ReportfortheFirstQuarterof2014ofKonkaGroupCo.,Ltd. Konka Group Co., Ltd.
Report for the First Quarter of 2014
2014-18
Apr. 2014
ReportfortheFirstQuarterof2014ofKonkaGroupCo.,Ltd. Section I. Important Reminders
The Board of Directors, the Supervisory Committee as well as all directors, supervisors and senior management staff of Konka Group Co., Ltd. (hereinafter referred to as “the Company”) warrant that 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.
Except for the following Directors, the others attended the board session for reviewing this report.
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|-|-|-|-|
|Name of Directors notattended the boardsession in person|Position of Directors notattended the boardsession in person|Reason of not attendingthe boars session inperson|Name of mandatory|
|Wang Xiaowen|Director|On a business trip|Wu Siyuan|

Wu Siyuan, Company Principal, Yang Rong, Chief of the Accounting Work, and Xu Youshan, 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.
ReportfortheFirstQuarterof2014ofKonkaGroupCo.,Ltd. Section II. Financial Highlights& Change of Shareholders I. Major accounting data and financial indexes
Does the Company adjust retrospectively or restate accounting data of previous years due to change of the accounting policy or correction of any accounting error?
□ Yes√ No
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|-|-|-|-|
||Jan.-Mar. 2014|Jan.-Mar. 2013|YoY increase/decrease(%)|
|Operating revenues (RMB Yuan)|4,049,737,785.15|4,806,314,071.49|-15.74%|
|Net profit attributable toshareholders of the Company (RMBYuan)|9,522,762.31|14,242,614.75|-33.14%|
|Net profit attributable toshareholders of the Company afterextraordinarygainsandlosses(RMBYuan)|149,469.07|-5,211,332.98|102.87%|
|Net cash flows from operatingactivities (RMB Yuan)|935,058,191.82|457,336,811.79|104.46%|
|Basic EPS (RMB Yuan/share)|0.0079|0.0118|-33.05%|
|Diluted EPS (RMB Yuan/share)|0.0079|0.0118|-33.05%|
|Weighted average ROE (%)|0.23%|0.35%|-0.12%|
||31 Mar. 2014|31 Dec. 2013|Increase/decrease (%)|
|Total assets (RMB Yuan)|16,046,574,202.72|15,743,284,335.49|1.93%|
|Net assets attributable toshareholders of the Company (RMBYuan)|4,088,537,577.61|4,080,458,151.63|0.2%|

Items and amounts of extraordinary gains and losses
√Applicable□Inapplicable
Unit: RMB Yuan
||||
|-|-|-|
|Item|AmountasofJan.-Mar.2014|Note|
|Gains/losses on the disposal of non-current assets (including theoffset part of the asset impairment provisions)|-947,183.34||
|Government grants recognized in the current period, except forthose acquired in the ordinary course of business or granted atcertain quotas or amounts according to the government’s unifiedstandards|8,264,258.99||
|Non-operating income and expense other than the above|2,210,406.53||

ReportfortheFirstQuarterof2014ofKonkaGroupCo.,Ltd.
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|-|-|-|
|Other gain and loss items that meet the definition of an extraordinarygain/loss|1,245,374.19||
|Less: Income tax effects|1,451,134.70||
|Minority interests effects (after tax)|-51,571.57||
|Total|9,373,293.24|--|

 Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to thePublic—Extraordinary Gains and Losses, or classifies any extraordinary gain/loss item mentioned in the said explanatory announcement as a recurrent gain/loss item
□ Applicable√ Inapplicable
II. Total number of shareholders at the period-end and shares held by the top ten shareholders
Unit: share
||||||||
|-|-|-|-|-|-|-|
|Total number of shareholders atthe period-end||85,726|||||
|Shares held by the top ten shareholders|||||||
|Name ofshareholder|Nature ofshareholder|Shareholdingpercentage(%)|Number of theshares held|Number of therestrictedshares held|Pledged or frozen shares||
||||||Status ofshares|Number ofshares|
|OCT ENTERPRISESCO.|State-ownedcorporation|19%|228,754,783|198,381,940|Pledged|0|
||||||Frozen|0|
|HOLY TIME GROUPLIMITED|Foreigncorporation|4.9%|59,001,100|0|Pledged|0|
||||||Frozen|0|
|GAOLING FUND,L.P.|Foreigncorporation|2.19%|26,400,625|0|Pledged|0|
||||||Frozen|0|
|China ResourcesSZITIC —ExtraordinaryNo.18FundTrust|Domesticnon-state-ownedcorporation|1.93%|23,238,965|0|Pledged|0|
||||||Frozen|0|
|Sun Zhenxiang|Domesticnaturalperson|1.2%|14,456,488|0|Pledged|0|
||||||Frozen|0|
|Hwabao TrustCo., Ltd.—SoleFund TrustR2007ZX037|Domesticnon-state-ownedcorporation|1.17%|14,093,200|0|Pledged|0|
||||||Frozen|0|
|NAM NGAI|Foreign|0.97%|11,690,520|0|Pledged|0|

