Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2018 HAINAN JINGLIANG HOLDINGS CO., LTD. THIRD QUARTER REPORT 2018 October 2018 1 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2018 Part I Important Notes The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors, supervisors and senior managers of Hainan Jingliang Holdings Co., Ltd. (together with its consolidated subsidiaries, the “Company”, except where the context otherwise requires) hereby guarantee the factuality, accuracy and completeness of the contents of this Report and its summary, and shall be jointly and severally liable for any misrepresentations, misleading statements or material omissions therein. All the Company’s directors have attended the Board meeting for the review of this Report and its summary. Wang Guofeng, the Company’s legal representative, Guan Ying, the Company’s head for financial affairs, and Liu Quanli, head of the Company’s financial department (equivalent to financial manager) hereby guarantee that the financial statements carried in this Report are factual, accurate and complete. This Report and its summary have been prepared in both Chinese and English. Should there be any discrepancies or misunderstandings between the two versions, the Chinese versions shall prevail. 2 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2018 Part II Key Corporate Information I Key Consolidated Financial Information Indicate by tick mark whether there is any retrospectively restated datum in the table below. □ Yes √ No 30 September 2018 31 December 2017 Change (%) Total assets (RMB) 5,580,372,664.55 6,082,383,851.23 -8.25% Equity attributable to the listed 2,204,056,918.96 2,101,342,683.37 4.89% company’s shareholders (RMB) Q3 2018 YoY change (%) Q1-Q3 2018 YoY change (%) Operating revenue (RMB) 1,899,805,985.97 -14.91% 5,539,431,965.38 0.44% Net profit attributable to the listed 42,345,394.93 0.43% 102,264,390.61 0.42% company’s shareholders (RMB) Net profit attributable to the listed company’s shareholders before 42,526,321.21 301.98% 99,885,357.72 133.62% exceptional items (RMB) Net cash generated from/used in -- -- 419,583,694.49 142.19% operating activities (RMB) Basic earnings per share (RMB/share) 0.06 -14.29% 0.15 -6.25% Diluted earnings per share (RMB/share) 0.06 -14.29% 0.15 -6.25% Weighted average return on equity (%) 2.00% -0.06% 4.75% -0.14% Exceptional gains and losses: √ Applicable □ Not applicable Unit: RMB Item Q1-Q3 2018 Note Gain or loss on disposal of non-current assets (inclusive of -1,796,072.16 impairment allowance write-offs) Gains/Losses on fair value changes of trading financial assets and liabilities & investment income from disposal of trading financial assets and liabilities as well as financial assets available for sale 5,360,397.35 (exclusive of effective hedges related to normal business operations of the Company) Non-operating income and expense other than above 885,054.45 Less: Income tax effects 1,112,344.91 Non-controlling interests effects (net of tax) 958,001.84 Total 2,379,032.89 -- Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss Items: □ Applicable √ Not applicable No such cases for the Reporting Period. 3 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2018 II Total Number of Shareholders and Holdings of Top 10 Shareholders at 30 September 2018 1. Numbers of Ordinary Shareholders and Preferred Shareholders with Resumed Voting Rights as well as Holdings of Top 10 Shareholders Unit: share Number of preferred shareholders with Number of ordinary shareholders 37,523 0 resumed voting rights (if any) Top 10 shareholders Shares in pledge or Shareholding Number of Restricted frozen Name of shareholder Nature of shareholder percentage shares shares Status Shares BEIJING GRAIN GROUP CO., LTD. State-owned legal person 42.06% 288,439,561 164,877,598 BEIJING STATE-OWNED CAPITAL OPERATION AND MANAGEMENT State-owned legal person 7.07% 48,510,460 48,510,460 CENTER CHINA DEVELOPMENT BANK State-owned legal person 3.33% 22,828,451 22,828,451 CAPITAL CO., LTD. GOLD BUFFALO RUNYING (TIANJIN) EQUITY INVESTMENT FUND MANAGEMENT CO., Other 3.33% 22,828,451 22,828,451 LTD.—GOLD BUFFALO RUNYING (TIANJIN) EQUITY INVESTMENT FUND (L.P.) LI SHERYN ZHAN MING Foreign natural person 3.19% 21,873,700 0 MEI JIANYING Domestic natural person 0.38% 2,604,203 0 DONGYANG HENGDIAN Domestic non-state-owned 0.32% 2,204,976 0 GUARANTY CO., LTD. legal person HU TIANGAO Domestic natural person 0.30% 2,065,352 0 ZHANG XIAOXIA Domestic natural person 0.28% 1,949,250 0 WANG DAO Domestic natural person 0.28% 1,920,600 0 Top 10 unrestricted shareholders Shares by type Name of shareholder Unrestricted shares Type Shares BEIJING GRAIN GROUP CO., LTD. 123,561,963 RMB-denominated ordinary stock 123,561,963 LI SHERYN ZHAN MING 21,873,700 Domestically listed foreign stock 21,873,700 MEI JIANYING 2,604,203 RMB-denominated ordinary stock 2,604,203 DONGYANG HENGDIAN 2,204,976 RMB-denominated ordinary stock 2,204,976 GUARANTY CO., LTD. HU TIANGAO 2,065,352 RMB-denominated ordinary stock 2,065,352 ZHANG XIAOXIA 1,949,250 Domestically listed foreign stock 1,949,250 WANG DAO 1,920,600 RMB-denominated ordinary stock 1,920,600 WANG XIAOXING 1,808,000 RMB-denominated ordinary stock 1,808,000 ZHANG PENG 1,790,000 RMB-denominated ordinary stock 1,790,000 ZHONG YI 1,727,783 RMB-denominated ordinary stock 1,727,783 Beijing State-Owned Capital Operation And Management Center owns 100% of Beijing Related or acting-in-concert parties Grain Group Co., Ltd., and Beijing Grain Group Co., Ltd. is a shareholder of the Company among shareholders above (a 42.06% holding). Apart from that, the Company does not know whether there are any other related parties or acting-in-concert parties among the top 10 shareholders. Top 10 ordinary shareholders 1. Shareholder Wang Xiaoxing holds 1,808,000 shares in the Company through his account involved in securities margin trading of collateral securities for margin trading in Soochow Securities Co., Ltd. 4 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2018 (if any) 2. Shareholder Zhong Yi holds 1,727,783 shares in the Company through his account of collateral securities for margin trading in Fortune Securities Co., Ltd. Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the Company conducted any promissory repo during the Reporting Period. □ Yea √ No No such cases in the Reporting Period. 2. Number of Preferred Shareholders and Shareholdings of Top 10 of Them □ Applicable √ Not applicable 5 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2018 Part III Significant Events I Changes in Selected Consolidated Financial Statement Line Items and Explanation of why √ Applicable □ Not applicable 1. Monetary capital declined as at 30 September 2018 compared to 31 December 2017, primarily driven by the repayment of borrowings during Q1~Q3 2018. 2. Financial assets at fair value through profit or loss declined as at 30 September 2018 compared to 31 December 2017, primarily because fewer futures contracts resulted in smaller margins. 3. Notes and accounts receivable rose as at 30 September 2018 compared to 31 December 2017, primarily because more customers were allowed to buy on credit to boost sales. 4. Prepayments declined as at 30 September 2018 compared to 31 December 2017, primarily because supplies associated with certain prepayments were received and such prepayments were thus reclassified as inventories. 5. The current portion of non-current assets declined as at 30 September 2018 compared to 31 December 2017, primarily driven by a smaller investment in wealth management products. 6. Other current assets rose as at 30 September 2018 compared to 31 December 2017, primarily driven by larger investments in government securities reverse repurchase and structured deposits. 7. Other non-current assets declined as at 30 September 2018 compared to 31 December 2017, primarily because equipment associated with certain prepayments were received and installed and such prepayments were thus reclassified as fixed assets. 8. Notes and accounts payable declined as at 30 September 2018 compared to 31 December 2017, primarily driven by payments to suppliers. 9. Payroll payable declined as at 30 September 2018 compared to 31 December 2017, primarily driven by the payment in Q1~Q3 2018 of the 2017 annual performance pay that had been set aside in 2017. 10. Other current liabilities declined as at 30 September 2018 compared to 31 December 2017, primarily driven by a smaller book loss on hedged items. 11. Taxes and surcharges declined during Q1~Q3 2018 compared to Q1~Q3 2017, primarily because Q1~Q3 2017 had seen a land value added tax on real estate revenue, while there was no such revenue during Q1~Q3 2018. 12. Finance costs rose during Q1~Q3 2018 compared to Q1~Q3 2017, primarily driven by a larger amount of bank loans and higher cost of capital. 13. Asset impairment loss declined during Q1~Q3 2018 compared to Q1~Q3 2017, primarily driven by some allowances for doubtful accounts in Q1~Q3 2017. 14. Investment income rose during Q1~Q3 2018 compared to Q1~Q3 2017, primarily driven by the income generated from investments in government securities reverse repurchase and beneficiary certificates. 15. Gain on changes in fair value declined during Q1~Q3 2018 compared to Q1~Q3 2017, primarily driven by changes in the fair value of futures positions. 16. Net cash generated from operating activities rose during Q1~Q3 2018 compared to Q1~Q3 2017, primarily driven by the sales of inventory products. 17. Net cash generated from investing activities declined during Q1~Q3 2018 compared to Q1~Q3 2017, primarily driven by more investments in reverse repurchase and banks’ wealth management products. 6 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2018 18. Net cash generated from financing activities declined during Q1~Q3 2018 compared to Q1~Q3 2017, primarily driven by a higher amount of bank loan repayment in Q1~Q3 2017. II Progress, Influence and Solutions Associated with Significant Events □ Applicable √ Not applicable III Commitments that the Company’s Actual Controller, Shareholders, Related Parties and Acquirers, as well as the Company Itself and Other Parties, Failed to Fulfill on Time during Reporting Period □ Applicable √ Not applicable No such cases in the Reporting Period. IV 2018 Annual Operating Performance Forecast Warning of a forecast loss on or a forecast significant year-on-year change in net profit for year 2018, as well as explanation of why: □ Applicable √ Not applicable V Securities Investments √ Applicable □ Not applicable Unit: RMB Gain/Lo Accumu ss on lated fair-valu Purchas Gain/los Beginni fair-valu Sold in Initial Measure e ed in s in Ending Security Security Security ng e Reporti Account Funding investm ment changes Reporti Reporti carrying type code name carrying changes ng ing title source ent