Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 TSANN KUEN (CHINA) ENTERPRISE CO., LTD. THIRD QUARTER REPORT 2016 October 2016 1 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 Section I Important Statements 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. Pan Zhirong, company principal, and Mr. Feng Zhiqing, 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 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 Section II Financial Highlights & Shareholder Changes I Highlights of accounting data and financial indicators Whether the Company performs any retroactive adjustments to or restatements of its accounting data of last year due to change in accounting policies or correction of accounting errors √ Yes □ No Unit: RMB 30 September 31 December 2015 Item +/- (%) 2016 Before adjustment After adjustment Total assets 1,672,677,864.16 1,656,036,577.21 1,662,657,829.11 0.60 Owner’s equities attributed to the shareholders of the 589,611,941.25 559,728,743.98 562,024,410.53 4.91 Company July-September January-September YoY +/- Item YoY +/- (%) 2016 2016 (%) Operating revenues 530,619,224.33 -8.38 1,328,727,913.60 -9.88 Net profit attributable to shareholders of the Company 12,124,393.34 2.48 29,914,194.70 14.49 Net profit attributable to shareholders of the Company 11,674,289.80 -33.38 27,619,142.36 30.34 excluding exceptional profit and loss Net cash flows from operating activities -1,728,404.23 -96.83 -61,900,410.52 -41.46 Basic earnings per share 0.06 0.00 0.16 14.29 Diluted earnings per share 0.06 0.00 0.16 14.29 Weighted average return on equity (%) 2.05 -0.46 5.16 0.07 Notes to the retroactive adjustment of 2016 opening amount and that of the same period of last year: On 24 April 2015, the Company held the 2015 2nd Board of Directors had approved the resolutions, of which the controlling subsidiary Zhangzhou Tsann Kuen Industrial Co., Ltd. (named “Zhangzhou Tsann Kuen” for short with the shareholding of 75%) and firstly set up the wholly owned subsidiary Orient Star Investments Limited (named “Orient Star Investments”) then secondly Orient Star Investments invested and purchased the 100% equities of the wholly owned subsidiary Tsannkuen Edge Intelligence Co., Ltd. (named “Tsannkuen Edge Intelligence” for short) of STAR COMGISTIC CAPITAL CO., LTD. (named “STAR COMGISTIC CAPITAL” for short). Orient Star Investments received the relevant letter about approving the purchase of the 100% equities of Tsannkuen Edge Intelligence from Taiwan competent authorities on 15 March 2016 and amount that STAR COMGISTIC CAPITAL received the purchase of the whole equities of Tsannkuen Edge Intelligence by Orient Star Investments on 21 March 2016 was of USD968,545.48. And had completed the relevant alternation procedures of the commercial registration of the equity transfer on 19 April 2016 and with the details, please refer to the Announcement on the Controlling Subsidiary of the Company Zhangzhou Tsann Kuen Invested on Its Wholly-owned Subsidiary which Purchased the Equity of Tsannkuen Edge Intelligence and the Related Transactions that disclosed on Securities Times, Hong Kong Ta Kung Pao and www.cninfo.com.cn on 25 April 2015, the Correcting 3 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 Announcement on the Controlling Subsidiary of the Company Zhangzhou Tsann Kuen Invested on Its Wholly-owned Subsidiary which Purchased the Equity of Tsannkuen Edge Intelligence and the Related Transactions that disclosed on Securities Times, Hong Kong Ta Kung Pao and www.cninfo.com.cn on 28 April 2015, Announcement on the Completion of the Commercial Registration Procedures of the Hong Kong Wholly-owned Subsidiary of Zhangzhou Tsann Kuen that disclosed on Securities Times, Hong Kong Ta Kung Pao and www.cninfo.com.cn on 21 May 2015, Announcement on the Controlling Subsidiary of the Company Zhangzhou Tsann Kuen Purchased Tsannkuen Edge Intelligence and the Progress of the Related Transactions that disclosed on Securities Times, Hong Kong Ta Kung Pao and www.cninfo.com.cn on 16 March 2016 and the Announcement on the Completion of the Commercial Alternation Registration of the Controlling Subsidiary of the