ReportfortheFirstQuarterof2014ofKonkaGroupCo.,Ltd.
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|-|-|-|-|-|-|-|
||naturalperson||||Frozen|0|
|Li Yichao|Domesticnaturalperson|0.48%|5,733,081|0|Pledged|0|
||||||Frozen|0|
|Xia Rui|Domesticnaturalperson|0.42%|5,006,500|0|Pledged|0|
||||||Frozen|0|
|ZhongrongInternationalTrust—RongjinNo.23FundTrustContract|Domesticnon-state-ownedcorporation|0.25%|3,059,123|0|Pledged|0|
||||||Frozen|0|
|Shares held by the top ten non-restricted share holders|||||||
|Name of shareholder||Number of non-restricted shares held|||Type of shares||
||||||Type|Number|
|HOLY TIME GROUP LIMITED||59,001,100|||Domesticallylistedforeignshares|59,001,100|
|OCT ENTERPRISES CO.||30,372,843|||RMB ordinaryshares|30,372,843|
|GAOLING FUND, L.P.||26,400,625|||Domesticallylistedforeignshares|26,400,625|
|China Resources SZITIC —Extraordinary No.18 Fund Trust||23,238,965|||RMB ordinaryshares|23,238,965|
|Sun Zhenxiang||14,456,488|||RMB ordinaryshares|14,456,488|
|Hwabao Trust Co., Ltd.—SoleFund Trust R2007ZX037||14,093,200|||RMB ordinaryshares|14,093,200|
|NAM NGAI||11,690,520|||Domesticallylistedforeignshares|11,690,520|
|Li Yichao||5,733,081|||RMB ordinaryshares|5,733,081|
|Xia Rui||5,006,500|||RMB ordinaryshares|5,006,500|

ReportfortheFirstQuarterof2014ofKonkaGroupCo.,Ltd.
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|-|-|-|-|
|Zhongrong International Trust— Rongjin No.23 Fund Trust|3,059,123|RMB ordinaryshares|3,059,123|
|ContractExplanation on associatedrelationship or persons actingin concert among theabove-mentioned shareholders|The first majority shareholder OVERSEAS CHINESE TOWN ENTERPRISES CO. hasno related-party relationship with other shareholders and they are notacting-in-concert parties, either. Except for that, the Company does notknow whether the other shareholders are related parties and whether theyare acting-in-concert parties.|||
|Top 10 shareholders taking partin margin financing andsecurities lending (if any)|Asharesshareholder—SunZhenxiangheld14,456,488sharesthroughcustomercredit trading collateral securities account of GF Securities Co., Ltd.|||

Did any shareholder of the Company carry out an agreed buy-back in the reporting period?
□ Yes√ No
ReportfortheFirstQuarterof2014ofKonkaGroupCo.,Ltd. Section III. Significant Events
I. Significant changes of the major accounting statement items and financial indicators for the reporting period, as well as the reasons for these changes (I) In the reporting period, our strategy of transformation towards Internet produced initial results, with an improved product structure and a larger proportion of intelligent TVs in the sales. However, affected by the decrease of the sales volume and sales in the color TV market, the sales income of our color TV business decreased to some degree, leading to a decrease in profit.
(II) In the reporting period, we worked harder on the transformation towards Internet, with details as follows:
1. We unveiled the E-strategy to build an intelligent TV-Internet operation platform. With high responsiveness and being always one among the first to notice the development trends in the industry, we put forward to build the first intelligent TV-Internet operation platform in China. We not only could deepen the intelligent TV division to include content production anddistributionplatforms,butalsowerelikelytobuildthelargestprecisionmarketingplatform of it to achieve maximum value. Under this strategic goal, we put forward the strategic slogan of“E-dominance”andunveiledtheGroup’sE-strategyforthefirsttime.TheE-strategyconsists of twocores—E-end and E-platform, the“1+1 Strategy” for short. “E-end” refers to the extremely easy-to-use TV intelligent end, the household internet control center. “E-platform” refers to the open and easily enjoyable intelligent TV Internet operation. For Konka, E-end is thetechnicalsupportandhardwarebasis forE-platform;andE-platformisE-endintheaggregate, platform and internet forms. E-platform is the future of the Company, and the most important product in the future.
Konka E-platform is a fully open platform for content and application suppliers in the vertical direction andforcounterpartsin thehorizontaldirection. Intheverticaldirection, E-platform is a platform of information renewal. Through information exchange among users on E-platform, we can analyze and integrate data and renew information to help explore new production functions, application contents and business modes, which helps form an interest community of the up-and-down-stream industries. In the horizontal direction, E-platform helps us study the big picture of the TV industry and promotes the formulation of exchange standards in the industry. In this way, it will grow into a more convenient, faster and stronger operation platform, as well as the hub with the richest contents and applications and a highland for added value. 2. The Company proactively searched for opportunities to strengthen foreign corporation such as the Internet and application content.
The Company achieved strategic corporation with Youku Tudou Group and the latter offered video software services for the Internet TV promoted by the Company and implanted the function and service of Youku TV App into the full line of products of the Company.
ReportfortheFirstQuarterof2014ofKonkaGroupCo.,Ltd. 3. The Company launched new intelligent TV products.
(1) The Company released three series of smart TV--“Easyterminal” which considered “Easy to Use” as the core: Yixuan 9800 Series, Yiku 1800 Series and Yicai 6600/6800.
(2) According to the“1+1 Strategy” mode of the“Easyterminal+Easyplatform”, the Company released 4 KKTV new products including 42 inches K70U, 49 inches K70A, 49 inches K70U and 49 inches K70T, which further expanded the product line layout of KKTV.
(III) Change of other main financial indicators: Unit:RMB ten thoudsand yuan
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|-|-|-|-|-|-|
|Item|Closing amount|Openingamount|Amount ofchange|Ratio ofchange(%)|Main reasons for change|
|Prepayments|68,683.49|16,427.29|52,256.20|318.11%|Prepayments for land|
|Taxes and farespayable|-4,380.63|-9,467.05|5,086.42|53.73%|Deductible input taxdecreased.|
|Long-termborrowings|31,617.69|500.00|31,117.69|6,223.54%|Subsidiaries securedmore long-termborrowings.|
|Financialexpenses|5,699.61|2,671.61|3,028.00|113.34%|Exchangelossincreased.|
|Investment gain|217.43|-410.53|627.96|152.96%|Investment gain onassociates increased.|
|Cash paid toacquire fixedassets,intangible assetsand otherlong-term assets|55,476.39|6,029.73|49,446.66|820.05%|Prepayments for land|

