TSANN KUEN (CHINA) ENTERPRISE CO., LTD.
THE THIRD QUARTERLY REPORT 2011
§1. Important Notice
1.1 The Board of Directors, the Supervisory Committee and directors, supervisors and senior
management of TSANN KUEN (CHINA) ENTERPRISE CO., LTD. (hereinafter referred to as
“the Company”) warrant that this report does not contain any false or misleading statements or
omit any material facts and hereby accept, individually and collectively, responsibility for the truth,
accuracy and completeness of the contents of this report.
1.2 None of the directors, supervisors, senior management demonstrated uncertainty or
disagreement about the truthfulness, accuracy, and completeness of the third quarterly report.
1.3 All the directors attended the Board meeting.
1.4 The Financial Report of the quarterly report period has not been audited.
1.5 Mr. Jian Derong, Chairman of the Board of Directors and Mr. Chen Zongyi, Accounting
Manager jointly guaranteed that the financial statements in this quarterly report are true and
complete.
§2 Company Profile
Short form of the stock Tsann Kuen B
Stock code 200512
Stock exchange listed with Shenzhen Stock Exchange
Secretary of the Board Securities Affairs Representative
Name Sun Meimei
Tsann Kuen Industrial Park, Longchi
Contact address
Development Zone, Zhangzhou, Fujian Province
Telephone 0596-6268161
Fax 0596-6268104
E-mail mm_sun@tkl.tsannkuen.com
1
2.1 Main accounting data and financial indices
Unit: RMB Yuan
At the period-end of this reporting At the period-end of Increase/decreas
Items
period last year e (%)
Total assets (Yuan) 2,176,856,098.73 1,985,108,875.38 9.66
Owners’ equity attributable to shareholders of
491,439,067.32 461,411,506.21 6.51
listed company (Yuan)
Share capital (Share) 1,112,350,077.00 1,112,350,077.00 0.00
Net assets per share attributable to shareholders of
0.44 0.41 7.32
listed company (Yuan / share)
Increase/decreas From the year-begin Increase/decreas
Items The reporting period e year-on-year to the end of e year-on-year
(%) reporting period (%)
Operating revenue (Yuan) 721,142,352.34 (15.52) 2,094,507,219.54 (16.84)
Net profit attributable to shareholders of listed
8,037,812.45 (54.80) 30,586,282.30 (44.12)
company (Yuan)
Net cash flow arising from operating activities
93,325,914.94 (11.20) (31,461,111.88) (122.07)
(Yuan)
Net cash flow per share arising from operating
0.08 (15.34) (0.03) (123.40)
activities (Yuan / share)
Basic earnings per share (Yuan / share) 0.0072 (55.00) 0.0275 (44.11)
Diluted earnings per share (Yuan / share) 0.0072 (55.00) 0.0275 (44.11)
Weighted average return on equity (%) 1.65% (58.85) 6.42% (6.48)
Weighted average return on equity after deducting
0.71% (82.26) 2.33% (8.74)
non-recurring gains and losses (%)
Items of non-recurring gains and losses
Unit: RMB Yuan
Amount from the year-begin to the
Items
period-end
Gains and losses from disposal of non-current assets 5,547,344.81
Government subsidy measured into current gains and losses, while closely
related with the business of the Company, excluding the fixed-amount or 3,499,073.49
fixed-proportion government subsidy enjoyed according to the certain standard
Gains and losses from change in fair value of tradable financial assets and
tradable financial liabilities and investment income from disposal of tradable
financial assets, tradable financial liabilities and available-for-sale financial 20,385,418.61
assets except for effective hedging business related to normal operation business
of the Company
Other non-operating income and expense beside for the above-mentioned each
944,384.54
items
Influence on enterprise income tax (4,496,722.24)
Net profit attributable to minority shareholders after deducting non-recurring
(6,384,760.05)
gains and losses
Total 19,494,739.16
2.2 Total number of shareholders at the end of the reporting period and statement on shares held by
the top ten shareholders holding tradable shares
2
Unit: Share
Total number of shareholders at the end of
33,011
reporting period
Shares held by the top ten shareholders holding tradable shares
Number of tradable shares
No. Name of shareholder (full name) Type of share
held
1 FORDCHEE DEVELOPMENT LIMITED 323,643,179 B-share
2 EUPA INDUSTRY CORPORATION LIMITED 153,802,306 B-share
3 FILLMAN INVESTMENTS LIMITED 27,729,575 B-share
4 TIMMERTON CO INC 14,505,644 B-share
5 CHEN YONG QUAN 10,004,383 B-share
6 CHEN LI JUAN 6,076,746 B-share
7 CHEN YONG QING 5,889,589 B-share
8 SHENYIN WANGUO SECURITIES (H.K.) LIMITED 4,810,002 B-share
9 CSC SECURITIES (HK) LTD 4,558,979 B-share
10 HE JIAN XIONG 4,439,551 B-share
The top three shareholders are controlling corporate
shareholders. The Company was not aware that whether
there were any related relationships between other
shareholders holding tradable shares and whether or not
Explanation on related relationship and action-in-concert among above
the other shareholders holding tradable shares belonged
mentioned shareholder
to the action-in-concert people specified in The
Regulations for Information Disclosure on the Change
of Shares Held by the Shareholders of the Listed
Companies.
