KonkaGroupCo.,Ltd. FirstQuarterReport2017 KONKA GROUP CO., LTD.
FIRST QUARTER REPORT 2017
2017-22
April 2017
KonkaGroupCo.,Ltd. FirstQuarterReport2017 Section I Important Statements
The Board of Directors, the Supervisory Committee, directors, supervisors and senior management staff of Konka Group 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.
Liu Fengxi, Company Principal, Li Chunlei, Chief of the Accounting Work, and Feng Junxiu, Chief of the Accounting Organ (Chief of Accounting), hereby confirm that the financial statements enclosed in this report are 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.
KonkaGroupCo.,Ltd. FirstQuarterReport2017 Section II Profile of the Company
I Keyfinancial results
Whether the Company performed any retroactive adjustments to or restatement of its accounting data dueto changes ofaccounting policies or correction ofaccounting errors
□Yes√ No
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|-|-|-|-|
||January-March2017|January-March2016|+/-%|
|Operatingrevenues(RMB)|4,686,318,957.34|4,072,311,262.92|15.08%|
|NetprofitattributabletoshareholdersoftheCompany(RMB)|26,245,353.83|8,429,549.66|211.35%|
|NetprofitattributabletoshareholdersoftheCompanybeforeexceptionalprofitandloss(RMB)|-18,772,884.12|27,524,586.04|-168.20%|
|Netoperatingcashflow(RMB)|-1,629,437,072.94|295,245,741.81|-651.89%|
|Basicearningspershare(RMB/share)|0.0109|0.0035|211.43%|
|Dilutedearningspershare(RMB/share)|0.0109|0.0035|211.43%|
|Weightedaveragereturnonequity|0.90%|0.30%|0.60%|
||March31,2017|December31,2016|+/-%|
|Totalassets(RMB)|18,539,102,991.75|17,243,119,597.97|7.52%|
|NetassetsattributabletoshareholdersoftheCompany(RMB)|2,930,377,224.23|2,901,481,607.04|1.00%|

Exceptional profit and loss
√ Applicable□Not applicable
Unit: RMB
||||
|-|-|-|
|Item|January-March2017|Note|
|Profit/loss on disposal of non-current assets (including offset asset impairmentprovisions)|33,059,453.01||
|Governmentsubsidieschargedtotheprofit/lossforthisReportingPeriod(exceptforthegovernmentgrantscloselyrelatedtothebusinessoftheCompanyandgivenatafixedquotaoramountinaccordancewiththeState’suniformstandards)|48,128,191.73||
|Profit/lossonentrustingotherswithinvestmentsorassetmanagement|28,220,131.51||
|Profit/loss on fair value changes of transactional financial assets and liabilities &|-53,257,727.64||

KonkaGroupCo.,Ltd. FirstQuarterReport2017
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|-|-|-|
|investment income from disposal of transactional financial assets and liabilities aswell as financial assets available for sale, except for effective hedges related toroutineoperationsoftheCompany|||
|Non-operatingincomeandexpenseotherthantheabove|6,863,175.27||
|Less:Corporateincometaxeffects|17,593,437.26||
|Minorityinterestseffects(aftertax)|401,548.67||
|Total|45,018,237.95|--|

 Explanation of why the Company classified an item as exceptional profit/loss according to the definition in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to thePublic—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
||||
|-|-|-|
|Item|Amount(RMB)|Reason|
|Taxrebatesonsoftware|24,447,136.81|GovernmentgrantscloselyrelatedtotheCompany’snormaloperationandconstantlygivenatcertainquotasoramountsaccordingtothegovernment’spoliciesandstandards|

II Total number ofshareholders atthe period-endand shareholdingsoftop ten shareholders 1. Numbers of common shareholders and preference shareholders with resumed voting rights as wellas shareholdings oftop ten shareholders
Unit: share
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Totalnumberofcommonshareholdersattheperiod-end|126,834|||Totalnumberofpreferenceshareholderswithresumedvotingrightsattheperiod-end(ifany)||||0||
|Shareholdingsoftoptenshareholders||||||||||
|Nameofshareholder||Natureofshareholder|Shareholdingpercentage(%)||Numberofsharesheld|Numberofrestrictedsharesheld|Pledgedorfrozenshares|||
||||||||Statusofshares||Numberofshares|
|OCTENTERPRISESCO.||State-ownedcorporation|21.75%||523,746,932|0||||
|CITICSECURITIESBROKERAG(HK)CO.,LIMITED||Foreigncorporation|7.56%||182,100,202|0||||
|HOLYTIMEGROUPLIMITED||Foreign|2.33%||56,049,824|0||||

KonkaGroupCo.,Ltd. FirstQuarterReport2017
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|-|-|-|-|-|-|-|-|
||corporation|||||||
|GUOYUANSECURITIESBROKERAGE(HK)CO.,LIMITED|Foreigncorporation|2.32%||55,973,345|0|||
|GAOLINGFUND,L.P.|Foreigncorporation|2.19%||52,801,250|0|||
|NANHUAFUTURESCO.,LIMITED-NANHUAFUTURESNO.5SILVERLEAFASSETMANAGEMENTPLAN|Other|1.22%||29,446,979|0|||
|CHINAMERCHANTSSECURITIES(HK)CO.,LTD.|State-ownedcorporation|0.97%||23,246,820|0|||
|NAMNGAI|Foreignindividual|0.94%||22,535,240|0|||
|CSICAPITALMANAGEMENTLIMITED|Foreigncorporation|0.83%||20,050,928|0|||
|MENGDILIANG|Domesticindividual|0.62%||15,000,083|0|||
|Shareholdingsoftoptennon-restrictedshareholders||||||||
|Nameofshareholder|||Numberofnon-restrictedsharesheld|||Varietyofshares||
|||||||Variety|Number|
|OCTENTERPRISESCO.|||523,746,932|||RMBcommonshares|523,746,932|
|CITICSECURITIESBROKERAG(HK)CO.,LIMITED|||182,100,202|||Domesticallylistedforeignshares|182,100,202|
|HOLYTIMEGROUPLIMITED|||56,049,824|||Domesticallylistedforeignshares|56,049,824|
|GUOYUANSECURITIESBROKERAGE(HK)CO.,LIMITED|||55,973,345|||Domesticallylistedforeignshares|55,973,345|
|GAOLINGFUND,L.P.|||52,801,250|||Domesticallylistedforeignshares|52,801,250|
|NANHUAFUTURESCO.,LIMITED-NANHUAFUTURESNO.5SILVERLEAFASSETMANAGEMENTPLAN|||29,446,979|||RMBcommonshares|29,446,979|
|CHINAMERCHANTSSECURITIES(HK)CO.,LTD.|||23,246,820|||Domesticallylistedforeign|23,246,820|