II. Progress and influence of significant events, as well as the analysis and explanation on solutions
(I) Progress of urban renewal projects of the Company headquarters
According to the application of the Company, The Restructuring Office of Chengzhong Village in Nanshan District of Shenzhen issued the Circular of the Main Implementer of the Renewal Project of the Headquarters of Konka Group in Nanshan District, Shenzhen in Nov. 2012, which publicized Konka Group as the main implementer of the Renewal Project of the Headquarters of Konka Group. In Aug. 2013, OCT Group Co., Ltd. submitted the Comment Letter about Opposing Konka as the Sole Implementer of Plant Renewal of the Headquarters of Konka Group Project and according to this, the Restructuring Office of Chengzhong Village in Nanshan District of Shenzhen issued the Comment Letter about Konka as Main Implementer of Plant Renewal of the Headquarters of Konka Group Project in Aug., which put forward the related procedures should be suspended and dealt with after the OCT Group Co., Ltd and the Company negotiating the solutions.
Since then, although through negotiated by the relevant parties, there had not reached consensus
on “whether Konka has the right to be as the sole implementer of plant renewal of the
headquarters”.
ReportfortheFirstQuarterof2014ofKonkaGroupCo.,Ltd. For solving the divergence as soon as possible and to promote the execution of the renewal project ofheadquartersofKonkaGroup,aftertheresearchofthe53rdSessionofthe7thBoardofDirectors held on 28 Feb. 2014, the Company decided to summit the dispute about “whether Konka has the right to be as the sole implementer of plant renewal of the headquarters” to Shenzhen International Court of Arbitration for arbitration. The Company had summated the relevant application documents of arbitration to Shenzhen International Court of Arbitration and the latter planed to hold a hearing of this case in its securities arbitration tribunal at 3pm on 16 Apr. 2014 (Thursday).
Because the Company had decided to summit the dispute about the main developer of the headquarters of Konka Group for arbitration, the related departments in Shenzhen agreed the Company to hand in the land accounts of the renewal project of the headquarter of Konka Group in advance. The 2nd Administration Bureau directly under the Urban Planning, Land and Resources Commission of Shenzhen Municipality issued anew of the Shenzhen State-owned Land Use Right Transfer Income Payment Notice which verified that the total fees of the renewal of the headquarters of Konka Group was of RMB 1,492,931,087.
For promoting the execution of the renewal project of the headquarters of Konka Group, after the research of the 54th Session of the 7th Board of Directors, the Company decided to pay for the land accounts of the renewal project of headquarters of Konka Group in advance according to the requirements of the related government departments by the Konka Group before the arbitration results came out.
If the related arbitration institutions affirmed that the Konka Group had the right to be as the sole developer of the project, the Konka Group should continued to execute; if the arbitration institutions affirmed that it had no right to be as the sole developer, the Konka Group and the OCT Group Co., Ltd. should make an additional statement of the cooperative development materials separately according to the cooperative development plan achieved by the negotiation of the both parties and conduct the transfer procedures of the project site according to the bilateral agreement and share the paid land prices.
(II) Index to announcements on significant events
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|-|-|-|
|Overview of the significant event|Date of disclosure|Indextotherelevantannouncementdisclosed on the website|
|Announcement on the Resolution ofthe 50th Session of the 7th Board of|3 Jan. 2014|http://www.cninfo.com.cn/finalpage/2014-01-03/63442676.PDF|
|DirectorsAnnouncement on the Resignation ofthe Vice President of the Company|11 Jan. 2014|http://www.cninfo.com.cn/finalpage/2014-01-11/63473432.PDF|
|Announcement on the Resolution ofthe 53rd Session of the 7th Board of|1 Mar. 2014|http://www.cninfo.com.cn/finalpage/2014-03-01/63620067.PDF|
|DirectorsAnnouncement on SignificantArbitration|1 Mar. 2014|http://www.cninfo.com.cn/finalpage/2014-03-01/63620918.PDF|
|Announcement on the Resolution ofthe 54th Session of the 7th Board of|7 Mar. 2014|http://www.cninfo.com.cn/finalpage/2014-03-07/63645662.PDF|
|DirectorsAnnouncement on the Progress of theDeclaration of the Renewal Plan|7 Mar. 2014|http://www.cninfo.com.cn/finalpage/2014-03-07/63645661.PDF|

ReportfortheFirstQuarterof2014ofKonkaGroupCo.,Ltd.
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|Announcement on Arrival of TaxRebates|27 Mar. 2014|http://www.cninfo.com.cn/finalpage/2014-03-27/63730510.PDF|

