HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 (Short Form) Stock Code: 000505, 200505 Stock Name: Pearl River A, Pearl River B Announcement No.: 2017-068 HAINAN PEARL RIVER HOLDINGS CO., LTD. THIRD QUARTER REPORT 2017 (SHORT FORM) 1 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 (Short Form) Sectio 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. Director Xue Chunlei didn’t attend the board session in person due to the cause of work, authorizing director Zhao Yinhu to attend and vote. Other directors have attended the board session for reviewing this report in person. Wang Chunli, Company Prinpal, Guan Ying, cheif of the accounting work and Guan Ying, head of the accounting department (head of accounting) of the Company, hereby confirm that the Financial Report carried 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 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 (Short Form) Section II Company Fundamentals I Key Consolidated Operating Results Indicate by tick mark whether the Company needs to retrospectively restate any of its accounting data. √Yes □No Reason: Business merger under the same control December 31, 2016 Change September 30, 2017 Before adjustment After adjustment After adjustment Total assets (RMB) 4,747,421,920.84 1,385,469,635.17 5,007,343,324.00 -5.19% Equity attributable to owners of the 1,680,315,717.61 65,088,302.88 2,032,242,890.44 -17.32% parent (RMB) January-September July-September 2017 YoY change YoY change 2017 Net sales (RMB) 2,232,700,520.70 -22.04% 5,515,262,797.63 -7.79% Net margin attributable to shareholders of the Company 42,164,080.63 14.41% 113,833,212.48 60.02% (RMB) Net margin attributable to shareholders of the Company -18,544,858.72 -148.90% 5,766,539.70 116.35% before exceptional gains and losses (RMB) Net cash from operating activities -- -- -1,071,443,766.31 -278.96% (RMB) Basic earnings per share 0.07 16.67% 0.18 63.64% (RMB/share) Diluted earnings per share 0.07 16.67% 0.18 63.64% (RMB/share) Weighted average return on equity 2.05% -0.08% 5.45% 1.38% (%) Exceptional gains and losses: √ Applicable □ Not applicable Unit: RMB Item January-September 2017 Note Capital occupation charges on non-financial enterprises that are 16,810,053.35 charged to the profit/loss for the Reporting Period Reporting Period net profit/loss of subsidiaries acquired through business mergers under the same control from period-beginnings 117,422,986.25 to merger dates Non-operating income and expense other than above -1,007,624.03 Minority interests effects (after tax) 25,158,742.79 Total 108,066,672.78 -- Explanation of why the Company classified an item as an exceptional gain/loss according to the definition in the Explanatory 3 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 (Short Form) Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gains and Losses, or reclassified any exceptional gain/loss item given as an example in the said explanatory announcement as a recurrent gain/loss: □ Applicable √ Not applicable No such cases in the Reporting Period. II Total Number of Shareholders and Shareholdings of Top 10 Shareholders at Period-End 1. Numbers of Common Shareholders and Preference Shareholders with Resumed Voting Rights, and Shareholdings of Top 10 Shareholders Unit: share Total number of preference Total number of common 30,806 shareholders with resumed voting 0 shareholders at period-end rights at period-end (if any) Top 10 shareholders Shareholdi Total shares Pledged or frozen shares Nature of Restricted shares Name of shareholder ng held at shareholder held at period-end Status Number percentage period-end BEIJING GRAIN GROUP CO., State-owned 28.95% 123,561,963 LTD. corporation Foreign LI SHERYN ZHAN MING 4.99% 21,282,800 individual Domestic MEI JIANYING 0.61% 2,583,803 individual Foreign YAO LIYUAN 0.46% 1,950,000 individual Domestic ZHANG XIAOXIA 0.46% 1,949,250 individual Domestic WANG XIAOXING 0.43% 1,836,500 individual Domestic CHEN OUQIN 0.39% 1,652,679 individual Domestic WANG DAO 0.38% 1,633,300 individual Domestic ZHONG YI 0.38% 1,604,283 individual Domestic XU ZHEN 0.37% 1,595,000 individual Top 10 non-restricted shareholders Non-restricted shares held at Type of stock Name of shareholder period-end Type Number BEIJING GRAIN GROUP CO., 123,561,963 RMB common stock 123,561,963 LTD. Domestically listed stock LI SHERYN ZHAN MING 21,282,800 21,282,800 for foreign investors MEI JIANYING 2,583,803 RMB common stock 2,583,803 4 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 (Short Form) Domestically listed stock YAO LIYUAN 1,950,000 1,950,000 for foreign investors Domestically listed stock ZHANG XIAOXIA 1,949,250 1,949,250 for foreign investors WANG XIAOXING 1,836,500 RMB common stock 1,836,500 CHEN OUQIN 1,652,679 RMB common stock 1,652,679 WANG DAO 1,633,300 RMB common stock 1,633,300 ZHONG YI 1,604,283 RMB common stock 1,604,283 XU ZHEN 1,595,000 RMB common stock 1,595,000 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 shareholders above 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. Shareholder Wang Xiaoxing held 1,836,500 shares in the Company through the account of collateral securities for margin trading in Soochow Securities Co., Ltd. Top 10 common shareholders Shareholder Zhong Yi held 1,604,283 shares in the Company through the account of conducting securities margin trading collateral securities for margin trading in Eastmoney Securities Co., Ltd. (if any) Shareholder Wang Dao held 301,900 shares in the Company through