KonkaGroupCo.,Ltd. FirstQuarterReport2017
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|-|-|-|-|-|
||||shares||
|NAMNGAI||22,535,240|Domesticallylistedforeignshares|22,535,240|
|CSICAPITALMANAGEMENTLIMITED||20,050,928|Domesticallylistedforeignshares|20,050,928|
|MENGDILIANG||15,000,083|RMBcommonshares|15,000,083|
|Relatedoracting-in-concertpartiesamongtheaboveshareholders|ThewhollyownedsubsidiaryJialongInvestmentCo.,Ltd.ofthefirstmajorityshareholderOverseasChineseTownEnterprisesCo.respectivelyholdthecommonshareoftheCompanyof180,001,110sharesand18,360,000sharesthroughCITICSecuritiesBrokerage(HK)Co.,LimitedandChinaMerchantsSecurities(HK)Co.,Ltd.,andJialongInvestmentCo.,Ltd.andOverseasChineseTownEnterprisesCo.werepersonsactinginconcert;theCompanydoesnotknowwhethertheothershareholdersarerelatedpartiesandwhethertheyareacting-in-concertparties.||||
|Toptencommonshareholdersconductingsecuritiesmargintrading(ifany)|A-shareshareholderMengDiliangholdstheshareoftheCompanyof15,000,083sharesthroughtheaccountofcustomercredittransactionssecuredsecuritiesinEssenceSecuritiesCo.,Limited.||||

Did any ofthetop ten common shareholders or thetop tennon-restricted common shareholders of the Companyconduct any promissory repo during theReporting Period?
□Yea√ No
No suchcases in theReporting Period.
2.Total number ofpreference shareholders and shareholdingsof thetop ten ofthem
□Applicable√ Not applicable
KonkaGroupCo.,Ltd. FirstQuarterReport2017 Section III Significant Events
I Changes in the key financial results of this Reporting Period, as well as the reasons for such changes
√ Applicable□Not applicable
(I) During the Reporting Period, the Company became a top sponsor for the Jiangsu Suning Football Club, which would infuse new vitality into theCompany’s brand by introducing it to more young people, and at the same time bring about a positive effect on the other cooperation between the Companyand SuningCommerce Group Co., Ltd.
In the period, the Company carried on with its mechanism reform. On March 10, 2017, it finished hiring new senior executive officers in an open and market-oriented way. Meanwhile, the market-oriented mechanism reform onbusiness units proceeded smoothly.
In the period, the Company has become more capable in the smart TV business. It not only realized a considerable year-on-year growth in revenues from both contents provided and advertising service, but also has strengthened its user loyalty and brand competitiveness. Hardware (end products) is no longer the only main source for its profit. It can now also rely on software (contents provided for users) as anothermain source.
In the period, the Company tried toproduce more competitive products through integrating itsR&D, production and supply systems, as well as through improving its product structure. However, due to the rising costs of raw materials, the gross profit margins of color TVs and white goods saw a drop, leading to aloss inthemain business.
For the period, the exceptional profits and losses had an effect of RMB45.02 million on the net profit.
(II) Changes inkey financial results
Unit:RMB’0,000
|||||||
|-|-|-|-|-|-|
|Item|March31,2017|December31,2016|Change|Change(%)|Mainreasonforchange|
|Transactionalfinancialassets|19,325.87|25,208.50|-5,882.63|-23.34%|Changesintheclosingfairvalueoftransactionalfinancialassets|
|Accountspaidinadvance|112,026.93|27,481.07|84,545.86|307.65%|IncreasedprepaymentsfortheCompany’sbusiness|
|Item|January-March2017|January-March2016|Change|Change(%)|Mainreasonforchange|

KonkaGroupCo.,Ltd. FirstQuarterReport2017
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|-|-|-|-|-|-|
|Gainsonfairvaluechanges|-6,933.28|-4,832.58|-2,100.70|-43.47%|FairvaluechangesofthesharesoftheRefondstock|
|Investmentincome|3,497.92|-130.49|3,628.41|2780.60%|TheidlelandofsubsidiaryKunshanKonkawaspurchasedbythegovernmentforreserve|

 II Progress ofsignificanteventsandanalysis&explanationson theirinfluenceandsolutions√ Applicable□Not applicable
1.Progress ontheproject ofcity renewal in theplant areaof ourHeadquarters
According to the Proposal on the Cooperation Development Plan of the Urban Renewal Projects of the Headquarters Factory of Konka Group which be reviewed and approved by the 2nd Extraordinary General Meeting held on 8 Dec. 2014 by the Company, the Company and the OCT Enterprises Co. set up the Shenzhen Kangqiao Jiacheng Real Estate Investment Co., Ltd. by joint capital, and developed the urban renewal project in the plan area of theCompany’s original headquarters by regarding Shenzhen Kangqiao Jiacheng Real Estate Investment Co., Ltd. as the main body.
Shenzhen Kangqiao Jiacheng Real Estate Investment Co., Ltd. has worked out the land use planning and obtained the land use planning permit, approval of energy conservation assessment report and EIA report. Besides, it has signed the contract for land transfer and paid the first tranche for land transfer. At present, Shenzhen Kangqiao Jiacheng Real Estate Investment Co., Ltd. is making an integral design and conducting geological prospecting.
2.Progress onourKunshan Zhouzhuang project
After the approval by the 42nd meeting of the 6th Board of Directors, the Company obtained the land use rights of the land in the south of Quanwang Road, Zhouzhuang County, Kunshan. The project covers an area of366,575.8m2fortourism facilities and commercial housing.
The Company is planned to develop the land by stages and determine the annual development plans according to market condition. Recently the residential projects of Phase I and Phase II had both completed and the majority of the residential sales had finished with the Phase III was still in progress.
3.Progress ontheproject ofBuilding Konka ScienceInnovation Centre
According to the Proposal on the Investment in Building Konka Science Innovation Centre in Chuzhou which was reviewed and approved by the 24th meeting of the 8th Board of Directors held on Dec. 29, 2016, the Company increased its investments in Chuzhou Konka Technology Industry Development Co., Ltd. and invested in the building of Konka Science Innovation Centre in Chuzhou economic development zone by regarding Chuzhou Konka Technology Industry Development Co.,Ltd. as themain body.
During this Reporting Period, the Company has signed the investment cooperation agreement with
Chuzhou economic development zone management committee and obtained the land use right of
KonkaGroupCo.,Ltd. FirstQuarterReport2017 parcels covering an area of about 68 mu for commercial use in west side of Nanqiao South Road in Chuzhou City and south side of Chuyang Road through auction. At present Chuzhou Konka Technology Industry Development Co. Ltd. is making thedevelopment plan.
||||
|-|-|-|
|Summaryofsignificantevent|Dateofdisclosure|Indextodisclosedinformation|
|TheThree-oldRenovationProjectinGuankangPlantandProjectofInvestmentinBuildingtheNewPlantinDongguan.|03/11/2017|http://www.cninfo.com.cn|