 III. Commitments made by the Company or shareholders holding over5% of theCompany’ s shares in the reporting period or such commitments carried down into the reporting period
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|-|-|-|-|-|-|
|Commitment|Commitmentmaker|Contents|Time ofmakingcommitment|Period ofcommitment|Fulfillment|
|Commitments made in a share reform|Naught|||||
|Commitments made in an acquisition|Naught|||||
|reportorareportonequitychangesCommitments made in asset|Naught|||||
|reorganizationCommitments made in the first|Naught|||||
|public offering or refinancing.Other commitments made to minority|Naught|||||
|shareholdersExecuted in time or not?|Yes|||||
|Detailed reason for failing toexecute and the plan for the nextstep (If any)|Inapplicable|||||

IV. Predict the operating results from Jan.-Jun. of 2014
Warnings of possible loss or large-margin change of the accumulated net profit made during the period from the beginning of the year to the end of the next reporting period compared with the same period of the last year according to prediction, as well as explanations on the reasons
□Applicable√Inapplicable
V. Securities investment
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|-|-|-|-|-|-|-|-|-|-|-|-|
|Variety ofsecurities|Codeofsecurities|Nameofsecurities|Initialinvestmentcost(RMBYuan)|Numberofsharesheldatperiod-begin|Shareholdingpercentageatperiod-begin|Numberofsharesheldatperiod-end|Shareholdingpercentageatperiod-end|Closing bookvalue(RMBYuan)|Gain/lossforreportperiod(RMBYuan)|Accountingtitle|Sourceofstock|
|Stock|000002|VankeA|2,311,748.07|117,310|0%|117,310|0%|949,037.90|0.00|Available-for-salefinancial a|Subscriptionof additional iss|

ReportfortheFirstQuarterof2014ofKonkaGroupCo.,Ltd.
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|-|-|-|-|-|-|-|-|-|-|
|||||||||ssets|ue|
|Other securitiesinvestment holding at theperiod-end|0.00|0|--|0|--|||--|--|
|Total|2,311,748.07|117,310|--|117,310|--|949,037.90|0.00|--|--|
|Disclosure date of the|30 Aug. 2007|||||||||
|board announcement onDisclosure date of thegeneral meetingannouncement on approvalof the securitiesinvestment (if any)|Inapplicable|||||||||

Shareholdings in other listed companies
□Applicable√Inapplicable
VI. Investments in derivatives
Unit: RMB Ten thousand Yuan
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|-|-|-|-|-|-|-|-|-|-|-|-|
|Operator|Relation|Related-partytransactionor not|Typeofderivativeinvestment|Initialinvestmentamount|Startdate|Endingdate|Openinginvestmentamount|Impairmentprovision(ifany)|Closinginvestmentamount|Proportionof theclosinginvestmentamountin theCompany’sclosing netassets(%)|Actualgain/loss inreportingperiod|
|Naught|Naught|No|Naught|0|||0|0|0|0%|0|
|Total||||0|--|--|0|0|0|0%|0|
|Capital source for derivativeinvestment||||Inapplicable||||||||
|Cases involving lawsuit (ifapplicable)||||Inapplicable||||||||
|Disclosure date of the board||||Inapplicable||||||||
|announcement approving the wealthDisclosure date of the general||||Inapplicable||||||||

ReportfortheFirstQuarterof2014ofKonkaGroupCo.,Ltd.
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|-|-|
|Analysis on risks and controlmeasures of derivative productsheld in the reporting period(including but not limited tomarketrisk,liquidityrisk,creditrisk, operation risk, law risk,etc.)|Inapplicable|
|Changes of market prices or fairvalues in the reporting period ofthe invested derivatives. And theanalysis on the fair value of thederivatives should include thespecific use methods and therelevant assumptions andparameters.|Inapplicable|
|Whether significant changesoccurred to the Company’saccounting policy and specificaccounting principles ofderivativesinthereportingperiodcompared to the previous reportingperiod|Inapplicable|
|Specific opinion from independentdirectors on the Company’sderivatives investment and riskcontrol|Inapplicable|

VII. Researches, visits and interviews received in the reporting period
|||||||
|-|-|-|-|-|-|
|Time ofreception|Place ofreception|Way ofreception|Visitor type|Visitor|Main discussion andmaterials provided bythe Company|
|Naught|Naught|Other|Other|Naught|Naught|

ReportfortheFirstQuarterof2014ofKonkaGroupCo.,Ltd. Section IV. Financial Statements
I. Financial statements
1. Consolidated balance sheet
Prepared by Konka Group Co., Ltd.
Unit: RMB Yuan
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|Current Assets:|||
|Monetary funds|3,081,491,524.74|1,843,743,089.94|
|Settlement reserves||0.00|
|Intra-group lendings||0.00|
|Transactional financialassets||0.00|
|Notes receivable|3,675,603,804.65|4,150,779,374.32|
|Accounts receivable|1,867,066,658.58|2,460,996,984.92|
|Accounts paid in advance|686,834,907.48|164,272,929.59|
|Premiums receivable||0.00|
|Reinsurance premiumsreceivable||0.00|
|Receivable reinsurancecontract reserves||0.00|
|Interest receivable|6,730,721.33|2,898,419.90|
|Dividend receivable||0.00|
|Other accounts receivable|285,234,557.88|298,749,414.95|
|Financial assets purchasedunder agreements to resell||0.00|
|Inventories|3,085,309,631.43|3,582,669,024.26|
|Non-current assets due within1 year||0.00|
|Other current assets||0.00|
|Total current assets|12,688,271,806.09|12,504,109,237.88|
|Non-current assets:|||
|Loans by mandate and advancesgranted||0.00|
|Available-for-sale financial|949,037.90|941,999.30|

