Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd.
TSANN KUEN (CHINA) ENTERPRISE CO., LTD.
Report for the Third Quarter of 2015
October 2015
1
Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd.
Section I. Important Reminders
The Board of Directors, the Supervisory Committee as well as all directors, supervisors and
senior management staff of Tsann Kuen (China) Enterprise 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.
Other Directors attended the board meeting that reviewed the quarterly report personally
except the following Directors
Name of the entrusted
Name Position Reason
person
Bai Shaoxiang Independent Directors On a business trip Tang Jinmu
Mr. Pan Zhirong, company principal, and Mr. Wu Yanru, head of the accounting work & the
accounting division (head of accounting) jointly declare that the financial statements carried
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.
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Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd.
Section II. Financial Highlights & Change of Shareholders
I. Financial highlights
Does the Company adjust retrospectively or restate financial data of previous periods?
□ Yes √ No
Unit: RMB Yuan
Item 30 Sept. 2015 31 Dec. 2014 Increase/decrease (%)
Total assets 1,826,569,790.69 1,651,024,619.41 10.63
Net assets attributable to shareholders of the Company 549,589,276.40 546,574,409.55 0.55
YoY YoY
Item Jul.-Sept. 2015 increase/decrease Jan.-Sept. 2015 increase/decrease
(%) (%)
Operating revenues 579,140,206.32 6.40 1,474,334,364.39 2.77
Net profit attributable to shareholders of the Company 12,960,350.00 -45.79 28,071,375.18 -27.58
Net profit attributable to shareholders of the Company
19,466,416.78 30.84 23,132,923.92 -27.54
after extraordinary gains and losses
Net cash flows from operating activities -53,558,201.77 102.37 -104,121,841.58 74.86
Basic EPS 0.07 -46.15 0.15 -28.57
Diluted EPS 0.07 -46.15 0.15 -28.57
Weighted average ROE (%) 2.36 -2.12 5.09 -2.21
Total share capital of the Company up to the former exchange date before the disclosure:
Total share capital of the Company up to the former exchange date before the disclosure (share) 185,391,680
Whether there were changes caused from the Company issuing the new shares, additional issuance, allotment, equity incentive
exercise and repurchase that influenced the amount of the owners’ equities
□ Yes √ No
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Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd.
Items and amounts of extraordinary gains and losses
√Applicable □Inapplicable
Unit: RMB Yuan
Amount as of Jan.-Sept.
Item 2015 Note
Gains/losses on the disposal of non-current assets (including the offset part of asset
impairment provisions) 1,391,390.00
Tax rebates, reductions or exemptions due to approval beyond authority or the lack of
official approval documents
Government grants recognized in the current period, except for those acquired in the
ordinary course of business or granted at certain quotas or amounts according to the 1,774,449.00
country’s unified standards
Capital occupation charges on non-financial enterprises that recorded into current gains
and losses
Gains due to that the investment costs for the Company to obtain subsidiaries,
associates and joint ventures are lower than the enjoyable fair value of the identifiable
net assets of the investees when making the investments
Gain/loss on non-monetary asset swap
Gain/loss on entrusting others with investments or asset management
Asset impairment provisions due to acts of God such as natural disasters
Gain/loss on debt restructuring
Expenses for business reorganization, such as expenses for staffing, reorganization etc.
Gain/loss on the part over the fair value due to transactions with distinctly unfair prices
Current gains and losses of subsidies acquired from business combination under the
same control as from period-begin to combination date
Gain/loss on contingent events irrelevant to the Company’s normal business
Gains on sale of forward
Gains and losses on change in fair value from tradable financial assets and tradable exchange contracts, fair
financial liabilities, as well as investment income from disposal of tradable financial
assets and tradable financial liabilities and financial assets available for sales, except 3,012,812.34 value changes, wealth
for effective hedging related with normal businesses of the Company management products
and other current assets
Reversal of impairment provisions for the accounts receivable on which impairment
tests were carried out separately
Gain/loss on external entrustment loans
Gain/loss on change of the fair value of investing real estate of which the subsequent
measurement is carried out adopting the fair value method
Effect on current gains/losses when a one-off adjustment is made to current
gains/losses according to requirements of taxation, accounting and other relevant laws
and regulations
Custody fee income when entrusted with operation
Non-operating incomes and expenses other than the above 1,554,104.77
Other gain/loss items that meet the definition of an extraordinary gain/loss
Less: Income tax effects 1,158,481.06
Minority interests effects (after tax) 1,635,823.79
Total 4,938,451.26
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 the Public —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
In the reporting period, the Company did not classify any extraordinary gain/loss item as defined or particularized in the
Gains and Losses> as a recurrent gain/loss item. 4 Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. II. Total number of shareholders and shareholdings of the top ten shareholders at the period-end 1. Total number of common shareholders and shareholdings of the top ten common shareholders at the period-end Unit: share Total number of common shareholders at the period-end 18,231 Shareholdings of top 10 common shareholders Number of Pledged or frozen shares Nature of Shareholding Number of Name of shareholder restricted shareholder percentage (%) shares held Status of shares Number of shares shares held FORDCHEE DEVELOPMENT Foreign LIMITED 29.10% 53,940,530 N/A N/A corporation EUPA INDUSTRY Foreign CORPORATION LIMITED 13.04% 24,172,340 N/A N/A corporation GUOTAI JUNAN Foreign SECURITIES(HONGKONG) 5.89% 10,920,091 N/A N/A LIMITED corporation FILLMAN INVESTMENTS Foreign 2.49% LIMITED corporation 4,621,596 N/A N/A Foreign natural WU CHI LI person 1.46% 2,715,200 N/A N/A Chen Yongquan Domestic 1.02% natural person 1,888,819 N/A N/A Foreign natural Chen Yongqing person 0.77% 1,436,149 N/A N/A Foreign natural Chen Lijuan person 0.69% 1,287,817 N/A N/A Domestic Xie Qingjun natural person 0.60% 1,112,276 N/A N/A Shanghai Hong Kong Wanguo Foreign 0.59% 1,093,356 N/A N/A Securities corporation Shareholdings of top 10 non-restricted common shareholders Number of non-restricted Variety of shares Name of shareholder common shares held Variety Number FORDCHEE DEVELOPMENT LIMITED 53,940,530 Domestically listed foreign shares 53,940,530 EUPA