Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. HaiNan Pearl River Holdings Co., Ltd. Report for the First Quarter of 2017 April 2017 1 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. Section I Important Statements The Board of Directors, the Supervisory Committee, directors, supervisors and senior management staff of HaiNan Pearl River Holdings Co., Ltd. (hereinafter referred to as “the Company”) warrant that the information carried in this report is factual, accurate and complete, without any false record, misleading statement or material omission. And they shall be jointly and severally liable for that. All directors have attended the board session for reviewing this report. Wang Chunli, company principal, Guan Ying, chief of the accounting work and Wu Xiukun, chief of the accounting organ (chief of accounting), hereby confirm that the Financial Report enclosed in this report is factual, accurate and complete. This Report is prepared in both Chinese and English. Should there be any discrepancy between the two versions, the Chinese version shall prevail. 2 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. Section II Profile of the Company I Financial results Whether the Company performed any retroactive adjustments to or restatement of its accounting data due to changes of accounting policies or correction of accounting errors □ Yes √ No January-March 2017 January-March 2016 +/-% Operating revenues (RMB) 250,701,694.22 80,025,245.10 213.28% Net profit attributable to shareholders of 13,757,116.56 -38,541,192.11 135.69% the Company (RMB) Net profit attributable to shareholders of the Company before exceptional profit and 14,595,277.71 -38,415,455.62 137.99% loss (RMB) Net operating cash flow (RMB) -77,228,574.91 124,823,160.52 -161.87% Basic earnings per share (RMB/share) 0.03 -0.09 133.33% Diluted earnings per share (RMB/share) 0.03 -0.09 133.33% Weighted average return on equity (%) 19.12% 0.00% 19.12% 31 March 2017 31 December 2016 +/-% Total assets (RMB) 1,090,959,173.69 1,385,469,635.17 -21.26% Net assets attributable to shareholders of 78,845,419.44 65,088,302.88 21.14% the Company (RMB) Exceptional profit and loss √ Applicable □ Not applicable Unit: RMB Item January-March 2017 Note Profit/loss on disposal of non-current assets (including offset 167,691.55 amount of asset impairment provisions) Capital occupation charges on non-financial enterprises that are 512,971.70 charged to the profit/loss for the Reporting Period Non-operating income and expense other than the above -1,539,967.75 Less: Income tax effects -42,187.36 Minority interests effects (after tax) 21,044.01 Total -838,161.15 -- Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Profit and Loss, or reclassified any exceptional profit/loss item given as an example in the said explanatory announcement to recurrent profit/loss □ Applicable √ Not applicable 3 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. No such cases in the Reporting Period. II Total number of shareholders at the period-end and shareholdings of top ten shareholders 1. Numbers of common shareholders and preference shareholders with resumed voting rights as well as shareholdings of top ten shareholders Unit: share Total number of preference Total number of common shareholders with resumed 31,930 0 shareholders at the period-end voting rights at the period-end (if any) Shareholdings of top ten shareholders Number of Pledged or frozen shares Name of Nature of Shareholding Number of shares restricted shares shareholder shareholder percentage (%) held Status of shares Number of shares held Beijing Grain State-owned 28.95% 123,561,963 Group Co., Ltd. corporation Li Sheryn Zhan Foreign 4.84% 20,647,100 Ming individual BOC—Jiashi Securities Domestic Investment Fund non-state-owned 0.61% 2,595,200 in Value-added corporation Industry Domestic Yang Shuling 0.58% 2,458,000 individual Domestic Xu Zhen 0.52% 2,209,200 individual Domestic Gao Biao 0.50% 2,120,000 individual Foreign Yao Liyuan 0.46% 1,950,000 individual Foreign Zhang Xiaoxia 0.46% 1,949,250 individual Domestic Zhong Yi 0.38% 1,640,083 individual Domestic Wang Dao 0.37% 1,595,900 individual Shareholdings of top ten non-restricted shareholders 4 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. Variety of shares Name of shareholder Number of non-restricted shares held Variety Number Beijing Grain Group Co., Ltd. 123,561,963 RMB common shares 123,561,963 Domestically listed foreign Li Sheryn Zhan Ming 20,647,100 20,647,100 shares BOC—Jiashi Securities Investment 2,595,200 RMB common shares 2,595,200 Fund in Value-added Industry Yang Shuling 2,458,000 RMB common shares 2,458,000 Xu Zhen 2,209,200 RMB common shares 2,209,200 Gao Biao 2,120,000 RMB common shares 2,120,000 Domestically listed foreign Yao Liyuan 1,950,000 1,950,000 shares Domestically listed foreign Zhang Xiaoxia 1,949,250 1,949,250 shares Zhong Yi 1,640,083 RMB common shares 1,640,083 Wang Dao 1,595,900 RMB common shares 1,595,900 Among shareholders above, there exists no related-party relationship between the principal shareholder and other shareholders of the Company. Nor they are parties with concerted Related or acting-in-concert parties action as prescribed in the Information Disclosure Administrative Methods for Changes in among the above shareholders Shareholding of Shareholders of Listed Companies. And it is unknown whether there is related-party relationship among other shareholders and whether they are prescribed parties with concerted action. The shareholder, Zhong Yi held 1,640,083 shares of the Company through the customer credit Top ten common shareholders collateral securities trading account of Fortune Securities Co., Ltd.. The shareholder, Wang conducting securities margin trading Dao held 1,295,900 shares of the Company through common account and held 300,000 (if any) shares of the Company through the customer credit collateral securities trading account of Cinda Securities Co., Ltd.. Did any of the top ten common shareholders or the top ten non-restricted common shareholders of the Company conduct any promissory repo during the Reporting Period? □ Yea √ No No such cases in the Reporting Period. 2. Total number of preference shareholders and shareholdings of the top ten of them □ Applicable √ Not applicable 5 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. Section III Significant Events I Changes in major accounting statement items and financial indicators for the Reporting Period, as well as reasons for such changes √ Applicable □ Not applicable Item 03/31/2017 12/31/2016 +/- (%) Reason for change Monetary funds 145,198,515.20 246,504,351.39 -41.10% Mainly because of the repayment of loans and money for land transfer from subsidiary Hubei Pearl River Co., Ltd. in this Reporting Period Inventories 113,680,381.94 297,867,807.05 -61.84% Mainly because of subsidiary Shanghai Real Estate Co., Ltd.’s change of holding purpose of building it holds, from inventories to investment real estate and costs of the selling of real estate transaction from Hubei Company. Other current assets - 8,714,139.07 -100.00% Mainly because there are no such cases in this Reporting Period where subsidiary Hubei Company paid taxes in advance Investment real estate 41,424,771.83 19,244,780.80 115.25% Mainly because of subsidiary Shanghai Real Estate Co., Ltd.’s change of holding purpose of building it holds, from inventories to investment real estate Accounts payable 17,670,161.90 77,627,005.61 -77.24% Mainly because of the payment of parts of project fund from subsidiary Hubei Real 6 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. Estate Co., Ltd. in this Reporting Period Accounts received in 224,367,103.88 365,746,868.16 -38.66% Mainly because of advance income of the selling of real estate transaction from subsidiary Hubei Real Estate Co., Ltd. Non-current liabilities - 78,710,181.59 -100.00% Mainly because of due within one year repayment of loans from subsidiary Mudanjiang Travel Group Long-term borrowings 5,000,000.00 73,666,666.66 -93.21% Mainly because of repayment of loans from subsidiary Mudanjiang Travel Group Minority equity -11,470,075.98 -4,096,952.76 -179.97% Mainly because of dividend of subsidiary Hubei Real Estate Co., Ltd. Item January-March 2017 January-March 2016 +/- (%) Reason for change Operating revenues 250,701,694.22 80,025,245.10 213.28% Mainly because of income of the selling of real estate transaction from subsidiary Hubei Pearl River Co., Ltd. Operating costs 184,669,214.20 62,053,529.67 197.60% Mainly because of costs of the selling of real estate transaction from subsidiary Hubei Pearl River Co., Ltd. Taxes and surtaxes 11,359,640.40 4,535,479.61 150.46% Mainly because of the provision of related taxes for selling of real estate from subsidiary Hubei Pearl River Co., Ltd. Selling expenses 2,813,146.35 4,500,007.25 -37.49% Mainly because of the decrease of sales commission in this Reporting