ReportfortheFirstQuarterof2014ofKonkaGroupCo.,Ltd.
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|-|-|-|
|assets|||
|Held-to-maturity investments||0.00|
|Long-term accounts receivable||0.00|
|Long-term equity investment|448,329,772.69|446,155,499.42|
|Investing property|236,584,561.46|237,986,524.12|
|Fixed assets|2,014,540,354.68|1,908,503,979.80|
|Construction in progress|62,232,435.11|49,924,027.97|
|Engineering materials||0.00|
|Disposal of fixed assets||0.00|
|Production biological assets||0.00|
|Oil-gas assets||0.00|
|Intangible assets|356,790,325.42|359,585,571.12|
|R&D expense||0.00|
|Goodwill|3,943,671.53|3,943,671.53|
|Long-term deferred expenses|12,492,140.67|13,405,084.94|
|Deferred income tax assets|222,440,097.17|218,728,739.41|
|Other non-current assets||0.00|
|Total of non-current assets|3,358,302,396.63|3,239,175,097.61|
|Total assets|16,046,574,202.72|15,743,284,335.49|
|Current liabilities:|||
|Short-term borrowings|5,942,289,449.92|5,239,069,764.48|
|Borrowings from Central Bank||0.00|
|Customerbankdepositsanddueto banks and other financialinstitutions||0.00|
|Intra-group borrowings||0.00|
|Transactional financialliabilities||0.00|
|Notes payable|595,077,612.69|565,137,790.84|
|Accounts payable|2,773,491,300.72|3,341,804,144.12|
|Accounts received in advance|408,388,325.75|482,716,035.68|
|Financial assets sold forrepurchase||0.00|
|Handling charges andcommissions payable||0.00|

ReportfortheFirstQuarterof2014ofKonkaGroupCo.,Ltd.
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|-|-|-|
|Employee ’ s compensationpayable|250,292,611.91|332,090,987.76|
|Tax payable|-43,806,259.35|-94,670,496.91|
|Interest payable|41,287,852.77|34,945,870.48|
|Dividend payable|0.00|0.00|
|Other accounts payable|1,312,776,359.45|1,391,396,130.97|
|Reinsurance premiums payable||0.00|
|Insurance contract reserves||0.00|
|Payablesforactingtradingofsecurities||0.00|
|Payables for actingunderwriting of securities||0.00|
|Non-current liabilities duewithin 1 year|1,356,837.03|1,755,444.00|
|Other current liabilities||0.00|
|Total current liabilities|11,281,154,090.89|11,294,245,671.42|
|Non-current liabilities:|||
|Long-term borrowings|316,176,909.95|5,000,000.00|
|Bonds payable||0.00|
|Long-term payables|31,366,530.13|31,366,530.13|
|Specific payables||0.00|
|Estimated liabilities|911,085.41|911,085.41|
|Deferred income taxliabilities|||
|Other non-current liabilities|128,555,178.00|131,658,369.11|
|Total non-current liabilities|477,009,703.49|168,935,984.65|
|Total liabilities|11,758,163,794.38|11,463,181,656.07|
|Owners ’ equity (orshareholders’ equity)|||
|Paid-up capital (or sharecapital)|1,203,972,704.00|1,203,972,704.00|
|Capital reserves|1,274,411,221.73|1,274,405,942.78|
|Less: Treasury stock||0.00|
|Specific reserves||0.00|
|Surplus reserves|847,908,466.28|847,908,466.28|
|Provisions for general risks||0.00|

ReportfortheFirstQuarterof2014ofKonkaGroupCo.,Ltd.
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|-|-|-|
|Retained profits|747,514,484.71|737,991,722.40|
|Foreign exchange difference|14,730,700.89|16,179,316.17|
|Total equity attributable toowners of the Company|4,088,537,577.61|4,080,458,151.63|
|Minority interests|199,872,830.73|199,644,527.79|
|Total owners ’ (orshareholders’) equity|4,288,410,408.34|4,280,102,679.42|
|Total liabilities and owners’(or shareholders’) equity|16,046,574,202.72|15,743,284,335.49|

Legal representative: Wu Siyuan Person-in-charge of the accounting work: Yang Rong
Chief of the accounting division: Xu Youshan
2. Balance sheet of the Company
Prepared by Konka Group Co., Ltd.
Unit: RMB Yuan
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|Current Assets:|||
|Monetary funds|1,590,554,860.24|1,118,577,010.98|
|Transactional financialassets|||
|Notes receivable|3,580,458,253.34|3,963,969,934.07|
|Accounts receivable|1,132,855,365.87|1,543,050,476.67|
|Accounts paid in advance|767,559,746.44|239,011,903.60|
|Interest receivable|17,148,036.76|12,151,753.22|
|Dividend receivable|||
|Other accounts receivable|768,819,303.67|668,297,184.77|
|Inventories|1,775,383,195.93|2,333,107,085.15|
|Non-current assets due within1 year|||
|Other current assets|||
|Total current assets|9,632,778,762.25|9,878,165,348.46|
|Non-current assets:|||
|Available-for-sale financialassets|949,037.90|941,999.30|

