Report for the First Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. Tsann Kuen (China) Enterprise Co., Ltd. Report for the First Quarter of 2015 Apr. 2015 1 Report for the First 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. All directors attended the board session for reviewing this report. Mr. Panzhirong, 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. 2 Report for the First 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 Jan.-Mar. 2015 Jan.-Mar. 2014 +/- (%) Operating revenues 453,454,308.58 424,258,718.53 6.88 Net profit attributable to shareholders of the 7,995,185.44 5,447,385.36 46.77 Company Net profit attributable to shareholders of the 2,993,743.17 11,424,272.23 -73.79 Company after extraordinary gains and losses Net cash flows from operating activities -36,982,666.95 -15,588,009.47 -137.25 Basic EPS (Yuan/share) 0.04 0.03 33.33 Diluted EPS (Yuan/share) 0.04 0.03 33.33 Weighted average ROE (%) 1.45 1.04 0.41 Item 31 Mar. 2015 31 Dec. 2014 +/- (%) Total assets 1,779,320,126.34 1,651,024,619.41 7.77 Net assets attributable to shareholders of the 554,821,340.14 546,574,409.55 1.51 Company 3 Report for the First Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. Items and amounts of extraordinary gains and losses √ Applicable □ Inapplicable Unit: RMB Yuan Item Jan.-Mar. 2015 Explanation Gains/losses on the disposal of non-current assets (including the offset part of 630,473.82 the asset impairment provisions) 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 1,303,299.00 according to the government’s unified standards Capital occupation charges on non-financial enterprises that are 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 on business reorganization, such as expenses on staff arrangements, integration, etc. Gain/loss on the part over the fair value due to transactions with distinctly unfair prices Current net gains and losses of subsidiaries acquired in business combination under the same control from period-begin to combination date Gain/loss on contingent events irrelevant to the Company’s normal business Mainly were the revenues of Gains and losses on change in fair value from tradable financial assets and selling the foreign exchange tradable financial liabilities, as well as investment income from disposal of forward transaction investment, tradable financial assets and tradable financial liabilities and financial assets 5,617,117.62 changes in fair value and other available for sales except for effective hedging related with normal businesses current assets revenues of the of the Company finance products Impairment provision reversal of accounts receivable on which the impairment test is carried out separately Gain/loss on 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 income and expense other than the above 291,380.63 Other gain and loss items that meet the definition of an extraordinary gain/loss Less: Income tax effects 1,169,274.51 Minority interests effects (after tax) 1,671,554.29 Total 5,001,442.27 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 4 Report for the First Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. II. Total number of shareholders at the period-end and shareholdings of top 10 shareholders 1. Total number of common shareholders at the period-end and shareholdings of top 10 common shareholders Unit: share Total number of common 22,157 shareholders at the period-end Shareholdings of top 10 common shareholders Number of Pledged or frozen shares Nature of Shareholding Number of shares Name of shareholder restricted shares shareholder percentage (%) held Status of shares Number of shares held FORDCHEE Foreign DEVELOPMENT 29.10% 53,940,530 N/A N/A corporation LIMITED EUPA INDUSTRY Foreign CORPORATION 13.83% 25,633,718 N/A N/A corporation LIMITED FILLMAN Foreign INVESTMENTS 2.49% 4,621,596 N/A N/A corporation LIMITED Domestic Chen Yongquan natural 0.95% 1,760,147 N/A N/A person Domestic Xia Qianru natural 0.70% 1,299,545 N/A N/A person Foreign Chen Lijuan natural 0.57% 1,051,791 N/A N/A person Foreign Chen Yongqing natural 0.56% 1,037,898 N/A N/A person Domestic Ding Xiaolun natural 0.56% 1,032,018 N/A N/A person Domestic Xie Qingjun natural 0.56% 1,030,000 N/A N/A person Foreign WU CHI LI natural 0.53% 980,096 N/A N/A person Shareholdings of top 10 non-restricted common shareholders Name of shareholder Number of non-restricted common shares held Variety of shares 5 Report for the First Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. Variety Number FORDCHEE DEVELOPMENT Domestically 53,940,530 listed foreign 53,940,530 LIMITED shares EUPA INDUSTRY CORPORATION Domestically 25,633,718 listed