Company Zhangzhou Tsann Kuen through the Purchase of Tsannkuen Edge Intelligence by Hong Kong Subsidiary that disclosed on Securities Times, Hong Kong Ta Kung Pao and www.cninfo.com.cn on 21 April 2016. According to No. 20 of ASBE - Enterprise Merger, the Transaction formed the enterprise merger under the same control and the main body was regarded as always exist in the previous periods after the merger. The combining party shall adjust the opening amounts and the amounts for the same period of last year of relevant items in the statements. Total share capital up to the trading day before the disclosure: Total share capital up to the trading day before the disclosure (share) 185,391,680 Fully diluted EPS calculated according to the latest share capital (RMB/share) 0.16 Exceptional profit and loss √ Applicable □ Not applicable Unit: RMB Item January-September 2016 Note Profit/loss on disposal of non-current assets (including offset amount of 125,273.22 asset impairment provisions) Tax rebates, reductions and exemptions due to approval beyond authority or the lack of official approval documents Government grants charged to the profit/loss for the Reporting Period (except for the government grants closely related to the business of the 2,758,460.00 Company and given at a fixed quota or amount in accordance with the State’s uniform standards) Capital occupation charges on non-financial enterprises that are charged to the profit/loss for the Reporting Period Profit due to the situation where investment costs for the Company to obtain subsidiaries, associates and joint ventures are lower than the enjoyable fair value of identifiable net assets of investees when making investments Profit/loss on non-monetary asset swap Profit/loss on entrusting others with investments or asset management Asset impairment provisions due to acts of God such as natural disasters Profit/loss on debt restructuring Restructuring costs in staff arrangement, integration, etc. 4 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 Item January-September 2016 Note Profit/loss on the part over the fair value due to transactions with distinctly unfair prices Reporting Period net profit/loss of subsidiaries acquired through Loss of Tsannkuen Edge business mergers under the same control from period-beginnings to -2,224,231.59 Intelligence before merger dates combination Profit/loss on contingencies irrelevant to the Company’s normal business activities Profit/loss on fair value changes of transactional financial assets and Gains on sale of forward liabilities & investment profit on disposal of transactional financial exchange contracts, fair assets and liabilities as well as financial assets available for sale, except 1,224,489.40 value changes, financial for effectively hedging business related to normal business operations of products and other the Company current assets Impairment provision reversal for accounts receivable on which the impairment test is carried out separately Profit/loss on entrusted loans Profit/loss on fair value changes in investing properties of which the subsequent measurement is carried out adopting the fair value method Effect on Reporting Period profit/loss when a one-off adjustment is made to Reporting Period profit/Loss according to requirements of taxation, accounting and other relevant laws and regulations Custody fee income when entrusted with operations Non-operating income and expense other than the above 2,188,569.92 Other profit/loss that meet the definition of exceptional profit/loss Less: Income tax effects 1,063,069.49 Minority interests effects (after tax) 714,439.12 Total 2,295,052.34 Explanation of why the Company classified an item as exceptional profit/loss according to the definition in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Profit and Loss, or reclassified any exceptional profit/loss item given as an example in the said explanatory announcement to recurrent profit/loss □ Applicable √ Not applicable II Total number of shareholders and shareholdings of top 10 shareholders at the period-end 1. Total number of ordinary shareholders and preference shareholders who had resumed their