ReportfortheFirstQuarterof2014ofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|Held-to-maturity investments|545,000,000.00|505,000,000.00|
|Long-term accounts receivable|||
|Long-term equity investment|1,675,299,526.82|1,675,299,526.82|
|Investing property|236,584,561.46|237,986,524.12|
|Fixed assets|594,216,729.85|599,950,784.99|
|Construction in progress|12,588,400.40|8,713,508.63|
|Engineering materials|||
|Disposal of fixed assets|||
|Production biological assets|||
|Oil-gas assets|||
|Intangible assets|75,362,754.48|76,133,522.45|
|R&D expense|||
|Goodwill|||
|Long-term deferred expenses|4,256,233.85|4,597,304.79|
|Deferred income tax assets|182,654,432.30|183,062,820.76|
|Other non-current assets|||
|Total of non-current assets|3,326,911,677.06|3,291,685,991.86|
|Total assets|12,959,690,439.31|13,169,851,340.32|
|Current liabilities:|||
|Short-term borrowings|656,386,152.24|1,023,913,426.22|
|Transactional financialliabilities|||
|Notes payable|126,326,834.91|190,949,990.17|
|Accounts payable|6,586,024,504.74|6,320,384,438.01|
|Accounts received in advance|206,474,299.22|186,326,967.62|
|Employee ’ s compensationpayable|148,208,839.55|187,697,895.87|
|Tax payable|-41,337,870.49|-92,265,968.33|
|Interest payable|18,051,313.97|21,189,076.79|
|Dividend payable|||
|Other accounts payable|1,142,350,551.85|1,243,478,983.84|
|Non-current liabilities duewithin 1 year|||
|Other current liabilities|||
|Total current liabilities|8,842,484,625.99|9,081,674,810.19|

ReportfortheFirstQuarterof2014ofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|Non-current liabilities:|||
|Long-term borrowings|||
|Bonds payable|||
|Long-term payables|||
|Specific payables|||
|Estimated liabilities|||
|Deferred income taxliabilities|||
|Other non-current liabilities|72,566,271.31|74,192,786.56|
|Total non-current liabilities|72,566,271.31|74,192,786.56|
|Total liabilities|8,915,050,897.30|9,155,867,596.75|
|Owners ’ equity (orshareholders’ equity)|||
|Paid-up capital (or sharecapital)|1,203,972,704.00|1,203,972,704.00|
|Capital reserves|1,250,138,868.99|1,250,133,590.04|
|Less: Treasury stock|||
|Specific reserves|||
|Surplus reserves|847,908,466.28|847,908,466.28|
|Provisions for general risks|||
|Retained profits|742,619,502.74|711,968,983.25|
|Foreign exchange difference|||
|Total owners ’ (orshareholders’) equity|4,044,639,542.01|4,013,983,743.57|
|Total liabilities and owners’(or shareholders’) equity|12,959,690,439.31|13,169,851,340.32|

Legal representative: Wu Siyuan Person-in-charge of the accounting work: Yang Rong
Chief of the accounting division: Xu Youshan
3. Consolidated income statement
Prepared by Konka Group Co., Ltd.
Unit: RMB Yuan
||||
|-|-|-|
|Item|Jan.-Mar. 2014|Jan.-Mar. 2013|

ReportfortheFirstQuarterof2014ofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|I. Total operating revenues|4,049,737,785.15|4,806,314,071.49|
|Including: Sales income|4,049,737,785.15|4,806,314,071.49|
|Interest income|||
|Premium income|||
|Handling charge and commissionincome|||
|II. Total operating cost|4,063,464,797.95|4,813,813,240.44|
|Including: Cost of sales|3,314,296,879.16|3,986,443,828.73|
|Interest expenses|||
|Handling charge and commissionexpenses|||
|Surrenders|||
|Net claims paid|||
|Net amount withdrawn for theinsurance contract reserve|||
|Expenditure on policy dividends|||
|Reinsurance premium|||
|Taxes and associate charges|13,476,912.89|14,928,244.57|
|Selling and distribution expenses|530,426,324.73|618,981,796.40|
|Administrative expenses|153,450,740.64|152,643,177.30|
|Financial expenses|56,996,063.54|26,716,097.95|
|Asset impairment loss|-5,182,123.01|14,100,095.49|
|Add: Gain/(loss) from change in fairvalue (“-” means loss)|||
|Gain/(loss)frominvestment(“-”meansloss)|2,174,273.27|-4,105,315.64|
|Including: share of profits in associatesand joint ventures|2,174,273.27|-4,105,315.64|
|Foreign exchange gains (“-” means loss)|||
|III. Business profit (“-” means loss)|-11,552,739.53|-11,604,484.59|
|Add: non-operating income|36,198,775.51|21,216,013.33|
|Less: non-operating expense|1,583,788.49|709,260.06|
|Including: loss from non-current assetdisposal|950,183.34|249,901.40|
|IV. Total profit (“-” means loss)|23,062,247.49|8,902,268.68|
|Less: Income tax expense|12,737,179.94|-2,156,950.02|

