056,064.29 Expired investment in possess 27 The Third Quarterly Report 2016 Long-term receivable Long term share equity investment 6,959,396,872.23 5,053,688,539.24 Property investment 3,083,886.18 3,432,046.23 Fixed assets 3,072,108.00 3,734,470.83 Construction in progress Engineering material Fixed asset disposal Production physical assets Gas & petrol Intangible assets 821,703.40 1,056,003.37 R & D petrol Goodwill Long-germ expenses to be amortized 1,985,294.75 3,261,555.68 Deferred income tax asset Other non-current asset 932,903,684.98 75,000,000.00 Total of non-current assets 9,591,454,889.03 6,936,228,679.64 Total of assets 11,824,081,397.13 7,762,904,790.64 Current liabilities Short-term loans Financial liabilities measured at fair value with variations accounted into current income account Derivative financial liabilities Bill payable Account payable Advance payment Employees’ wage payable 995,183.07 1,022,391.27 Tax payable 513,624.70 4,915,239.62 Interest payable 72,410,994.22 17,625,272.46 Dividend payable 12,506,777.92 11,681,423.74 Other account payable 2,001,028.83 6,378,723.77 Classified as held for sale debt Non-current liability due in 1 year 1,047,000,000.00 997,000,000.00 Other current liability 459,271,411.61 309,154,118.44 Total of current liability 1,594,699,020.35 1,347,777,169.30 28 The Third Quarterly Report 2016 Non-current liabilities: Long-term loan 2,500,000,000.00 1,500,000,000.00 Bond payable Including:preferred stock Sustainable debt Long-term payable 2,022,210.11 52,022,210.11 Long-term payable to employees Special payable Expected liabilities Deferred income Deferred income tax liability Other non-current liabilities Total of Non-current liabilities 2,502,022,210.11 1,552,022,210.11 Total of liability 4,096,721,230.46 2,899,799,379.41 Owners’ equity Share capital 2,090,806,126.00 1,257,117,748.00 Other equity instrument Including:preferred stock Sustainable debt Capital reserves 3,359,791,693.12 1,534,920,742.49 Less:Shares in stock Other comprehensive income 374,055,360.96 479,920,085.76 Special reserves Surplus reserves 279,797,987.31 279,797,987.31 Undistributed profit 1,622,908,999.28 1,311,348,847.67 Total of owners’ equity 7,727,360,166.67 4,863,105,411.23 Total of liabilities and owners’ equity 11,824,081,397.13 7,762,904,790.64 3.Consolidated Income statement of the Report period In RMB Items Amount in this period Amount in last period I. Income from the key business 741,459,581.99 714,204,217.20 Incl:Business income 741,459,581.99 714,204,217.20 29 The Third Quarterly Report 2016 Interest income Insurance fee earned Fee and commission received II. Total business cost 428,810,522.37 495,889,288.96 Incl:Business cost 305,283,543.01 312,963,207.85 Interest expense 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 2,696,476.12 24,567,749.10 Sales expense Administrative expense 38,686,992.60 39,878,152.84 Financial expenses 82,143,510.64 118,480,179.17 Asset impairment loss Add:Gains from change of fir value (“-”for loss) Investment gain(“-”for loss) 109,156,739.38 118,898,393.83 Incl: investment gains from affiliates 109,156,739.38 117,887,555.88 Gains from currency exchange(“-”for loss) III. Operational profit(“-”for loss 421,805,799.00 337,213,322.07 Add:Non-business income 1,913,046.35 20,443,266.52 Incl:Gains from disposal of 35,674.48 1,638.80 non-current assets Less:Non business expenses 765,994.15 1,603,931.24 Incl:Loss from disposal of 69,835.80 12,284.85 non-current assets IV.Total profit(“-”for loss) 422,952,851.20 356,052,657.35 Less:Income tax expenses 88,169,879.72 70,192,892.17 V. Net profit(“-”for net loss 334,782,971.48 285,859,765.18 Net profit attributable to the owners of 291,476,074.93 231,062,859.76 30 The Third Quarterly Report 2016 parent company Minority shareholders’ equity 43,306,896.55 54,796,905.42 VI. Net after-tax of Other 7,057,648.32 -348,177,317.12 comprehensive income Net after-tax of other comprehensive income attribut 7,057,648.32 -348,177,317.12 able to owners of 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 pl ans of changes in net debt or net assets 2.Other comprehensive income under th e equity method investee can not be recl assified into profit or loss. (II) Other comprehensive income that will b 7,057,648.32 -348,177,317.12 e reclassified into profit or loss. 1.Other comprehensive income under th e equity method investee can be reclassi fied into profit or loss. 2.Gains and losses from changes in fair 7,057,648.32 -348,177,317.12 value available for sale financial assets 3.Held-to-maturity investments reclassif ied to gains and losses of available for s ale financial assets 4.The effective portion of cash flow hed ges and losses 5.Translation differences