III Commitments of the Company, its shareholders, actual controller, acquirer, directors, supervisors, senior management or other related parties fulfilled in the Reporting Period or ongoingat theperiod-end
□Applicable√ Not applicable
No suchcases in theReporting Period.
IVOperating result forecastforJanuary-June2017
Forecast of a possible deficit or considerable 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 ofwhy:
□Applicable√ Not applicable
V Securities investments
√ Applicable□Not applicable
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|-|-|-|-|-|-|-|-|-|-|-|-|
|Varietyofsecurities|Codeofsecurities|Nameofsecurities|Initialinvestmentcost(RMB)|Numberofsharesheldatperiod-begin|Shareholdingpercentageatperiod-begin|Numberofsharesheldatperiod-end|Shareholdingpercentageatperiod-end|Closingbookvalue(RMB)|Gain/lossforreportingperiod(RMB)|Accountingtitle|Sourceofsecurities|
|Stock|300605|HFXX|4671.8|0|0|0|0|0|19929.7|Available-for-salefinancialassets|Newsharessubscribed|

KonkaGroupCo.,Ltd. FirstQuarterReport2017
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|-|-|-|-|-|-|-|-|-|-|-|-|
|Stock|300610|CHGF|3371.83|0|0|0|0|0|11417.01|Available-for-salefinancialassets|Newsharessubscribed|
|Stock|300609|HNKJ|3369.8|0|0|0|0|0|22235.7|Available-for-salefinancialassets|Newsharessubscribed|
|Stock|002848|GSBE|4417|0|0|0|0|0|21693|Available-for-salefinancialassets|Newsharessubscribed|
|Stock|002849|WXZN|3575.68|0|0|0|0|0|15516.32|Available-for-salefinancialassets|Newsharessubscribed|
|Stock|300611|MLKJ|3579.03|0|0|0|0|0|13733.07|Available-for-salefinancialassets|Newsharessubscribed|
|Stock|002850|KDL|22997|0|0|0|0|0|62204.75|Available-for-salefinancialassets|Newsharessubscribed|
|Stock|002851|MGMT|4016.1|0|0|0|0|0|22383.9|Available-for-salefinancialassets|Newsharessubscribed|

KonkaGroupCo.,Ltd. FirstQuarterReport2017
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|-|-|-|-|-|-|-|-|-|-|-|-|
|Stock|300616|SPZP|20109.5|0|0|0|0|0|47970.5|Available-for-salefinancialassets|Newsharessubscribed|
|Stock|300618|HRGY|5689.65|0|0|0|0|0|42894.02|Available-for-salefinancialassets|Newsharessubscribed|
|Stock|002852|DDQ|17832.1|0|0|0|0|0|42423.433|Available-for-salefinancialassets|Newsharessubscribed|
|Stock|300620|GKKJ|2766.06|0|0|0|0|0|11882.2|Available-for-salefinancialassets|Newsharessubscribed|
|Stock|300622|BSYJ|1916.85|0|0|195|0|8667.75|0|Available-for-salefinancialassets|Newsharessubscribed|
|Stock|300623|JJWD|5526|0|0|0|0|0|13674|Available-for-salefinancialassets|Newsharessubscribed|
|Stock|300621|WYGF|4016.2|0|0|467|0|16489.77|0|Available-for-salefinancialassets|Newsharessubscribed|

KonkaGroupCo.,Ltd. FirstQuarterReport2017
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|-|-|-|-|-|-|-|-|-|-|-|-|
|Stock|300625|SXJG|10885.2|0|0|0|0|0|21996|Available-for-salefinancialassets|Newsharessubscribed|
|Stock|002856|MZGF|3831.3|0|0|330|0|13008.6|0|Available-for-salefinancialassets|Newsharessubscribed|
|Stock|002855|JRJS|3256.92|0|0|498|0|10059.6|0|Available-for-salefinancialassets|Newsharessubscribed|
|Stock|300626|HRGF|2362.5|0|0|315|0|8026.2|0|Available-for-salefinancialassets|Newsharessubscribed|
|Stock|300627|HCDH|2949.87|0|0|231|0|9106.02|0|Available-for-salefinancialassets|Newsharessubscribed|
|Stock|300630|PLZY|4389.18|0|0|382|0|8415.46|0|Available-for-salefinancialassets|Newsharessubscribed|
|Stock|002774|KYDT|5124|0|0|840|0|11886|0|Available-for-salefinancialassets|Newsharessubscribed|