voting right & shareholdings of top 10 shareholders at the period-end 5 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 Unit: share Total number of preference shareholders Total number of ordinary shareholders at the end 17,617 who had resumed their voting right at the 0 of the Reporting Period end of the Reporting Period Shareholdings of top 10 shareholders Number of Pledged or frozen shares Nature of Shareholding Number of Name of shareholder restricted shareholder percentage shares held Status Number shares held FORDCHEE DEVELOPMENT Foreign 29.10% 53,940,530 0 N/A 0 LIMITED corporation EUPA INDUSTRY Foreign 13.09% 24,268,840 0 N/A 0 CORPORATION LIMITED corporation GUOTAI JUNAN Foreign SECURITIES(HONGKONG) 6.05% 11,210,194 0 N/A 0 corporation LIMITED FILLMAN INVESTMENTS Foreign 2.49% 4,621,596 0 N/A 0 LIMITED corporation Foreign natural WU CHI LI 1.14% 2,110,500 0 N/A 0 person Domestic CHEN YONGQUAN 1.02% 1,888,819 0 N/A 0 natural person Foreign natural CHEN YONGQING 0.77% 1,436,149 0 N/A 0 person Foreign natural CHEN LIJUAN 0.69% 1,287,817 0 N/A 0 person SHENWAN HONGYUAN Foreign 0.63% 1,170,051 0 N/A 0 SECURITIES (HK) CO., LTD. corporation Domestic DING XIAOLUN 0.54% 1,000,000 0 N/A 0 natural person Shareholdings of top 10 non-restricted shareholders Number of non-restricted Type of shares Name of shareholder shares held at the Type Number period-end FORDCHEE DEVELOPMENT LIMITED 53,940,530 Domestically listed foreign share 53,940,530 EUPA INDUSTRY CORPORATION LIMITED 24,268,840 Domestically listed foreign share 24,268,840 GUOTAI JUNAN SECURITIES(HONGKONG) 11,210,194 Domestically listed foreign share 11,210,194 LIMITED FILLMAN INVESTMENTS LIMITED 4,621,596 Domestically listed foreign share 4,621,596 6 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 WU CHI LI 2,110,500 Domestically listed foreign share 2,110,500 CHEN YONGQUAN 1,888,819 Domestically listed foreign share 1,888,819 CHEN YONGQING 1,436,149 Domestically listed foreign share 1,436,149 CHEN LIJUAN 1,287,817 Domestically listed foreign share 1,287,817 SHENWAN HONGYUAN SECURITIES (HK) 1,170,051 Domestically listed foreign share 1,170,051 CO., LTD. DING XIAOLUN 1,000,000 Domestically listed foreign share 1,000,000 The first, the second and the fourth largest shareholders are the Company’s corporate controlling shareholders. It is unknown to the Company whether there Related or act-in-concert parties among the exists associated relationship among the shareholders above or they are shareholders above acting-in-concert entities as stipulated in the Administrative Measures on Information Disclosure of Changes in Shareholding of Listed Companies. Top 10 ordinary shareholders conducting N/A securities margin trading (if any) Did any of the top 10 ordinary shareholders or the top 10 non-restricted ordinary shareholders of the Company conduct any promissory repo during the Reporting Period? □ Yea √ No No such cases in the Reporting Period. 2. Total number of preference shareholders and shareholdings of the top 10 of them at the period-end □ Applicable √ Not applicable 7 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 Section III Significant Events I Changes in main accounting statement items and financial indicators in the Reporting Period, as well as reasons for the changes √ Applicable □ Not applicable Unit: RMB 30 September Item 31 December 2015 +/- (%) Main reason for change 2016 Monetary funds 526,886,316.72 756,223,544.72 -30.33 Purchase of more wealth management products Accounts receivable 352,359,192.16 219,609,267.40 60.45 Increase in shipment Interest receivable 1,744,323.00 1,135,305.55 53.64 Increase in term deposits Other accounts receivable 32,213,545.17 50,308,515.39 -35.97 Export tax rebates received RMB200 million was invested in wealth Other current assets 292,407,364.10 89,858,232.99 225.41 management products. Construction that has not yet been checked and Construction in progress 913,971.74 210,796.20 333.58 accepted Molds and equipment that had been prepaid for Other non-current assets 1,310,775.41 6,264,771.15 -79.08 were checked and accepted. Short-term borrowings 112,854,820.00 0.00 100.00 Short-term borrowings