in currency fin ancial statements 6.Other Net after-tax of other comprehensive incom e attributable to Minority shareholders’ equity VII. Total comprehensive income 341,840,619.80 -62,317,551.94 Total comprehensive income 298,533,723.25 -117,114,457.36 attributable to the owner of the parent 31 The Third Quarterly Report 2016 company Total comprehensive income 43,306,896.55 54,796,905.42 attributable minority shareholders VIII. Earnings per share (I)Basic earnings per share 0.14 0.13 (II)Diluted earnings per share 0.14 0.13 The current business combination under common control, the net profits of the combined party before achieved net profit of RMB 102,025,476.76, last period the combined party realized RM106,981,773.68. Legal Representative: Zheng Renfa Person in charge of accounting:Fang Zhi Accounting Dept Leader: Zhou Fang 4.Income statement of the Parent Company of the Report period In RMB Items Amount in this period Amount in last period I. Income from the key business 20,658,732.80 2,801,641.76 Less:Business cost 116,053.35 116,053.35 Business tax and surcharge 156,891.95 Sales expense Administrative expense 13,019,284.71 15,877,775.35 Financial expenses 42,042,957.40 40,354,014.61 Asset impairment loss Add:Gains from change of fir value (“-”for loss) Investment gain(“-”for loss) 336,768,519.45 141,754,006.05 Incl: investment gains from affiliates 109,156,739.37 140,743,168.10 II. Operational profit(“-”for loss) 302,248,956.79 88,050,912.55 Add :Non-operational income Including:Income from disposal of non-current assets Less:Non business expenses 116,650.81 Incl:Loss from disposal of non-current 115,075.00 assets III.Total profit(“-”for loss) 302,248,956.79 87,934,261.74 Less:Income tax expenses IV. Net profit(“-”for net loss) 302,248,956.79 87,934,261.74 V.Net of profit of other comprehensive i 7,057,648.32 -348,177,317.12 32 The Third Quarterly Report 2016 ncome (I)Other comprehensive income items that will not be reclassified into gains/losses in the subsequent accounting period 1.Re-measurement of defined benefit pl ans of changes in net debt or net assets 2.Other comprehensive income under th e equity method investee can not be recl assified into profit or loss. ( II ) Other comprehensive income that will b 7,057,648.32 -348,177,317.12 e reclassified into profit or loss. 1.Other comprehensive income under th e equity method investee can be reclassi fied into profit or loss. 2.Gains and losses from changes in fair 7,057,648.32 -348,177,317.12 value available for sale financial assets 3.Held-to-maturity investments reclassif ied to gains and losses of available for s ale financial assets 4.The effective portion of cash flow hed ges and losses 5.Translation differences in currency fin ancial statements 6.Other VI. Total comprehensive income 309,306,605.11 -260,243,055.38 VII. Earnings per share: (I)Basic earnings per share (II)Diluted earnings per share 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 2,074,951,761.76 1,964,338,360.43 Including:Operating income 2,074,951,761.76 1,964,338,360.43 Interest income 33 The Third Quarterly Report 2016 Insurance gained Commission charge and commission income II. Total operating cost 1,291,061,746.90 1,410,380,734.86 Including:Operating cost 864,231,016.09 840,635,532.67 Interest expense Commission chare and commission expense Insurance discharge payment Net claim amount paid Insurance policy dividend paid Insurance policy dividend paid Reinsurance expenses Business tax and 34,979,823.57 68,510,498.89 surcharge Sales expense Administrative expense 119,266,608.44 125,170,256.10 Financial expenses 272,761,745.85 375,993,065.54 Asset impairment loss -177,447.05 71,381.66 Add:Gains from change of fir value (“-”for loss) Investment gain(“-”for loss) 336,587,426.70 316,444,941.22 Incl: investment gains from affiliates 290,889,715.03 270,822,473.40 Gains from currency exchange(“-”for loss) III. Operational profit(“-”for loss 1,120,477,441.56 870,402,566.79 Add:Non-business income 65,594,191.49 26,476,745.03 Incl:Gains from disposal of 146,849.95 12,320.80 non-current assets Less:Non business expenses 1,644,322.74 2,453,414.22 Incl:Loss from disposal of 172,289.45 378,014.94 non-current assets IV.Total profit(“-”for loss) 1,184,427,310.31 894,425,897.60 Less:Income tax expenses 245,502,700.15 187,237,062.97 34 The Third Quarterly Report 2016 V. Net profit(“-”for net loss 938,924,610.16 707,188,834.63 Net profit attributable to the owners of 797,375,219.22 569,900,003.49 parent company Minority shareholders’ equity 141,549,390.94 137,288,831.14 VI. Net after-tax of Other -105,864,724.80 -235,254,944.00 comprehensive income Net after-tax of other comprehensive income attribut -105,864,724.80 -235,254,944.00 