INDUSTRY CORPORATION LIMITED 24,172,340 Domestically listed foreign shares 24,172,340 GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED 10,920,091 Domestically listed foreign shares 10,920,091 FILLMAN INVESTMENTS LIMITED 4,621,596 Domestically listed foreign shares 4,621,596 WU CHI LI 2,715,200 Domestically listed foreign shares 2,715,200 Chen Yongquan 1,888,819 Domestically listed foreign shares 1,888,819 Chen Yongqing 1,436,149 Domestically listed foreign shares 1,436,149 5 Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. Chen Lijuan 1,287,817 Domestically listed foreign shares 1,287,817 Xie Qingjun 1,112,276 Domestically listed foreign shares 1,112,276 Shanghai Hong Kong Wanguo Securities 1,093,356 Domestically listed foreign shares 1,093,356 Explanation on associated relationship or persons The first, the second and the fourth largest shareholders are the Company’s corporate controlling shareholders. It is unknown to the Company whether there exists associated acting in concert among the above-mentioned relationship among the shareholders above or they are acting-in-concert entities as stipulated in the Administrative Measures on Information Disclosure of Changes in shareholders Shareholding of Listed Companies. Did any of the top 10 common shareholders or the top 10 non-restricted common shareholders of the Company conduct any promissory repo during the reporting period? □ Yea √ No None of the top 10 common shareholders or the top 10 non-restricted common shareholders of the Company carried out any agreed buy-back in the reporting period. 2. Total number of preferred shareholders at the period-end and shareholdings of top 10 preferred shareholders □ Applicable √ Inapplicable 6 Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. Section III. Significant Events I. Major changes in main accounting statement items and financial indicators in the reporting period, as well as reasons for the changes √ Applicable □ Inapplicable Unit: RMB Yuan Increase/decrease Item 30 Sept. 2015 31 Dec. 2014 Main reason for the change (%) Financial assets measured at fair value and of which The value of the unconcluded forward exchange 473,250.00 2,610,000.00 -81.87 changes are recorded into contracts decreased. current gains and losses Notes receivable 1,211,475.00 2,004,498.59 -39.56 Due notes receivable were honored. Accounts receivable 390,473,324.52 247,336,334.86 57.87 The shipment in September increased. The raw materials prepaid for were put in storage Prepayments 6,398,747.99 12,758,696.10 -49.85 upon check. Interest receivable 5,628,024.99 3,590,399.84 56.75 Undue term deposits Other receivables 94,406,041.33 34,873,104.97 170.71 The unreceived export tax rebate receivable Other current assets 234,879,972.20 13,087,495.75 1,694.69 RMB 230 million was invested in financial products. The expense on land certificate alteration and land Construction in progress 542,189.69 233,968.67 131.74 preparation increased. The leases on some premises expired and the Intangible assets 17,252,210.16 12,145,423.16 42.05 premises have been adjusted for the Company’s own use. Meanwhile, some software was purchased. The molds prepaid for and the multifunctional test Other non-current assets 4,567,247.22 1,929,374.75 136.72 equipment that have not yet been checked and accepted Short-term borrowings 222,645,500.00 61,190,000.00 263.86 Short-term borrowings from banks increased. Interest payable 1,210,088.58 68,275.80 1,672.35 The undue short-term borrowings from banks Deferred income tax The value of the unconcluded forward exchange 307,459.59 618,966.78 -50.33 liabilities contracts decreased. Other comprehensive The translation difference of foreign-currency 1,852,863.47 -899,380.20 -306.02 incomes statements increased. Same period of Increase/decrease Item Current period Main reason for the change last year (%) Business tax and surtaxes 4,272,747.17 8,249,924.72 -48.21 The exempted and deducted taxes decreased. The appraised gain on exchange rates due to the Financial expenses -24,906,680.93 -14,125,625.27 76.32 depreciation of the RMB The appraised losses on forward exchange contracts Gains on fair value changes -3,029,390.15 -21,610,150.00 85.98 decreased. The decreased gains on unconcluded forward exchange Investment gains 6,042,202.49 20,446,066.98 -70.45 contracts and the undue gains on financial products Non-business incomes 4,854,787.57 11,558,038.21 -58.00 Subsidy incomes decreased. Some idle equipment were scrapped in the same period Non-business expense 134,843.80 870,000.91 -84.50 of last year. Net cash flows from -104,121,841.57 -59,545,501.43 74.86 The export tax rebate decreased. operating activities Net cash flows from -239,918,515.37 -841,214,480.14 71.48 The alterations in two restricted term deposits investing activities Net cash flows from Export financings and the borrowings from the 111,687,491.87 329,318,253.75 -66.09 financing activities controlling shareholder decreased. 7 Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. II. Progress of significant events and analysis & explanations on their influence and solutions √ Applicable □ Inapplicable (I) Contingent events Tsann Kuen Zhangzhou, one of the Company’s subsidiaries, and Xinda Motor Co., Ltd. (hereinafter refer to as “Xinda Motor”) signed a product supply contract on 20 Jul. 2009, with the valid period for the contract being from 1 Jul. 2009 to 30 Jun. 2012. Both parties also signed the 2011 ED Procurement Contract of Tsann Kuen Zhangzhou Enterprises Co., Ltd., the Special Agreement and other agreements, according to which Tsann Kuen Zhangzhou would purchase products from Xinda Motor. Later, Tsann Kuen Zhangzhou refused to pay for the products and chose to terminate the contract due to quality problems found in Xinda Motor ’s products. On 2 Nov. 2011, Xinda Motor filed a civil action against Tsann Kuen Zhangzhou to Zhangzhou Intermediate People’s Court, asking the court to order Tsann Kuen Zhangzhou to pay USD 479,089.06 (RMB 3,071,535.78) to it for the part of the contract that had been executed but not yet paid for, to bear the damages for overdue payment, and to continue to execute the unexecuted contractual obligation (equivalent to a payment of USD 189,423.25 for goods). Tsann Kuen Zhangzhou filed a cross action on 8 Jan. 2012. Xinda Motor had caused serious economic loss and reputation damage on Tsann Kuen Zhangzhou for the products it provided for Tsann Kuen Zhangzhou did not go with the contract, due to which Tsann Kuen Zhangzhou produced products of ill quality, goods were returned and orders were canceled. On that basis, Tsann Kuen Zhangzhou asked Zhangzhou Intermediate People’s Court to terminate the contract between both parties and order Xinda Motor to pay to Tsann Kuen Zhangzhou a damage of RMB 1,000,000.00, and a compensation of RMB 7,621,576.00. On 15 Aug. 2013, Zhangzhou Intermediate People’s Court issued the judgment of the first trial, with its contents as follows: 1. Defendant Tsann Kuen Zhangzhou Enterprise Co., Ltd. shall pay a product payment