cost method in ng ng amount amount charged Period Reporti Period Period to ng equity Period 17,709, 17,709, Cost 2,585,3 Other Self-rais Other 204001 GC001 600,000 600,000 0.00 method 61.95 assets ed .00 .00 Cost 388,400 388,400 74,885. Other Self-rais Other 204002 GC002 0.00 method ,000.00 ,000.00 68 assets ed Cost 57,800, 57,800, 46,619. Other Self-rais Other 204003 GC003 0.00 method 000.00 000.00 45 assets ed Cost 171,800 171,800 101,482 Other Self-rais Other 204004 GC004 0.00 method ,000.00 ,000.00 .98 assets ed Cost 606,000 606,000 501,621 Other Self-rais Other 204007 GC007 0.00 method ,000.00 ,000.00 .73 assets ed 18,933, 18,933, 3,309,9 Total 0.00 -- 0.00 0.00 0.00 600,000 600,000 0.00 -- -- 71.79 .00 .00 7 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2018 Disclosure date of announcement on Board’s 27 January 2018 consent for securities investments Disclosure date of announcement on general meeting’s consent for 13 February 2018 securities investments (if any) VI Wealth Management Entrustment √ Applicable □ Not applicable Unit: RMB’0,000 (in RMB ten thousand yuan) Type of wealth Outstanding amount Funding source Principal Overdue amount management before maturity Wealth management product purchased from Idle raised 26,000 20,000 0 securities trader Wealth management product purchased from Self-funded 6,780 4,280 0 bank Total 32,780 24,280 0 High-risk wealth management entrustments with amounts that are individually significant, or with low security, low liquidity, or no protection of the principal: √ Applicable □ Not applicable Unit: RMB’0,000 (in RMB ten thousand yuan) Collection Impa Throu Refere Actual Any Overview Type of Invest /payment irme gh Type Fun nce gain/lo plan and index wealth ment of nt prescri of Princip ding Start End Way of annual ss in for to more Trustee manage with gain/loss allo bed truste al sour date date payback ized Reporti further informati ment princip in wan proced e ce return ng entrust on (if product al Reporting ce (if ure or (%) Period ment any) Period any) not Pay the principal www.cnin Idle Agree Securi Certific 28 and fo.com.cn CITIC raise 29 ment ties ation of Septe earnings at : SECUR 6,000 d June of 4.00% 59.84 Redeemed Yes No comp trust mber the 2018-044 ITIES capit 2018 contra any receipt 2018 maturity and al ct date of 2018-055 investment Pay the principal Idle Agree DONG Securi Certific 17 and www.cnin raise ment XING ties ation of 4 July Dece earnings at Unredeem fo.com.cn 20,000 d of 4.80% 0 Yes No SECUR comp trust 2018 mber the ed : capit contra ITIES any receipt 2018 maturity 2018-045 al ct date of investment Total 26,000 -- -- -- -- -- -- 59.84 -- -- -- -- Wealth management entrustments with possible impairments including an expectedly unrecoverable principal: □ Applicable √ Not applicable 8 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2018 VII Investments in Derivative Financial Instruments √ Applicable □ Not applicable Unit: RMB’0,000 (in RMB ten thousand yuan) Ending investment Actual Ending as % of the gain/loss in Type of derivative Start date End date investment Company’s ending net Reporting assets Period Soybean hedging 1 January 2018 30 September 2018 6,271.62 2.28% -4,750.5 Foreign exchange forwards 1 January 2018 30 September 2018 0 0.00% 3,322.53 Agricultural product future 1 January 2018 30 September 2018 2,938.86 1.07% 4,371.86 contract Agricultural product future 1 January 2018 30 September 2018 1,512.18 0.55% 346.03 contract Agricultural product future 1 January 2018 30 September 2018 0.1 0.00% -427.76 contract Agricultural product future 1 September 2018 19 September 2018 0 0.00% 0.04 contract Total -- -- 10,722.76 3.90% 2,862.2 Funding source Self-funded Legal matters involved (if N/A applicable) Disclosure date of board 13 April 2018 announcement approving derivative investment (if any) 9 June 2018 Disclosure date of general 11 May 2018 meeting announcement approving derivative 27 June 2018 investment (if any) The Company’s conduction of hedging business is not aimed at speculation, but mainly to effectively avoid the impact of raw material price fluctuation on the Company. However, there will be certain risks: 1. Price fluctuation risk: price fluctuation risk may be generated when the futures market changes greatly, resulting in transaction losses; 2. Capital risk: capital risk may be correspondingly brought because the futures trading adopts margin and marking-to-market system; 3. Internal control risk: there may be risks due to imperfect internal control system for the high expertise and complexity of futures trading; 4. Technical risk: there may be technical risks due to Analysis of risks and control incomplete computer systems. The Company adopts following risk control measures: 1. Matching measures associated with the hedging business with the Company’s production and operation so as to maximally reduce the derivative investments held in price fluctuation risk; 2. The Company will reasonably dispatch its own funds for hedging business, Reporting Period (including strictly control the hedging fund scale and reasonably plan and use margins; 3. Regulations for but not limited to market risk, Commodity Futures Trading and Regulations for Futures Business are formulated at the Company liquidity risk, credit risk, and subsidiaries levels respectively based on actual situation of the Company and pursuant to operational risk, legal risk, governing stipulations of