Period 7 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. Financial expenses 3,601,893.63 24,749,365.53 -85.45% Mainly because of repayment of the principal and decrease of financing costs in this Reporting Period Asset impairment loss -4,012,911.94 245,161.16 -1736.85% Mainly because of receiving parts of receivables in this Reporting Period Income tax expenses 8,208,612.14 29,699.94 27538.48% Mainly because of provision of income taxes for revenues from Hubei Pearl River Co., Ltd. and Shanghai Real Estate Co., Ltd. Minority interest 1,806,876.78 -2,335,161.42 177.38% Mainly because of income revenues from subsidiary Hubei Pearl River Co., Ltd. Net cash flow from -77,228,574.91 124,823,160.52 -161.87% Mainly because of operating activities decrease of receipt of house payment in advance from subsidiary Hubei Pearl River Co., Ltd. in this Reporting Period Net cash flow from 53,904,911.22 7,258,357.17 642.66% Mainly because of investment activities receiving cash from recovery of parts of investment and selling of parts of fixed assets and investment real estate Net cash flow from -77,982,172.50 -127,094,529.15 38.64% Mainly because of financing activities increase of receipts from loans in this Reporting Period II Progress of significant events and analysis & explanations on their influence and solutions (I) The Company signed the Supplementary Agreement (II) on the Profit Compensation Agreement that has additional conditions with Beijing Grain Group Co., Ltd. and Beijing State-owned Capital Management Center on February 15, 2017. After the signing of the supplementary agreement, the profitability commitment period of the transaction is adjusted from 2016, 2017 and 2018 to 2017, 8 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. 2018 and 2019, and if the transaction fails to be implemented in 2017, the first year of the profitability commitment period of this transaction will be the year when the target company completes the transaction. The net profit-attributable to the owner of the Company- of the consolidated financial statements after deducting non-recurring gains and losses committed by the target company for 2017, 2018, and 2019 will be adjusted accordingly to not less than RMB 130.1115 million, RMB 150.3937 million and RMB 162.1605 million. (II) To resolve competition between the controlling shareholders and the listed company, to safeguard the interests of listed companies and small and medium shareholders, the Company decides to terminate the grain trade contract signed by parties concerned, to recover the commercial acceptance bill and authorize the management of the Company to handle the specific business and contract’s cancellation and termination. (III) According to the relevant issues raised in "The Notice of the First Review Feedback of China Securities Regulatory Commission Administrative Licensing Project, the Company has updated and revised documents related to major assets reorganization such as the auditing report of the transaction object and files for review of listed companies, has seriously studied and implemented the helpful feedback and has replied to questions raised as required together with the agency in accordance with the latest financial status of the Company and the target company. (IV) In order to ensure the smooth progress of this major assets reorganization, the Company determined to terminate the cooperation agreement with Beijing Anxin Law Firm and entrusted Beijing Zhonglun Law Firm as the special legal adviser for this major assets reorganization, providing documents related to the major assets reorganization such as the legal opinion after the friendly consultations with Beijing Anxin Law Firm and Beijing Zhonglun Law Firm. (V) The progress of the Company's joint and several liability guarantee for ICBC Mudanjiang Sub-Branch and China Citic Bank Mudanjiang Sub-Branch and the Company’s liability of counter guarantee for Heilongjiang Xinzheng Investment Guarantee Group Co., Ltd.: the Company has received the notice from ICBC Mudanjiang Sub-Branch, China Citic Bank Mudanjiang Sub-Branch and Heilongjiang Xinzheng Investment Guarantee Group Co., Ltd. that the Company’s related liabilities have been lifted after the full return of loans by Mudanjiang Pearl River Wanjia Tourism Investment Development Group Co., Ltd.. Generalization of significant events Date of disclosure Index The Company signed the Supplementary Agreement (II) on the Profit Compensation Agreement that has additional conditions with Beijing Grain Group Co., Ltd. and Beijing State-owned Capital Management Center on February 15, 2017. After the signing of the supplementary agreement, the profitability commitment period of the transaction is adjusted from 2016, 2017 http://www.cninfo.com.cn and 2018 to 2017, 2018 and 2019, and if the transaction fails to be implemented 02/16/2017 Announcement No.: in 2017, the first year of the profitability commitment period of this transaction 2017-003 will be the year when the target company completes the transaction. The net profit-attributable to the owner of the Company- of the consolidated financial statements after deducting non-recurring gains and losses committed by the target company for 2017, 2018, and 2019 will be adjusted accordingly to not less than RMB 130.1115 million, RMB 150.3937 million and RMB 162.1605 million. To resolve competition between the controlling shareholders and the listed company, to safeguard the interests of listed companies and small and medium http://www.cninfo.com.cn shareholders, the Company decides to terminate the grain trade contract signed 03/07/2017 Announcement No.: by parties concerned, to recover the commercial acceptance bill and authorize the 2017-009 management of the Company to handle the specific business and contract’s cancellation and termination. According to the relevant issues raised in "The Notice of the First Review http://www.cninfo.com.cn 03/17/2017 Feedback of China Securities Regulatory Commission Administrative Licensing Announcement No.: 9 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. Project, the Company has updated and revised documents related to major assets 2017-012 reorganization such as the auditing report of the transaction object and files for review of listed companies, has seriously studied and implemented the helpful feedback and has replied to questions raised as required together with the agency in accordance with the latest financial status of the Company and the target company. In order to ensure the smooth progress of this major assets reorganization, the Company determined to terminate the cooperation agreement with Beijing Anxin http://www.cninfo.com.cn Law Firm and entrusted Beijing Zhonglun Law Firm as the special legal adviser 04/01/2017 Announcement No.: for this major assets reorganization, providing documents related to the major 2017-015 assets reorganization such as the legal opinion after the friendly consultations with Beijing Anxin Law Firm and Beijing Zhonglun Law Firm. The progress of the Company's joint and several liability guarantee for ICBC Mudanjiang Sub-Branch and China Citic Bank Mudanjiang Sub-Branch and the Company’s liability of counter guarantee for Heilongjiang Xinzheng Investment Guarantee Group Co., Ltd.: the Company has received the notice from ICBC http://www.cninfo.com.cn Mudanjiang Sub-Branch, China Citic Bank Mudanjiang Sub-Branch and 04/11/2017 Announcement No.: Heilongjiang Xinzheng Investment Guarantee Group Co., Ltd. that the 2017-017 Company’s related liabilities have been lifted after the full return of loans by Mudanjiang Pearl River Wanjia Tourism Investment Development Group Co., Ltd.. III Commitments of the Company’s actual controller, shareholders, related parties and acquirer, as well as the Company and other commitment makers, unfulfilled in this reporting period √ Applicable □ Inapplicable Time of Commitment Period of Commitment Commitment maker Contents making Fulfillment type commitment commitment Beijing Food Group Co., Ltd(hereinafter the referred to as “BGG”); The Company will bear commitment Chen Binglian; Guan Performing compensation liabilities if makers Ying; Wang Chunli; according to Commitments Other there exists illegal behaviors, abided by the Wang Guofeng; Wang 03/17/2017 the made at the commitments like idle land not disclosed, commitments Jianxin; Wang Xinxin; commitment time of assets causing a loss for listed during the Xue Chunlei; Yao s reorganization companies and investors. Reporting Gang; Zhao Yanming; Period Zhao Yinhu; Zhu Hengyuan Beijing Food Group Commitments "1. Person who increases Performing the 11/07/2016 Co., Ltd on increased shares: BGG; 2. according to commitment 10 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. shares Implementation period of the makers increased shares plan: from commitment abided by the 11/07/2016 to 05/07/2017, s commitments total 6 months; 3. The amount during