of USD 479,089.06 (RMB 3,071,535.78) to plaintiff Xinda Motor Co., Ltd. within 15 days from the date of entry into force of this Judgment; 2. Plaintiff Xinda Motor Co., Ltd. and third party Boluo County Lian Yuan Industry Technology Co., Ltd. shall jointly pay liquidated damages of RMB 1,233,399.70 to defendant Tsann Kuen Zhangzhou Enterprise Co., Ltd. within 15 days from the date of entry into force of this Judgment; 3. The 10 orders that have not been executed between plaintiff Xinda Motor Co., Ltd. & third party Boluo County Lian Yuan Industry Technology Co., Ltd. and defendant Tsann Kuen Zhangzhou Enterprise Co., Ltd. shall be cancelled; 4. The other claims of plaintiff Xinda Motor Co., Ltd. shall be overruled; and 5. The other claims of defendant Tsann Kuen Zhangzhou Enterprise Co., Ltd. shall be overruled. Both parties were not satisfied with the judgment of the first trial and filed appeals. Fujian Province Higher People's Court had held a hearing on 26 Mar. 2014. Up to the date of this report, the outstanding carrying amount due from Tsann Kuen Zhangzhou to Xinda Motor was USD 479,089.06. Since the case is currently in the second trial, Tsann Kuen Zhangzhou has not yet recognized the contingent asset of RMB 1,233,399.70 on Xinda Motor. Meanwhile, the defective motor products provided by Xinda Motor were 104,691 units and only 23,035 units of them were handled in this case, leaving 81,656 units un-handled. Therefore, Tsann Kuen Zhangzhou filed another suit in Zhangzhou Intermediate People’s Court on 24 Dec. 2013, with the involved amount being RMB 3,770,430.64 and Zhangzhou Intermediate People's Court had accepted and heard the case. Zhangzhou Tsann Kuen had submitted the nol-pros application on 9 Sep. 2015 to the Zhangzhou Intermediate People’s Court , Zhangzhou Intermediate People’s Court made an order granting that Zhangzhou Tsann Kuen could 8 Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. withdraw the prosecute. Significant lawsuits and arbitrations √ Applicable □ Inapplicable Unit: RMB Ten Thousand Yuan Whether Results and Execution Basic information of formed into Disclosure Disclosure Amount Progress influences of information of lawsuit (arbitration) estimated date index the hearing the judgment liabilities Events of the appeal progress of the controlling Fujian Province Higher www.cninfo.c subsidiary of the 430.49 No People's Court had held a Pending N/A 22 Feb. 2014 Company, Zhangzhou om.cn hearing on 26 Mar. 2014. Tsann Kuen sued Xinda Motor Co., Ltd. Zhangzhou Tsann Kuen had submitted the nol-pros application on 9 Sep. 2015 Events of another to the Zhangzhou prosecution of the Intermediate People’s www.cninfo.c controlling subsidiary of 377.04 No Court, Zhangzhou Withdrawn N/A 23 Sep. 2015 the Company, Zhangzhou om.cn Intermediate People’s Tsann Kuen sued Xinda Court made an order Motor Co., Ltd. granting that Zhangzhou Tsann Kuen could withdraw the prosecute. 9 Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. (II) Sale of assets Due to operating needs, the following assets were sold in the reporting period: Unit: RMB Ten Thousand Yuan Net profit Proportion of the net Whether Related Whether the relationship contributed by the profit contributed by was involving Whether the Transaction Selling Selling sold asset to the Influence on the sold asset to the Pricing related with the property involving claims Disclosu Disclosure party Asset sold date price listed companies the Company listed companies of principle party counterparty right had and debts had re date index from period-begin the total amount of transacti (applied for wholly wholly transferred the related transferred to date of sale the net profit (%) on transaction) Xinwang Machinery 2015.1.31 2.50 2.45 2.45 0.09 The Non-rela Inapplicable Yes Yes 2015.08. www.cninfo devices transaction ted party 08 .com.cn Nanyanghuan Other devices 2015.1.31 1.51 1.29 1.29 0.05 prices Machinery were Jinyuan devices 2015.1.31 8.00 3.09 3.09 0.11 decided Machinery based on Li Qinghua 2015.1.31 9.00 3.20 3.20 0.11 the market devices price and Ruicheng Mould devices 2015.1.31 3.40 3.26 3.26 0.12 settled Liao Sezhong Machinery 2015.1.31 12.80 2.04 2.04 0.07 according devices to the Zheng Wenhui Machinery 2015.1.31 1.30 0.54 0.54 0.02 signed devices contract of SHANGHAI both EXCELLENCE Mould devices 2015.1.31 115.00 22.72 22.72 0.81 parties Li Yiming Machinery 2015.3.31 10.50 3.72 3.72 0.13 devices Xinwang Machinery 2015.3.31 0.25 0.25 0.25 0.01 devices Haichengxing Electronic 2015.3.31 0.80 0.78 0.78 0.03 devices Baoxing Mould devices 2015.3.31 0.40 0.39 0.39 0.01 Hongyuan Mould devices 2015.3.31 13.93 13.34 13.34 0.48 Transportation Gusong 2015.3.31 6.50 6.36 6.36 0.23 devices Yongkun Transportation 2015.4.30 3.00 2.94 2.94 0.10 devices Kunsheng Mould devices 2015.4.30 1.25 1.23 1.23 0.04 Hu Songchun Machinery 2015.4.30 23.60 -8.54 -8.54 -0.30 devices Yixin Mould devices 2015.4.30 3.00 2.92 2.92 0.10 Liao Sezhong Other devices 2015.4.30 1.10 0.94 0.94 0.03 Hongyuan Mould devices 2015.4.30 2.62 2.54 2.54 0.09 Haicheng Electronic Xingxin devices 2015.5.31 0.80 0.78 0.78 0.03 Hufeng Machinery 2015.5.31 0.50 0.48 0.48 0.02 Industrial devices 10 Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. Net profit Related Proportion of the net Whether relationship Whether the contributed by the profit contributed by was involving Whether the Transaction Selling Selling sold asset to the Influence on with the Asset sold the sold asset to the Pricing related counterparty property involving claims Disclosu Disclosure party date price listed companies the Company listed companies of principle party right had and debts had re date index from period-begin the total amount of transacti (applied for wholly the related transferred wholly transferred to date of sale the net profit (%) on transaction) Jingjing Machinery 2015.5.31 0.08 0.08 0.08 0.00 devices Jingjing Other devices 2015.5.31 0.08 0.08 0.08 0.00 Yixin Mould devices 2015.5.31 1.50 1.45 1.45 0.05 Haikun Mould devices 2015.5.31 3.70 3.50 3.50 0.12 Xiamen Nanyang Mould devices 2015.5.31 1.28 1.24 1.24 0.04 University Hongyuan Mould devices 2015.5.31 3.06 3.00 3.00 0.11 Hongyuan Other devices 2015.5.31 0.19 0.16 0.16 0.01 Dakun Mould devices 2015.6.30 6.35 6.20 6.20 0.22 Suyuan Machinery 2015.6.30 5.10 -1.78 -1.78 -0.06 devices Hongyuan Mould devices 2015.7.31 14.90 14.61 14.61 0.52 INDIA-HAVEL Mould devices 2015.8.31 59.92 26.41 26.41 0.94 LS Lianming Mould devices 2015.8.31 0.54 0.53 0.53 0.02 Liu Chengjiang Electronic devices 2015.8.31 0.50 0.49 0.49 0.02 Hongyuan Mould devices 2015.8.31 3.37 3.30 3.30 0.12 Yixin Mould devices 2015.9.30 0.85 0.83 0.83 0.03 Inapplic Inapplicable Hecheng Mould devices 2015.9.30 1.50 1.37 1.37 0.05 able Hongyuan Mould devices 2015.9.30 8.00 7.82 7.82 0.28 Xin Jiafeng Machinery 2015.9.30 3.05 2.99 2.99 0.11 devices Leasehold Xin Jiafeng 2015.9.30 0.75 0.39 0.39 0.01 improvement Transportation Wang Chunzhi 2015.9.30 3.25 -1.30 -1.30 -0.05 devices Shui Guohai Transportation 2015.9.30 2.40 2.35 