Guidelines for Standard Operation of Companies Listed in Shenzhen Stock etc.) Exchange which have made clearly stipulations about the amount, variety scope, approval authority, internal approval procedures, responsible departments and persons, information isolation measures, internal risk report and related solution process, information disclosure, etc. regarding hedging business. The Company will strictly control all sectors in accordance with the two regulations formulated; 4. Establishing qualified systems for transaction, communication and information services so as to guarantee the normal operation of the transaction system and smooth proceeding of transactions. When a wrong order occurs, corresponding measures should be timely taken to reduce losses. Changes in market prices or fair value of derivative investments in Reporting The value of the Company’s future contracts changed according to the contract prices declared by Period (fair value analysis the future exchange, which were broadly representative. And the fair value of the Company’s future should include measurement contracts was executed in strict compliance with the future exchange’s settlement methods. method and related assumptions and parameters) 9 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2018 Major changes in accounting policies and specific accounting principles adopted N/A for derivative investments in Reporting Period compared to last reporting period The relevant decision-making procedures for the Company and its majority-owned subsidiaries to conduct foreign exchange derivatives trading business are in compliance with relevant national laws, regulations and the governing provisions of the Articles of Association. Based on normal Opinion of independent production and operation, the Company uses foreign exchange derivatives instruments to reduce directors on derivative exchange rate risks and finance costs, and control business risks. There is no harm to the interests of investments and risk control the Company and all other shareholders, especially minority shareholders. It is agreed that the Company and its majority-owned subsidiaries will conduct foreign exchange derivative trading business within the consideration amount. VIII 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. IX Irregularities in Provision of Guarantees for External Parties □ Applicable √ Not applicable No such cases in the Reporting Period. X Occupation of the Company’s Capital by Controlling Shareholder or Its Related Parties for Non-Operating Purposes □ Applicable √ Not applicable No such cases in the Reporting Period. 10 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2018 Part IV Financial Statements I Financial Statements 1. Consolidated Balance Sheet Prepared by Hainan Jingliang Holdings Co., Ltd. 30 September 2018 Unit: RMB Item 30 September 2018 31 December 2017 Current assets: Monetary capital 675,664,075.75 1,014,438,663.43 Settlement reserve Interbank loans granted Financial assets at fair value through profit or loss 122,746,473.30 176,699,298.60 Derivative financial assets Notes and accounts receivable 145,203,498.55 75,165,127.11 Including: Notes receivable Accounts receivable Prepayments 293,268,069.36 912,843,489.70 Premiums receivable Reinsurance receivables Receivable reinsurance contract reserve Other receivables 88,438,332.04 75,722,139.87 Financial assets purchased under resale agreements Inventories 1,412,314,191.90 1,393,958,764.07 Assets classified as held for sale Current portion of non-current assets 21,000,000.00 51,000,000.00 Other current assets 658,143,211.20 165,867,238.70 Total current assets 3,416,777,852.10 3,865,694,721.48 Non-current assets: Loans and advances to customers Available-for-sale financial assets 20,000,000.00 20,000,000.00 Held-to-maturity investments Long-term receivables Long-term equity investments 185,589,701.74 174,589,701.74 Investment property 33,798,539.49 35,008,852.62 Fixed assets 1,284,346,034.52 1,333,410,146.38 Construction in progress 9,196,483.50 12,737,673.01 Productive living assets Oil and gas assets Intangible assets 387,044,956.90 398,844,032.07 R&D expense 11 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2018 Goodwill 191,394,422.51 191,394,422.51 Long-term prepaid expense 36,216,267.37 33,247,595.28 Deferred income tax assets 16,008,406.42 14,179,072.07 Other non-current assets 3,277,634.07 Total non-current assets 2,163,594,812.45 2,216,689,129.75 Total assets 5,580,372,664.55 6,082,383,851.23 Current liabilities: Short-term borrowings 1,772,635,314.81 2,007,171,362.73 Borrowings from central bank Customer deposits and interbank deposits Interbank loans obtained Financial liabilities at fair value through profit or loss Derivative financial liabilities Notes and accounts payable 262,470,835.87 400,693,157.47 Advances from customers 154,657,322.35 212,124,147.38 Financial assets sold under repurchase agreements Handling charges and commissions payable Payroll payable 14,742,261.81 30,762,031.53 Taxes payable 30,242,573.77 36,855,139.18 Other payables 412,744,319.51 541,399,822.67 Reinsurance payables Insurance contract reserve Payables for acting trading of securities Payables for underwriting of securities Liabilities directly associated with assets classified as held for sale Current portion of non-current liabilities Other current liabilities 13,004,507.08 90,215,292.43 Total current liabilities 2,660,497,135.20 