§3 Significant Events
3.1 Particular about large-margin change of main accounting statement item and financial indices
and its reason
Unit: RMB’0000 Yuan
Closing Opening Increase/decrease
Item Main reasons for the movement
amount amount (%)
Transactional financial Increase of unsettled forward exchange
1,196.47 230.16 419.84
assets contracts in the current period
Interest earnings from mature term
Interest receivable 8.92 12.82 -30.42
deposits were recognized.
It was a production peak in the current
Inventory 41,227.50 27,658.95 49.06
period.
Input for developing new types of
Construction in process 386.58 284.25 36.00
machines
Goodwill 99.70 249.70 -60.07 Transfer of subsidiary equities
Increase of input VAT in the current
Taxes and fares payable 1,193.57 4,836.23 -75.32
period
Bank borrowings increased in the
Short-term borrowings 2,553.60 0.00 100.00
current period.
A borrowing of US$ 20 million from
Other payables 22,081.57 9,069.72 143.46
the controlling shareholder
Foreign exchange contracts unsettled
Deferred income tax
179.47 34.52 419.90 by the period-end were evaluated to be
liabilities
increasingly profitable.
Foreign-currency Difference from translating
statement translation (55.86) 0.01 -558,700.00 foreign-currency statements of
difference subsidiaries
3
Jan.-Sept. Increase/decrease
Item Jan.-Sept. 2010 Main reasons for the movement
2011 (%)
Business taxes and Increase of the city maintenance tax
1,170.76 329.55 255.26
surtaxes rate and the surtax rates
Reversal of bad-debt provisions for
Asset impairment loss (63.29) 115.64 -154.73 accounts receivable in the current
period
Foreign exchange contracts unsettled
Income from fair value
966.31 (182.23) 630.27 by the period-end were evaluated to be
changes (“-”for loss)
increasingly profitable.
Investment income Increase of gains from settled foreign
1,102.70 (242.57) 554.59
(“-”for loss) exchange contracts
Decrease of disposal gains in the
Non-business income 1,104.82 1,579.04 -30.03
current period
Net cash flows from
(3,146.11) 14,255.61 -122.07 Decrease of sales turnover
operating activities
Net cash flows from Gains on asset disposal decreased on a
(1,500.12) (310.73) 382.77
investing activities year-on-year basis.
The Company borrowed more loans
Net cash flows from
13,365.91 (22,830.08) -158.55 from the controlling shareholder and
financing activities
banks in the current period.
3.2 Progress and influence of significant events and explanation on its solution
3.2.1 About non-standard opinion
□Applicable √Inapplicable
3.2.2 The Company offers capital to the controlling shareholder or its related parties or provides
external guarantees in violation of the prescribed procedures.
□Applicable √Inapplicable
3.2.3 Signing and execution of contracts concerning routine operation
Sales of assets:
For details, please refer to the Public Notice on Selling Some Operating Assets of Spare Parts
Plants by Holding Subsidiary Tsann Kuen Zhangzhou Enterprise Co., Ltd., the Public Notice on
Progress of Holding Subsidiary’s Selling Some Operating Assets of Spare Parts Plants and Another
Sale of Assets and the Public Notice on Progress of Holding Subsidiary’s Selling Some Operating
Assets of Spare Parts Plants and A Third Sale of Assets, all published on Securities Times, Hong
Kong Ta Kung Pao and http://www.cninfo.com.cn dated respectively on 29 Jul. 2008, 21 Jan. 2009,
28 Apr. 2009 and 28 Apr. 2010. Up to 30 Sept. 2011, the relevant execution status was as follows:
4
Unit: RMB’0000 Yuan
Net profit Whether whether or
contributed to or not the not the
the Company Gains and Whether a ownership relevant
Explanation Relationship
Selling by the sold losses due related of the creditor’s
Transaction party Asset sold Date of sale on pricing with the
price asset from to selling transaction involved rights and
principle Company
year-begin to the asset or not asset had liabilities
the date of been had been
sale transferred transferred
Zhangzhou Baokun Motor equipment 2011.01.31 12.00 5.47 5.47
Zhangzhou Shunkun Bakelite equipment 2011.01.31 0.35 0.31 0.31
Zhangzhou Haikun Die casting equipment 2011.02.28 36.20 34.33 34.33
Zhangzhou Bo’er Die casting equipment 2011.02.28 17.50 15.71 15.71
Zhangzhou Yufeng Die casting equipment 2011.02.28 6.30 6.18 6.18
Zhangzhou Hongyuan Die casting equipment 2011.02.28 3.60 3.53 3.53
Zhangzhou Ruicheng Die casting equipment 2011.02.28 6.00 5.88 5.88
Zhangzhou Shengyuan Hardware equipment 2011.03.30 5.20 4.46 4.46
Zhangzhou Xiangkun Hardware equipment 2011.03.30 2.67 2.42 2.42
Zhangzhou Hewang Bakelite equipment 2011.03.30 0.80 0.49 0.49
Zhangzhou Haikun Die casting equipment 2011.03.30 1.10 1.03 1.03
Xiamen Pinrui Hardware equipment 2011.04.30 1.90 0.50 0.50
Xiamen Jinyuan Hardware equipment 2011.04.30 40.37 2.84 2.84
Zhangzhou Hailong Hardware equipment 2011.04.30 2.15 1.68 1.68 The
transaction
Zhangzhou
Die casting equipment 2011.04.30 1.20 1.08 1.08 prices were
Shengliang
decided
Zhangzhou Shunkun Bakelite equipment 2011.04.30 3.71 0.70 0.70 based on
the
Zhangzhou Yufeng Die casting equipment 2011.04.30 2.08 2.04 2.04 principle of
Non-related Non-related
being Yes Yes
company company
Zhangzhou Hongyuan Die casting equipment 2011.04.30 3.20 2.27 2.27 above the
book value,
Zhangzhou Hongyuan Die casting equipment 2011.04.30 11.50 3.19 3.19 as well as
the
Xiamen Pinrui Hardware equipment 2011.05.31 3.57 1.23 1.23 assessment
and market
Zhangzhou Haikun Die casting equipment 2011.05.31 6.43 0.75 0.75 prices.