2.35 0.08 devices Total 342.13 140.44 140.44 5.00 11 Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. III. Commitments made by the Company or shareholders holding over 5% of the Company’s shares in the reporting period or such commitments carried down into the reporting period √ Applicable □ Inapplicable Time of making Period of Commitment Commitment maker Contents Fulfillment commitment commitment Commitments made in a share reform Commitments made in an acquisition report or a report on equity changes Commitments made in asset reorganization Commitments made in the first public offering or refinancing. Based on the confidence on the continuous and stable development of the Company, it committed to increase the The Company’s stocks shareholding if the Company’s stock price was lower than resumed trading on 31 Dec. HKD2.40 per share after the implementation of the shares 2012, but the Company’s FILLMAN contraction and trading resumption, and it would increase no stock price hasn’t met the INVESTMENTS more than 2% shares (i.e. 3,707,800 shares ) of the total shares Long-term condition for shareholding LIMITED 28 Dec. 2012 effective increase since the date of issued by the Company within one year since the date of initial trading resumption, shareholding increase. If the plan on increasing holding 2% FILLMAN Investment shares of the total shares is completed, if the stock price hasn’t Limited hasn’t reached the target price, it will perform relevant approval implemented the Other commitments made to minority shareholding increase plan. shareholders procedures, and propose to CSRC on continuous implementation Executed in time or not? of shareholding increase by exemption of offering. The Company had received the Notices from the controlling shareholder EUPA INDUSTRY CORPORATION LIMITED on 10 Jul. 2015 (Chinese name: 优柏工业有限公司, which was Since the announcement called “EUPA INDUSTRY” for short): based on responding the date on 10 Jul. 2015 up to EUPA INDUSTRY appeal of the CSRC about maintaining the stabilization of the now, EUPA INDUSTRY CORPORATION capital market, maintaining the legitimate interest of the investors 10 Jul. 2015 9 Jan. 2016 had not carried out the LIMITED and the confidence of the sustainable and stable development of decrease or increase of the the future of the Company, EUPA INDUSTRY committed to no shareholding of the stocks more decrease the shareholding of the stocks of the Company of the Company. within 6 months (10 Jul. 2015-9 Jan. 2016), and to increase the shareholding in appropriate time within 6 months. Detailed reason for failing to execute and the Yes plan for the next step (If any) The Company’s stocks resumed trading on 31 Dec. 2012, but the Company’s stock price hasn’t met the condition for shareholding increase since the Commitments made in a share reform date of trading resumption, FILLMAN Investment Limited hasn ’t implemented the shareholding increase plan. 12 Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. IV. Predict the 2015 annual operating results 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 □Applicable √Inapplicable The Company was not involved in any securities investment of the reporting period. VI. Shareholdings in other listed companies □Applicable √ Inapplicable The Company was not involved in any shareholding in other listed companies. 13 Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. VII. Investments in derivatives √ Applicable □ Inapplicable Unit: RMB Ten thousand Yuan Proportion of the closing Actual Related-party Type of Initial Opening Closing investment Impairment gain/loss in Operator Relation transaction or derivative investment Beginning date Ending date investment investment amount in the provision reporting not investment amount amount amount Company’s period closing net assets (%) Forward Bank No No 90,143.64 1 Jan. 2015 30 Sep. 2015 61,298.55 42,920.43 78.10 166.95 exchange Total 90,143.64 -- -- 61,298.55 42,920.43 78.10 166.95 Capital source for derivative investment Self-owned funds Litigation cases situation N/A Disclosure date of the board announcement approving the 2013/3/12 wealth management entrustment Disclosure date of the general meeting announcement 2013/5/18 approving the wealth management entrustment Analysis on risks and control measures of derivative 1. Analysis on risks from holding of derivative products: gains or losses from difference between contracted exchange rate and products held in the reporting period (including but not market exchange rate on value date. limited to market risk, liquidity risk, credit risk, operation risk, law risk, etc.) 2. Control measures (1) Principle: The purpose of the financial derivative operation is to avoid risks. The Company shall not conduct transactional operation for other purposes than risk avoidance. The Company shall not conduct complex derivative trading above the actual operation needs and shall not speculate in derivative trading with hedging as an excuse. The overall contractual amount for risk avoidance of the Company shall not exceed the summation of the net risk exposure of the existing assets and liabilities and the net risk exposure of assets and liabilities arising from the operation of the Company in the coming year. (2) Staff requirements: Personnel taking part in the investment shall all fully understand the risks of derivative investment and strictly execute the business operation and risk management mechanisms for derivative investment. (3) Operation standardization: Before making a derivative investment, the Company shall rationally equip itself with professional personnel for investment decision-making, business operation, risk control, et c. It shall also inquire and compare among various markets and products. Besides, it shall strictly control the variety and size of derivative investment and try to choose derivative trading on exchange as much as possible. (4) Periodic evaluation: Derivative investments shall be evaluated at least twice for a month and the evaluation report shall be sent to a high-ranking executive authorized by the Board of Directors. And a derivative investment report shall be sent to the Board of Directors annually. (5) Loss limit: The investment loss on a single derivative and all the investment loss shall not exceed 20% of the total investment 14 Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. amount. (6) Audit system: The audit department audits derivative product trading periodically and submits audit reports to relevant units. (1) In the reporting period, the gain and loss effect of the delivered derivative contracts was RMB 4.6989 million; the appraised losses on the undelivered contracts were RMB 3.0294 million, including a reversed appraised loss of RMB 1.3463 million on Changes of market prices or fair values in the reporting undelivered forward exchange contracts of last year; period of the invested derivatives. And the analysis on the (2) The former contracted bank provided monthly sheets of estimated exchange rates for the undue