foreign 25,633,718 LIMITED shares FILLMAN INVESTMENTS Domestically 4,621,596 listed foreign 4,621,596 LIMITED shares Domestically Chen Yongquan 1,760,147 listed foreign 1,760,147 shares Domestically Xia Qianru 1,299,545 listed foreign 1,299,545 shares Domestically Chen Lijuan 1,051,791 listed foreign 1,051,791 shares Domestically Chen Yongqing 1,037,898 listed foreign 1,037,898 shares Domestically Ding Xiaolun 1,032,018 listed foreign 1,032,018 shares Domestically Xie Qingjun 1,030,000 listed foreign 1,030,000 shares Domestically WU CHI LI 980,096 listed foreign 980,096 shares Explanation on associated The top three shareholders are the Company’s corporate controlling shareholders. It is unknown relationship or persons acting in to the Company whether there exists associated relationship among the shareholders above or concert among the above-mentioned they are acting-in-concert entities as stipulated in the Administrative Measures on Information shareholders Disclosure of Changes in 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 2. Total number of preferred shareholders at the period-end and shareholdings of top 10 preferred shareholders □ Applicable √ Inapplicable 6 Report for the First Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. Section III. Significant Events I. Significant changes in the major accounting statement items and financial indicators for the reporting period, as well as the reasons for these changes √ Applicable □ Inapplicable Unit: RMB Yuan Item 31 Mar. 2015 31 Dec. 2014 +/-% Main reasons for the change Financial assets measured at The expected gains on forward foreign exchange fair value with changes 3,910,800.00 2,610,000.00 49.84 contracts increased on RMB depreciation at the recorded into current gains and period-end. losses Notes receivable 4,907,057.29 2,004,498.59 144.80 Some notes receivable were undue. Opening term deposits became due and the Interest receivable 2,420,302.66 3,590,399.84 -32.59 relevant interest was received. Wealth management products of RMB 330 million Other current assets 347,641,923.44 13,087,495.75 2,556.29 were purchased. Expense on enclosure construction and land Construction in progress 459,967.01 233,968.67 96.59 ownership certificates Other non-current assets 2,778,530.49 1,929,374.75 44.01 Prepayments for equipment increased. Short-term borrowings 272,529,414.00 61,190,000.00 345.38 Short-term borrowings from banks increased. Financial liabilities measured The forward foreign exchange transactions at fair value with changes 744,974.03 3,956,259.85 -81.17 appraised at the beginning of the year generated recorded into current gains and gains in the current period. losses Notes payable 17,453,976.17 29,749,982.77 -41.33 Due notes payable were settled. Interest payable 352,036.05 68,275.80 415.61 Short-term borrowings from banks increased. The expected gains on forward foreign exchange Deferred income tax liabilities 814,947.53 618,966.78 31.66 contracts increased. Item Jan.-Mar. 2015 Jan.-Mar. 2014 +/-% Main reasons for the change The same period of last year saw an effect of RMB 1.3 million in this item in relation to tax exemption Business tax and surtaxes 1,271,419.53 2,430,498.24 -47.69 and offset while the current period saw no such expenses. The export expenses and the advertising promotion Selling expenses 20,838,172.33 15,550,356.79 34.00 expenses both increased. In the same period of last year, some customers ’ Asset impairment losses -887,025.98 -5,248,202.75 83.10 payments were collected, reversing the relevant bad-debt provisions. The appraised gains on forward foreign exchange Gains on fair value changes 4,512,085.82 -23,960,252.94 118.83 contracts The gains on settled forward foreign exchange Investment gains 1,105,031.80 7,075,877.04 -84.38 contracts decreased and there were no gains on wealth management products. Non-operating incomes 2,229,112.34 7,623,739.38 -70.76 The subsidy income decreased. Adjusted according to the income tax accounting Income tax expenses -378,618.00 -909,585.09 58.37 estimation. Net cash flows from operating The time difference between two stages of export -36,982,666.95 -15,588,009.47 -137.25 activities tax rebates. Wealth management products and fixed assets Net cash flows from investing -350,155,153.04 -252,135,178.71 -38.88 increased while the gains on settled forward activities foreign exchange contracts decreased. Export financings decreased and the Company did Net cash flows from financing 211,021,879.00 468,848,906.82 -54.99 not borrow from the controlling shareholder in the activities current period. 7 Report for the First 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 23 Dec. 