3,319,220,953.39 Non-current liabilities: Long-term borrowings Bonds payable Including: Preferred shares Perpetual bonds Long-term payables 33,778,247.87 27,592,835.11 Long-term payroll payable Provisions Deferred income 77,689,781.40 78,961,972.67 Deferred income tax liabilities 52,333,976.95 56,185,676.15 Other non-current liabilities Total non-current liabilities 163,802,006.22 162,740,483.93 Total liabilities 2,824,299,141.42 3,481,961,437.32 Owners’ equity: Share capital 685,790,364.00 685,790,364.00 Other equity instruments Including: Preferred shares Perpetual bonds 12 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2018 Capital reserves 1,592,541,582.73 1,592,541,582.73 Less: Treasury stock Other comprehensive income 449,844.98 Specific reserve Surplus reserves 122,122,436.98 122,122,436.98 General reserve Retained earnings -196,847,309.73 -299,111,700.34 Total equity attributable to owners of the Company as 2,204,056,918.96 2,101,342,683.37 the parent Non-controlling interests 552,016,604.17 499,079,730.54 Total owners’ equity 2,756,073,523.13 2,600,422,413.91 Total liabilities and owners’ equity 5,580,372,664.55 6,082,383,851.23 Legal representative: Wang Guofeng Head for financial affairs: Guan Ying Head of the financial department: Liu Quanli 2. Balance Sheet of the Company as the Parent Unit: RMB Item 30 September 2018 31 December 2017 Current assets: Monetary capital 15,426,423.97 15,360,177.32 Financial assets at fair value through profit or loss Derivative financial assets Notes and accounts receivable 106,626.00 109,389.00 Including: Notes receivable Accounts receivable Prepayments Other receivables 57,946,415.19 60,576,292.62 Inventories 4,824,035.45 4,824,035.45 Assets classified as held for sale Current portion of non-current assets Other current assets 1,954,976.06 2,905,667.38 Total current assets 80,258,476.67 83,775,561.77 Non-current assets: Available-for-sale financial assets 20,000,000.00 20,000,000.00 Held-to-maturity investments Long-term receivables Long-term equity investments 2,375,639,964.05 2,336,639,964.05 Investment property 5,854,403.48 6,081,230.93 Fixed assets 3,348,428.40 3,589,144.87 Construction in progress Productive living assets Oil and gas assets Intangible assets 196,729.56 R&D expense Goodwill Long-term prepaid expense Deferred income tax assets Other non-current assets 13 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2018 Total non-current assets 2,405,039,525.49 2,366,310,339.85 Total assets 2,485,298,002.16 2,450,085,901.62 Current liabilities: Short-term borrowings Financial liabilities at fair value through profit or loss Derivative financial liabilities Notes and accounts payable 2,482,949.70 2,482,949.70 Advances from customers 38,896.41 38,896.41 Payroll payable 326,765.16 2,017,684.57 Taxes payable 972,437.66 2,557,993.95 Other payables 513,668,222.16 449,510,029.34 Liabilities directly associated with assets classified as held for sale Current portion of non-current liabilities Other current liabilities Total current liabilities 517,489,271.09 456,607,553.97 Non-current liabilities: Long-term borrowings Bonds payable Including: Preferred shares Perpetual bonds Long-term payables Long-term payroll payable Provisions Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities 517,489,271.09 456,607,553.97 Owners’ equity: Share capital 685,790,364.00 685,790,364.00 Other equity instruments Including: Preferred shares Perpetual bonds Capital reserves 2,173,387,468.71 2,173,387,468.71 Less: Treasury stock Other comprehensive income Specific reserve Surplus reserves 109,487,064.39 109,487,064.39 Retained earnings -1,000,856,166.03 -975,186,549.45 Total owners’ equity 1,967,808,731.07 1,993,478,347.65 Total liabilities and owners’ equity 2,485,298,002.16 2,450,085,901.62 3. Consolidated Income Statement for Q3 Unit: RMB 14 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2018 Item Q3 2018 Q3 2017 1. Revenue 1,899,805,985.97 2,232,700,520.70 Including: Operating revenue 1,899,805,985.97 2,232,700,520.70 Interest income Premium income Handling charge and commission income 2. Operating costs and expenses 1,807,110,268.05 2,167,977,012.70 Including: Cost of sales 1,703,299,548.14 2,038,295,230.88 Interest expense Handling charge and commission expense Surrenders Net claims paid Net amount provided as insurance contract reserve Expenditure on policy dividends Reinsurance premium expense Taxes and surcharges 4,706,132.09 14,277,726.11 Selling expense 48,195,311.31 40,680,538.06 Administrative expense 52,378,722.27 33,632,981.69 R&D expense 349,299.58 626,504.24 Finance costs -2,022,277.92 11,712,245.37 Including: Interest expense Interest income Asset impairment loss 203,532.58 28,751,786.35 Add: Other income 3,420,131.60 1,606,288.34 Investment income (“-” for loss) 5,574,816.04 2,267,152.41 Including: Share of profit or loss of joint ventures and associates Gain on changes in fair value (“-” for loss) -36,001,451.60 -5,151,289.48 Foreign exchange gain (“-” for loss) Asset disposal income (“-” for loss) -1,607,843.98 -74,102.52 3. Operating profit (“-” for loss) 64,081,369.98 63,371,556.75 Add: Non-operating income 983,957.85 11,333,584.99 Less: Non-operating expense 276,289.34 1,989,190.94 4. Profit before tax (“-” for loss) 64,789,038.49 72,715,950.80 Less: Income tax expense 9,498,223.59 26,083,375.95 5. Net profit (“-” for net loss) 55,290,814.90 46,632,574.85 5.1 Net profit from