Zhangzhou Haikun Die casting equipment 2011.05.31 3.48 3.24 3.24
Zhangzhou
Die casting equipment 2011.05.31 1.20 1.13 1.13
Shengliang
Zhangzhou Jiafeng Wiring equipment 2011.05.31 1.60 0.67 0.67
Xiamen Jingjing Die casting equipment 2011.05.31 3.00 2.56 2.56
Zhangzhou Ruicheng Die casting equipment 2011.05.31 1.75 1.72 1.72
Zhangzhou Hongyuan Die casting equipment 2011.05.31 11.54 3.25 3.25
Zhangzhou Hongyuan Die casting equipment 2011.05.31 24.79 4.83 4.83
Zhangzhou Jinkun Fitting equipment 2011.06.30 6.45 2.82 2.82
Zhangzhou Hongyuan Die casting equipment 2011.06.30 10.79 9.23 9.23
Zhangzhou Hewang Bakelite equipment 2011.06.30 0.36 0.33 0.33
Zhangzhou Haikun Die casting equipment 2011.06.30 8.10 1.98 1.98
Zhangzhou Yingfa Bakelite equipment 2011.06.30 0.25 0.23 0.23
Xiamen Jingjing Die casting equipment 2011.06.30 1.10 1.00 1.00
5
Net profit
Whether or
contributed
not the whether or not
to the
Gains and Whether Explanatio ownership the relevant
Company by Relationshi
Selling losses due a related n on of the creditor’s rights
Transaction party Asset sold Date of sale the sold p with the
price to selling transacti pricing involved and liabilities
asset from Company
the asset on or not principle asset had had been
year-begin
been transferred
to the date
transferred
of sale
Zhangzhou Hongyuan Die casting equipment 2011.06.30 3.64 3.57 3.57
Xiamen Hechengfeng Hardware equipment 2011.07.31 5.00 4.27 4.27
Zhangzhou Shunkun Bakelite equipment 2011.07.31 0.29 0.29 0.29
Zhangzhou Hailong Hardware equipment 2011.07.31 10.00 8.55 8.55
Zhangzhou Hongyuan Die casting equipment 2011.07.31 3.40 2.99 2.99
Zhangzhou Shengyuan Hardware equipment 2011.07.31 2.60 1.15 1.15
Xiamen Jinyuan Hardware equipment 2011.07.31 63.88 3.99 3.99
Zhangzhou Bo’er Die casting equipment 2011.07.31 1.00 0.79 0.79
Xiamen Xinxionghui Hardware equipment 2011.07.31 5.00 4.90 4.90
Zhangzhou Bo’er Die casting equipment 2011.08.31 5.00 2.32 2.32
Zhangzhou Bo’er Die casting equipment 2011.08.31 9.10 8.93 8.93
Zhangzhou Bo’er Die casting equipment 2011.08.31 15.19 9.72 9.72
Zhangzhou Hongyuan Die casting equipment 2011.08.31 10.10 8.85 8.85
Zhangzhou Hongyuan Die casting equipment 2011.08.31 1.01 0.74 0.74
The
Zhangzhou Hongyuan Die casting equipment 2011.08.31 78.26 49.04 49.04 transaction
prices
Zhangzhou Xinhui Hardware equipment 2011.08.31 3.64 1.03 1.03 were
decided
Zhangzhou Jingu Bakelite equipment 2011.08.31 3.00 1.07 1.07 based on
the
Xiamen Shangheyang Bakelite equipment 2011.09.30 0.89 0.66 0.66 Non-relat
principle Non-related
ed Yes Yes
Xiamen Shangheyang Bakelite equipment 2011.09.30 0.10 0.10 0.10 company of being company
above the
Zhangzhou Hewang Bakelite equipment 2011.09.30 0.16 0.15 0.15 book
value, as
Xiamen Pinrui Hardware equipment 2011.09.30 4.71 4.35 4.35 well as the
assessment
Zhangzhou Haikun Die casting equipment 2011.09.30 8.30 8.10 8.10 and market
prices.