contracted forward exchanges on fair value of the derivatives should include the specific use the last trading day of the month; methods and the relevant assumptions and parameters. (3) The profit and loss from fair value changes of the derivative was confirmed according to the difference between the contracted amount undue by the month*the estimated exchange rate and the currency amount when bought in. Whether significant changes occurred to the Company’s accounting policy and specific accounting principles of There were no significant changes between the Company’s accounting policy and specific accounting principles of derivatives in the derivatives in the reporting period compared to the previous reporting period and those in the last reporting period. reporting period Special opinion from independent directors, sponsor or The Company has carried out a strict internal assessment for the financial d erivative business and has established a corresponding financial consultant on the Company’s derivatives supervision mechanism. We are of the opinion that the financial derivative business conducted by the Company is fairly necessary in investment and risk control its routine operation and is in compliance with relevant laws and regulations, with the risks controllable. 15 Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. VIII. Researches, visits and interviews received in the reporting period √ Applicable □ Inapplicable Main discussion and materials Time of reception Place of reception Way of reception Visitor type Visitor provided by the Company Inquired of the reform situation of the Telephone Share B and the basic information of 23 Sep. 2015 Individual Mr. Zhang Communication the Company as well as the intelligent R&D situation of the Company. 16 Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. Section IV. Financial Statements I. Financial statements 1. Consolidated balance sheet Prepared by TSANN KUEN (CHINA) ENTERPRISE CO., LTD. Unit: (RMB) Yuan Item Closing balance Opening balance Current assets: Monetary funds 639,606,104.56 886,464,448.01 Settlement reserves Intra-group lendings Financial assets measured at fair value of which changes 473,250.00 2,610,000.00 are recorded in current profits and losses Derivative financial assets Notes receivable 1,211,475.00 2,004,498.59 Accounts receivable 390,473,324.52 247,336,334.86 Accounts paid in advance 6,398,747.99 12,758,696.10 Premiums receivable Reinsurance premiums receivable Receivable reinsurance contract reserves Interest receivable 5,628,024.99 3,590,399.84 Dividend receivable Other accounts receivable 94,406,041.33 34,873,104.97 Financial assets purchased under agreements to resell Inventories 198,300,800.67 193,150,144.07 Assets held for sale Non-current assets due within 1 year Other current assets 234,879,972.20 13,087,495.75 Total current assets 1,571,377,741.26 1,395,875,122.19 Non-current assets: Loans by mandate and advances granted Available-for-sale financial assets 40,000.00 40,000.00 Held-to-maturity investments Long-term accounts receivable Long-term equity investment Investing real estate 38,661,224.79 51,731,414.90 Fixed assets 171,931,761.47 165,560,208.64 Construction in progress 542,189.69 233,968.67 Engineering materials Disposal of fixed assets Production biological assets Oil-gas assets Intangible assets 17,252,210.16 12,145,423.16 R&D expense Goodwill Long-term deferred expenses 5,069,513.99 4,797,144.17 Deferred income tax assets 17,127,902.11 18,711,962.93 Other non-current assets 4,567,247.22 1,929,374.75 Total of non-current assets 255,192,049.43 255,149,497.22 Total assets 1,826,569,790.69 1,651,024,619.41 Current liabilities: Short-term borrowings 222,645,500.00 61,190,000.00 Borrowings from the Central Bank Customer bank deposits and due to banks and other financial institutions Intra-group borrowings Financial liabilities measured at fair value of which 4,848,900.00 3,956,259.85 changes are recorded in current profits and losses 17 Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. Item Closing balance Opening balance Derivative financial liabilities Notes payable 34,106,530.95 29,749,982.77 Accounts payable 532,650,997.68 533,071,295.43 Accounts received in advance 13,725,729.67 14,769,179.12 Financial assets sold and repurchased Handling charges and commissions payable Payroll payable 46,333,697.97 45,910,725.14 Tax payable 5,395,584.18 6,521,778.61 Interest payable 1,210,088.58 68,275.80 Dividend payable Other accounts payable 60,073,681.15 53,159,623.33 Reinsurance premiums payable Insurance contract reserves Payables for acting trading of securities Payables for acting underwriting of securities Liabilities held for sale Non-current liabilities due within 1 year Other current liabilities Total current liabilities 920,990,710.18 748,397,120.05 Non-current liabilities: Long-term borrowings Bonds payable Of which: preference shares Perpetual bonds Long-term payables Long-term payroll payables Specific payables Estimated liabilities Deferred income Deferred income tax liabilities 307,459.59 618,966.78 Other non-current liabilities Total non-current liabilities 307,459.59 618,966.78 Total liabilities 921,298,169.77 749,016,086.83 Owners’ equity: Share capital 185,391,680.00 185,391,680.00 Other equity instruments Of which: preference shares Perpetual bonds Capital reserves 278,458,862.55 278,458,862.55 Less: Treasury stock Other comprehensive income 1,852,863.47 -899,380.20 Specific reserves Surplus reserves 16,400,043.27 16,400,043.27 Provisions for general risks Retained profits 67,485,827.11 67,223,203.93 Total equity attributable to owners of the Company 549,589,276.40 546,574,409.55 Minority interests 355,682,344.52 355,434,123.03 Total owners’ equity 905,271,620.92 902,008,532.58 Total liabilities and owners’ equity 1,826,569,790.69 1,651,024,619.41 Legal representative: Pan Zhirong Chief of the accounting work: Wu Yanru Chief of the accounting organ: Wu Yanru 18 Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. 