the or number of increased shares: Reporting increasing the Company’s Period shares on the condition that the related rules of CSRC and Shenzhen Stock Exchange are observed, and the amount is no less than RMB130 million, no more than RMB220 million, and it can’t trigger the duty of tender offer; 4. Price of increased shares: not setting a price range. BGG will not initiatively decrease the holdings of Company’s shares on holding period and within the legal time limit. " "BGG and GGZX committed that the net profit attributable to owners of the Company after deducting exceptional profit and loss in the consolidates financial statements committed during the commitment period of profit by Beijing Food Co., the Beijing State-owned Commitment Ltd(hereinafter referred to as commitment Capital Operation and Performing on “JLGF”) was respectively no makers Management according to performance less than RMB130.1115 abided by the Center(hereinafter 11/02/2016 the and million, commitments referred to as “GGZX”); commitment compensation RMB150.3937million, and during the Beijing Food Group s arrangement RMB162.1605 million. Reporting Co., Ltd During the commitment Period period of profit, if the placed assets’ accumulative actual net profit till the end of the current period is less then accumulative the promised net profit till the end of the current period, then BGG and GGZX should 11 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. compensate the listed companies as agreed……" “According to requirements in the Guidance about Diluted Immediate Return of Initial Offering and Refunding, Major Assets Restructuring Related Issues of China Securities Regulatory Commission (announcement of China Securities Regulatory Commission No. [2015]31), director and senior managers of listed company make the following commitment: 1. Do not transport interest to other units or person with payment or unfair terms, also, do not take Guan Ying; Song other methods to harm the the Chunling; Wang Chunli; interest of company; 2. commitment Wang Guofeng; Wang Performing Restrain the position-related makers Jianxin; Wang Xinxin; according to Other consuming behavior of abided by the Xu Laizheng; Xue 11/02/2016 the commitments committing party; 3. Do not commitments Chunlei; Yao Gang; commitment use capital of corporate assets during the Zhang Cunliang; Zhao s to work on investment and Reporting Yanming; Zhao Yinhu; consumption activities which Period Zhu Hengyuan are irrelevant to implementation of duty; 4. The salary system formulated by board of directors or salary and assessment committee is linked up with the implementation of filling return measures of the company; 5. If the company publishes equity incentive policy next, the exercise conditions of equity incentive policy to be published is linked up with the implementation of filling return measures of the company; 6. From the date of 12 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. issuing the commitment to the date of the implementation of major assets reconstructing of the company this time is completed, if China Securities Regulatory Commission publishes other new regulatory rules about filling return measures and the commitment, and the above commitment cannot meet the corresponding rule of China Securities Regulatory Commission, then complementary commitment will be issued according to new rules of China Securities Regulatory Commission.” “The stocks which are issued to GGZXthis time cannot be transferred within 36 months since the date of listed stocks. When the above term expires, if the GGZX does not complete to implement the obligations of profit compensation which is agreed according to Profit the Compensation Agreement and commitment Performing the complementary makers Beijing State-owned according to Other agreement, then the lockup abided by the Capital Management 07/29/2016 the commitments period of stocks which are commitments Center commitment issued to GGZX will be during the s prolonged to the date when Reporting GGZX completes to Period implement the obligations of profit compensation. If the information provided or revealed for the transaction is suspected of being involved in false record, mislead statement or major omission, and judicial office places a case on file for investigation 13 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. or China Securities Regulatory Commission places a case on file for investigation, before forming investigation conclusions, committing party cannot transfer the stocks with equity in HaiNan Pearl River Holdings Co., Ltd. (hereinafter referred to as “ZJKG”), and written application for pausing transferring and stock account shall be submitted to board of directors of listed company within two transaction days since the date that the case is filed and inspection notice is received. Board of directors applies to Stock Exchange and Registration & Settlement Company for lockup directly. If committing party does not submit lockup application within two transaction days, board of directors is authorized for verification, after this, board of directors can report the identification information and account information of the person to Stock Exchange and Registration & Settlement Company directly, and the board applies for lockup. If board of directors does not report the identification information and account information of committing party to Stock Exchange and Registration & Settlement Company, Stock Exchange and Registration & Settlement Company are authorized to 14 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. lock the relevant stocks directly. If laws violating and regulations violating conditions are found in investigation conclusions, committing party promises that the locked stocks can be used for compensation for relevant investors voluntarily." "1. Except that the Company/I myself, once regarded as the limited partner with Xinniu Runying(Tianjing) Equity Investment Funds Partnership Firm(limited partnership) (hereinafter referred to as “XNRY”)existed associated relationships with it, the Company/I myself didn’t exist any associated relationships with ZJKG, BGG, GGZX, Guokai Finance Co., Ltd(hereinafter referred to as the “GKJR”), and JLGF. 2. the commitment Performing Beijing Fang Cheng Company/I myself signed the makers according to Real Estate Other Share Transfer Agreement of abided by the 07/29/2016 the Development CO., commitments Partnership Firm with Beijing commitments commitment Ltd; Zhao Guangsheng Xinniu Investment Consulting during the s Co., Ltd, and Xinniu Reporting Runying(Tianjing) Equity Period Investment Funds Management Co., Ltd, transferring all the shares of XNRY held by the Company to Beijing Xinniu Investment Consulting Co., Ltd. The price of this share transfer is based on the initial invested amount. Considering the 10% return on investment per year, the pricing of this share transfer is not comparable with the pricing of this 15 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. transaction, and there is no associated relationship between this transfer agreement and this transaction.” Beijing Xinniu Investment Consulting Co., Ltd; Beijing I myself / the Company Xingrongji Real Estate invested the Xinniu Funds Co., Ltd; Beijing with own funds without cases Zhibang Rongye of share-holding entrustment the Investment Co., Ltd; or other equity arranfements. commitment Shan Jinchao; Jiang Performing Except that I myself / the makers Shuang; Lu Zhuohui; according to Other Company, once regarded as abided by the Xinniu 07/29/2016 the commitments the limited partner with commitments Runying(Tianjing) commitment XNRY existed associated during the Equity Investment s relationships with it, I myself Reporting Funds Partnership /the Company didn’t exist any Period Firm(limited associated relationships with partnership); Xu JLGF, BGG, GGZX, GKJR, Dianxiang; Yang and ZJKG. Hanhui; Zunhua Dadexing Investment Co., Ltd BGG will no transfer any holding shares of ZJKG within 12 months after the date of this transaction ( that is the date when the shares the issued to BGG listed in this commitment Performing transaction) if the shares of makers according to Beijing Food Group Other ZJKG increased due to abided by the 07/29/2016 the Co., Ltd commitments reasons, like stock dividend, commitments commitment bonus, and the increased during the s share capital before the date Reporting of this transaction, the Period increased part of shares should be in compliance with the aforementioned regular arrangement. Beijing Wanfa Real “1. If ZJKG does not release Performing the Other Estate Development the guarantee or security 07/29/2016 according to commitment commitments Co., Ltd provided for subsidiary debt the makers 16 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. in sold assets of the commitment abided by the transaction before the second s commitments board meeting about the during the transaction, and Pearl River Reporting Holding holds responsibilities Period for debtors or guaranteed person as guarantor, Beijing Wanfa is responsible for compensating the listed company. 