Zhangzhou Xiangkun Hardware equipment 2011.09.30 3.00 2.62 2.62
Zhangzhou Xiangkun Hardware equipment 2011.09.30 1.00 0.71 0.71
Zhangzhou Shunkun Bakelite equipment 2011.09.30 0.99 0.97 0.97
Zhangzhou Yufeng Die casting equipment 2011.09.30 4.90 0.94 0.94
Zhangzhou Yufeng Die casting equipment 2011.09.30 118.00 (16.82) (16.82)
Xiamen
Hardware equipment 2011.09.30 165.48 22.05 22.05
Rongxingsheng
Zhangzhou Haikun Die casting equipment 2011.09.30 1.60 1.42 1.42
Zhangzhou Haoyunda Hardware equipment 2011.09.30 1.80 1.14 1.14
Zhangzhou Haoyunda Die casting equipment 2011.09.30 0.65 0.64 0.64
Zhangzhou Ruicheng Die casting equipment 2011.09.30 7.03 5.31 5.31
Zhangzhou Yingfa Bakelite equipment 2011.09.30 1.03 1.01 1.01
Zhangzhou Hongyuan Die casting equipment 2011.09.30 4.00 3.92 3.92
Xiamen Xinxionghui Hardware equipment 2011.09.30 3.80 3.73 3.73
Xiamen Xinxionghui Hardware equipment 2011.09.30 19.00 8.52 8.52
Total 808.79 290.81 290.81
6
3.2.4 Changes of scope of consolidation financial statements
Suzhou Tai Lake International Travel Service Co., Ltd., of which 100% equity that had been held
by Tang Yijun was purchased on 10 Sept. 2010 by Xiamen Star Commerce & Trade Co., Ltd. with
monetary capital of RMB 486,867.80, has a registered capital of RMB 1.50 million. Due to
business needs, the Company transferred the equity of Suzhou Tai Lake International Travel
Service Co., Ltd. in this March, which was thus de-consolidated for the reporting period. But
earnings, expenses and profits generated by the enterprise before the equity transfer were included
in the consolidated income statement.
The Company’s subsidiary Tsann Kuen Zhangzhou Enterprise Co. Ltd. intended to invest its own
capital of USD 5,000,000 to establish 2 wholly-owned subsidiaries in Hong Kong, namely
Brilliant Leader Co., Ltd. and Globe Strong Co., Ltd. (or Hong Kong Brilliant Leader and Hong
Kong Globe Strong for short), of which the registered capital recorded at USD 4,950,000 and USD
50,000 respectively. Tsann Kuen Zhangzhou Enterprise Co. Ltd. had finished commercial
registration procedures of Hong Kong Brilliant Leader and Hong Kong Globe Strong on 28 Sept.
2010 and paid investment of USD 2,660,000 and USD 50,000 to Hong Kong Brilliant Leader and
Hong Kong Globe Strong respectively up to the date of this announcement.
Brilliant Leader Co., Ltd. and Globe Strong Co., Ltd., both wholly-owned subsidiaries of the
Company’s subsidiary Tsann Kuen Zhangzhou Enterprise Co. Ltd., made joint investments in Pt.
Tsann Kuen Zhangzhou Indonesia with USD 4,950,000 and USD 50,000 respectively. Up to 30
Sept. 2011, Brilliant Leader Co., Ltd. and Globe Strong Co., Ltd. had respectively paid USD
1,250,000 and USD 12,627 with monetary funds. As such, Pt. Tsann Kuen Zhangzhou Indonesia
was newly included in the consolidation scope for the reporting period.
(1) Entities newly consolidated for the reporting period
Unit: RMB Yuan
Name of the newly Net profit for the Reason for
Date of consolidation Closing net assets
consolidated subsidiary reporting period consolidation
Pt. Tsann Kuen Zhangzhou A newly incorporated
21 Apr. 2011 7,683,405.83 (192,962.41)
Indonesia subsidiary
(2) Entities newly de-consolidated for the reporting period
Unit: RMB Yuan
Net profit for the
Net assets as at period
Name of the newly Date of Reason for
the date of from the year-begin
de-consolidated subsidiary de-consolidation de-consolidation
disposal to the date of
disposal
Suzhou Tai Lake International
1 Mar. 2011 (1,297,175.94) (119,956.55) Equity transfer
Travel Service Co., Ltd.
3.3 Particulars about fulfillment of commitments made by the Company, its shareholders or actual
controller
□Applicable √Inapplicable
3.4 Warnings of estimated losses or major changes of the accumulative net profit achieved during
the period from year-begin to the end of the next reporting period compared with the same period
of last year, as well as explanation on reasons
□Applicable √Inapplicable
3.5 Other significant events to be explained
3.5.1 Securities investment
□Applicable √Inapplicable
7
3.5.2 Researches, interviews and visits received in the reporting period
In the reporting period, when receiving researches and interviews, the Company and relevant
information disclosure obligors abided by the Guide for Fair Information Disclosure of Listed
Companies, not conducting differential treatments or selectively and privately leak undisclosed
information to certain parties. And the researches and interviews received were listed as follows:
Reception
Reception time Reception way Visitor Main discussion and materials provided
place
7 Jul. 2011 By telephone Mr. Yu Operation status of the Company
11 Jul. 2011 By telephone Mr. Zhang Operation status of the Company
12 Jul. 2011 Office of the By telephone Mr. Xie Operation status of the Company
13 Jul. 2011 Company By telephone Mr. Zhou Operation status of the Company
6 Sept. 2011 Field research Mr. Wu Operation status of the Company
6 Sept. 2011 Field research Mr. Li Operation status of the Company
8
3.6 Derivative investments
√Applicable □Inapplicable
As a listed company, the Company has not been engaged in derivatives investment. And this
derivatives investment deal was conducted by the Company’s holding subsidiary—Tsann Kuen
Zhangzhou Enterprise Co., Ltd.—in order to avoid foreign exchange risks, which involved buying
and selling derivative financial products such as forward exchange and forward purchase/sale of
foreign currency.