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 hold a hearing on 26 Mar. 2014 and 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. Index to the relevant announcement Overview of the significant event Disclosure date disclosed on the website The progress events of the appeal between the Company’s 22 Feb. 2014 http://www.cninfo.com.cn/ controlling subsidiary—Zhangzhou Tsann Kuen and Xinda Motor Events of the Company’s controlling subsidiary—Zhangzhou Tsann 27 Dec. 2013 http://www.cninfo.com.cn/ Kuen separately sued Xinda Motor 8 Report for the First 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 Whether Proportion of Related Whether Net profit the the net profit relationshi the contributed by involvin contributed by p with the involvin the sold asset g claims the sold asset Whether was counterpar g Transaction Selling to the listed Influence on and Disclosure Disclosure Asset sold Selling date to the listed Pricing principle related party ty (applied property party price companies the Company debts date index companies of transaction for the right had from had the total related wholly period-begin wholly amount of the transaction transferr to date of sale transferr net profit (%) ) ed ed Machinery Xinwang 2015.1.31 2.50 2.45 2.45 0.31 devices Nanyanghua Other 2015.1.31 1.51 1.29 1.29 0.16 n devices Machinery Jinyuan 2015.1.31 8.00 3.09 3.09 0.39 devices Machinery Li Qinghua 2015.1.31 9.00 3.20 3.20 0.40 devices Mould Ruicheng 2015.1.31 3.40 3.26 3.26 0.41 devices Liao Machinery 2015.1.31 12.80 2.04 2.04 0.26 Sezhong devices The transaction prices Zheng Machinery 2015.1.31 1.30 0.54 0.54 0.07 were decided based on Wenhui devices the market price and Inapplicab Inapplicab Inapplicab SHANGHAI Non-related party Yes Yes Mould settled according to the le le le EXCELLEN 2015.1.31 115.00 22.72 22.72 2.84 devices signed contract of both CE parties Machinery Li Yiming 2015.3.31 10.50 3.72 3.72 0.47 devices Machinery Xinwang 2015.3.31 0.25 0.25 0.25 0.03 devices Haichengxin Electronic 2015.3.31 0.80 0.78 0.78 0.10 g devices Mould Baoxing 2015.3.31 0.40 0.39 0.39 0.05 devices Mould Hongyuan 2015.3.31 13.93 13.34 13.34 1.67 devices Transportati Gusong 2015.3.31 6.5 6.36 6.36 0.80 on devices Total 185.89 63.43 63.43 7.96 9 Report for the First 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 Period of Commitment Commitment maker Contents making commitme Fulfillment commitment nt 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 shareholding if the Company’s stock price was lower than HKD2.40 per share after the implementation of The Company’s the shares contraction stocks resumed and trading resumption, trading on 31 Dec. and it would increase no 2012, but the more than 2% shares Company’s stock price hasn’t met the (i.e. 370,780,000 shares) FILLMAN of the total shares issued condition for Other commitments made to minority Long-term shareholding shareholders INVESTMENTS by the Company within 28 Dec. 2012 effective LIMITED) one year since the date increase since the of initial shareholding date of trading increase. If the plan on resumption, increasing holding 2% FILLMAN shares of the total shares Investment Limited is completed, if the hasn’t implemented stock price hasn’t the shareholding increase plan. reached the target price, it will perform relevant approval procedures, and propose to CSRC on continuous implementation of shareholding increase by exemption of offering. Executed in time or not? Yes Detailed reason for failing to execute The Company’s stocks resumed trading on 31 Dec. 2012, but the Company’s stock price hasn’t and the plan for the next step (If any) met the condition forhasn’t implemented the shareholdingdate of trading resumption, FILLMAN shareholding increase since the Investment Limited increase plan. IV. Predict the operating results of Jan.-Jun. 2015 Warning of possible loss or considerable YoY change of the accumulated net profit made during the period-begin to the end of the next reporting period according to prediction, as well as explanations on the reasons □Applicable √ Inapplicable V. Securities investment □Applicable √ Inapplicable VI. Shareholdings in other listed companies □Applicable √ Inapplicable 10 Report for the First Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. VII. Investments in derivatives √ Applicable □ Inapplicable Unit: RMB Ten Thousand Yuan Proportion of the Related-part Type of Initial Closing closing investment Actual Operator Relation y transaction derivative investment Beginning date Ending date Opening Impairmen investment amount in the gain/loss in or not investment amount investment amount t