from banks increased. Financial liabilities at fair The assessed loss on undelivered forwards 1,000.00 8,462,500.00 -99.99 value through profit/loss occurred. Accounts received in Products were sold to customers who had paid 8,618,079.41 15,828,556.71 -45.55 advance advances Taxes and fares payable 8,520,634.41 6,158,817.21 38.35 Increase in corporate income tax provided for Interest payable 422,850.67 0.00 100.00 Interest on short-term borrowings provided for Other comprehensive Bigger difference on foreign-currency statement 5,551,286.95 3,231,050.04 71.81 income translation Same period of last Item Current period +/- (%) Main reason for change year Finance costs -12,805,713.25 -24,918,982.50 -48.61 Decrease in assessed foreign currency profit Bad-debt loss and inventory falling price loss Asset impairment loss 13,958,770.43 4,410,887.38 216.46 provided for as per the accounting policies Reversal of assessed loss on undelivered Profit on fair value changes 8,461,500.00 -3,029,390.15 379.31 forwards Return on investment -7,228,536.60 6,042,202.49 -219.63 Assessed loss on delivered forwards Increase in asset disposal loss due to plant Non-operating expense 696,278.23 134,843.80 416.36 renewal Increase in corporate income tax provided for Corporate income tax 8,493,215.93 5,736,527.36 48.06 of subsidiary Zhangzhou Tsann Kuen 8 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 Same period of last Item Current period +/- (%) Main reason for change year Net cash flows from More export tax rebates than the same period of -61,900,410.52 -105,736,860.04 -41.46 operating activities last year Net cash flows from Net increase in term deposits of restricted -394,513,599.97 -237,614,305.31 -66.03 investing activities money II Progress on significant events, as well as the influence and solutions √ Applicable □ Not applicable Contingency (1) The subsidiary of the Company -TsannKuen (Zhangzhou) Enterprise Co., Ltd. (hereafter, TKL) signed the < Product Supply Agreement> with XindaElectromechanics Co., Ltd. (hereafter, Xinda) on July 20, 2009. The validity of the contract is from July 1, 2009 to June 30, 2012. Furthermore, on 1 January 2011, they signed theand relevant , and other agreements. According to those agreements, TKL should purchase products from Xinda. TKL rejected to pay for the purchase and terminated those agreements due to the poor quality products from Xinda. On 2 November 2011, Xinda lodged petition for civil litigation to the Intermediate People’s Court of Zhangzhou for the order of Intermediate People’s Court of Zhangzhou that TKL pay for purchase from Xindaamounting to USD 479,089.06 (CNY 3,071,535.78) immediately together with the liquidated damages for delay payment and resume performance of the agreement (the value of the unperformed agreement amounting to USD 189,423.25). On 8 January 2012, TKL lodged counterclaim to the Court claiming that due to unsatisfactory quality of goods supplied by Xinda, goods supplied by TKL had been returned from clients and orders cancelled, resulting in substantial financial loss and reputation damage suffered by the TKL. TKL therefore petitioned for the cour order for relief of agreement and that Xinda shall pay to TKL liquidated damage amounting to CNY 1 million together with financial loss amounting to CNY 7.6216 million. Intermediate People’s Court of Zhangzhou made the judgement on 15 August 2013 as follow: I. TKL should pay goods payments amount USD479, 089.06 to plaintiff Xinda within 15 days from the date on which the judgement becomes effective, equivalent to CNY3, 071,535.78. II. Plaintiff Xinda and the third party BoLuoLianyuan industry Co., Ltd. (hereafter Lianyua) should jointly pay the liquidated damage for CNY1,233,399.70 to TKL within 15 days from the date on which the judgement becomes effective. III. Unperformed 10 orders entered into by TKL, Xinda and Lianyuan are declared cancelled. IV. Reject other claims partitioned by the plaintiff Xinda. V. Reject other claims partitioned by TKL. After the first judgment, both parties appealed against the judgment. Up to the end of the reporting date, the financial statement of TKL included accounts