continuing operations (“-” for 55,290,814.90 46,632,574.85 net loss) 5.2 Net profit from discontinued operations (“-” for net loss) Net profit attributable to owners of the Company as 42,345,394.93 42,164,080.63 the parent Net profit attributable to non-controlling interests 12,945,419.97 4,468,494.22 6. Other comprehensive income, net of tax 264,437.23 0.00 Attributable to owners of the Company as the parent 264,437.23 0.00 6.1 Items that will not be reclassified to profit or loss 15 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2018 6.1.1 Changes in net liabilities or assets caused by remeasurements on defined benefit pension schemes 6.1.2 Share of other comprehensive income of investees that will not be reclassified to profit or loss under equity method 6.2 Items that may subsequently be reclassified to 264,437.23 0.00 profit or loss 6.2.1 Share of other comprehensive income of investees that will be reclassified to profit or loss under equity method 6.2.2 Gain/Loss on changes in fair value of available-for-sale financial assets 6.2.3 Gain/Loss arising from reclassification of held-to-maturity investments to available-for-sale financial assets 6.2.4 Effective gain/loss on cash flow hedges 6.2.5 Differences arising from translation of 264,437.23 0.00 foreign currency-denominated financial statements 6.2.6 Other Attributable to non-controlling interests 7. Total comprehensive income 55,555,252.13 46,632,574.85 Attributable to owners of the Company as the parent 42,609,832.16 42,164,080.63 Attributable to non-controlling interests 12,945,419.97 4,468,494.22 8. Earnings per share 8.1 Basic earnings per share 0.06 0.07 8.2 Diluted earnings per share 0.06 0.07 Legal representative: Wang Guofeng Head for financial affairs: Guan Ying Head of the financial department: Liu Quanli 4. Income Statement of the Company as the Parent for Q3 Unit: RMB Item Q3 2018 Q3 2017 1. Operating revenue 0.00 0.00 Less: Cost of sales 75,609.15 100,812.20 Taxes and surcharges 32,242.73 145,225.03 Selling expense Administrative expense 8,498,118.65 2,984,720.67 R&D expense Finance costs 3,587,578.96 -10,284,711.37 Including: Interest expense 3,588,242.50 2,771,987.50 Interest income 2,774.94 13,670,637.08 Asset impairment loss 580.00 96,843,906.63 Add: Other income Investment income (“-” for loss) 0.00 -141,966.40 Including: Share of profit or loss of joint 0.00 2,205,283.12 ventures and associates Gain on changes in fair value (“-” for loss) Asset disposal income (“-” for loss) 2. Operating profit (“-” for loss) -12,194,129.49 -89,931,919.56 Add: Non-operating income Less: Non-operating expense 3. Profit before tax (“-” for loss) -12,194,129.49 -89,931,919.56 16 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2018 Less: Income tax expense 4. Net profit (“-” for net loss) -12,194,129.49 -89,931,919.56 4.1 Net profit from continuing operations (“-” for net loss) 4.2 Net profit from discontinued operations (“-” for net loss) 5. Other comprehensive income, net of tax 5.1 Items that will not be reclassified to profit or loss 5.1.1 Changes in net liabilities or assets caused by remeasurements on defined benefit pension schemes 5.1.2 Share of other comprehensive income of investees that will not be reclassified to profit or loss under equity method 5.2 Items that may subsequently be reclassified to profit or loss 5.2.1 Share of other comprehensive income of investees that will be reclassified to profit or loss under equity method 5.2.2 Gain/Loss on changes in fair value of available-for-sale financial assets 5.2.3 Gain/Loss arising from reclassification of held-to-maturity investments to available-for-sale financial assets 5.2.4 Effective gain/loss on cash flow hedges 5.2.5 Differences arising from translation of foreign currency-denominated financial statements 5.2.6 Other 6. Total comprehensive income -12,194,129.49 -89,931,919.56 7. Earnings per share 7.1 Basic earnings per share 7.2 Diluted earnings per share 5. Consolidated Income Statement for Q1~Q3 Unit: RMB Item Q1~Q3 2018 Q1~Q3 2017 1. Revenue 5,539,431,965.38 5,515,262,797.63 Including: Operating revenue 5,539,431,965.38 5,515,262,797.63 Interest income Premium income Handling charge and commission income 2. Operating costs and expenses 5,367,497,218.29 5,325,251,308.02 Including: Cost of sales 5,038,627,672.46 4,946,577,567.18 Interest expense Handling charge and commission expense Surrenders Net claims paid Net amount provided as insurance contract reserve Expenditure on policy dividends Reinsurance premium expense 17 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2018 Taxes and surcharges 19,018,278.45 40,345,029.56 Selling expense 139,821,320.67 133,704,147.54 Administrative expense 135,753,834.87 156,614,807.20 R&D expense 1,072,960.08 1,123,501.16 Finance costs 33,482,038.92 23,373,101.68 Including: Interest expense Interest income Asset impairment loss -278,887.16 23,513,153.70 Add: Other income 8,937,425.37 7,920,871.71 Investment income (“-” for loss) 16,487,429.06 11,766,061.71 Including: Share of profit or loss of joint ventures and associates Gain on changes in fair value (“-” for loss) -22,110,484.16 -13,904,516.93 Foreign exchange gain (“-” for loss) Asset disposal income (“-” for loss) -1,796,072.16 -25,199.59 3. Operating profit (“-” for loss) 173,453,045.20 195,768,706.51 Add: Non-operating income 10,781,378.60 13,821,293.02 Less: Non-operating expense 9,896,461.65 5,528,315.74 4. Profit