his account of collateral securities for margin trading and held 1,331,400 shares in the Company through his common stock account in Cinda Securities Co., Ltd. Indicate by tick mark whether any of the top 10 common shareholders or the top 10 non-restricted common shareholders of the Company conducted 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 Top 10 of Them at Period-End □ Applicable √ Not applicable 5 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 (Short Form) Section III Significant Events I Changes in Key Consolidated Financial Statement Items and Reasons for Such Changes √ Applicable □ Not applicable 1. Accounts receivable on September 30, 2017 (3.68% of the net sales during the period from July to September 2017) increased by RMB0.12 billion (143.50%) from the December 31, 2016 due to RMB0.12 billion of accounts receivables recognized in September 2017 from new strategic customers in the southern markets. As of October 19, 2017, these accounts receivable had all been settled. 2. Prepayments on September 30, 2017 increased by RMB0.25 billion (187.2%) from the December 31, 2016 due primarily to the arrival at the end of September 2017 of the two shipments of soybean purchased by the subsidiary Jingliang (Tianjin) Grain & Oil Industry CO. Ltd, which has all been accepted by the end of October 2017 and is being processed for sale. 3. Interest receivable on September 30, 2017 decreased 67.83% from the December 31, 2016 due primarily to the interest receivable at the end of 2016 along with the Assets Transfer. 4. Dividends receivable on September 30, 2017 decreased 100% from the December 31, 2016 due primarily to the dividends receivable at the end of 2016 along with the Assets Transfer. 5. Other current assets on September 30, 2017 decreased 62.66% from the December 31, 2016 due primarily to decrease in bank wealth management products. 6. Available-for-sale financial assets on September 30, 2017 decreased by RMB10.82 million (35.12%) from the December 31, 2016 due primarily to the Assets Transfer. 7. Construction in progress on September 30, 2017 decreased 88.99% from the December 31, 2016 due primarily to the transfer of assets and the shift of Zhejiang Xiaowangzi Food Share Co., Ltd. (“Xiaowangzi Food”)’s completed production line to fixed assets. 8. Other non-current assets on September 30, 2017 decreased by RMB 4.52 million (100%) from the December 31, 2016 due primarily to the Assets Transfer. 9. Short-term borrowings on September 30, 2017 increased 2113.90% from the December 31, 2016 due primarily to the borrowings obtained for the purchases in the grease business line for the second half of the year according to production needs and the market situation. 10. Notes payable on September 30, 2017 increased 66.87% from the December 31, 2016 due primarily to more letters of credit issued for the more imports’. 11. Accounts payable on September 30, 2017 decreased 84.92% from the December 31, 2016 due primarily to a decrease of approximately RMB80 million in accounts payable along with the transfer of the related assets, as well as caused by RMB0.31 billion of accounts payable to suppliers. 12. Advances received on September 30, 2017 decreased 47.01% from the December 31, 2016 amount due primarily to the Assets Transfer. 13. Payroll payable on September 30, 2017 decreased 90.65% from the December 31, 2016 due primarily to a decrease in payroll payable along with the Assets Replacement, as well as the payment of last year’s annual performance salaries in the current year. 14. Taxes payable on September 30, 2017 decreased 96.64% from the December 31, 2016 amount due primarily to payment of taxes in the current year. 15. Non-current liabilities due within one year on September 30, 2017 decreased 100% from the December 31, 2016 due primarily to repayment of due long-term bank loans. 16. Long-term borrowings on September 30, 2017 decreased 100% from the December 31, 2016 due primarily to the early repayment of long-term bank loans. 6 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 (Short Form) 17. The year-over-year decrease of 7.79% in net sales during the period,primarily because the net sales during the corresponding period of last year had included combined revenue of RMB1.997 billion from 14 trade subsidiaries, which were all transferred in the current period. Regardless of the effects of the said trade subsidiaries, net sales increased by RMB1.530 billion (38.46%) during the period January through September 2017 compared to the same period of last year. 18. The year-over-year increase of 97.25% in taxes and surtaxes during the period primarily resulted from the reclassification of taxes under “administrative expense” as “taxes and surtaxes” according to the Notice of the Ministry of Finance (Financial Accounting [2016] No. 22) on Printing and Issuing of VAT Accounting Rules. 19. The year-over-year decrease of 71.11% in finance costs compared to the same period of last year primarily resulted from significantly decreased loan interest as a result of the repayment of loans with high interest rates. 20. The year-over-year increase of RMB21.90 million (1356.34%) in asset impairment losses during the period January through September 2017 primarily resulted from the bad-debt provisions made, out of prudence, for the creditor’s rights associated with the assets transferred by the Company during the transition period, as well as the reversal into capital reserve at the time of the Asset Transfer. 