2. The liabilities which are not revealed within the scope of the sold assets (subject to sold assets audit report) of the transaction by ZJKG before base date are not regarded as the liabilities related to sold assets, the liabilities are undertaken by ZJKG after settlement day. Any claim or requirement, proposed by the third party about additional liabilities, not revealed and undertaken by ZJKG in reality, exceed the additional liabilities which are recorded in financial statement on May 31, 2016 (hereafter referred to as “base date”), is treated by Beijing Wanfa or entity assigned by Beijing Wanfa, and Beijing Wanfa undertakes any actual loss or expenditure of ZJKG generated by the demand or requirement of the third party. 3. Except the liability within the scope of sold assets, Beijing Wanfa will compensate for liabilities and loss, expense and expenditure formed by liabilities which are not covered in audit report issued by accounting firm with qualification for 17 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. securities business up to base date of listed company to ZJKG. 4. As the guarantor for ZJKG to carry out Major Assets Exchange and Issued Stocks Purchase Assets Agreement between All Shareholders of Hainan Pearl River Holding Co., Ltd. and Beijing Food Co., Ltd., Beijing Wanfa, (hereafter referred to as “Major Assets Exchange and Issued Stocks Purchase Assets Agreement”), Beijing Wanfa agrees to compensate to the counter party of the transaction for the loss, expense and expenditure (including the expenditure of agency fee such as legal service etc) generated by ZJKG and Beijing Wanfa violate the statement, guarantee or commitment under Major Assets Exchange and Issued Stocks Purchase Assets Agreement. Beijing Wanfa agrees to take compensation responsibilities within 60 days since the day the listed company or counter party undertakes the responsibilities or loss incurs for the above committed issue.” "1. BGG has clearly known the that ZJKG prepared to commitment exchange-out assets and Performing makers limited right defects and legal according to Beijing Food Group Other abided by the risks listed in the Report of 07/29/2016 the Co., Ltd commitments commitments Assets Assessment, and commitment during the Auditor’s Report in this s Reporting transaction. BGG made sure Period that service supply partner of 18 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. exchanged-out assets designated by BGG shall fully accept exchanged-out assets according to the conditions of exchanged-out assets on delivery date. 2. After the delivery date, BGG makes certain that exchanged-out assets and its corresponding business’s all rights and duties are transferred to the service supply partner of exchanged-out assets designated by BGG to enjoy and undertake. ZJKG no longer enjoy any rights or undertake any duties and responsibilities for exchanged-out assets. 3. BGG will help JLGF to cancel the guarantee for other subsidiaries of BGG before the Second Board of Directors related to this transaction of ZJKG, and offer supplementary guarantee. 、 4. The shares issued to BGG can’t be transferred within 36 months after the date when shares listed. If BGG hasn’t performed the obligation of profit compensation according to Agreement on Profit Compensation and its supplementary agreement, then the lockup period of shares issued to BGG defers to the date when BGG has performed the the obligation of profit compensation. " "1. JLGF and its Performing the Other wholly-owned, holding according to commitment Beijing Food Co., Ltd 01/01/2014 commitments subsidiaries now don’t exist the makers any significant lawsuit cases commitment abided by the 19 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. and arbitration cases that are s commitments still not settled or predictable. during the 2. JLGF and its Reporting wholly-owned , holding Period subsidiaries haven’t subjected to any administrative punishments with serious circumstances for violating laws and administrative rules, like Industrial and Commercial Law, the Tax Law, and Law of National Land, Food Safety, Construction, Planning, Environmental Protection, Fire Protection, and Quality Supervision since January 1, 2014. 3. The food safety accidents haven’t happened in JLGF and its wholly-owned, holding subsidiaries since January 1, 2014. " “1. Except the revealed conditions, ZJKG confirms to possess the ownership and/or right to use of the assets to be sold legally; possess complete and effective disposition for the assets to be sold; guarantee the assets to be sold the do not have guarantee, commitment Performing mortgage, pledge to any third makers according to HaiNan Pearl River Other party and do not have unclear abided by the 07/29/2016 the Holdings Co., Ltd. commitments ownership, other flaws of commitments commitment assets to be sold (including during the s but not limited to unclear Reporting ownership, right is restricted, Period decrease in value which may exist, it is unable to transfer, it cannot be delivered actually etc) or any interests and rights of the third party, in order to assure that the third party will not press for payment, and to 20 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. assure that the assets to be sold can be transferred to the contractor of assets to be sold assigned by BGG according to Chinese law. 2. ZJKG will negotiate with the relevant parties of rights and interests of the third party or other limitation of rights which the sold assets are set with to solve the release issues of other rights of the assets, and the written agreement about agreeing to release the mortgage from mortgager of the mortgage shall be got before the settlement of the sold assets in this transaction. 3. ZJKG promises that the conditions of mortgage, pledge or rights and interests of the third party or other limitation of rights which restrict the transfer of ownership of sold assets will be released legally before the settlement date of sold assets, in order to ensure the sold assets are deliverable. The debtor and corresponding guarantee person (if there is) of liabilities in sold assets shall issue written document about agreement of transfer of liabilities/assured responsibilities. 4. ZJKG promises that ZJKG and subsidiary companies of ZJKG do not have the conditions of providing external guarantee and it is still not released, and do not add new external guarantee before the settlement of sold 21 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. assets. ZJKG will release the guarantee or pledge provided for the liabilities of subsidiary companies in sold assets of the transaction before the second board meeting about the transaction. 5. ZJKG plans to purchase 100% of shares of JLGF by assets exchange and issued shares purchase assets (hereafter referred to as “the restructuring”). According to the restructuring scheme, non-equity assets related five properties to be sold in restructuring draft are as the assets to be sold of the company, the contractor of sold assets will undertake them. As the properties are in the state of mortgage and being closed down, the company promises if the transfer of ownership cannot be completed for the properties at the settlement date agreed in Major Assets Exchange and Issued Stocks Purchase Assets Agreement signed by each party, then the company will compensate the contractor of sold assets or other parties assigned by the contractor according to the equal amount of appraisal value of the properties in the restructuring by cash, after compensation, the properties will not be sold any more.” Xinniu "1. There doesn’t exist Performing the Runying(Tianjing) employee stock ownership according to commitment Other Equity Investment plan or share-holding 07/29/2016 the makers commitments Funds Partnership entrustment, or equity commitment abided by the Firm(limited arrangement in XNRY and s commitments 22 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. partnership) investors in various levels. 2. during the XNRY confirms that Jiang Reporting Shuang is the actual controller Period of XURY. XNRY calculates through penetration that there are 12 individual investors who conform with the regulations of Article 10 numbers of issuing targets is no more than 200 in Securities Law. 3. the investors of XNRY are institutions and natural person. there doesn’t exist structured arrangement. And it doesn’t influence the stability of the Company’s equity structure. 