2. Balance sheet of the Company Unit: (RMB) Yuan Item Closing balance Opening balance Current assets: Monetary funds 6,784,115.28 3,236,270.65 Financial assets measured at fair value of which changes are recorded in current profits and losses Derivative financial assets Notes receivable 1,211,475.00 2,004,498.59 Accounts receivable 11,565,334.01 28,535,190.86 Accounts paid in advance 905,923.07 159,129.74 Interest receivable Dividend receivable Other accounts receivable 598,921.70 618,435.08 Inventories 12,491,009.36 9,123,446.86 Assets held for sale Non-current assets due within 1 year Other current assets 248,982.79 259,083.99 Total current assets 33,805,761.21 43,936,055.77 Non-current assets: Available-for-sale financial assets 40,000.00 40,000.00 Held-to-maturity investments Long-term accounts receivable Long-term equity investment 985,814,030.83 985,814,030.83 Investing real estate 31,365,907.78 43,650,654.94 Fixed assets 7,752,529.74 573,821.18 Construction in progress 200,000.00 Engineering materials Disposal of fixed assets Production biological assets Oil-gas assets Intangible assets 3,347,903.31 R&D expense Goodwill Long-term deferred expenses 1,021,498.52 758,014.49 Deferred income tax assets 1,480,913.40 1,902,042.53 Other non-current assets 28,385.00 4,000.00 Total of non-current assets 1,031,051,168.58 1,032,742,563.97 Total assets 1,064,856,929.79 1,076,678,619.74 Current liabilities: Short-term borrowings Financial liabilities measured at fair value of which changes are recorded in current profits and losses Derivative financial liabilities Notes payable Accounts payable 44,272,389.52 52,496,435.80 19 Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. Item Closing balance Opening balance Accounts received in advance 2,202,141.94 5,652,792.49 Payroll payable 2,152,788.11 2,347,177.91 Tax payable 432,473.87 898,026.25 Interest payable Dividend payable Other accounts payable 474,953,978.71 475,204,952.74 Liabilities held for sale Non-current liabilities due within 1 year Other current liabilities Total current liabilities 524,013,772.15 536,599,385.19 Non-current liabilities: Long-term borrowings Bonds payable Of which: preference shares Perpetual bonds Long-term payables Long-term payroll payables Specific payables Estimated liabilities Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities 524,013,772.15 536,599,385.19 Owners’ equity: Share capital 185,391,680.00 185,391,680.00 Other equity instruments Of which: preference shares Perpetual bonds Capital reserves 271,489,596.88 271,489,596.88 Less: Treasury stock Other comprehensive income Specific reserves Surplus reserves 16,400,043.27 16,400,043.27 Retained profits 67,561,837.49 66,797,914.40 Total owners’ equity 540,843,157.64 540,079,234.55 Total liabilities and owners’ equity 1,064,856,929.79 1,076,678,619.74 Legal representative: Pan Zhirong Chief of the accounting work: Wu Yanru Chief of the accounting organ: Wu Yanru 20 Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. 3. Consolidated income statement for the reporting period Unit: (RMB) Yuan Item Jul.-Sept. 2015 Jul.-Sept. 2014 I. Operating revenues 579,140,206.32 544,321,965.08 Including: Sales income 579,140,206.32 544,321,965.08 Interest income Premium income Handling charge and commission income II. Operating costs 548,892,463.28 525,887,541.49 Including: Cost of sales 496,371,056.95 460,219,102.58 Interest expenses Handling charge and commission expenses Surrenders Net claims paid Net amount withdrawn for the insurance contract reserve Expenditure on policy dividends Reinsurance premium Taxes and associate charges 1,188,384.99 3,319,615.53 Selling and distribution expenses 22,069,831.45 19,897,087.88 Administrative expenses 41,664,771.57 42,240,352.84 Financial expenses -15,708,735.27 -2,908,650.92 Asset impairment loss 3,307,153.59 3,120,033.58 Add: Gain/(loss) from change in fair value (“-” means loss) -11,830,300.00 5,158,021.00 Gain/(loss) from investment (“-” means loss) 11,533.67 6,445,948.48 Including: share of profits in associates and joint ventures Foreign exchange gains (“-” means loss) III. Business profit (“-” means loss) 18,428,976.71 30,038,393.07 Add: non-operating income 1,625,298.40 2,737,189.92 Including: Gains on disposal of non-current assets 611,012.33 707,991.80 Less: non-operating expense 16,648.18 128,227.96 Including: Losses on disposal of non-current assets 12,219.06 66,177.57 IV. Total profit (“-” means loss) 20,037,626.93 32,647,355.03 Less: Income tax expense 2,435,769.58 1,711,949.34 V. Net profit (“-” means loss) 17,601,857.35 30,935,405.69 Net profit attributable to owners of the Company 12,960,350.00 23,906,043.41 Minority shareholders’ income 4,641,507.35 7,029,362.28 VI. After-tax net amount of other comprehensive incomes 3,747,922.14 5,510.99 After-tax net amount of other comprehensive incomes attributable 2,810,941.60 4,133.24 to owners of the Company (I) Other comprehensive incomes that will not be reclassified into gains and losses 1. Changes in net liabilities or assets with a defined benefit plan upon re-measurement 2. Enjoyable shares in other comprehensive incomes in investees that cannot be reclassified into gains and losses under the equity method (II) Other comprehensive incomes that will be reclassified into 2,810,941.60 4,133.24 21 Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. Item Jul.-Sept. 2015 Jul.-Sept. 2014 gains and losses 1. Enjoyable shares in other comprehensive incomes in investees that will be reclassified into gains and losses under the equity method 2. Gains and losses on fair value changes of available-for-sale financial assets 3. Gains and losses on reclassifying held-to- maturity investments into available-for-sale financial assets 4. Effective hedging gains and losses on cash flows 5. Foreign-currency financial statement translation difference 2,810,941.60 4,133.24 6. Other After-tax net amount of other comprehensive incomes attributable 936,980.54 1,377.75 to minority shareholders VII. Total comprehensive incomes 21,349,779.49 30,940,916.68 Attributable to owners of the Company 15,771,291.60 23,910,176.65 Attributable to minority shareholders 5,578,487.89 7,030,740.03 VIII. Earnings per share (I) Basic earnings per share 0.07 0.13 (II) Diluted earnings per share 0.07 0.13 Where business mergers under the same control occurred in the reporting period, the net profit achieved by the merged parties before the business mergers was RMB 0.00, with the corresponding amount for the same period of last year being RMB 0.00. Legal representative: Pan Zhirong Chief of the accounting work: Wu Yanru Chief of the accounting organ: Wu Yanru 22 Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. 4. Income statement of the Company for the reporting period Unit: (RMB) Yuan Item Jul.-Sept. 2015 Jul.-Sept. 2014 I. Total sales 13,495,092.82 58,442,043.78 Less: cost of sales 9,569,195.18 48,755,369.75 Business taxes and surcharges 237,633.66 485,845.98 Distribution expenses 1,260,115.65 2,041,280.17 Administrative expenses 3,823,193.17 2,695,990.94 Financial costs -34,646.87 -35,304.63 Impairment loss 310,192.06 899,716.50 Add: gain/(loss) from change in fair value (“-” means loss) Gain/(loss) from investment (“-” means loss) Including: income form investment on associates and joint ventures II. Business profit (“-” means loss) -1,670,590.03 3,599,145.07 Add: non-operating income 36,918.98 107,652.70 Including: Gains on disposal of non-current assets 23,533.98 79,148.08 Less: non-operating expense 12,952.66 Including: Losses on disposal of non-current assets 12,952.66 III. Total profit (“-” means loss) -1,646,623.71 3,706,797.77 Less: Income tax expense -90,906.24 1,346,073.08 IV. Net profit (“-” means loss) -1,555,717.47 2,360,724.69 V. After-tax net amount of other comprehensive incomes (I) Other comprehensive incomes that will not be reclassified into gains and losses 1. Changes in net liabilities or assets with a defined benefit plan upon re-measurement 2. Enjoyable shares in other comprehensive incomes in investees that cannot be reclassified into gains and losses under the equity method (II) Other comprehensive incomes that will be reclassified into gains and losses 1. Enjoyable shares in other comprehensive incomes in investees that will be reclassified into gains and losses under the equity method 2. Gains and losses on fair value changes of available-for-sale financial assets 3. Gains and losses on reclassifying held-to-maturity investments into available-for-sale financial assets 4. Effective hedging gains and losses on cash flows 5. Foreign-currency financial statement translation difference 6. Other VI. Total comprehensive incomes -1,555,717.47 2,360,724.69 VII. Earnings per share (I) Basic earnings per share (II) Diluted earnings per share Legal representative: Pan Zhirong Chief of the accounting work: Wu Yanru Chief of the accounting organ: Wu Yanru 23 Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. 