KonkaGroupCo.,Ltd. FirstQuarterReport2017
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|-|-|-|-|-|-|-|-|-|-|-|-|
|Stock|002859|JMKJ|6798.96|0|0|228|0|6798.96|0|Available-for-salefinancialassets|Newsharessubscribed|
|Stock|300635|DAGF|3605.49|0|0|291|0|5191.44|0|Available-for-salefinancialassets|Newsharessubscribed|
|Stock|300632|GPGF|2549.55|0|0|345|0|2549.55|0|Available-for-salefinancialassets|Newsharessubscribed|
|Stock|300241|RFGD|232,711,950.00|13,155,000|4.76%|13,155,000|4.76%|176,540,100|-35,650,050|Tradingfinancialassets||
|Other securityinvestment held atperiod-end|||0|0|--|0|--|0|0|--|--|
|Total|||232,865,557.57|13,155,000|--|13,159,122|--|176,640,299.35|-35,280,096.40|--|--|
|Disclosure date of the board announcement on securitiesinvestmentapproval||||||N/A||||||
|Disclosure date of the general meeting announcement onsecuritiesinvestmentapproval(ifany)||||||N/A||||||

VI Investments inderivative financialinstruments
√ Applicable□Not applicable
Unit:RMB’0,000
|||
|-|-|
|Sourceofinvestmentfunds|USDfinancing|
|Lawsuit(ifapplicable)|N/A|
|Disclosure date of theannouncement about the board’sconsentfortheinvestment|05/24/2014|
|Disclosure date of theannouncement about the general|06/10/2014|

KonkaGroupCo.,Ltd. FirstQuarterReport2017
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|-|-|
|meeting’s consent for theinvestment||
|RiskanalysisandriskcontrolmeasuresforpositionsheldinderivativesintheReportingPeriod|We engage in forward forex transactions to reduce the currency risk when securingforeign-currency financing. This is very needed in our routine operation and is incompliance with the applicable laws and regulations. We have formulated theManagement Rules of Konka Group Co., Ltd. for Investment In Derivative FinancialInstruments,makingcleartherelevantconsiderationandapprovalprocedure,riskcontrol,etc..WealwayssignforwardforexcontractswithlargebankssuchastheBankofChina,which operate steadily and have good credit standing, which could help prevent loss onforwardforexcontractsduetobankfailure.|
|Changes in market price or fairvalue of derivatives invested in theReporting Period (specific methodsused and relevant assumption andparameter settings shall bedisclosed for analysis of fair valueofderivatives)|How we usually measure the fair value of derivative financial instruments: Based on theforward forex sales and purchase contracts that are signed between the Company andbanks and have not expired in a Reporting Period, we recognize the differences betweenthequotationsforthesecontractsonthebalancesheetdatesprovidedbythebanksandthecontractual prices as transactional financial assets or liabilities, andthe profit/loss on fairvaluechangesisrecognizedaccordingly.Becausethesecontractshavelockedinexchangerates, nochanges will occur when comparingthefair valueonsigningdateswiththat ondeliverydates.|
|Significant changes in theCompany’saccountingpoliciesandspecific accounting principles forderivatives in the Reporting Periodascomparedtothepriorperiod|N/A|
|Special opinions expressed byindependent directors concerningthe Company’s derivativesinvestmentandriskcontrol|It is considered necessary for the Company to lock in foreign-currency financing coststhrough financial instruments, because it could effectively reduce the currency risk whensecuring foreign-currency financing. The Company has formulated the internal controlmechanismforinvestmentinderivativefinancialinstruments,andtherelevantriskcontrolmeasuresthattheCompanyhastakenareconsideredeffective.|

Unit:RMB’0,000
||||||
|-|-|-|-|-|
|Typeofderivativefinancialinstrument|Openingcontractualamount|Closingcontractualamount|Profit/lossintheReportingPeriod|ClosinginvestmentamountasapercentageoftheCompany’sclosingnetassets|
|Forwardforexcontract|137,247.18|153,500.38|-1,659.10|52.38%|

VII Visits paid to the Company in the Reporting Period for purposes of research, communication, interview, etc.
□Applicable√ Not applicable
No suchcases in theReporting Period.
VIII Illegal provisionofguarantees forexternal parties
□Applicable√ Not applicable
KonkaGroupCo.,Ltd. FirstQuarterReport2017 No suchcases in theReporting Period.
IX Occupation of theCompany’s funds by the controlling shareholder or its related parties fornon-operating purposes
□Applicable√ Not applicable
No suchcases in theReporting Period.
KonkaGroupCo.,Ltd. FirstQuarterReport2017 Section IV Financial Statements
I Financialstatements
1.Consolidated balancesheet
Prepared byKonka Group Co., Ltd.
March 31,2017
Unit:RMB
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|-|-|-|
|Item|Closingbalance|Openingbalance|
|Currentassets:|||
|Monetaryfunds|2,329,841,813.95|2,617,606,256.42|
|Settlementreserve|||
|Interbanklendings|||
|Financial assets measured at fair value with fair value changesincludedintheprofitandlossfortheReportingPeriod|193,258,692.37|252,084,994.12|
|Derivativefinancialassets|||
|Notesreceivable|2,793,422,570.38|2,871,633,498.82|
|Accountsreceivable|2,038,181,138.03|2,307,965,548.49|
|Accountspaidinadvance|1,120,269,312.59|274,810,658.72|
|Premiumsreceivable|||
|Reinsurancepremiumsreceivable|||
|Receivablereinsurancecontractreserve|||
|Interestreceivable|820,013.85|1,342,063.84|
|Dividendsreceivable|10,171,609.48|10,171,609.48|
|Otheraccountsreceivable|283,647,558.38|222,389,921.80|
|Financialassetspurchasedunderagreementstoresell|||
|Inventories|5,494,420,460.51|4,287,413,944.35|
|Assetsheldforsale|||
|Non-currentassetsduewithinoneyear|||
|Othercurrentassets|439,759,267.01|562,204,116.20|
|Totalcurrentassets|14,703,792,436.55|13,407,622,612.24|
|Non-currentassets:|||
|Loansandadvancestocustomers|||
|Available-for-salefinancialassets|315,008,440.18|314,967,639.36|