4. There doesn’t exist any other significant agreement arrangement in XNRY. " “1. The committing party and the company which is controlled or influenced by the party shall avoid and decrease the related transaction between ZJKGand Beijing State-owned its subsidiary companies as Capital Operation and much as possible. For the Management Center; Commitments transaction which ZJKG and the Beijing Food Group on the its subsidiary companies deal commitment Performing Co., Ltd; Guokai horizontal with independent third party makers according to Finance Co., Ltd; competition, through market, ZJKG and its abided by the 07/29/2016 the Xinniu the related subsidiary companies will commitments commitment Runying(Tianjing) transaction deal with the independent during the s Equity Investment and the capital third party. The company Reporting Funds Partnership occupation which is controlled or Period Firm(limited influenced by committing partnership) party will strictly avoid lending from ZJKG and its subsidiary companies, occupying the capital of ZJKG and its subsidiary companies or using the advanced money of ZJKG and 23 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. its subsidiary companies or using the method of compensating liabilities etc to embezzle the capital of ZJKG. 2. For all necessary transaction behavior between committing party and the company controlled or influenced by the party and ZJKG and its subsidiary companies, each party shall obey the market rules and the transaction shall be carried fairly and reasonably with the general principles of equality and mutual benefit, compensation of equal value. If the price of transaction is fixed by government, then the fixed price shall be executed; if the price of transaction is not fixed by government, then the generally accepted price of market shall be executed; if the price of transaction is not fixed by government and there has no reference price of market, the cost shall be confirmed and executed according to cost added comparable reasonable profit. 3. For the related transaction between committing party and the company controlled or influenced by the party and ZJKG and its subsidiary companies, necessary legal procedures will be implemented according to regulations of ZJKG and management system of related transaction. When issues about related transaction are deliberated in authority of 24 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. ZJKG, avoidance obligation shall be implemented legally and initially; the issues about related transaction which must be reported to authority for deliberation can be executed after they are deliberated and passed by authority. 4. Committing party promises that the party will not gain any improper interests or make ZJKG and its subsidiary companies undertake any obligations by related transaction. If there is loss of ZJKG and its subsidiary companies caused by violating the commitment or the interests of ZJKG and its subsidiary companies are invaded by using related transaction, the loss of ZJKG and its subsidiary companies is undertaken by committing party.” "Except the target company and its subsidiaries, other enterprises controlled by commitment maker don’t engage in any businesses by any way that exist competition Commitments the or may compete with the on the commitment target company and its Performing horizontal makers subsidiaries at present. In according to Beijing Food Group competition, abided by the order to avoid the horizontal 07/29/2016 the Co., Ltd the related commitments competition with ZJKG after commitment transaction during the this transaction, the s and the capital Reporting commitment maker occupation Period committees that: 1. The commitment maker will not directly or indirectly engage in any business by any way, including cooperating with others , that is as same as, 25 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. similar to or competitive in any aspects with ZJKG; 2. The commitment maker will spare no efforts to prevent its associated enterprises from engaging in business that is as same as, similar to or competitive in any aspects with ZJKG; 3. The commitment maker will not invest or control shares of the companies, enterprises, or other organizations whose business is as same as, similar to or competitive in any aspects with ZJKG; 4. The commitment maker will not offer trade secrets, such as proprietary technology, sales channel, and clients information to the companies, enterprises, or other organizations and individuals whose business is as same as, similar to or competitive in any aspects with ZJKG; 5. If the commitment maker will prepare to engage in business that may exists horizontal competition with ZJKG and its subsidiaries, the commitment maker should resolve it through negotiation with ZJKG based on the principle that ZJKG and its subsidiaries have the priority." Beijing State-owned The commitment maker will the Capital Operation and provide ZJKG with the related commitment Performing Management Center; information of this transaction makers according to Beijing Food Group Other in time and guarantee that the abided by the 07/29/2016 the Co., Ltd; Beijing Wanfa commitments offered information is factual, commitments commitment Real Estate accurate and complete. The during the s Development Co., Ltd; commitment maker will Reporting Guokai Finance Co., undertake compensation Period 26 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. Ltd; Xinniu liability according to law if Runying(Tianjing) there exists any false record, Equity Investment misleading statement or Funds Partnership material omission, making a Firm(limited loss to ZJKG and investors. partnership) Beijing State-owned The commitment makers and Capital Operation and its management personnel Management Center; guaranteed that there were no the Beijing Food Group cases where the Companies commitment Performing Co., Ltd; Guokai failed to repay large debts as makers according to Finance Co., Ltd; Other scheduled or failed to fulfill abided by the 07/29/2016 the Xinniu commitments the commitments, or they commitments commitment Runying(Tianjing) were in administrative during the s Equity Investment supervision by CSRC or Reporting Funds Partnership punished by law by Stock Period Firm(limited Exchange in the past five partnership) years. The staff, assets, finances, institutions, and business of the target company are totally independent from the commitment maker and other enterprises controlled by commitment maker, there was the no confusion between them. commitment Performing The commitment maker makers according to Beijing Food Group Other guarantee to separate the staff, abided by the 07/29/2016 the Co., Ltd commitments assets, finance, institutions, commitments commitment and business of listed during the s companies from the Reporting commitment maker and other Period enterprises controlled by commitment maker to keep the independence of listed companies in staff, assets, finance, institutions, and business after this transaction. "There are no such things, like Performing the false funding, influence on according to commitment Beijing Food Group Other legal procedure in JLGF, 07/29/2016 the makers Co., Ltd commitments and it will not influence the commitment abided by the normal use of JLGF if its s commitments 27 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. assets with defects are during the existed. The commitment Reporting will need to compensate Period ZJKG and JLGF for all economic losses with equal amount if there are any defects of main assets in JLGF resulting to any economic losses in ZJKG and JLGF after this significant assets restructuring. " "1. Speeding up the completion of integrating the underlying assets. After this transaction, the Company will speed up to integrate the underlying assets, setting up a more scientific and standard operating system, expand the market positively, keeping a good communication with customers, and completing the operating plan efficiently with the existing business concept the in accordance with industry commitment Performing characteristics of target makers according to HaiNan Pearl River Other companies. 、2. Strengthening abided by the 07/29/2016 the Holdings Co., Ltd. commitments operating management and commitments commitment internal control. The during the s Company will strengthen Reporting operating management and Period internal control further, improving daily operating efficiency, cutting down operating costs, controlling comprehensively and effectively the risks of operation and management, improving operation efficiency. 