5. Consolidated income statement for Jan.-Sept. 2015 Unit: (RMB) Yuan Item Jan.-Sept. 2015 Jan.-Sept. 2014 I. Operating revenues 1,474,334,364.39 1,434,538,264.59 Including: Sales income 1,474,334,364.39 1,434,538,264.59 Interest income Premium income Handling charge and commission income II. Operating costs 1,439,488,730.13 1,389,310,291.72 Including: Cost of sales 1,267,854,353.96 1,222,193,517.04 Interest expenses Handling charge and commission expenses Surrenders Net claims paid Net amount withdrawn for the insurance contract reserve Expenditure on policy dividends Reinsurance premium Taxes and associate charges 4,272,747.17 8,249,924.72 Selling and distribution expenses 63,193,960.77 54,280,542.64 Administrative expenses 124,663,461.78 115,152,940.25 Financial expenses -24,906,680.93 -14,125,625.27 Asset impairment loss 4,410,887.38 3,558,992.34 Add: Gain/(loss) from change in fair value (“-” means loss) -3,029,390.15 -21,610,150.00 Gain/(loss) from investment (“-” means loss) 6,042,202.49 20,446,066.98 Including: share of profits in associates and joint ventures Foreign exchange gains (“-” means loss) III. Business profit (“-” means loss) 37,858,446.60 44,063,889.85 Add: non-operating income 4,854,787.57 11,558,038.21 Including: Gains on disposal of non-current assets 1,520,804.68 2,241,842.00 Less: non-operating expense 134,843.80 870,000.91 Including: Losses on disposal of non-current assets 129,414.68 615,040.69 IV. Total profit (“-” means loss) 42,578,390.37 54,751,927.15 Less: Income tax expense 5,736,527.36 4,669,389.24 V. Net profit (“-” means loss) 36,841,863.01 50,082,537.91 Net profit attributable to owners of the Company 28,071,375.18 38,764,033.17 Minority shareholders’ income 8,770,487.83 11,318,504.74 VI. After-tax net amount of other comprehensive incomes 3,669,658.23 373,684.95 After-tax net amount of other comprehensive incomes 2,752,243.67 280,263.71 attributable to owners of the Company (I) Other comprehensive incomes that will not be reclassified into gains and losses 1. Changes in net liabilities or assets with a defined benefit plan upon re-measurement 2. Enjoyable shares in other comprehensive incomes in investees that cannot be reclassified into gains and losses under the equity method 24 Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. Item Jan.-Sept. 2015 Jan.-Sept. 2014 (II) Other comprehensive incomes that will be reclassified 2,752,243.67 280,263.71 into gains and losses 1. Enjoyable shares in other comprehensive incomes in investees that will be reclassified into gains and losses under the equity method 2. Gains and losses on fair value changes of available-for-sale financial assets 3. Gains and losses on reclassifying held-to- maturity investments into available-for-sale financial assets 4. Effective hedging gains and losses on cash flows 5. Foreign-currency financial statement translation 2,752,243.67 280,263.71 difference 6. Other After-tax net amount of other comprehensive incomes 917,414.56 93,421.24 attributable to minority shareholders VII. Total comprehensive incomes 40,511,521.24 50,456,222.86 Attributable to owners of the Company 30,823,618.85 39,044,296.88 Attributable to minority shareholders 9,687,902.39 11,411,925.98 VIII. Earnings per share (I) Basic earnings per share 0.15 0.21 (II) Diluted earnings per share 0.15 0.21 Where business mergers under the same control occurred in this period, the net profit achieved by the merged parties before the business mergers was RMB 0.00, with the corresponding amount for the same period of last year being RMB 0.00. Legal representative: Pan Zhirong Chief of the accounting work: Wu Yanru Chief of the accounting organ: Wu Yanru 25 Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. 6. Income statement of the Company for Jan.-Sept. 2015 Unit: (RMB) Yuan Item Jan.-Sept. 2015 Jan.-Sept. 2014 I. Total sales 92,169,899.28 101,050,036.42 Less: cost of sales 73,644,929.63 77,835,613.62 Business taxes and surcharges 765,552.24 1,152,004.18 Distribution expenses 5,460,113.47 5,040,950.06 Administrative expenses 11,147,771.28 8,274,173.54 Financial costs 451,509.01 236,803.63 Impairment loss 37,341.13 -598,460.81 Add: gain/(loss) from change in fair value (“-” means loss) Gain/(loss) from investment (“-” means loss) 28,286,287.22 38,189,978.21 Including: income form investment on associates and joint ventures II. Business profit (“-” means loss) 28,948,969.74 47,298,930.41 Add: non-operating income 96,763.54 128,575.86 Including: Gains on disposal of non-current assets 23,533.98 83,894.34 Less: non-operating expense 12,952.66 35,791.72 Including: Losses on disposal of non-current assets 12,952.66 III. Total profit (“-” means loss) 29,032,780.62 47,391,714.55 Less: Income tax expense 460,105.53 2,742,335.10 IV. Net profit (“-” means loss) 28,572,675.09 44,649,379.45 V. After-tax net amount of other comprehensive incomes (I) Other comprehensive incomes that will not be reclassified into gains and losses 1. Changes in net liabilities or assets with a defined benefit plan upon re-measurement 2. Enjoyable shares in other comprehensive incomes in investees that cannot be reclassified into gains and losses under the equity method (II) Other comprehensive incomes that will be reclassified into gains and losses 1. Enjoyable shares in other comprehensive incomes in investees that will be reclassified into gains and losses under the equity method 2. Gains and losses on fair value changes of available-for-sale financial assets 3. Gains and losses on reclassifying held-to-maturity investments into available-for-sale financial assets 4. Effective hedging gains and losses on cash flows 5. Foreign-currency financial statement translation difference 6. Other VI. Total comprehensive incomes 28,572,675.09 44,649,379.45 VII. Earnings per share (I) Basic earnings per share (II) Diluted earnings per share Legal representative: Pan Zhirong Chief of the accounting work: Wu Yanru Chief of the accounting organ: Wu Yanru 26 Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. 7. Consolidated cash flow statement for Jan.-Sept. 2015 Unit: (RMB) Yuan Item Jan.-Sept. 2015 Jan.