before tax (“-” for loss) 174,337,962.15 204,061,683.79 Less: Income tax expense 44,488,495.00 57,511,192.19 5. Net profit (“-” for net loss) 129,849,467.15 146,550,491.60 5.1 Net profit from continuing operations (“-” for 129,849,467.15 133,828,422.33 net loss) 5.2 Net profit from discontinued operations (“-” for 12,722,069.27 net loss) Net profit attributable to owners of the Company as 102,264,390.61 101,833,212.48 the parent Net profit attributable to non-controlling interests 27,585,076.54 44,717,279.12 6. Other comprehensive income, net of tax 449,844.98 0.00 Attributable to owners of the Company as the 449,844.98 0.00 parent 6.1 Items that will not be reclassified to profit or loss 6.1.1 Changes in net liabilities or assets caused by remeasurements on defined benefit pension schemes 6.1.2 Share of other comprehensive income of investees that will not be reclassified to profit or loss under equity method 6.2 Items that may subsequently be reclassified 449,844.98 0.00 to profit or loss 6.2.1 Share of other comprehensive income of investees that will be reclassified to profit or loss under equity method 6.2.2 Gain/Loss on changes in fair value of available-for-sale financial assets 6.2.3 Gain/Loss arising from reclassification of held-to-maturity investments to available-for-sale financial assets 6.2.4 Effective gain/loss on cash flow hedges 6.2.5 Differences arising from translation of 449,844.98 0.00 foreign currency-denominated financial statements 6.2.6 Other Attributable to non-controlling interests 7. Total comprehensive income 130,299,312.13 146,550,491.60 18 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2018 Attributable to owners of the Company as the 102,714,235.59 101,833,212.48 parent Attributable to non-controlling interests 27,585,076.54 44,717,279.12 8. Earnings per share 8.1 Basic earnings per share 0.15 0.16 8.2 Diluted earnings per share 0.15 0.16 6. Income Statement of the Company as the Parent for Q1~Q3 Unit: RMB Item Q1~Q3 2018 Q1~Q3 2017 1. Operating revenue 0.00 2,857.14 Less: Cost of sales 226,827.45 252,030.50 Taxes and surcharges 1,046,593.89 212,753.35 Selling expense Administrative expense 14,511,777.95 10,807,855.19 R&D expense Finance costs 9,982,985.70 -8,270,296.34 Including: Interest expense 10,929,291.28 7,144,759.73 Interest income 954,302.98 16,810,053.35 Asset impairment loss -98,668.41 91,226,030.51 Add: Other income Investment income (“-” for loss) 0.00 74,749,139.55 Including: Share of profit or loss of joint 0.00 1,276,389.07 ventures and associates Gain on changes in fair value (“-” for loss) Asset disposal income (“-” for loss) 2. Operating profit (“-” for loss) -25,669,516.58 -19,476,376.52 Add: Non-operating income 0.00 920.00 Less: Non-operating expense 100.00 811,971.93 3. Profit before tax (“-” for loss) -25,669,616.58 -20,287,428.45 Less: Income tax expense 4. Net profit (“-” for net loss) -25,669,616.58 -20,287,428.45 4.1 Net profit from continuing operations (“-” for net loss) 4.2 Net profit from discontinued operations (“-” for net loss) 5. Other comprehensive income, net of tax 5.1 Items that will not be reclassified to profit or loss 5.1.1 Changes in net liabilities or assets caused by remeasurements on defined benefit pension schemes 5.1.2 Share of other comprehensive income of investees that will not be reclassified to profit or loss under equity method 5.2 Items that may subsequently be reclassified to profit or loss 5.2.1 Share of other comprehensive income of investees that will be reclassified to profit or loss under equity method 5.2.2 Gain/Loss on changes in fair value of available-for-sale financial assets 19 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2018 5.2.3 Gain/Loss arising from reclassification of held-to-maturity investments to available-for-sale financial assets 5.2.4 Effective gain/loss on cash flow hedges 5.2.5 Differences arising from translation of foreign currency-denominated financial statements 5.2.6 Other 6. Total comprehensive income -25,669,616.58 -20,287,428.45 7. Earnings per share 7.1 Basic earnings per share 7.2 Diluted earnings per share 7. Consolidated Cash Flow Statement for Q1~Q3 Unit: RMB Item Q1~Q3 2018 Q1~Q3 2017 1. Cash flows from operating activities: Proceeds from sale of commodities and rendering 6,089,990,408.11 5,822,570,435.19 of services Net increase in customer deposits and interbank deposits Net increase in borrowings from central bank Net increase in loans from other financial institutions Premiums received on original insurance contracts Net proceeds from reinsurance Net increase in deposits and investments of policy holders Net increase in proceeds from disposal of financial assets at fair value through profit or loss Interest, handling charges and commissions received Net increase in interbank loans obtained Net increase in proceeds from repurchase transactions Tax rebates 11,907,624.39 9,136,150.48 Cash generated from other operating activities 1,766,762,056.68 1,245,333,510.27 Subtotal of cash generated from operating activities 7,868,660,089.18 7,077,040,095.94 Payments for commodities and services 5,488,803,432.64 6,237,205,329.97 Net increase in loans and advances to customers Net increase in deposits in central bank and in interbank loans granted Payments for claims on original insurance contracts Interest, handling charges and commissions paid Policy dividends paid Cash paid to and for employees 215,823,143.63 