Tsann Kuen Zhangzhou Enterprise Co., Ltd., the Company’s holding subsidiary, established the
Management Procedures for Trading Derivative Financial Products after the Procedures was
approved by the Board of Directors on 6 Mar. 2008.
1. Analysis on risks from holding of derivative products: gains or losses from difference
between contracted exchange rate and market exchange rate on value date.
2. Control measures:
(1) Principle: total amount of whole contracted derivative financial commodities will not
exceed sum of net position (net position: total foreign currency assets- total foreign
currency liabilities) of current assets liabilities plus net position arising from business of
the Company in the next 6 months.
(2) Separation of post: separation of post of trader, dealer and authorization.
Analysis on risks and control
(3) Normalization of procedure: trader should offer sufficient market information and
measures of derivative products held
risks to people who was authorized, clarify possible risks, consider feasibility of
in the reporting period (including but
transaction when sign the contract, and complete derivative financial commodities trade
not limited to market risk, liquidity
with authorization. Documents referring to contract trade need examination of legal
risk, credit risk, operation risk, law
affairs ministry, and the dealer will requested to be authorized when complete business
risk, etc.)
transaction.
(4) Periodic evaluation: The Company kept an eye on the profit and loss from the fair
value changes of the derivative by checking daily/(monthly) the difference between the
estimated exchange rate (provided by the bank)*the undue contracted amount and the
currency amount when bought in.
(5) Loss limit: contracted losses mustn’t exceed 6% of total trading amount.
(6) Audit system: Audit ministry audits derivative audit trade of derivative financial
products periodically and submit audit report.
(1) Losses effected by completed transaction amount of derivative products was
Changes of market prices or fair
RMB10,722,323.90, and loss from undelivered transaction was RMB 9,663,094.71 in the
values in the reporting period of the
reporting period;
invested derivatives. And the analysis
(2) The former contracted bank provided monthly sheets of estimated exchange rates for
on the fair value of the derivatives
the undue contracted forward exchanges on the last trading day of the month;
should include the specific use
(3) The profit and loss from fair value changes of the derivative was confirmed according
methods and the relevant assumptions
to the difference between the contracted amount undue by the month*the estimated
and parameters.
exchange rate and the currency amount when bought in.
Whether significant changes occurred
to the Company’s accounting policy
There were no significant changes between the Company’s accounting policy and
and specific accounting principles of
specific accounting principles of derivatives in the reporting period and those in the last
derivatives in the reporting period
reporting period.
compared to the previous reporting
period
Specific opinion from independent
Derivative investment, which was operated by Zhangzhou Tsann Kuen, controlling
directors, sponsors or financial
subsidiary of the Company, was performance of signed contract. Then they will execute
consultants on the Company’s
the examination and review procedure of the Board Meeting or Shareholder’s Meeting in
derivatives investment and risk
accordance with regulations and execute obligation of information disclosure in time.
control
9
3.6.1 Position-holding situation of derivative investments as at the end of the reporting period
√Applicable □Inapplicable
Unit: (RMB) Yuan
Proportion of the closing
contract amount in the
Opening contract Closing contract Gains and losses for
Type of contract Company’s net assets as
amount amount reporting period
at the end of the
reporting period
Buying and selling
44,380,034.94 80,773,460.84 (2,050,480.29) 16.44%
forward exchange
Forward
purchase/sale of 265,523,000.00 787,829,500.00 11,713,575.00 160.31%
foreign currency
Total 309,903,034.94 868,602,960.84 9,663,094.71 176.75%
3.7 Other matters
Zhangzhou Tsann Kuen, the controlling subsidiary of the Company, entered into Cooperation
Framework Agreement, Purchase Agreement on Operation Assets and Agreement of Supply of
Raw Materials for Production with Shanghai Sigma Metals Inc. (hereinafter referred to as
Shanghai Sigma) on 31 Dec. 2006 and the main contents of agreements include: Expect for sale of
the operation assets, Zhangzhou Tsann Kuen would transfer the business opportunities to Shanghai
Sigma with the total transaction amount of RMB 100 million, which becomes the main supplier of
raw materials of aluminum products purchased by the Company later, settlement price per ton
would be determined according to decreasing amount and proportion stipulated by two parties. In
accordance with Purchase Agreement on Operation Assets, Shanghai Sigma would pay the first
installment amounting to RMB 38 million, the rest RMB 62 million would be deducted from the
processing expense for molten aluminum by the month, which Zhangzhou Tsann Kuen entrusted
Shanghai Sigma to do production. Zhangzhou Tsann Kuen committed that it shall, within three
years following Agreement of Supply of Raw Materials for Production into force, purchase molten
aluminum (aluminum pig) from Shanghai Sigma with purchase volume not less than 70% of total
demands of Zhangzhou Tsann Kuen for molten aluminum (aluminum pig). In case of expiration of
three year, because of a shortage of orders, Zhangzhou Tsann Kuen fails to deducted fully the
balance from processing expense, it shall agree to give extension to Agreement of Supply of Raw
Materials for Production, the balance owed shall continue to deduct through business cooperation
till full deduction. If executive termination due to responsibility of Zhangzhou Tsann Kuen, the
balance owed shall not be paid by Shanghai Sigma, if executive termination due to responsibility
of Shanghai Sigma, the balance owed shall be paid by Shanghai Sigma one-off.