-Sept. 2014 I. Cash flows from operating activities: Cash received from sale of commodities and rendering of service 1,314,183,043.25 1,360,412,327.85 Net increase of deposits from customers and dues from banks Net increase of loans from the central bank Net increase of funds borrowed from other financial institutions Cash received from premium of original insurance contracts Net cash received from reinsurance business Net increase of deposits of policy holders and investment fund Net increase of disposal of financial assets measured at fair value of which changes are recorded into current gains and losses Cash received from interest, handling charges and commissions Net increase of intra-group borrowings Net increase of funds in repurchase business Tax refunds received 102,311,292.95 154,669,374.04 Other cash received relating to operating activities 46,920,557.30 73,864,346.39 Subtotal of cash inflows from operating activities 1,463,414,893.50 1,588,946,048.28 Cash paid for goods and services 1,181,254,376.36 1,257,184,026.76 Net increase of customer lendings and advances Net increase of funds deposited in the central bank and amount due from banks Cash for paying claims of the original insurance contracts Cash for paying interest, handling charges and commissions Cash for paying policy dividends Cash paid to and for employees 200,883,474.33 184,072,607.32 Various taxes paid 18,022,371.12 22,474,160.98 Other cash payment relating to operating activities 167,376,513.27 184,760,754.65 Subtotal of cash outflows from operating activities 1,567,536,735.08 1,648,491,549.71 Net cash flows from operating activities -104,121,841.58 -59,545,501.43 II. Cash flows from investing activities: Cash received from withdrawal of investments 104,698,869.16 231,422,984.72 Cash received from return on investments 1,343,333.33 8,692,082.35 Net cash received from disposal of fixed assets, intangible assets and other 3,340,201.65 3,330,778.97 long-term assets Net cash received from disposal of subsidiaries or other business units Other cash received relating to investing activities 834,157,694.00 Subtotal of cash inflows from investing activities 943,540,098.14 243,445,846.04 27 Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. Item Jan.-Sept. 2015 Jan.-Sept. 2014 Cash paid to acquire fixed assets, intangible assets and other long-term assets 51,555,680.88 33,255,449.23 Cash paid for investment 330,000,000.00 440,000,000.00 Net increase of pledged loans Net cash paid to acquire subsidiaries and other business units Other cash payments relating to investing activities 801,902,932.63 611,404,876.95 Subtotal of cash outflows from investing activities 1,183,458,613.51 1,084,660,326.18 Net cash flows from investing activities -239,918,515.37 -841,214,480.14 III. Cash Flows from Financing Activities: Cash received from capital contributions Including: Cash received from minority shareholder investments by subsidiaries Cash received from borrowings 583,727,183.61 672,464,728.00 Cash received from issuance of bonds Other cash received relating to financing activities 143,957,350.00 Subtotal of cash inflows from financing activities 583,727,183.61 816,422,078.00 Repayment of borrowings 434,082,752.61 410,050,948.00 Cash paid for interest expenses and distribution of dividends or profit 37,956,939.13 43,214,926.25 Including: dividends or profit paid by subsidiaries to minority shareholders 8,485,886.15 12,877,215.94 Other cash payments relating to financing activities 33,837,950.00 Sub-total of cash outflows from financing activities 472,039,691.74 487,103,824.25 Net cash flows from financing activities 111,687,491.87 329,318,253.75 IV. Effect of foreign exchange rate changes on cash and cash equivalents 17,749,283.00 2,644,547.11 V. Net increase in cash and cash equivalents -214,603,582.08 -568,797,180.71 Add: Opening balance of cash and cash equivalents 469,965,448.01 834,088,959.68 VI. Closing balance of cash and cash equivalents 255,361,865.93 265,291,778.97 Legal representative: Pan Zhirong Chief of the accounting work: Wu Yanru Chief of the accounting organ: Wu Yanru 28 Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. 8. Cash flow statement of the Company for Jan.-Sept. 2015 Unit: (RMB) Yuan Item Jan.-Sept. 2015 Jan.-Sept. 2014 I. Cash flows from operating activities: Cash received from sale of commodities and rendering of service 108,538,211.67 94,631,963.05 Tax refunds received Other cash received relating to operating activities 33,426,268.98 37,492,388.45 Subtotal of cash inflows from operating activities 141,964,480.65 132,124,351.50 Cash paid for goods and services 95,873,694.77 115,910,450.05 Cash paid to and for employees 9,089,806.07 5,402,684.19 Various taxes paid 5,331,450.02 5,504,014.56 Other cash payment relating to operating activities 25,969,329.55 19,623,261.39 Subtotal of cash outflows from operating activities 136,264,280.41 146,440,410.19 Net cash flows from operating activities 5,700,200.24 -14,316,058.69 II. Cash flows from investing activities: Cash received from withdrawal of investments Cash received from return on investments 28,286,287.22 38,189,978.21 Net cash received from disposal of fixed assets, intangible assets and 85,700.00 other long-term assets Net cash received from disposal of subsidiaries or other business units Other cash received relating to investing activities Subtotal of cash inflows from investing activities 28,286,287.22 38,275,678.21 Cash paid to acquire fixed assets, intangible assets and other long-term 2,565,567.30 400,135.90 assets Cash paid for investment Net cash paid to acquire subsidiaries and other business units Other cash payments relating to investing activities Subtotal of cash outflows from investing activities 2,565,567.30 400,135.90 Net cash flows from investing activities 25,720,719.92 37,875,542.31 III. Cash Flows from Financing Activities: Cash received from capital contributions Cash received from borrowings Cash received from issuance of bonds Other cash received relating to financing activities Subtotal of cash inflows from financing activities Repayment of borrowings Cash paid for interest expenses and distribution of dividends or profit 27,883,693.93 25,337,391.98 Other cash payments relating to financing activities Sub-total of cash outflows from financing activities 27,883,693.93 25,337,391.98 Net cash flows from financing activities -27,883,693.93 -25,337,391.98 IV. Effect of foreign exchange rate changes on cash and cash equivalents 10,618.40 -13,623.73 V. Net increase in cash and cash equivalents 3,547,844.63 -1,791,532.09 Add: Opening balance of cash and cash equivalents 3,236,270.65 11,811,615.43 VI. Closing balance of cash and cash equivalents 6,784,115.28 10,020,083.34 Legal representative: Pan Zhirong Chief of the accounting work: Wu Yanru Chief of the accounting organ: Wu Yanru 29 Report for the Third Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. II. Auditor’s report Is this report audited? □ Yes √ No This report is not audited. 30
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