provision amount Company’s reporting closing net assets period (%) Bank No No Forward 72,325.41 1 Jan. 2015 31 Mar. 2015 61,298.55 52,864.34 95.28 561.71 exchange Total 72,325.41 -- -- 61,298.55 52,864.34 95.28 561.71 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 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: 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 n et risk exposure of assets and liabilities arising from the Analysis on risks and control measures of derivative operation of the Company in the coming year. products held in the reporting period (including but not (2) Staff requirements: Personnel taking part in the investment shall all fully understand the risks of derivative investment and strictly execute limited to market risk, liquidity risk, credit risk, operation the business operation and risk management mechanisms for derivative investment. risk, law risk, etc.) (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, etc. 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 Boa rd 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 amount. (6) Audit system: The audit department audits derivative product trading periodically and submits audit reports to relevant units. (1) Gains and losses effected by completed transaction amount of derivative products was RMB 1.105 million, and loss from undelivered Changes of market prices or fair values in the reporting transaction was RMB 4.5121 million, of which the of revenue rotation of the undelivered forward exchange assessment was of RMB 1.3463 period of the invested derivatives. And the analysis on the million. fair value of the derivatives should include the specific use (2) The former contracted bank provided monthly sheets of estimated exchange rates for the undue contracted forward exchanges on the last methods and the relevant assumptions and parameters. trading day of the month. (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 reporting derivatives in the reporting period compared to the period and those in the last reporting period. previous reporting period Special opinion from independent directors, sponsor or The Company has carried out a strict internal assessment for the financial derivative business and has established a corresponding supervision financial consultant on the Company’s derivatives mechanism. We are of the opinion that the financial derivative business conducted by the Company is fairly necessary in its routine operation investment and risk control and is in compliance with relevant laws and regulations, with the risks controllable. 11 Report for the First 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 Time of reception Place of reception Way of reception Visitor type Visitor materials provided by the Company Operating situation of the Company, whether the The office of the Telephone 30 Jan. 2015 Individual Mr. Zhang Indonesia factory could Company Communication reverse a loss; had not offer any written sources. Operating situation of the The office of the Telephone Company, relevant policies 13 Mar. 2015 Individual Mr. Chen Company Communication of B shares; had not offer any written sources. Operating situation of the The office of the Telephone Company, relevant policies 23 Mar. 2015 Individual Ms. Liu Company Communication of B shares; had not offer any written sources. 12 Report for the First 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 715,597,380.90 886,464,448.01 Settlement reserves Intra-group lendings Financial assets measured at fair value of which changes 3,910,800.00 2,610,000.00 are recorded in current profits and losses Derivative financial assets Notes receivable 4,907,057.29 2,004,498.59 Accounts receivable 241,124,201.42 247,336,334.86 Accounts paid in advance 10,297,673.78 12,758,696.10 Premiums receivable Reinsurance premiums receivable Receivable reinsurance contract reserves Interest receivable 2,420,302.66 3,590,399.84 Dividend receivable Other accounts receivable 37,832,748.99 34,873,104.97 Financial assets purchased under agreements to resell Inventories 163,649,409.48 193,150,144.07 Assets held for sale Non-current assets due within 1 year Other current assets 347,641,923.44 13,087,495.75 Total current assets 1,527,381,497.96 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 48,312,902.04 50,370,557.48 Fixed assets 163,745,147.21 166,921,066.06 Construction in progress 459,967.01 233,968.67 Engineering materials Disposal of fixed assets Production biological assets Oil-gas assets Intangible assets 12,707,621.00 12,145,423.16 R&D expense Goodwill Long-term deferred expenses 4,531,213.93 4,797,144.17 Deferred income tax assets 