3. Carrying out positive policy of profit distribution. After this restructuring, the Company 28 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. will increase the return to investors, perfect the policy of profit distribution, increase transparency of distribution policy implementation, and protect the interests of all shareholders, setting up a more scientific and rational profit distribution and decision-making mechanism to protect the interests of shareholders and investors better. If the Company violate the aforementioned commitments, it will need to announce its violation and the reason. Except the force majeure or other reasons attributable to the Company, the Company will need to apologize to the shareholders and public investors. Meanwhile, it also needs to provide the investors with supplementary commitments or substitutive commitments to try to protect the interests of investors. It need to carry out the supplementary commitments or substitutive commitments reviewed and approved by general meeting of shareholders. " "1. The commitment makers Beijing State-owned had the only, undisputed, and Capital Operation and the exclusive rights to the shares Management Center; commitment of target company. There were Performing Guokai Finance Co., makers no such cases where the according to Ltd; Xinniu Other abided by the commitment makers acted for 07/29/2016 the Runying(Tianjing) commitments commitments the third party to hold shares, commitment Equity Investment during the where lawsuits and potential s Funds Partnership Reporting disputes was caused, where Firm(limited Period any third party put forward partnership) the claim for rights to the 29 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. shares of target company held by the commitment makers by any way; 2. The commitment makers and management personnel(if any)haven’t been in any administrative punishment(except the punishment irrelevant to securities market), criminal penalties. Also, they haven’t been involved in any significant civil lawsuits or arbitration related to economic disputes; 3. The commitment makers are qualified to be the issuing targets of non-public stock of listed companies. There was no cases where the commitments makers can’t be regarded as the issuing targets as stipulated in law, regulations, rules, and normative documents. " "1. The commitment makers had the only, undisputed, and exclusive rights to the shares of target company. There were no such cases where the commitment makers acted for the the third party to hold shares, commitment where lawsuits and potential Performing makers disputes was caused, where according to Beijing Food Group Other abided by the any third party put forward 07/29/2016 the Co., Ltd commitments commitments the claim for rights to the commitment during the shares of target company held s Reporting by the commitment makers by Period any way; 2. The commitment makers and management personnel(if any)haven’t been in any administrative punishment(except the 30 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. punishment irrelevant to securities market), criminal penalties. Also, they haven’t been involved in any significant civil lawsuits or arbitration related to economic disputes; 3. The commitment makers are qualified to be the issuing targets of non-public stock of listed companies. There was no cases where the commitments makers can’t be regarded as the issuing targets as stipulated in law, regulations, rules, and normative documents; 4. Purchasing the listed companies is permitted. " “The stocks which are issued to committing party this time cannot be transferred within 36 months since the date of listed stocks. If the closing price of stocks of ZJKG is lower than offering price for 20 successive transaction days within 6 months after the the transaction is completed, or commitment the closing price at the end of Performing makers 6 months is lower than according to Beijing Food Group Other abided by the offering price after the 07/29/2016 the Co., Ltd commitments commitments transaction is completed, the commitment during the lockup term of stocks of s Reporting ZJKG which are held by Period committing party will be prolonged for at least 6 months. If the information provided or revealed for the transaction is suspected of being involved in false record, mislead statement or major omission, and judicial office places a case on file for 31 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. investigation or China Securities Regulatory Commission places a case on file for investigation, before forming investigation conclusions, committing party cannot transfer the stocks with equity in ZJKG, and written application for pausing transferring and stock account shall be submitted to board of directors of listed company within two transaction days since the date that the case is filed and inspection notice is received. Board of directors applies to Stock Exchange and Registration & Settlement Company for lockup directly. If committing party does not submit lockup application within two transaction days, board of directors is authorized for verification, after verification, board of directors can report the identification information and account information of the person to Stock Exchange and Registration & Settlement Company directly, and the board applies for lockup. If board of directors does not report the identification information and account information of committing party to Stock Exchange and Registration & Settlement Company, Stock Exchange and Registration & Settlement Company are authorized to lock the relevant stocks directly. If laws violating and regulations violating 32 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. conditions are found in investigation conclusions, committing party promises that the locked stocks can be used for compensation for relevant investors voluntarily.” "The stocks which are issued to committing party this time cannot be transferred within 12 months since the date of listed stocks. If the information provided or revealed for the transaction is suspected of being involved in false record, mislead statement or major omission, and judicial office places a case on file for investigation or China Securities Regulatory Commission places a case on file for the Guokai Finance Co., investigation, before forming commitment Ltd; Xinniu investigation conclusions, Performing makers Runying(Tianjing) committing party cannot according to Other abided by the Equity Investment transfer the stocks with equity 07/29/2016 the commitments commitments Funds Partnership in Pearl River Holding, and commitment during the Firm(limited written application for s Reporting partnership) pausing transferring and stock Period account shall be submitted to board of directors of listed company within two transaction days since the date that the case is filed and inspection notice is received. Board of directors applies to Stock Exchange and Registration & Settlement Company for lockup directly. If committing party does not submit lockup application within two transaction days, board of directors is authorized for verification, 33 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. after verification, board of directors can report the identification information and account information of the person to Stock Exchange and Registration & Settlement Company directly, and the board applies for lockup. If board of directors does not report the identification information and account information of committing party to Stock Exchange and Registration & Settlement Company, Stock Exchange and Registration & Settlement Company are authorized to lock the relevant stocks directly. If laws violating and regulations violating conditions are found in investigation conclusions, committing party promises that the locked stocks can be used for compensation for relevant investors voluntarily. " Executed Yes timely or not? IV Operating result forecast for January-June 2017 Warning of a forecast deficit or considerable YoY change in the accumulative net profit made during the period from the beginning of the year to the end of the next reporting period, as well as explanation of why: □ Applicable √ Not applicable V Securities investments □ Applicable √ Not applicable No such cases in the Reporting Period. VI Investments in derivative financial instruments □ Applicable √ Not applicable 34 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. No such cases in the Reporting Period. VII Visits paid to the Company in the Reporting Period for purposes of research, communication, interview, etc. □ Applicable √ Not applicable No such cases in the Reporting Period. VIII Illegal provision of guarantees for external parties □ Applicable √ Not applicable No such cases in the Reporting Period. IX Occupation of the Company’s funds by the controlling shareholder or its related parties for non-operating purposes □ Applicable √ Not applicable No such cases in the Reporting Period. 