KonkaGroupCo.,Ltd. FirstQuarterReport2017
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|-|-|-|
|Held-to-maturityinvestments|||
|Long-termaccountsreceivable|||
|Long-termequityinvestments|313,648,120.37|309,648,120.37|
|Investmentproperty|220,679,085.69|222,086,904.26|
|Fixedassets|1,556,678,058.00|1,573,978,914.03|
|Constructioninprogress|347,616,910.58|315,536,437.05|
|Engineeringmaterials|||
|Disposaloffixedassets|||
|Productivelivingassets|||
|Oil-gasassets|||
|Intangibleassets|255,029,607.52|302,045,627.44|
|R&Dexpenses|||
|Goodwill|3,597,657.15|3,597,657.15|
|Long-termdeferredexpenses|88,824,182.52|91,901,533.39|
|Deferredtaxassets|714,228,493.19|701,734,152.68|
|Othernon-currentassets|20,000,000.00||
|Totalnon-currentassets|3,835,310,555.20|3,835,496,985.73|
|Totalassets|18,539,102,991.75|17,243,119,597.97|
|Currentliabilities:|||
|Short-termborrowings|7,855,946,916.74|6,562,834,226.51|
|BorrowingsfromtheCentralBank|||
|Moneydepositsacceptedandinter-bankdeposits|||
|Interbankborrowings|||
|FinancialliabilitiesmeasuredatfairvaluewithfairvaluechangesincludedintheprofitandlossfortheReportingPeriod|5,720,009.41|337,263.13|
|Derivativefinancialliabilities|||
|Notespayable|959,618,467.71|863,709,138.39|
|Accountspayable|2,777,439,129.23|3,160,073,575.56|
|Accountsreceivedinadvance|1,593,377,657.51|1,201,426,223.70|
|Financialassetssoldforrepurchase|||
|Feesandcommissionspayable|||
|Payrollpayable|201,373,491.43|273,059,516.65|
|Taxespayable|105,214,729.16|121,905,421.18|
|Interestpayable|17,875,291.84|21,344,172.45|
|Dividendspayable|||

KonkaGroupCo.,Ltd. FirstQuarterReport2017
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|-|-|-|
|Otheraccountspayable|1,394,683,434.33|1,444,349,986.74|
|Reinsurancepremiumspayable|||
|Insurancecontractreserve|||
|Payablesforactingtradingofsecurities|||
|Payablesforactingunderwritingofsecurities|||
|Liabilitiesheldforsale|||
|Non-currentliabilitiesduewithinoneyear|41,025.60|41,025.60|
|Othercurrentliabilities|||
|Totalcurrentliabilities|14,911,290,152.96|13,649,080,549.91|
|Non-currentliabilities:|||
|Long-termborrowings|70,000,000.00|70,000,000.00|
|Bondspayable|||
|Ofwhich:Preferenceshares|||
|Perpetualbonds|||
|Long-termaccountspayable|30,102,564.14|30,102,564.14|
|Long-termpayrollpayable|16,836,847.08|18,151,659.90|
|Specialpayables|||
|Estimatedliabilities|7,551,985.10|7,551,985.10|
|Deferredincome|128,221,227.04|130,571,125.42|
|Deferredtaxliabilities|26,610,301.90|19,162,818.83|
|Othernon-currentliabilities|||
|Totalnon-currentliabilities|279,322,925.26|275,540,153.39|
|Totalliabilities|15,190,613,078.22|13,924,620,703.30|
|Owners’equity:|||
|Sharecapital|2,407,945,408.00|2,407,945,408.00|
|Otherequityinstruments|||
|Ofwhich:Preferenceshares|||
|Perpetualbonds|||
|Capitalreserve|79,723,092.04|79,723,092.04|
|Less:Treasuryshares|||
|Othercomprehensiveincome|-4,281,841.29|-6,932,104.65|
|Specialreserve|||
|Surplusreserve|847,908,466.28|847,908,466.28|
|Provisionsforgeneralrisks|||

KonkaGroupCo.,Ltd. FirstQuarterReport2017
||||
|-|-|-|
|Retainedearnings|-400,917,900.80|-427,163,254.63|
|EquityattributabletoownersoftheCompany|2,930,377,224.23|2,901,481,607.04|
|Minorityinterests|418,112,689.30|417,017,287.63|
|Totalowners’equity|3,348,489,913.53|3,318,498,894.67|
|Totalliabilitiesandowners’equity|18,539,102,991.75|17,243,119,597.97|

 Legal representative: Liu Fengxi Accounting head for this Report: Li Chunlei Head of theaccounting department: Feng Junxiu
2.Balancesheet oftheCompany
Unit:RMB
||||
|-|-|-|
|Item|Closingbalance|Openingbalance|
|Currentassets:|||
|Monetaryfunds|1,191,529,650.54|982,562,273.45|
|Financial assets measured at fair value with fair value changesincludedintheprofitandlossfortheReportingPeriod|16,153,593.63|39,894,844.12|
|Derivativefinancialassets|||
|Notesreceivable|2,648,160,798.97|2,513,459,083.61|
|Accountsreceivable|1,717,714,673.86|3,145,529,199.35|
|Accountspaidinadvance|942,982,151.59|523,905,219.52|
|Interestreceivable|12,432,279.56|4,502,350.43|
|Dividendsreceivable|||
|Otheraccountsreceivable|2,482,317,325.16|1,725,494,161.08|
|Inventories|2,838,250,836.90|1,926,824,243.11|
|Assetsheldforsale|||
|Non-currentassetsduewithinoneyear|||
|Othercurrentassets|346,247,339.25|505,418,961.79|
|Totalcurrentassets|12,195,788,649.46|11,367,590,336.46|
|Non-currentassets:|||
|Available-for-salefinancialassets|270,217,639.36|270,217,639.36|
|Held-to-maturityinvestments|170,000,000.00|170,000,000.00|
|Long-termaccountsreceivable|||
|Long-termequityinvestments|2,423,970,009.87|2,383,970,009.87|
|Investmentproperty|220,679,085.69|222,086,904.26|
|Fixedassets|498,904,455.22|499,826,176.39|
|Constructioninprogress|18,414,554.20|11,754,885.34|
|Engineeringmaterials|||