ReportfortheFirstQuarterof2014ofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|V. Net profit (“-” means loss)|10,325,067.55|11,059,218.70|
|Including: Net profit achieved bycombined parties before the combinations|||
|Attributable to owners of the Company|9,522,762.31|14,242,614.75|
|Minority shareholders’ income|802,305.24|-3,183,396.05|
|VI. Earnings per share|--|--|
|(I) Basic earnings per share|0.0079|0.0118|
|(II) Diluted earnings per share|0.0079|0.0118|
|VII. Other comprehensive incomes|-2,017,338.63|656,645.45|
|VIII. Total comprehensive incomes|8,307,728.92|11,715,864.15|
|Attributable to owners of the Company|8,079,425.98|14,899,260.20|
|Attributable to minority shareholders|228,302.94|-3,183,396.05|

 Legal representative: Wu Siyuan Person-in-charge of the accounting work: Yang Rong
Chief of the accounting division: Xu Youshan
4. Income statement of the Company
Prepared by Konka Group Co., Ltd.
Unit: RMB Yuan
||||
|-|-|-|
|Item|Jan.-Mar. 2014|Jan.-Mar. 2013|
|I. Total sales|4,074,766,293.66|4,918,987,458.20|
|Less: cost of sales|3,517,553,792.86|4,283,442,338.56|
|Business taxes and surcharges|9,019,895.98|10,098,865.01|
|Distribution expenses|425,866,392.90|490,953,506.79|
|Administrative expenses|97,900,304.89|71,540,916.47|
|Financial costs|8,524,359.52|10,067,256.26|
|Impairment loss||14,100,546.17|
|Add: gain/(loss) from change in fairvalue (“-” means loss)|||
|Gain/(loss) from investment (“-”means loss)|||
|Including: income form investment onassociates and joint ventures|||
|II.Businessprofit(“-” meansloss)|15,901,547.51|38,784,028.94|

ReportfortheFirstQuarterof2014ofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|Add: non-business income|25,951,845.82|12,864,333.45|
|Less: non-business expense|443,862.26|275,695.38|
|Including:lossfromnon-currentassetdisposal|53,281.44|229,706.92|
|III. Total profit (“-” means loss)|41,409,531.07|51,372,667.01|
|Less: income tax expense|10,759,011.58|-2,789,564.82|
|IV. Net profit (“-” means loss)|30,650,519.49|54,162,231.83|
|V. Earnings per share|--|--|
|(I) Basic earnings per share|0.0255|0.0449|
|(II) Diluted earnings per share|0.0255|0.0449|
|VI. Other comprehensive income|5,278.95|56,308.80|
|VII. Total comprehensive income|30,655,798.44|54,218,540.63|

 Legal representative: Wu Siyuan Person-in-charge of the accounting work: Yang Rong
Chief of the accounting division: Xu Youshan
5. Consolidated cash flow statement
Prepared by Konka Group Co., Ltd.
Unit: RMB Yuan
||||
|-|-|-|
|Item|Jan.-Mar. 2014|Jan.-Mar. 2013|
|I. Cash flows from operatingactivities:|||
|Cash received from sale ofcommodities and rendering of service|4,228,168,316.46|4,707,055,676.28|
|Net increase of deposits fromcustomers and dues from banks|||
|Net increase of loans from thecentral bank|||
|Net increase of funds borrowed fromother financial institutions|||
|Cash received from premium oforiginal insurance contracts|||
|Net cash received from reinsurancebusiness|||
|Net increase of deposits of policy|||

ReportfortheFirstQuarterof2014ofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|holders and investment fund|||
|Net increase of disposal oftradable financial assets|||
|Cash received from interest,handling charges and commissions|||
|Net increase of intra-groupborrowings|||
|Net increase of funds in repurchasebusiness|||
|Tax refunds received|133,591,444.76|11,204,992.62|
|Other cash received relating tooperating activities|67,080,392.97|101,530,099.82|
|Subtotal of cash inflows fromoperating activities|4,428,840,154.19|4,819,790,768.72|
|Cash paid for goods and services|2,484,241,440.37|3,109,824,326.54|
|Net increase of customer lendingsand advances|||
|Net increase of funds deposited inthe central bank and amount due frombanks|||
|Cash for paying claims of theoriginal insurance contracts|||
|Cash for paying interest, handlingcharges and commissions|||
|Cash for paying policy dividends|||
|Cash paid to and for employees|483,492,822.28|458,548,740.76|
|Various taxes paid|210,931,969.79|420,947,307.28|
|Other cash payment relating tooperating activities|315,115,729.93|373,133,582.35|
|Subtotal of cash outflows fromoperating activities|3,493,781,962.37|4,362,453,956.93|
|Net cash flows from operatingactivities|935,058,191.82|457,336,811.79|
|II. Cash flows from investingactivities:|||
|Cash received from withdrawal ofinvestments|13,879,620.00||
|Cash received from return on|||