able to owners of 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 pl ans of changes in net debt or net assets 2.Other comprehensive income under th e equity method investee can not be recl assified into profit or loss. (II) Other comprehensive income that will b -105,864,724.80 -235,254,944.00 e reclassified into profit or loss. 1.Other comprehensive income under th e equity method investee can be reclassi fied into profit or loss. 2.Gains and losses from changes in fair -105,864,724.80 -235,254,944.00 value available for sale financial assets 3.Held-to-maturity investments reclassif ied to gains and losses of available for s ale financial assets 4.The effective portion of cash flow hed ges and losses 5.Translation differences in currency fin ancial statements 6.Other Net after-tax of other comprehensive incom e attributable to Minority shareholders’ equity 35 The Third Quarterly Report 2016 VII. Total comprehensive income 833,059,885.36 471,933,890.63 Total comprehensive income attributable to the owner of the parent 691,510,494.42 334,645,059.49 company Total comprehensive income 141,549,390.94 137,288,831.14 attributable minority shareholders VIII. Earnings per share (I)Basic earnings per share 0.43 0.33 (II)Diluted earnings per share 0.43 0.33 The current business combination under common control, the net profits of the combined party before achieved net profit of RMB 102,025,476.76, last period the combined party realized RMB106,981,773.68. 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 31,163,735.61 12,129,110.37 Less:Business cost 348,160.05 348,160.05 Business tax and surcharge 361,322.43 730,075.30 Sales expense Administrative expense 44,002,056.60 52,986,222.75 Financial expenses 115,490,339.57 125,871,739.15 Asset impairment loss Add:Gains from change of fir value (“-”for loss) Investment gain(“-”for loss) 629,165,956.85 401,519,305.58 Incl: investment gains from affiliates 325,057,770.08 328,722,259.68 II. Operational profit 500,127,813.81 233,712,218.70 Add:Non-business income 26,300.00 Incl:Gains from disposal of non-current assets Less:Non business expenses 124,348.25 Incl:Loss from disposal of non-current 122,652.44 assets III.Total profit 500,127,813.81 233,614,170.45 Less:Income tax expenses IV. Net profit 500,127,813.81 233,614,170.45 36 The Third Quarterly Report 2016 V. Net after-tax of Other comprehensive -105,864,724.80 -235,254,944.00 income Net after –tax of profit of other comprehensive incom e attributable to owners of the parent co mpany. (I)Other comprehensive income items that will not be reclassified into gains/losses in the subsequent accounting period 1.Re-measurement of defined benefit pl ans of changes in net debt or net assets 2.Other comprehensive income under th e equity method investee can not be recl -105,864,724.80 -235,254,944.00 assified into profit or loss. (II) Other comprehensive income that will b e reclassified into profit or loss. 1.Other comprehensive income under th e equity method investee can be reclassi -105,864,724.80 -235,254,944.00 fied into profit or loss. 2.Gains and losses from changes in fair value available for sale financial assets 3.Held-to-maturity investments reclassif ied to gains and losses of available for s ale financial assets 4.The effective portion of cash flow hed ges and losses 5.Translation differences in currency fin ancial statements 6.Other 394,263,089.01 -1,640,773.55 V. Earnings per share (I)Basic earnings per share (II)Diluted earnings per share 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 37 The Third Quarterly Report 2016 I.Cash flows from operating activities Cash received from sales of goods or 2,090,706,476.39 1,867,551,212.00 rending of 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 the financial assets that are measured at fair value and whose movement is counted to the current gain and loss Cash received as interest, processing fee and commission Net increase of inter-bank fund received Net increase of repurchasing business Tax returned Other cash received from business 64,414,941.26 85,490,024.37 operation Sub-total of cash inflow 2,155,121,417.65 1,953,041,236.37 Cash paid for purchasing of 77,747,481.21 63,673,763.99 merchandise and services 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 202,712,813.20 212,878,382.11 Taxes paid 312,423,889.98 268,045,921.07 38 The Third Quarterly Report 2016 Other cash paid for business activities 86,041,616.58 77,058,267.25 Sub-total of cash outflow from business 678,925,800.97 621,656,334.42 activities Cash flow generated by business 1,476,195,616.68 1,331,384,901.95 operation, net II.Cash flow generated by investing Cash received from investment 40,549,909.00 retrieving Cash received