The above contracts had been executed for over three years, up to the balance sheet date, RMB
39,746,220.40 has been left un-transferred, which can be used for deduction for the future to come.
10
§4 Attachment
4.1 Balance Sheet
TSANN KUEN (CHINA) ENTERPRISE CO., LTD.
Balance Sheet (Un-audited)
30 Sept. 2011
Unit: RMB Yuan
Closing balance Opening balance
Assets
Consolidation Parent company Consolidation Parent company
Current Assets:
Monetary funds 706,438,323.54 11,744,033.43 640,945,107.83 904,966.64
Transactional financial asset 11,964,674.66 2,301,579.95
Notes receivable 4,908,725.40 4,304,903.10
Accounts receivable 539,835,838.15 458,742,818.28
Account paid in advance 9,356,091.33 390,322.68 8,658,966.52 93,254.00
Interest receivable 89,249.79 128,237.14
Dividend receivable
Other account receivable 43,534,702.97 3,728,530.12 60,422,920.42 126,090.00
Inventories 412,274,993.52 276,589,483.95
Non-current assets due within 1
year
Other current assets
Total current assets 1,728,402,599.36 15,862,886.23 1,452,094,017.19 1,124,310.64
Non-current assets:
Financial assets available for
sale
Held to maturity investments
Long-term account receivable 55,774,141.86 71,186,747.74
Long-term equity investment 40,000.00 990,854,030.83 40,000.00 990,854,030.83
Investing property 28,140,896.41 23,026,662.19 29,344,230.78 24,409,738.09
Fixed asset 306,482,310.99 23,944,328.29 367,750,001.33 27,071,431.70
Construction in process 3,865,805.53 573,099.00 2,842,516.56
Engineering materials
Fixed asset disposal
Production biological asset
Oil-gas assets
Intangible assets 23,351,670.91 18,553,931.07 25,021,404.35 19,315,381.38
Development expense
Goodwill 996,979.09 2,496,979.09
Long-term deferred expenses 5,788,391.33 121,116.54 5,953,419.25 145,340.04
Deferred income tax assets 24,013,303.25 28,379,559.09
Other non-current assets
Total of non-current assets 448,453,499.37 1,057,073,167.92 533,014,858.19 1,061,795,922.04
Total assets 2,176,856,098.73 1,072,936,054.15 1,985,108,875.38 1,062,920,232.68
Legal Representative: Jian Derong CFO: Chen Zongyi Person in charge of Accounting Office: Chen Zongyi
11
TSANN KUEN (CHINA) ENTERPRISE CO., LTD.
Balance Sheet-Continued (Un-audited)
30 Sept. 2011
Unit: RMB Yuan
Closing balance Opening balance
Items
Consolidation Parent company Consolidation Parent company
Current liabilities:
Short-term borrowings 25,536,000.00
Transactional financial liabilities
Notes payable 84,145,196.37 77,161,578.38
Account payable 875,658,166.14 59,916.45 836,505,277.66 274,567.76
Account received in advance 16,322,051.20 15,875,235.26 31,260.00
Payroll payable 42,562,424.70 163,194.45 37,912,505.82 208,568.85
Taxes and fares payable 11,935,654.09 68,875,373.36 48,362,325.48 68,937,341.03
Interest payable
Dividend payable
Other account payable 220,815,656.42 542,449,245.37 90,697,163.04 594,840,595.36
Long-term borrowings due within 1
year
Other current liabilities
Total current liabilities 1,276,975,148.92 611,547,729.63 1,106,514,085.64 664,292,333.00
Non-current liabilities:
Long-term borrowings
Bonds payable
Long-term accounts payable
Special accounts payable
Deferred income
Estimated liabilities
Deferred income tax liabilities 1,794,701.20 345,236.99
Other non-current liabilities 39,923,170.80 39,746,220.40
Total of non-current liabilities 41,717,872.00 0.00 40,091,457.39 0.00
Total liabilities 1,318,693,020.92 611,547,729.63 1,146,605,543.03 664,292,333.00
Shareholders’ equity:
Share capital 1,112,350,077.00 1,112,350,077.00 1,112,350,077.00 1,112,350,077.00
Capital reserve 125,035,204.92 123,485,181.40 125,035,204.92 123,485,181.40
Less: Treasury Stock
Surplus reserves
Retained earnings (745,387,572.92) (774,446,933.88) (775,973,855.22) (837,207,358.72)
Foreign exchange difference (558,641.68) 79.51
Total shareholders' equity
491,439,067.32 461,388,324.52 461,411,506.21 398,627,899.68
attributable to parent company
Minority interest 366,724,010.49 377,091,826.14
Total shareholder’s equity 858,163,077.81 461,388,324.52 838,503,332.35 398,627,899.68
Total liabilities and shareholders’
2,176,856,098.73 1,072,936,054.15 1,985,108,875.38 1,062,920,232.68
equity
Legal Representative: Jian Derong CFO: Chen Zongyi erson in charge of Accounting Office: Chen Zongyi
12
4.2 Income statement during the reporting period
TSANN KUEN (CHINA) ENTERPRISE CO., LTD.