19,363,246.70 18,711,962.93 Other non-current assets 2,778,530.49 1,929,374.75 Total of non-current assets 251,938,628.38 255,149,497.22 Total assets 1,779,320,126.34 1,651,024,619.41 13 Report for the First Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. Item Closing balance Opening balance Current liabilities: Short-term borrowings 272,529,414.00 61,190,000.00 Borrowings from Central Bank Customer bank deposits and due to banks and other financial institutions Intra-group borrowings Financial liabilities measured at fair value of which 744,974.03 3,956,259.85 changes are recorded in current profits and losses Derivative financial liabilities Notes payable 17,453,976.17 29,749,982.77 Accounts payable 454,091,740.57 533,071,295.43 Accounts received in advance 17,064,566.12 14,769,179.12 Financial assets sold for repurchase Handling charges and commissions payable Payroll payable 38,982,504.95 45,910,725.14 Tax payable 6,411,750.44 6,521,778.61 Interest payable 352,036.05 68,275.80 Dividend payable Other accounts payable 58,997,751.89 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 866,628,714.22 748,397,120.05 Non-current liabilities: Long-term borrowings Bonds payable Of which: preferred shares Perpetual bonds Long-term payables Long-term payroll payables Specific payables Estimated liabilities Deferred income Deferred income tax liabilities 814,947.53 618,966.78 Other non-current liabilities Total non-current liabilities 814,947.53 618,966.78 Total liabilities 867,443,661.75 749,016,086.83 Owners’ equity: Share capital 185,391,680.00 185,391,680.00 Other equity instruments Of which: preferred shares Perpetual bonds Capital reserves 278,458,862.55 278,458,862.55 Less: Treasury stock Other comprehensive income -647,635.05 -899,380.20 Specific reserves Surplus reserves 16,400,043.27 16,400,043.27 Provisions for general risks Retained profits 75,218,389.37 67,223,203.93 Total equity attributable to owners of the Company 554,821,340.14 546,574,409.55 Minority interests 357,055,124.45 355,434,123.03 Total owners’ equity 911,876,464.59 902,008,532.58 Total liabilities and owners’ equity 1,779,320,126.34 1,651,024,619.41 Legal representative: Pan Zhirong Chief of the accounting work: Wu Yanru Chief of the accounting organ: Wu Yanru 14 Report for the First Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. 2. Balance sheet of the Company Prepared by Tsann Kuen (China) Enterprise Co., Ltd. Unit: RMB Yuan Item Closing balance Opening balance Current Assets: Monetary funds 8,911,498.54 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 4,907,057.29 2,004,498.59 Accounts receivable 31,065,097.20 28,535,190.86 Accounts paid in advance 605,536.03 159,129.74 Interest receivable Dividend receivable Other accounts receivable 501,987.84 618,435.08 Inventories 8,841,517.57 9,123,446.86 Assets held for sale Non-current assets due within 1 year Other current assets 259,083.99 Total current assets 54,832,694.47 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 42,415,100.80 43,650,654.94 Fixed assets 648,287.44 573,821.18 Construction in progress Engineering materials Disposal of fixed assets Production biological assets Oil-gas assets Intangible assets 130,500.00 R&D expense Goodwill Long-term deferred expenses 665,939.96 758,014.49 Deferred income tax assets 1,741,032.74 1,902,042.53 Other non-current assets 4,000.00 Total of non-current assets 1,031,454,891.77 1,032,742,563.97 Total assets 1,086,287,586.24 1,076,678,619.74 15 Report for the First Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. Item Closing balance Opening balance 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 60,143,797.89 52,496,435.80 Accounts received in advance 5,598,138.28 5,652,792.49 Payroll payable 1,260,009.26 2,347,177.91 Tax payable 850,755.25 898,026.25 Interest payable Dividend payable Other accounts payable 475,336,716.34 475,204,952.74 Liabilities held for sale Non-current liabilities due within 1 year Other current liabilities Total current liabilities 543,189,417.02 536,599,385.19 Non-current liabilities: Long-term borrowings Bonds payable Of which: preferred 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 0.00 0.00 Total liabilities 543,189,417.02 536,599,385.19 Owners’ equity: Share capital 185,391,680.00 185,391,680.00 Other equity instruments Of which: preferred 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 69,816,849.07 66,797,914.40 Total owners’ equity 543,098,169.22 540,079,234.55 Total liabilities and owners’ equity 1,086,287,586.24 1,076,678,619.74 Legal representative: Pan Zhirong Chief of the accounting work: Wu Yanru Chief of the accounting organ: Wu Yanru 16 Report for the First Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. 