35 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. Section IV Financial Statements I Financial statements 1. Consolidated balance sheet Prepared by HaiNan Pearl River Holdings Co., Ltd. March 31, 2017 Unit: RMB Item Closing balance Opening balance Current assets: Monetary funds 145,198,515.20 246,504,351.39 Settlement reserve Interbank lendings Financial assets at fair value through profit/loss Derivative financial assets Notes receivable Accounts receivable 13,783,788.48 16,084,139.32 Accounts paid in advance 85,029,876.68 67,598,789.02 Premiums receivable Reinsurance premiums receivable Receivable reinsurance contract reserve Interest receivable 2,710,880.79 2,710,880.79 Dividends receivable 260,015.00 260,015.00 Other accounts receivable 318,036,622.50 350,870,047.05 Financial assets purchased under agreements to resell Inventories 113,680,381.94 297,867,807.05 Assets held for sale Non-current assets due within one year Other current assets 8,714,139.07 Total current assets 678,700,080.59 990,610,168.69 Non-current assets: Loans and advances to customers Available-for-sale financial assets 30,824,994.90 30,824,994.90 36 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. Held-to-maturity investments Long-term accounts receivable Long-term equity investments 33,288,016.55 33,866,644.98 Investment property 41,424,771.83 19,244,780.80 Fixed assets 216,785,574.09 220,409,931.29 Construction in progress 78,169,695.02 78,169,695.02 Engineering materials Disposal of fixed assets Productive living assets Oil-gas assets Intangible assets 3,648,879.08 3,692,130.10 R&D expenses Goodwill Long-term deferred expenses 1,549,835.13 2,083,962.89 Deferred tax assets 4,985,486.50 4,985,486.50 Other non-current assets 1,581,840.00 1,581,840.00 Total non-current assets 412,259,093.10 394,859,466.48 Total assets 1,090,959,173.69 1,385,469,635.17 Current liabilities: Short-term borrowings Borrowings from the Central Bank Money deposits accepted and inter-bank deposits Interbank borrowings Financial liabilities at fair value through profit/loss Derivative financial liabilities Notes payable Accounts payable 17,670,161.90 77,627,005.61 Accounts received in advance 224,367,103.88 365,746,868.16 Financial assets sold for repurchase Fees and commissions payable Payroll payable 11,243,320.06 12,392,816.29 Taxes payable 94,264,637.00 84,404,890.27 Interest payable 82,587,092.77 86,294,850.36 Dividends payable 3,213,302.88 3,213,302.88 37 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. Other accounts payable 584,640,314.81 541,823,806.30 Reinsurance premiums payable Insurance contract reserve Payables for acting trading of securities Payables for acting underwriting of securities Liabilities held for sale Non-current liabilities due within one year 78,710,181.59 Other current liabilities Total current liabilities 1,017,985,933.30 1,250,213,721.46 Non-current liabilities: Long-term borrowings 5,000,000.00 73,666,666.66 Bonds payable Of which: Preference shares Perpetual bonds Long-term accounts payable Long-term payroll payable Special payables Provisions Deferred income Deferred tax liabilities 597,896.93 597,896.93 Other non-current liabilities Total non-current liabilities 5,597,896.93 74,264,563.59 Total liabilities 1,023,583,830.23 1,324,478,285.05 Owners’ equity: Share capital 426,745,404.00 426,745,404.00 Other equity instruments Of which: Preference shares Perpetual bonds Capital reserve 543,615,438.94 543,615,438.94 Less: Treasury shares Other comprehensive income Special reserve Surplus reserve 109,487,064.39 109,487,064.39 Provisions for general risks 38 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. Retained earnings -1,001,002,487.89 -1,014,759,604.45 Equity attributable to owners of the Company 78,845,419.44 65,088,302.88 Minority interests -11,470,075.98 -4,096,952.76 Total owners’ equity 67,375,343.46 60,991,350.12 Total liabilities and owners’ equity 1,090,959,173.69 1,385,469,635.17 2. Balance sheet of the Company Unit: RMB Item Closing balance Opening balance Current assets: Monetary funds 6,046,393.18 33,952,786.37 Financial assets at fair value through profit/loss Derivative financial assets Notes receivable Accounts receivable 663,817.23 1,032,085.83 Accounts paid in advance 50,000,000.00 50,000,000.00 Interest receivable Dividends receivable 260,015.00 260,015.00 Other accounts receivable 553,760,636.82 591,785,222.60 Inventories 4,824,035.45 4,824,035.45 Assets held for sale Non-current assets due within one year Other current assets Total current assets 615,554,897.68 681,854,145.25 Non-current assets: Available-for-sale financial assets 30,824,994.90 30,824,994.90 Held-to-maturity investments Long-term accounts receivable Long-term equity investments 101,171,813.99 101,713,800.55 Investment property 6,308,058.38 6,383,667.53 Fixed assets 3,898,673.13 4,019,513.64 Construction in progress Engineering materials Disposal of fixed assets Productive living assets 39 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. Oil-gas assets Intangible assets R&D expenses Goodwill Long-term deferred expenses 232,283.31 278,707.32 Deferred tax assets Other non-current assets Total non-current assets 142,435,823.71 143,220,683.94 Total assets 757,990,721.39 825,074,829.19 Current liabilities: Short-term borrowings Financial liabilities at fair value through profit/loss Derivative financial liabilities Notes payable Accounts payable 2,482,949.70 2,482,949.70 Accounts received in advance 38,896.41 38,896.41 Payroll payable 1,096,956.10 1,224,801.48 Taxes payable 27,517,328.47 27,537,449.60 Interest payable 82,468,756.03 82,468,756.03 Dividends payable 3,213,302.88 3,213,302.88 Other accounts payable 508,873,600.84 650,471,361.88 Liabilities held for sale Non-current liabilities due within one year Other current liabilities Total current liabilities 625,691,790.43 767,437,517.98 Non-current liabilities: Long-term borrowings Bonds payable Of which: Preference shares Perpetual bonds Long-term payables Long-term payroll payable Special payables Provisions 40 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. Deferred income Deferred tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities 625,691,790.43 767,437,517.98 Owners’ equity: Share capital 426,745,404.00 426,745,404.00 Other equity instruments Of which: Preference shares Perpetual bonds Capital reserve 546,201,098.01 546,201,098.01 Less: Treasury shares Other comprehensive income Special reserve Surplus reserve 109,487,064.39 109,487,064.39 Retained earnings -950,134,635.44 -1,024,796,255.19 Total owners’ equity 132,298,930.96 57,637,311.21 Total liabilities and owners’ equity 757,990,721.39 825,074,829.19 3. Consolidated income statement Unit: RMB Item January-March 2017 January-March 2016 1. Operating revenues 250,701,694.22 80,025,245.10 Including: Sales income 250,701,694.22 80,025,245.10 Interest income Premium income Fee and commission income 2. Operating costs 224,978,184.11 120,292,401.17 Including: Cost of sales 184,669,214.20 62,053,529.67 Interest expenses Fee and commission expenses Surrenders Net claims paid Net amount provided as insurance contract reserve 41 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. Expenditure on policy dividends Reinsurance premium Taxes and surtaxes 11,359,640.40 4,535,479.61 Selling expenses 2,813,146.35 4,500,007.25 Administrative expenses 26,547,201.47 24,208,857.95 Finance costs 3,601,893.63 24,749,365.53 Asset impairment loss -4,012,911.94 245,161.16 Add: Profit on fair value changes (“-” means loss) Investment income (“-” means loss) -578,628.43 -120,373.11 Including: Share of profit/loss of associates and -514,986.56 -93,817.01 joint ventures Exchange gains (“-” means loss) 3. Operating profit (“-” means loss) 25,144,881.68 -40,387,529.18 Add: Non-operating income 218,154.56 167,838.50 Including: Profit on disposal of non-current 168,799.75 37,402.65 assets Less: Non-operating expense 1,590,430.76 626,962.91 Including: Loss on disposal of non-current 1,108.20 assets 4. Total profit (“-” means loss) 23,772,605.48 -40,846,653.59 Less: Corporate income tax 8,208,612.14 29,699.94 5. Net profit (“-” means loss) 15,563,993.34 -40,876,353.53 Net profit attributable to owners of the 13,757,116.56 -38,541,192.11 Company Minority interests’ income 1,806,876.78 -2,335,161.42 6. Other comprehensive income net of tax Other comprehensive income net of tax attributable to owners of the Company 6.1 Other comprehensive income that will not be reclassified into profit/loss 6.1.1 Changes in net liabilities or assets with a defined benefit plan upon re-measurement 6.1.2 Share of other comprehensive income of investees that cannot be reclassified into profit/loss under the equity method 6.2 Other comprehensive income to be subsequently reclassified into profit/loss 6.2.1 Share of other comprehensive income of investees that will be reclassified into profit/loss 42 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. under the equity method 6.2.2 Profit/loss on fair value changes of available-for-sale financial assets 6.2.3 Profit/loss on reclassifying held-to-maturity investments into available-for-sale financial assets 6.2.4 Effective profit/loss on cash flow hedges 6.2.5 Currency translation differences 6.2.6 Other Other comprehensive income net of tax attributable to minority interests 7. Total comprehensive income 15,563,993.34 -40,876,353.53 Attributable to owners of the Company 13,757,116.56 -38,541,192.11 Attributable to minority interests 1,806,876.78 -2,335,161.42 8. Earnings per share 8.1 Basic earnings per share 0.03 -0.09 8.2 Diluted earnings per share 0.03 -0.09 Where business mergers under the same control occurred in this Reporting Period, the net profit achieved by the merged parties before the business mergers was RMB , with the corresponding amount for the last period being RMB . 