316,577,321.67 Taxes paid 149,429,869.38 250,975,642.80 Cash used in other operating activities 1,595,019,949.04 1,266,821,118.63 Subtotal of cash used in operating activities 7,449,076,394.69 8,071,579,413.07 Net cash generated from/used in operating activities 419,583,694.49 -994,539,317.13 2. Cash flows from investing activities: Proceeds from disinvestment 1,647,338,090.45 642,702,070.16 Investment income 22,660,696.79 19,125,768.85 20 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2018 Net proceeds from disposal of fixed assets, 624,362.84 43,621,239.95 intangible assets and other long-lived assets Net proceeds from disposal of subsidiaries or other business units Cash generated from other investing activities 94,375,000.00 303,828,188.53 Subtotal of cash generated from investing activities 1,764,998,150.08 1,009,277,267.49 Payments for acquisition of fixed assets, intangible 44,298,838.25 29,376,357.42 assets and other long-lived assets Payments for investments 1,944,330,000.00 461,400,000.00 Net increase in pledged loans granted Net payments for acquisition of subsidiaries and 47,954,985.00 212,344,900.00 other business units Cash used in other investing activities 289,112,694.38 464,013,928.02 Subtotal of cash used in investing activities 2,325,696,517.63 1,167,135,185.44 Net cash generated from/used in investing activities -560,698,367.55 -157,857,917.95 3. Cash flows from financing activities: Capital contributions received 126,553,500.00 19,553,070.16 Including: Capital contributions by non-controlling interests to subsidiaries Increase in borrowings obtained 1,705,500,818.73 1,630,729,869.53 Net proceeds from issuance of bonds Cash generated from other financing activities 4,857,675,313.61 6,783,876,765.24 Subtotal of cash generated from financing activities 6,689,729,632.34 8,434,159,704.93 Repayment of borrowings 1,917,644,873.55 385,954,732.20 Payments for interest and dividends 98,022,459.14 63,040,361.51 Including: Dividends paid by subsidiaries to non-controlling interests Cash used in other financing activities 4,891,136,552.93 6,735,878,759.62 Subtotal of cash used in financing activities 6,906,803,885.62 7,184,873,853.33 Net cash generated from/used in financing activities -217,074,253.28 1,249,285,851.60 4. Effect of foreign exchange rate changes on cash and 19,414,338.66 252,498.89 cash equivalents 5. Net increase in cash and cash equivalents -338,774,587.68 97,141,115.41 Add: Cash and cash equivalents, beginning of the 1,014,438,663.43 505,477,847.81 period 6. Cash and cash equivalents, end of the period 675,664,075.75 602,618,963.22 8. Cash Flow Statement of the Company as the Parent for Q1~Q3 Unit: RMB Item Q1~Q3 2018 Q1~Q3 2017 1. Cash flows from operating activities: Proceeds from sale of commodities and rendering of services Tax rebates 750.00 0.00 Cash generated from other operating activities 58,581,113.47 15,215,693.63 Subtotal of cash generated from operating activities 58,581,863.47 15,215,693.63 Payments for commodities and services 87,700.45 0.00 Cash paid to and for employees 12,261,894.85 3,898,308.75 Taxes paid 5,670,439.48 27,309,480.98 Cash used in other operating activities 57,497,384.43 8,470,741.08 Subtotal of cash used in operating activities 75,517,419.21 39,678,530.81 21 Hainan Jingliang Holdings Co., Ltd. Third Quarter Report 2018 Net cash generated from/used in operating activities -16,935,555.74 -24,462,837.18 2. Cash flows from investing activities: Proceeds from disinvestment 0.00 10,000,000.00 Investment income Net proceeds from disposal of fixed assets, -34,427.35 35,000,000.00 intangible assets and other long-lived assets Net proceeds from disposal of subsidiaries or other business units Cash generated from other investing activities 0.00 240,582.60 Subtotal of cash generated from investing activities -34,427.35 45,240,582.60 Payments for acquisition of fixed assets, intangible 214,550.26 0.00 assets and other long-lived assets Payments for investments 39,000,000.00 0.00 Net payments for acquisition of subsidiaries and other business units Cash used in other investing activities Subtotal of cash used in investing activities 39,214,550.26 0.00 Net cash generated from/used in investing activities -39,248,977.61 45,240,582.60 3. Cash flows from financing activities: Capital contributions received Increase in borrowings obtained 75,900,000.00 29,000,000.00 Net proceeds from issuance of bonds Cash generated from other financing activities Subtotal of cash generated from financing activities 75,900,000.00 29,000,000.00 Repayment of borrowings 16,000,000.00 76,469,598.52 Payments for interest and dividends 3,649,220.00 1,659,125.50 Cash used in other financing activities 0.00 1,720,000.00 Sub-total of cash used in financing activities 19,649,220.00 79,848,724.02 Net cash generated from/used in financing activities 56,250,780.00 -50,848,724.02 4. Effect of foreign exchange rate changes on cash and cash equivalents 5. Net increase in cash and cash equivalents 66,246.65 -30,070,978.60 Add: Cash and cash equivalents, beginning of the 15,360,177.32 33,952,786.37 period 6. Cash and cash equivalents, end of the period 15,426,423.97 3,881,807.77 II Independent Auditor’s Report Indicate by tick mark whether the financial statements above have been audited by an independent auditor. □Yes √ No These financial statements have not been audited by such an auditor. Hainan Jingliang Holdings Co., Ltd. 23 October 2018 22