Income Statement (Un-audited)
1 Jul.-30 Sept. 2011
Unit: RMB Yuan
Jul.-Sept. 2011 Jul.-Sept. 2010
Items
Consolidation Parent company Consolidation Parent company
I. Total revenue 721,142,352.34 580,367.20 853,595,297.04 1,319,236.20
II. Total sales 714,734,133.40 2,294,861.55 826,189,199.04 3,330,148.43
Less: sales cost 636,103,636.56 473,055.37 733,014,214.31 1,271,516.44
Taxes and associate charges 3,640,158.52 35,865.43 1,196,073.91 69,995.34
Sales expenses 29,016,610.94 34,290,108.06
Administrative expenses 54,578,303.06 1,989,967.89 58,850,194.13 1,957,188.40
Financial expense (7,894,054.23) (205,842.39) 1,069,630.77 30,322.06
Impairment loss (710,521.45) 1,815.25 (2,231,022.14) 1,126.19
Add: gain/(loss) from change in fair value
(4,131,938.34) (9,256.59)
(“-” means loss)
Gain/(loss) from investment (“-” means
5,720,418.53 (4,521,157.79)
loss)
III. Business profit 7,996,699.13 (1,714,494.35) 22,875,683.62 (2,010,912.23)
Add: non-business income 5,766,477.28 281,890.46 4,531,665.78 131,428.37
Less: non-business expense 343,915.51 24,392.70
Including: loss from disposal of non-current
168,240.69 16,938.86
asset
IV. Total profit (“-” means loss) 13,419,260.90 (1,432,603.89) 27,382,956.70 (1,879,483.86)
Less: income tax expense 2,234,556.06 2,693,598.03
V. Net profit (“-” means loss) 11,184,704.84 (1,432,603.89) 24,689,358.67 (1,879,483.86)
Attributable to parent company 8,037,812.45 (1,432,603.89) 17,782,669.68 (1,879,483.86)
Minority interest 3,146,892.39 6,906,688.99
VI. Earnings per share
1. Basic earnings per share 0.0072 0.0160
2. Diluted earnings per share 0.0072 0.0160
VII. Other comprehensive income (553,810.23) 36,560.16
VIII. Total comprehensive income 10,630,894.61 (1,432,603.89) 24,725,918.83 (1,879,483.86)
Total comprehensive income attributable to
7,622,454.78 (1,432,603.89) 17,819,229.84 (1,879,483.86)
owner of parent company
Total comprehensive income attributable to
3,008,439.83 6,906,688.99
minority shareholders
Legal Representative: Jian Derong CFO: Chen Zongyi Person in charge of Accounting Office: Chen Zongyi
13
4.3 Income statement from the year-begin to the end of the reporting period
TSANN KUEN (CHINA) ENTERPRISE CO., LTD.
Income Statement (Un-audited)
1 Jan.-30 Sept. 2011
Unit: RMB Yuan
Jan.-Sept. 2011 Jan.-Sept. 2010
Items
Consolidation Parent company Consolidation Parent company
I. Total revenue 2,094,507,219.54 1,756,432.40 2,518,604,859.66 4,340,328.62
II. Total sales 2,076,585,445.06 7,080,216.85 2,448,299,260.58 9,112,221.91
Less: sales cost 1,831,217,040.22 1,432,986.91 2,198,044,090.73 4,192,428.15
Taxes and associate charges 11,707,632.91 101,155.09 3,295,459.81 220,540.00
Sales expenses 80,987,930.45 87,543,256.12
Administrative expenses 158,716,714.64 5,932,951.08 163,619,886.37 5,292,973.14
Financial expense (5,410,961.40) (389,858.00) (5,359,845.71) 77,161.81
Impairment loss (632,911.76) 2,981.77 1,156,413.26 (670,881.19)
Add: gain/(loss) from change in fair value
9,663,094.71 0.00 (1,822,269.60)
(“-” means loss)
Gain/(loss) from investment (“-” means
11,026,999.84 67,732,295.69 (2,425,692.45) 5,266,277.58
loss)
III. Business profit 38,611,869.03 62,408,511.24 66,057,637.03 494,384.29
Add: non-business income 11,048,212.45 441,913.60 15,790,354.63 245,350.78
Less: non-business expense 1,057,409.61 90,000.00 832,872.43
Including: loss from disposal of non-current
205,237.06 57,570.89
asset
IV. Total profit (“-” means loss) 48,602,671.87 62,760,424.84 81,015,119.23 739,735.07
Less: income tax expense 5,759,273.33 6,424,153.67
V. Net profit (“-” means loss) 42,843,398.54 62,760,424.84 74,590,965.56 739,735.07
Attributable to parent company 30,586,282.30 62,760,424.84 54,731,971.89 739,735.07
Minority interest 12,257,116.24 19,858,993.67
VI. Earnings per share
1. Basic earnings per share 0.0275 0.0492
2. Diluted earnings per share 0.0275 0.0492
VII. Other comprehensive income (558,721.19) 654,758.41 3,538.08
VIII. Total comprehensive income 42,284,677.35 62,760,424.84 75,245,723.97 743,273.15
Total comprehensive income attributable to
30,167,241.41 62,760,424.84 55,386,730.30 743,273.15
owner of parent company
Total comprehensive income attributable to
12,117,435.94 19,858,993.67
minority shareholders
Legal Representative: Jian Derong CFO: Chen Zongyi Person in charge of Accounting Office: Chen Zongyi
14
4.4 Cash flow statement from the year-begin to the end of the reporting period
TSANN KUEN (CHINA) ENTERPRISE CO., LTD.