as investment gains 292,667,352.01 311,676,183.82 Net cash retrieved from disposal of fixed assets, intangible assets, and other 656,801.00 17,107.00 long-term assets Net cash received from disposal of subsidiaries or other operational units Other investment-related cash received 61,275,293.24 Sub-total of cash inflow due to 354,599,446.25 352,243,199.82 investment activities Cash paid for construction of fixed assets, intangible assets and other 94,916,306.81 89,777,640.47 long-term assets Cash paid as investment 803,500,000.00 Net increase of loan against pledge Net cash received from subsidiaries and other operational units Other cash paid for investment 987,903,684.98 activities Sub-total of cash outflow due to 1,886,319,991.79 89,777,640.47 investment activities Net cash flow generated by investment -1,531,720,545.54 262,465,559.35 III.Cash flow generated by financing Cash received as investment 1,633,499,989.30 Incl: Cash received as investment from minor shareholders Cash received as loans 1,998,000,000.00 1,037,903,684.98 Cash received from bond placing Other financing –related ash received 5,173.81 Sub-total of cash inflow from financing 3,631,505,163.11 1,037,903,684.98 39 The Third Quarterly Report 2016 activities Cash to repay debts 1,283,400,000.00 1,824,623,684.98 Cash paid as dividend, profit, or 394,611,135.28 401,928,946.01 interests Incl: Dividend and profit paid by subsidiaries to minor shareholders Other cash paid for financing activities 4,727,368.84 3,000,000.00 Sub-total of cash outflow due to 1,682,738,504.12 2,229,552,630.99 financing activities Net cash flow generated by financing 1,948,766,658.99 -1,191,648,946.01 IV. Influence of exchange rate -523,203.86 -500,338.15 alternation on cash and cash equivalents V.Net increase of cash and cash 1,892,718,526.27 401,701,177.14 equivalents Add: balance of cash and cash 1,199,629,276.85 737,462,446.86 equivalents at the beginning of term VI ..Balance of cash and cash 3,092,347,803.12 1,139,163,624.00 equivalents at the end of 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 8,146,814.48 4,340,087.24 rending of services Tax returned Other cash received from business 171,178,904.77 11,626,230.90 operation Sub-total of cash inflow 179,325,719.25 15,966,318.14 Cash paid for purchasing of merchandise and services Cash paid to staffs or paid for staffs 27,376,371.77 34,605,679.08 Taxes paid 4,606,170.36 1,012,868.13 Other cash paid for business activities 29,074,861.23 99,667,792.25 Sub-total of cash outflow from business 61,057,403.36 135,286,339.46 activities 40 The Third Quarterly Report 2016 Cash flow generated by business 118,268,315.89 -119,320,021.32 operation, net II.Cash flow generated by investing Cash received from investment 40,549,909.00 retrieving Cash received as investment gains 551,077,827.12 328,973,857.11 Net cash retrieved from disposal of fixed assets, intangible assets, and other 1,425.00 long-term assets Net cash received from disposal of subsidiaries or other operational units Other investment-related cash received 73,220,416.67 137,891,227.77 Sub-total of cash inflow due to 624,298,243.79 507,416,418.88 investment activities Cash paid for construction of fixed assets, intangible assets 394,590.00 334,184.41 and other long-term assets Cash paid as investment 803,500,000.00 Net cash received from subsidiaries and other operational units Other cash paid for investment 987,903,684.98 activities Sub-total of cash outflow due to 1,791,798,274.98 334,184.41 investment activities Net cash flow generated by investment -1,167,500,031.19 507,082,234.47 III.Cash flow generated by financing Cash received as investment 1,633,499,989.30 Cash received as loans 1,000,000,000.00 50,000,000.00 Cash received from bond placing Other financing –related ash received 5,173.81 Sub-total of cash inflow from 2,633,505,163.11 50,000,000.00 financing activities Cash to repay debts Cash paid as dividend, profit, or 255,146,238.66 198,356,144.32 interests Other cash paid for financing activities 4,727,368.84 3,000,000.00 Sub-total of cash outflow due to 259,873,607.50 201,356,144.32 41 The Third Quarterly Report 2016 financing activities Net cash flow generated by financing 2,373,631,555.61 -151,356,144.32 IV. Influence of exchange rate -523,203.86 -500,338.15 alternation on cash and cash equivalents V.Net increase of cash and cash 1,323,876,636.45 235,905,730.68 equivalents Add: balance of cash and cash 822,286,507.11 332,632,828.69 equivalents at the beginning of term VI ..Balance of cash and cash 2,146,163,143.56 568,538,559.37 equivalents at the end of term II. Auditor‘s report If the 3rd quarterly report been audited [] Yes [V] No The 3rd quarterly report has not been audited. 42