ReportfortheFirstQuarterof2014ofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|investments|||
|Net cash received from disposal offixed assets, intangible assets andother long-term assets|304,708.58|736,418.31|
|Net cash received from disposal ofsubsidiaries or other business units|||
|Other cash received relating toinvesting activities|||
|Subtotal of cash inflows frominvesting activities|14,184,328.58|736,418.31|
|Cash paid to acquire fixed assets,intangibleassetsandotherlong-termassets|554,763,873.92|60,297,251.34|
|Cash paid for investment|||
|Net increase of pledged loans|||
|Net cash paid to acquiresubsidiariesandotherbusinessunits|||
|Other cash payments relating toinvesting activities|183,497.35||
|Subtotal of cash outflows frominvesting activities|554,947,371.27|60,297,251.34|
|Net cash flows from investingactivities|-540,763,042.69|-59,560,833.03|
|III. Cash Flows from FinancingActivities:|||
|Cash received from capitalcontributions|||
|Including: Cash received fromminority shareholder investments bysubsidiaries|||
|Cash received from borrowings|1,249,214,976.99|1,533,337,805.57|
|Cash received from issuance ofbonds|||
|Other cash received relating tofinancing activities|471.75|687,158,423.39|
|Subtotal of cash inflows fromfinancing activities|1,249,215,448.74|2,220,496,228.96|
|Repayment of borrowings|448,563,365.07|1,860,981,037.30|

ReportfortheFirstQuarterof2014ofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|Cash paid for interest expensesand distribution of dividends orprofit|9,784,990.71|43,302,013.82|
|Including: dividends or profitpaid by subsidiaries to minorityshareholders|||
|Other cash payments relating tofinancing activities|959,134.76|278,167,714.68|
|Sub-total of cash outflows fromfinancing activities|459,307,490.54|2,182,450,765.80|
|Net cash flows from financingactivities|789,907,958.20|38,045,463.16|
|IV. Effect of foreign exchange ratechanges on cash and cash equivalents|15,165,240.87|3,839,640.32|
|V. Net increase in cash and cashequivalents|1,199,368,348.20|439,661,082.24|
|Add: Opening balance of cash andcash equivalents|1,771,489,421.21|824,043,169.38|
|VI. Closing balance of cash and cashequivalents|2,970,857,769.41|1,263,704,251.62|

Legal representative: Wu Siyuan Person-in-charge of the accounting work: Yang Rong
Chief of the accounting division: Xu Youshan
6. Cash flow statement of the Company
Prepared by Konka Group Co., Ltd.
Unit: RMB Yuan
||||
|-|-|-|
|Item|Jan.-Mar. 2014|Jan.-Mar. 2013|
|I. Cash flows from operating activities:|||
|Cash received from sale of commoditiesand rendering of service|3,384,948,009.22|3,643,210,300.74|
|Tax refunds received|70,970,465.76|272,514.32|
|Other cash received relating tooperating activities|39,210,508.85|57,446,503.11|
|Subtotal of cash inflows from operatingactivities|3,495,128,983.83|3,700,929,318.17|
|Cash paid for goods and services|1,744,797,235.10|2,116,312,022.95|
|Cash paid to and for employees|275,654,888.89|258,260,617.84|
|Various taxes paid|108,228,753.26|313,589,900.23|
|Other cash payment relating to|367,470,718.52|251,392,656.24|

ReportfortheFirstQuarterof2014ofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|operating activities|||
|Subtotal of cash outflows from operatingactivities|2,496,151,595.77|2,939,555,197.26|
|Net cash flows from operating activities|998,977,388.06|761,374,120.91|
|II.Cashflowsfrominvestingactivities:|||
|Cash received from retraction ofinvestments|13,879,620.00||
|Cash received from return oninvestments|2,400,000.00|5,960,333.33|
|Net cash received from disposal offixedassets,intangibleassetsandotherlong-term assets|101,208.58|736,418.31|
|Net cash received from disposal ofsubsidiaries or other business units|||
|Other cash received relating toinvesting activities|||
|Subtotal of cash inflows frominvesting activities|16,380,828.58|6,696,751.64|
|Cash paid to acquire fixed assets,intangible assets and other long-termassets|506,239,295.60|36,658,177.27|
|Cash paid for investment|||
|Net cash paid to acquire subsidiariesand other business units|||
|Other cash payments relating toinvesting activities|40,000,000.00|60,000,000.00|
|Subtotal of cash outflows from investingactivities|546,239,295.60|96,658,177.27|
|Net cash flows from investing activities|-529,858,467.02|-89,961,425.63|
|III. Cash Flows from FinancingActivities:|||
|Cash received from capitalcontributions|||
|Cash received from borrowings|||
|Cash received from issuance of bonds|||
|Other cash received relating tofinancing activities||687,158,423.39|
|Subtotal of cash inflows from financing||687,158,423.39|

ReportfortheFirstQuarterof2014ofKonkaGroupCo.,Ltd.
||||
|-|-|-|
|activities|||
|Repayment of borrowings||402,278,336.53|
|Cash paid for interest expenses anddistribution of dividends or profit||32,450,715.74|
|Other cash payments relating tofinancing activities|524.85|277,451,252.05|
|Sub-totalofcashoutflowsfromfinancingactivities|524.85|712,180,304.32|
|Net cash flows from financing activities|-524.85|-25,021,880.93|
|IV. Effect of foreign exchange ratechanges on cash and cash equivalents|2,858,928.22|3,613,298.91|
|V. Net increase in cash and cashequivalents|471,977,324.41|650,004,113.26|
|Add:Openingbalanceofcashandcashequivalents|1,117,689,643.16|365,891,615.76|
|VI. Closing balance of cash and cashequivalents|1,589,666,967.57|1,015,895,729.02|

Legal representative: Wu Siyuan Person-in-charge of the accounting work: Yang Rong
Chief of the accounting division: Xu Youshan
II. Audit report
Is this report audited?
□ Yes√ No
This report is not audited.
Konka Group Co., Ltd.
Board of Directors
15 Apr. 2014