KonkaGroupCo.,Ltd. FirstQuarterReport2017
||||
|-|-|-|
|Disposaloffixedassets|||
|Productivelivingassets|||
|Oil-gasassets|||
|Intangibleassets|89,693,779.27|90,880,022.23|
|R&Dexpenses|||
|Goodwill|||
|Long-termdeferredexpenses|64,787,788.84|66,995,753.17|
|Deferredtaxassets|669,747,746.93|656,704,805.39|
|Othernon-currentassets|20,000,000.00||
|Totalnon-currentassets|4,446,415,059.38|4,372,436,196.01|
|Totalassets|16,642,203,708.84|15,740,026,532.47|
|Currentliabilities:|||
|Short-termborrowings|5,744,550,912.48|5,436,958,840.80|
|FinancialliabilitiesmeasuredatfairvaluewithfairvaluechangesincludedintheprofitandlossfortheReportingPeriod|5,720,009.41|337,263.13|
|Derivativefinancialliabilities|||
|Notespayable|1,729,962,097.76|1,454,982,347.31|
|Accountspayable|3,944,601,090.75|3,710,175,718.31|
|Accountsreceivedinadvance|717,171,976.85|322,402,357.59|
|Payrollpayable|111,223,674.82|131,415,800.19|
|Taxespayable|9,241,720.10|19,823,949.08|
|Interestpayable|24,405,190.47|23,767,528.97|
|Dividendspayable|||
|Otheraccountspayable|1,549,442,206.14|1,760,751,455.81|
|Liabilitiesheldforsale|||
|Non-currentliabilitiesduewithinoneyear|||
|Othercurrentliabilities|||
|Totalcurrentliabilities|13,836,318,878.78|12,860,615,261.19|
|Non-currentliabilities:|||
|Long-termborrowings|40,000,000.00|40,000,000.00|
|Bondspayable|||
|Ofwhich:Preferenceshares|||
|Perpetualbonds|||
|Long-termpayables|||
|Long-termpayrollpayable|||

KonkaGroupCo.,Ltd. FirstQuarterReport2017
||||
|-|-|-|
|Specialpayables|||
|Estimatedliabilities|7,551,985.10|7,551,985.10|
|Deferredincome|82,093,048.08|82,166,818.30|
|Deferredtaxliabilities|3,810,512.81|12,026,251.50|
|Othernon-currentliabilities|||
|Totalnon-currentliabilities|133,455,545.99|141,745,054.90|
|Totalliabilities|13,969,774,424.77|13,002,360,316.09|
|Owners’ equity:|||
|Sharecapital|2,407,945,408.00|2,407,945,408.00|
|Otherequityinstruments|||
|Ofwhich:Preferenceshares|||
|Perpetualbonds|||
|Capitalreserve|64,794,108.39|64,794,108.39|
|Less:Treasuryshares|||
|Othercomprehensiveincome|6,714,437.62|6,714,437.62|
|Specialreserve|||
|Surplusreserve|847,908,466.28|847,908,466.28|
|Retainedearnings|-654,933,136.22|-589,696,203.91|
|Totalowners’ equity|2,672,429,284.07|2,737,666,216.38|
|Totalliabilitiesandowners’ equity|16,642,203,708.84|15,740,026,532.47|

 3.Consolidated income statement
Unit:RMB
||||
|-|-|-|
|Item|January-March2017|January-March2016|
|1.Operatingrevenues|4,686,318,957.34|4,072,311,262.92|
|Including:Salesincome|4,686,318,957.34|4,072,311,262.92|
|Interestincome|||
|Premiumincome|||
|Feeandcommissionincome|||
|2.Operatingcosts|4,733,743,173.50|4,087,027,057.79|
|Including:Costofsales|4,023,149,407.98|3,295,207,195.04|
|Interestexpenses|||
|Feeandcommissionexpenses|||
|Surrenders|||
|Netclaimspaid|||

KonkaGroupCo.,Ltd. FirstQuarterReport2017
||||
|-|-|-|
|Netamountprovidedasinsurancecontractreserve|||
|Expenditureonpolicydividends|||
|Reinsurancepremium|||
|Taxesandsurtaxes|18,889,210.59|30,983,026.43|
|Sellingexpenses|518,071,670.57|581,981,228.20|
|Administrativeexpenses|135,856,678.53|128,846,125.87|
|Financecosts|42,775,464.29|49,908,929.45|
|Assetimpairmentloss|-4,999,258.46|100,552.80|
|Add:Profitonfairvaluechanges(“-”meansloss)|-69,332,778.97|-48,325,831.76|
|Investmentincome(“-”meansloss)|34,979,227.70|-1,304,925.71|
|Including:Shareofprofit/lossofassociatesandjointventures||-4,870,387.27|
|Exchangegains(“-”meansloss)|||
|3.Operatingprofit(“-”meansloss)|-81,777,767.43|-64,346,552.34|
|Add:Non-operatingincome|113,572,905.33|95,656,195.94|
|Including:Profitondisposalofnon-currentassets|||
|Less:Non-operatingexpense|767,810.90|1,657,321.74|
|Including:Lossondisposalofnon-currentassets|319,760.30|435,798.87|
|4.Totalprofit(“-”meansloss)|31,027,327.00|29,652,321.86|
|Less:Corporateincometax|5,067,406.90|15,988,231.88|
|5.Netprofit(“-”meansloss)|25,959,920.10|13,664,089.98|
|NetprofitattributabletoownersoftheCompany|26,245,353.83|8,429,549.66|
|Minorityinterests’income|-285,433.73|5,234,540.32|
|6.Othercomprehensiveincomenetoftax|2,713,427.50|475,840.93|
|Other comprehensive income net of tax attributable to ownersoftheCompany|2,650,263.36|623,958.73|
|6.1Othercomprehensiveincomethatwillnotbereclassifiedintoprofit/loss|||
|6.1.1 Changes in net liabilities or assets with a definedbenefitplanuponre-measurement|||
|6.1.2 Share of other comprehensive income of investeesthatcannotbereclassifiedintoprofit/lossundertheequitymethod|||
|6.2 Other comprehensive income to be subsequentlyreclassifiedintoprofit/loss|2,650,263.36|623,958.73|
|6.2.1 Share of other comprehensive income of investeesthatwillbereclassifiedintoprofit/lossundertheequitymethod|||
|6.2.2Profit/lossonfairvaluechangesofavailable-for-salefinancialassets||-1,875.00|