21. The year-over-year decrease of 86.79% in investment income during the period January through September 2017 primarily resulted from the transfer of equity interests in Heilongjiang Longshi Pearl River Media Co., Ltd. by the Company and the transfer of 14 trade subsidiaries by BGG Food in last year. 22. The year-over-year decrease of 66.27% in non-operating income during the period January through September 2017 primarily resulted from last year’s relocation compensation income. 23. The year-over-year decrease of 70.66% in non-operating expense during the period January through September 2017 primarily resulted from last year’s relocation expense. 24. The year-over-year decrease of 278.96% in net cash from operating activities during the period January through September 2017 primarily resulted from the cash used for the purchases in the grease business line for the second half of the year according to production needs and the market situation. 25. The year-over-year increase of 52.42% in net cash from investing activities during the period January through September 2017 primarily resulted from BGG Food’s acquisition of a 19% stake in Xiaowangzi Food. 26. The year-over-year increase of 250.43% in net cash from financing activities during the period January through September 2017 primarily resulted from the borrowings obtained from bank for the purchases in the grease business line for the second half of the year according to production needs and the market situation. II Progress, Influence and Solutions Associated with Significant Events √ Applicable □ Not applicable Announcement of significant event Disclosure date Disclosure website The major assets restructuring of the Company got Reply from China Securities Regulatory Commission to HaiNan Pearl River Holdings Co., Ltd.’s Issuing Announcement No. 2017-047 on 08/01/2017 Shares, Purchasing Assets and Raising Supporting www.cninfo.com.cn Funds to Beijing Grain Group Co., Ltd. etc. on July 28, 2017. On September 14, 2017, Beijing Grain Food Co., Ltd. became the wholly-owned subsidiary of the Company Announcement No. 2017-059 on after completing the transfer procedures of assets 09/30/2017 www.cninfo.com.cn planned to be put in in the major assets restructuring. As of September 30, 2017, the delivery of assets 7 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 (Short Form) planned to be put out excluding a small number of assets whose transfer procedures are still in progress has been finished. The total amount of assets that have been settled (including liabilities) accounts for 93.46% of that of assets (including liabilities) planned to be put out at this time. III Commitments that the Company’s Actual Controller, Shareholders, Related Parties and Acquirers, as well as the Company and Other Commitment Makers, Failed to Fulfill on Time during Reporting Period □ Applicable √ Not applicable No such cases in the Reporting Period. IV Forecast of 2017 Annual Operating Results Warning of a possible loss on or a significant year-over-year change in accumulative net margin during the period the beginning of the current year through the end of the next reporting period, as well as the reasons: □ 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 Unit: RMB'0,000 Proportion of closing Actual Closing investment amount in the gain/loss in Type of derivative investment Beginning date Ending date investment Company’s closing net Reporting amount assets (%) Period Futures of agricultural products 01/01/2017 09/30/2017 30,241.88 18.00% 7,161.1 Capital source for derivative Self-raised funds investment Lawsuit (if applicable) Naught Analysis on risks and control In the Reporting Period, the Company possessed the cash for hedging in futures. All cash has measures of derivative products held the physical correspondence which is distributed in forward contracts with good liquidity. in the Reporting Period (including The credit risk is low and there will be no default risk. In addition, there will be no risk but not limited to market risk, concerning operation and laws because of regulated transactions, rigorous decisions on liquidity risk, credit risk, operation futures and strict operation process. risk, law risk, etc.) Changes of market prices or fair values in the Reporting Period of the The value of futures contracts held by the Company is changing with the price of the invested derivatives. And the analysis futures exchange. The price of the futures exchange is broadly representative. And the fair on the fair value of the derivatives value of futures contracts will be measured in strict accordance with the settlement methods should include the specific use issued by the exchange. methods and the relevant assumptions and parameters. 8 HaiNan Pearl River Holdings Co., Ltd. Third Quarter Report 2017 (Short Form) VII Visits Paid to the Company for Purposes of Research, Communication, Interview, etc. during Reporting Period □ Applicable √ Not applicable No such cases in the Reporting Period. VIII Irregularities Arising from Provision of Guarantees for Third Parties □ Applicable √ Not applicable No such cases in the Reporting Period. IX Occupation of the Company’s Funds by Its Controlling Shareholder or Related Parties for Non-Operating Purposes □ Applicable √ Not applicable No such cases in the Reporting Period. X Targeted Measures Taken to Help People Lift Themselves out of Poverty The Company did not take such measures in the third quarter of the year and has no such plans for now. 9