4. Income statement of the Company Unit: RMB Item January-March 2017 January-March 2016 1. Operating revenues 2,857.14 24,000.00 Less: Operating costs 75,609.15 88,898.40 Taxes and surtaxes 35,285.59 1,344.00 Selling expenses Administrative expenses 3,558,898.68 3,345,978.22 Finance costs 1,463,740.59 19,802,710.81 Asset impairment loss -5,318,040.00 10,508.69 Add: profit on fair value changes (“-” means loss) Investment income (“-” means loss) 75,278,013.44 -93,817.01 Including: Share of profit/loss of associates -514,986.56 -93,817.01 and joint ventures 2. Operating profit (“-” means loss) 75,465,376.57 -23,319,257.13 Add: Non-operating income 37,402.65 43 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. Including: Profit on disposal of non-current 37,402.65 assets Less: Non-operating expense 803,756.82 505,557.69 Including: Loss on disposal of non-current assets 3. Total profit (“-” means loss) 74,661,619.75 -23,787,412.17 Less: Corporate income tax 4. Net profit (“-” means loss) 74,661,619.75 -23,787,412.17 5. Other comprehensive income net of tax 5.1 Other comprehensive income that will not be reclassified into profit and loss 5.1.1 Changes in net liabilities or assets with a defined benefit plan upon re-measurement 5.1.2 Share of other comprehensive income of investees that cannot be reclassified into profit/loss under the equity method 5.2 Other comprehensive income to be subsequently reclassified into profit/loss 5.2.1 Share of other comprehensive income of investees that will be reclassified into profit/loss under the equity method 5.2.2 Profit/loss on fair value changes of available-for-sale financial assets 5.2.3 Profit/loss on reclassifying held-to-maturity investments into available-for-sale financial assets 5.2.4 Effective profit/loss on cash flow hedges 5.2.5 Currency translation differences 5.2.6 Other 6. Total comprehensive income 74,661,619.75 -23,787,412.17 7. Earnings per share 7.1 Basic earnings per share 7.2 Diluted earnings per share 5. Consolidated cash flow statement Unit: RMB Item January-March 2017 January-March 2016 1. Cash flows from operating activities: Cash received from sale of commodities and 110,756,485.97 271,878,051.01 rendering of service 44 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. Net increase in money deposits from customers and interbank placements Net increase in loans from the Central Bank Net increase in funds borrowed from other financial institutions Cash received from premium of original insurance contracts Net cash received from reinsurance business Net increase in deposits of policy holders and investment fund Net increase in disposal of financial assets at fair value through profit/loss Interest, fees and commissions received Net increase in interbank borrowings Net increase in funds in repurchase business Tax refunds received Cash received from other operating activities 11,544,600.50 36,012,845.76 Subtotal of cash inflows from operating activities 122,301,086.47 307,890,896.77 Cash paid for goods and services 47,389,616.85 55,351,676.42 Net increase in loans and advances to customers Net increase in funds deposited in the Central Bank and interbank placements Cash paid for claims of original insurance contracts Interest, fees and commissions paid Cash paid as policy dividends Cash paid to and for employees 62,131,142.29 56,510,933.73 Taxes paid 14,923,785.96 24,943,567.32 Cash paid for other operating activities 75,085,116.28 46,261,558.78 Subtotal of cash outflows due to operating activities 199,529,661.38 183,067,736.25 Net cash flows from operating activities -77,228,574.91 124,823,160.52 2. Cash flows from investing activities: Cash received from retraction of investments 10,000,000.00 12,000,000.00 Cash received as investment income 8,767.17 Net cash received from disposal of fixed assets, 44,096,793.00 1,250,200.00 intangible assets and other long-term assets Net cash received from disposal of subsidiaries or other business units 45 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. Cash received from other investing activities 49,136.10 Subtotal of cash inflows from investing activities 54,145,929.10 13,258,967.17 Cash paid to acquire fixed assets, intangible 241,017.88 617,966.30 assets and other long-term assets Cash paid for investment 4,000,000.00 Net increase in pledged loans Net cash paid to acquire subsidiaries and other business units Cash paid for other investing activities 1,382,643.70 Subtotal of cash outflows due to investing activities 241,017.88 6,000,610.00 Net cash flows from investing activities 53,904,911.22 7,258,357.17 3. Cash flows from financing activities: Cash received from capital contributions Including: Cash received from minority shareholder investments by subsidiaries Cash received as borrowings 181,957,725.27 25,582,000.00 Cash received from issuance of bonds Cash received from other financing activities 5,890,876.56 Subtotal of cash inflows from financing activities 181,957,725.27 31,472,876.56 Repayment of borrowings 245,090,489.70 135,739,611.00 Cash paid for interest expenses and distribution 13,129,408.07 20,454,822.21 of dividends or profit Including: dividends or profit paid by subsidiaries to minority interests Cash paid for other financing activities 1,720,000.00 2,372,972.50 Sub-total of cash outflows due to financing 259,939,897.77 158,567,405.71 activities Net cash flows from financing activities -77,982,172.50 -127,094,529.15 4. Effect of foreign exchange rate changes on cash and cash equivalents 5. Net increase in cash and cash equivalents -101,305,836.19 4,986,988.54 Add: Opening balance of cash and cash 246,504,351.39 205,762,131.54 equivalents 6. Closing balance of cash and cash equivalents 145,198,515.20 210,749,120.08 6. Cash flow statement of the Company Unit: RMB Item January-March 2017 January-March 2016 46 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. 1. Cash flows from operating activities: Cash received from sale of commodities and 3,010,360.00 rendering of service Tax refunds received Cash received from other operating activities 37,335.96 81,546,191.96 Subtotal of cash inflows from operating activities 37,335.96 84,556,551.96 Cash paid for goods and services Cash paid to and for employees 1,632,281.06 2,077,411.96 Taxes paid 41,296.88 400,383.73 Cash paid for other operating activities 2,985,361.81 8,282,131.06 Subtotal of cash outflows due to operating activities 4,658,939.75 10,759,926.75 Net cash flows from operating activities -4,621,603.79 73,796,625.21 2. Cash flows from investing activities: Cash received from retraction of investments 10,000,000.00 8,000,000.00 Cash received as investment income Net cash received from disposal of fixed assets, 35,000,000.00 50,000.00 intangible assets and other long-term assets Net cash received from disposal of subsidiaries or other business units Cash received from other investing activities 49,136.10 Subtotal of cash inflows from investing activities 45,049,136.10 8,050,000.00 Cash paid to acquire fixed assets, intangible 5,999.00 assets and other long-term assets Cash paid for investment 10,000,000.00 Net cash paid to acquire subsidiaries and other business units Cash paid for other investing activities Subtotal of cash outflows due to investing activities 10,005,999.00 Net cash flows from investing activities 45,049,136.10 -1,955,999.00 3. Cash flows from financing activities: Cash received from capital contributions Cash received as borrowings 2,000,000.00 1,000,000.00 Cash received from issuance of bonds Cash received from other financing activities Subtotal of cash inflows from financing activities 2,000,000.00 1,000,000.00 Repayment of borrowings 66,954,800.00 66,739,611.00 47 Report for the First Quarter of 2017 of HaiNan Pearl River Holdings Co., Ltd. Cash paid for interest expenses and distribution 1,659,125.50 5,105,311.08 of dividends or profit Cash paid for other financing activities 1,720,000.00 118,830.00 Sub-total of cash outflows due to financing 70,333,925.50 71,963,752.08 activities Net cash flows from financing activities -68,333,925.50 -70,963,752.08 4. Effect of foreign exchange rate changes on cash and cash equivalents 5. Net increase in cash and cash equivalents -27,906,393.19 876,874.13 Add: Opening balance of cash and cash 33,952,786.37 479,720.71 equivalents 6. Closing balance of cash and cash equivalents 6,046,393.18 1,356,594.84 II Auditor’s report Is this Report audited? □ Yes √ No This Report is not audited. HaiNan Pearl River Holdings Co., Ltd. April 29, 2017 48