3. Consolidated income statement Prepared by Tsann Kuen (China) Enterprise Co., Ltd. Unit: RMB Yuan Item Jan.-Mar. 2015 Jan.-Mar. 2014 I. Total operating revenues 453,454,308.58 424,258,718.53 Including: Sales income 453,454,308.58 424,258,718.53 Interest income Premium income Handling charge and commission income II. Total operating costs 452,175,584.80 409,168,627.22 Including: Cost of sales 395,763,311.66 369,674,443.64 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 1,271,419.53 2,430,498.24 Selling and distribution expenses 20,838,172.33 15,550,356.79 Administrative expenses 41,325,920.87 34,218,799.09 Financial expenses -6,136,213.61 -7,457,267.79 Asset impairment loss -887,025.98 -5,248,202.75 Add: Gain/(loss) from change in fair value (“-” means loss) 4,512,085.82 -23,960,252.94 Gain/(loss) from investment (“-” means loss) 1,105,031.80 7,075,877.04 Including: share of profits in associates and joint ventures Foreign exchange gains (“-” means loss) III. Business profit (“-” means loss) 6,895,841.40 -1,794,284.59 Add: non-operating income 2,229,112.34 7,623,739.38 Including: Gains on disposal of non-current assets 634,432.71 641,715.41 Less: non-operating expense 3,958.89 57,039.34 Including: Losses on disposal of non-current assets 3,958.89 14,857.02 IV. Total profit (“-” means loss) 9,120,994.85 5,772,415.45 Less: Income tax expense -378,618.00 -909,585.09 17 Report for the First Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. Item Jan.-Mar. 2015 Jan.-Mar. 2014 V. Net profit (“-” means loss) 9,499,612.85 6,682,000.54 Net profit attributable to owners of the Company 7,995,185.44 5,447,385.36 Minority shareholders’ income 1,504,427.41 1,234,615.18 VI. After-tax net amount of other comprehensive incomes 251,745.15 1,534,422.53 After-tax net amount of other comprehensive incomes attributable to owners of the Company 251,745.15 1,534,422.53 (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 251,745.15 1,534,422.53 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 251,745.15 1,534,422.53 6. Other After-tax net amount of other comprehensive incomes attributable to minority shareholders VII. Total comprehensive incomes 9,751,358.00 8,216,423.07 Attributable to owners of the Company 8,246,930.59 6,981,807.89 Attributable to minority shareholders 1,504,427.41 1,234,615.18 VIII. Earnings per share (I) Basic earnings per share 0.04 0.03 (II) Diluted earnings per share 0.04 0.03 Legal representative: Pan Zhirong Chief of the accounting work: Wu Yanru Chief of the accounting organ: Wu Yanru 18 Report for the First Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. 4. Income statement of the Company Prepared by Tsann Kuen (China) Enterprise Co., Ltd. Unit: RMB Yuan Item Jan.-Mar. 2015 Jan.-Mar. 2014 I. Total sales 41,751,218.62 19,668,041.34 Less: cost of sales 34,658,665.63 12,827,510.42 Business taxes and surcharges 259,261.49 323,834.21 Distribution expenses 2,087,654.04 1,616,468.48 Administrative expenses 2,514,621.15 2,781,031.86 Financial costs -19,857.02 -42,307.79 Impairment loss -981,415.14 -1,556,664.17 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) 3,232,288.47 3,718,168.33 Add: non-operating income 24,799.69 416.19 Including: Gains on disposal of non-current assets Less: non-operating expense Including: Losses on disposal of non-current assets III. Total profit (“-” means loss) 3,257,088.16 3,718,584.52 Less: Income tax expense 238,153.49 IV. Net profit (“-” means loss) 3,018,934.67 3,718,584.52 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 3,018,934.67 3,718,584.52 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 19 Report for the First Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. 5. Consolidated cash flow statement Prepared by Tsann Kuen (China) Enterprise Co., Ltd. Unit: RMB Yuan Item Jan.-Mar. 2015 Jan.-Mar. 2014 I. Cash flows from operating activities: Cash received from sale of commodities and rendering of 456,218,930.18 472,050,234.57 service 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 42,054,356.30 71,980,717.35 Other cash received relating to operating activities 13,379,113.73 26,368,981.31 Subtotal of cash inflows from operating activities 511,652,400.21 570,399,933.23 Cash paid for goods and services 429,098,615.82 458,851,343.59 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 69,021,103.17 65,483,557.51 Various taxes paid 7,202,670.98 8,264,059.89 Other cash payment relating to operating activities 43,312,677.19 53,388,981.71 Subtotal of cash outflows from operating activities 548,635,067.16 585,987,942.70 Net cash flows from operating activities -36,982,666.95 -15,588,009.47 II. Cash flows from investing activities: Cash received from withdrawal of investments 1,105,031.80 55,014,569.58 Cash received from return on investments 2,172,140.79 Net cash received from disposal of fixed assets, intangible 1,720,653.22 439,943.13 20 Report for the First Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. Item Jan.