Cash Flow Statement (Un-audited)
1 Jan.-30 Sept. 2011
Unit: RMB Yuan
Accumulative amount as of reporting Accumulative amount at the same period
Items period of last year
Consolidation Parent company Consolidation Parent company
I. Cash flows for operating activities:
Cash received from sales of goods or rendering
2,129,176,757.82 2,349,018,074.47
of services
Refund of tax and fare received 194,086,294.07 35,329.81 197,497,897.91
Other cash received relating to operating
52,873,318.48 29,303,577.73 86,687,534.97 31,885,487.28
activities
Sub-total of cash inflows 2,376,136,370.37 29,338,907.54 2,633,203,507.35 31,885,487.28
Cash paid for goods and services 1,959,009,446.32 1,959,390,817.91
Cash paid to and on behalf of employees 207,746,802.57 25,340,753.13 265,834,906.95 24,118,979.65
Tax and fare paid 17,417,188.35 1,413,505.11 16,934,214.63 2,372,762.40
Other cash paid relating to operating activities 223,424,045.01 4,762,716.10 248,487,512.21 20,070,510.17
Sub-total of cash outflows 2,407,597,482.25 31,516,974.34 2,490,647,451.70 46,562,252.22
Net cash flow from operating activities (31,461,111.88) (2,178,066.80) 142,556,055.65 (14,676,764.94)
II. Cash Flows from Investment Activities:
Cash received from return of investments
Cash received from investment income 11,026,999.84 67,732,295.69 7,925,803.21 15,767,517.18
Net cash received from disposal of fixed assets,
7,173,207.90 17,020,782.09
intangible assets and other long-term assets
Net cash received from disposal of subsidiaries
202,824.06
and other operating units
Other cash received relating to investment
activities
Sub-total of cash inflows 18,403,031.80 67,732,295.69 24,946,585.30 15,767,517.18
Cash paid for acquiring fixed assets, intangible
33,112,118.14 214,500.00 27,399,317.27 1,919,183.89
assets and other long-term assets
Cash paid for acquiring investments 292,120.68 654,557.82
Net cash used in acquiring subsidiaries and other
operating units
Other cash paid relating to investment activities
Sub-total of cash outflows 33,404,238.82 214,500.00 28,053,875.09 1,919,183.89
Net cash flow from investing activities (15,001,207.02) 67,517,795.69 (3,107,289.79) 13,848,333.29
III. Cash Flows from Financing Activities:
Cash received from absorbing investment
Including: Cash received from increase in
minority investment
Cash received from borrowings 25,536,000.00
Cash received from issuance of bonds
Other cash relating to financing activities 196,042,600.00 5,000,000.00 160,000,000.00
Sub-total of cash inflows 221,578,600.00 5,000,000.00 160,000,000.00
Cash paid for settling debt 225,948,239.46 157,577,962.02
Cash paid for distribution of dividends or profit
23,214,517.47 2,352,514.18
or reimbursing interest
Including: dividends or profit paid to minority
23,214,517.47 2,352,514.18
dividends or interest
Other cash payments relating to financing
64,705,000.00 59,500,000.00
activities
Sub-total of cash outflows 87,919,517.47 59,500,000.00 228,300,753.64 157,577,962.02
Net cash flow from financing activities 133,659,082.53 (54,500,000.00) (228,300,753.64) 2,422,037.98
IV. Effect of foreign exchange rate changes on
(8,236,173.19) (662.10) (1,234,182.37) (57,060.12)
cash and cash equivalents
V. Increase in cash and cash equivalents 78,960,590.44 10,839,066.79 (90,086,170.15) 1,536,546.21
Add: Cash and cash equivalents at year-begin 627,477,733.10 904,966.64 540,739,906.30 494,441.23
VI. Cash and cash equivalents at the end of
706,438,323.54 11,744,033.43 450,653,736.15 2,030,987.44
the reporting period
Legal Representative: Jian Derong CFO: Chen Zongyi Person in charge of Accounting Office: Chen Zongyi
15
4.5 Auditors’ Report
Audit opinion: Un-audited
Chairman of the Board: Jian Derong
Tsann Kuen (China) Enterprise Co., Ltd.
22 October 2011
16