KonkaGroupCo.,Ltd. FirstQuarterReport2017
||||
|-|-|-|
|6.2.3 Profit/loss on reclassifying held-to-maturityinvestmentsintoavailable-for-salefinancialassets|||
|6.2.4Effectiveprofit/lossoncashflowhedges|||
|6.2.5Currencytranslationdifferences|2,650,263.36|625,833.73|
|6.2.6Other|||
|Othercomprehensiveincomenetoftaxattributabletominorityinterests|63,164.14|-148,117.80|
|7.Totalcomprehensiveincome|28,673,347.60|14,139,930.91|
|AttributabletoownersoftheCompany|28,895,617.19|9,053,508.39|
|Attributabletominorityinterests|-222,269.59|5,086,422.52|
|8.Earningspershare|||
|8.1Basicearningspershare|0.0109|0.0035|
|8.2Dilutedearningspershare|0.0109|0.0035|

 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 thelast period being RMB .
Legal representative: Liu Fengxi Accounting head for this Report: Li Chunlei Head of theaccounting department: Feng Junxiu
4.Income statementof theCompany
Unit:RMB
||||
|-|-|-|
|Item|January-March2017|January-March2016|
|1.Operatingrevenues|3,528,146,131.01|3,854,840,193.45|
|Less:Operatingcosts|3,096,777,598.35|3,347,575,734.55|
|Taxesandsurtaxes|5,965,647.75|18,102,003.16|
|Sellingexpenses|384,384,952.78|439,392,583.89|
|Administrativeexpenses|97,836,429.53|67,824,174.31|
|Financecosts|100,233,983.39|25,796,188.79|
|Assetimpairmentloss|||
|Add:profitonfairvaluechanges(“-”meansloss)|-34,248,996.77|-17,929,885.83|
|Investmentincome(“-”meansloss)|46,382,940.03|5,058,973.00|
|Including:Shareofprofit/lossofassociatesandjointventures||-1,400,941.31|
|2.Operatingprofit(“-”meansloss)|-144,918,537.53|-56,721,404.08|
|Add:Non-operatingincome|58,888,782.88|72,920,014.47|
|Including:Profitondisposalofnon-currentassets|||
|Less:Non-operatingexpense|465,857.89|438,291.21|

KonkaGroupCo.,Ltd. FirstQuarterReport2017
||||
|-|-|-|
|Including:Lossondisposalofnon-currentassets|48,234.28|17,639.35|
|3.Totalprofit(“-”meansloss)|-86,495,612.54|15,760,319.18|
|Less:Corporateincometax|-21,258,680.23|5,046,558.67|
|4.Netprofit(“-”meansloss)|-65,236,932.31|10,713,760.51|
|5.Othercomprehensiveincomenetoftax||-1,875.00|
|5.1Othercomprehensiveincomethatwill notbereclassified intoprofitandloss|||
|5.1.1 Changes in net liabilities or assets with a defined benefitplanuponre-measurement|||
|5.1.2 Share of other comprehensive income of investees thatcannotbereclassifiedintoprofit/lossundertheequitymethod|||
|5.2 Other comprehensive income to be subsequently reclassifiedintoprofit/loss||-1,875.00|
|5.2.1 Share of other comprehensive income of investees thatwillbereclassifiedintoprofit/lossundertheequitymethod|||
|5.2.2 Profit/loss on fair value changes of available-for-salefinancialassets||-1,875.00|
|5.2.3 Profit/loss on reclassifying held-to-maturity investmentsintoavailable-for-salefinancialassets|||
|5.2.4Effectiveprofit/lossoncashflowhedges|||
|5.2.5Currencytranslationdifferences|||
|5.2.6Other|||
|6.Totalcomprehensiveincome|-65,236,932.31|10,711,885.51|
|7.Earningspershare|||
|7.1Basicearningspershare|||
|7.2Dilutedearningspershare|||

5.Consolidated cash flowstatement
Unit:RMB
||||
|-|-|-|
|Item|January-March2017|January-March2016|
|1.Cashflowsfromoperatingactivities:|||
|Cashreceivedfromsaleofcommoditiesandrenderingofservice|3,504,876,874.27|4,128,537,310.84|
|Net increase in money deposits from customers and interbankplacements|||
|NetincreaseinloansfromtheCentralBank|||
|Netincreaseinfundsborrowedfromotherfinancialinstitutions|||
|Cashreceivedfrompremiumoforiginalinsurancecontracts|||
|Netcashreceivedfromreinsurancebusiness|||
|Netincreaseindepositsofpolicyholdersandinvestmentfund|||

KonkaGroupCo.,Ltd. FirstQuarterReport2017
||||
|-|-|-|
|Net increase in disposal of financial assets at fair value throughprofit/loss|||
|Interest,feesandcommissionsreceived|||
|Netincreaseininterbankborrowings|||
|Netincreaseinfundsinrepurchasebusiness|||
|Taxrefundsreceived|102,339,410.87|118,489,827.76|
|Cashreceivedfromotheroperatingactivities|118,039,119.57|100,254,946.62|
|Subtotalofcashinflowsfromoperatingactivities|3,725,255,404.71|4,347,282,085.22|
|Cashpaidforgoodsandservices|4,440,141,644.59|3,061,319,272.92|
|Netincreaseinloansandadvancestocustomers|||
|Net increaseinfundsdepositedintheCentralBankandinterbankplacements|||
|Cashpaidforclaimsoforiginalinsurancecontracts|||
|Interest,feesandcommissionspaid|||
|Cashpaidaspolicydividends|||
|Cashpaidtoandforemployees|458,532,563.30|472,208,935.22|
|Taxespaid|135,715,221.18|236,824,221.56|
|Cashpaidforotheroperatingactivities|320,303,048.58|281,683,913.71|
|Subtotalofcashoutflowsduetooperatingactivities|5,354,692,477.65|4,052,036,343.41|
|Netcashflowsfromoperatingactivities|-1,629,437,072.94|295,245,741.81|
|2.Cashflowsfrominvestingactivities:|||
|Cashreceivedfromretractionofinvestments|112,806.75|16,140.00|
|Cashreceivedasinvestmentincome|30,385,376.69|9,635,784.93|
|Net cash received from disposal of fixed assets, intangible assetsandotherlong-termassets|78,346,069.28|112,952.43|
|Net cash received from disposal of subsidiaries or other businessunits|||
|Cashreceivedfromotherinvestingactivities|557,451,449.68|1,020,011,000.00|
|Subtotalofcashinflowsfrominvestingactivities|666,295,702.40|1,029,775,877.36|
|Cash paid to acquire fixed assets, intangible assets and otherlong-termassets|73,620,997.55|21,789,341.60|
|Cashpaidforinvestment|4,157,113.94|10,455.00|
|Netincreaseinpledgedloans|||
|Netcashpaidtoacquiresubsidiariesandotherbusinessunits|||
|Cashpaidforotherinvestingactivities|285,575,000.00|498,374,070.44|
|Subtotalofcashoutflowsduetoinvestingactivities|363,353,111.49|520,173,867.04|