-Mar. 2015 Jan.-Mar. 2014 assets and other long-term assets Net cash received from disposal of subsidiaries or other business units Other cash received relating to investing activities 476,499,000.00 Subtotal of cash inflows from investing activities 479,324,685.02 57,626,653.50 Cash paid to acquire fixed assets, intangible assets and other 18,208,205.43 9,761,832.21 long-term assets Cash paid for investment 330,000,000.00 300,000,000.00 Net increase of pledged loans Net cash paid to acquire subsidiaries and other business units Other cash payments relating to investing activities 481,271,632.63 Subtotal of cash outflows from investing activities 829,479,838.06 309,761,832.21 Net cash flows from investing activities -350,155,153.04 -252,135,178.71 III. Cash Flows from Financing Activities: Cash received from capital contributions Including: Cash received from minority shareholder investments by subsidiaries Cash received from borrowings 272,756,272.00 338,139,940.00 Cash received from issuance of bonds Other cash received relating to financing activities 143,957,350.00 Subtotal of cash inflows from financing activities 272,756,272.00 482,097,290.00 Repayment of borrowings 61,422,000.00 Cash paid for interest expenses and distribution of dividends 312,393.00 944,183.18 or profit Including: dividends or profit paid by subsidiaries to minority shareholders Other cash payments relating to financing activities 12,304,200.00 Sub-total of cash outflows from financing activities 61,734,393.00 13,248,383.18 Net cash flows from financing activities 211,021,879.00 468,848,906.82 IV. Effect of foreign exchange rate changes on cash and cash 476,241.25 5,104,545.71 equivalents V. Net increase in cash and cash equivalents -175,639,699.74 206,230,264.35 Add: Opening balance of cash and cash equivalents 469,965,448.01 834,088,959.68 VI. Closing balance of cash and cash equivalents 294,325,748.27 1,040,319,224.03 Legal representative: Pan Zhirong Chief of the accounting work: Wu Yanru Chief of the accounting organ: Wu Yanru 21 Report for the First Quarter of 2015 of Tsann Kuen (China) Enterprise Co., Ltd. 6. Cash flow statement of the Company Prepared by Tsann Kuen (China) Enterprise Co., Ltd. Unit: RMB Yuan Item Jan.-Mar. 2015 Jan.-Mar. 2014 I. Cash flows from operating activities: Cash received from sale of commodities and 40,970,463.10 56,243,897.26 rendering of service Tax refunds received Other cash received relating to operating activities 11,797,781.95 14,183,210.67 Subtotal of cash inflows from operating activities 52,768,245.05 70,427,107.93 Cash paid for goods and services 31,932,105.35 54,480,417.57 Cash paid to and for employees 2,328,732.56 9,944,933.01 Various taxes paid 1,916,581.82 1,184,029.17 Other cash payment relating to operating activities 10,798,107.99 2,291,960.23 Subtotal of cash outflows from operating activities 46,975,527.72 67,901,339.98 Net cash flows from operating activities 5,792,717.33 2,525,767.95 II. Cash flows from investing activities: Cash received from retraction of investments Cash received from return on investments Net cash received from disposal of fixed assets, intangible assets and 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 0.00 0.00 Cash paid to acquire fixed assets, intangible assets 119,052.90 735.90 and other long-term 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 119,052.90 735.90 Net cash flows from investing activities -119,052.90 -735.90 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 0.00 0.00 Repayment of borrowings Cash paid for interest expenses and distribution of dividends or profit Other cash payments relating to financing activities Sub-total of cash outflows from financing activities 0.00 0.00 Net cash flows from financing activities 0.00 0.00 IV. Effect of foreign exchange rate changes on cash 1,563.46 6,996.02 and cash equivalents V. Net increase in cash and cash equivalents 5,675,227.89 2,532,028.07 Add: Opening balance of cash and cash 3,236,270.65 11,811,615.43 equivalents VI. Closing balance of cash and cash equivalents 8,911,498.54 14,343,643.50 Legal representative: Pan Zhirong Chief of the accounting work: Wu Yanru Chief of the accounting organ: Wu Yanru 22 Report for the First 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. 23