KonkaGroupCo.,Ltd. FirstQuarterReport2017
||||
|-|-|-|
|Netcashflowsfrominvestingactivities|302,942,590.91|509,602,010.32|
|3.Cashflowsfromfinancingactivities:|||
|Cashreceivedfromcapitalcontributions|265,000.00|4,900,000.00|
|Including: Cash received from minority shareholder investmentsbysubsidiaries|265,000.00|4,900,000.00|
|Cashreceivedasborrowings|2,238,876,860.00|402,000,000.00|
|Cashreceivedfromissuanceofbonds|||
|Cashreceivedfromotherfinancingactivities|444,080,082.06|717,390,962.65|
|Subtotalofcashinflowsfromfinancingactivities|2,683,221,942.06|1,124,290,962.65|
|Repaymentofborrowings|1,143,869,292.69|1,652,225,338.64|
|Cash paid for interest expenses and distribution of dividends orprofit|105,020,297.25|16,401,232.21|
|Including: dividends or profit paid by subsidiaries to minorityinterests|||
|Cashpaidforotherfinancingactivities|318,701.97|18,138,337.59|
|Sub-totalofcashoutflowsduetofinancingactivities|1,249,208,291.91|1,686,764,908.44|
|Netcashflowsfromfinancingactivities|1,434,013,650.15|-562,473,945.79|
|4. Effect of foreign exchange rate changes on cash and cashequivalents|5,263,241.18|-3,722,947.81|
|5.Netincreaseincashandcashequivalents|112,782,409.30|238,650,858.53|
|Add:Openingbalanceofcashandcashequivalents|2,020,902,945.14|1,488,154,851.35|
|6.Closingbalanceofcashandcashequivalents|2,133,685,354.44|1,726,805,709.88|

 6.Cash flowstatement oftheCompany
Unit:RMB
||||
|-|-|-|
|Item|January-March2017|January-March2016|
|1.Cashflowsfromoperatingactivities:|||
|Cashreceivedfromsaleofcommoditiesandrenderingofservice|4,295,329,683.99|3,339,394,183.83|
|Taxrefundsreceived|26,891,931.97|77,823,014.80|
|Cashreceivedfromotheroperatingactivities|707,878,209.00|189,560,391.00|
|Subtotalofcashinflowsfromoperatingactivities|5,030,099,824.96|3,606,777,589.63|
|Cashpaidforgoodsandservices|3,920,920,891.18|3,160,511,022.15|
|Cashpaidtoandforemployees|276,264,044.77|267,788,226.72|
|Taxespaid|46,694,339.02|156,747,638.23|
|Cashpaidforotheroperatingactivities|1,124,083,766.45|417,545,747.64|
|Subtotalofcashoutflowsduetooperatingactivities|5,367,963,041.42|4,002,592,634.74|
|Netcashflowsfromoperatingactivities|-337,863,216.46|-395,815,045.11|

KonkaGroupCo.,Ltd. FirstQuarterReport2017
||||
|-|-|-|
|2.Cashflowsfrominvestingactivities:|||
|Cashreceivedfromretractionofinvestments||5,685.00|
|Cashreceivedasinvestmentincome|32,123,053.44|17,509,465.52|
|Net cash received from disposal of fixed assets, intangible assetsandotherlong-termassets|98,058.25|110,602.00|
|Net cash received from disposal of subsidiaries or other businessunits|||
|Cashreceivedfromotherinvestingactivities|557,000,000.00|1,122,000,000.00|
|Subtotalofcashinflowsfrominvestingactivities|589,221,111.69|1,139,625,752.52|
|Cash paid to acquire fixed assets, intangible assets and otherlong-termassets|15,173,135.90|2,400,854.44|
|Cashpaidforinvestment|40,000,000.00|8,016,000.00|
|Netcashpaidtoacquiresubsidiariesandotherbusinessunits|||
|Cashpaidforotherinvestingactivities|333,255,000.00|570,030,000.00|
|Subtotalofcashoutflowsduetoinvestingactivities|388,428,135.90|580,446,854.44|
|Netcashflowsfrominvestingactivities|200,792,975.79|559,178,898.08|
|3.Cashflowsfromfinancingactivities:|||
|Cashreceivedfromcapitalcontributions|||
|Cashreceivedasborrowings|471,029,374.72|402,000,000.00|
|Cashreceivedfromissuanceofbonds|||
|Cashreceivedfromotherfinancingactivities|141,159,013.75||
|Subtotalofcashinflowsfromfinancingactivities|612,188,388.47|402,000,000.00|
|Repaymentofborrowings|165,708,656.06||
|Cash paid for interest expenses and distribution of dividends orprofit|101,133,666.93|2,671,625.00|
|Cashpaidforotherfinancingactivities|318,701.97|310,717,730.59|
|Sub-totalofcashoutflowsduetofinancingactivities|267,161,024.96|313,389,355.59|
|Netcashflowsfromfinancingactivities|345,027,363.51|88,610,644.41|
|4. Effect of foreign exchange rate changes on cash and cashequivalents|7,947,240.71|-462,682.54|
|5.Netincreaseincashandcashequivalents|215,904,363.55|251,511,814.84|
|Add:Openingbalanceofcashandcashequivalents|973,613,753.40|478,267,624.53|
|6.Closingbalanceofcashandcashequivalents|1,189,518,116.95|729,779,439.37|

 IIAuditor’s report
Is thisReport audited?
□Yes√ No
KonkaGroupCo.,Ltd. FirstQuarterReport2017 This Report is not audited.
The Board ofDirectors
Konka Group Co.,Ltd.
April 28,2017