payable to Xinda amounting to USD 479,089.06. As the second hearing was yet to be finalized, TKL unrecognized contingent assets CNY1,233,399.70 to Xinda. (2) The subsidiary of the Company - TsannKuen China (Shanghai) Enterprise Co., Ltd. (hereafter, TKS) signed the Plant Leasing contract with Shanghai Liangxin Industrial Co., Ltd. (hereafter, SHLX) at November 2007, and leased the plant (including plant affiliated land, ground buildings and related ancillary equipment, etc) located in No. 4407 Caoan Road Jiading District, Shanghai to SHLX. The real estate certificate of leasehold is Hu Fangdi Jia Zi (2006) No. 011945, the lease period is from November 2007 to 9 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 November 2019, the purpose to the lessee for the use of legitimate factory and storage. The provisions of contract point out if the lessee need to build plant because of production should to obtain government and relevant authorities’ agreements. Except to confiscate the deposit, the lessor can terminate the contract and does not have to undertake any responsibility if the lessee sublease the leasehold, make improvement or addition to the leasehold without to obtain the written consent from lessor. TKS submitted the civil action to Shanghai Jiading District People's Court by cause of action “the lessee SHLX decorated and subleased the leasehold to Shanghai Hujia Fruit Sales Limited Company (hereafter, SHHJ) without to obtain the written consent from lessor” on 28 October 2015, and required early termination of the Plant Leasing contract with SHLX, and required SHHJ to terminate construction and to repristinate the leasehold. In July 2016, TKS appealed to Shanghai Jiading District People's Court by cause of requiring SHXL repristinate the leasehold. Up to the end of the reporting date, the civil action is still in process. Index of the interim report disclosure Summary of the significant events Disclosure date website The progress events of the appeal between the Company’s controlling subsidiary—Zhangzhou Tsann 22 Feb. 2014 www.cninfo.com.cn Kuen and Xinda Motor 10 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 III Commitments of the Company, its shareholders, actual controller, acquirer, directors, supervisors, senior management or other related parties fulfilled in the Reporting Period or ongoing at the period-end √ Applicable □ Not applicable Commit Date of Term of Type of Commitment ment Contents commitment commitmen Fulfillment commitment maker making t Commitments made in share reform Commitments made in acquisition documents or shareholding alteration documents Commitments made in time of asset restructuring Commitments made in time of IPO or refinancing Commitments concerning stock ownership incentive Based on the confidence on the continuous and stable The Company’s stocks development of the Company, it committed to increase the resumed trading on 31 Dec. shareholding if the Company’s stock price lower than HKD2.40 2012, but the Company’s FILLM per share after the implementation of the shares contraction and stock price hasn’t met the AN Commitments trading resumption, and it would increase no more than 2% shares condition for shareholding INVEST on the (i.e.3,707,800 shares ) of the total shares issued by the Company Long-term Other commitments made to minority shareholders 28 Dec. 2012 increase since the date of MENTS shareholding within one year since the date of initial shareholding increase. If effective trading resumption, LIMITE increase the plan on increasing holding 2% shares of the total shares is FILLMAN Investment D completed, if the stock price hasn’t reached the target price, it Limited hasn’t implemented will perform relevant approval procedures, and propose to CSRC the shareholding increase on continuous implementation of shareholding increase by plan. exemption of offering. Executed on time Yes IV Performance forecast for Y2016 Warning of possible loss or considerable YoY change in the accumulative net profit made during the year-beginning to the end of the next reporting period, as well as the reasons □ Applicable √ Not applicable V Securities investment □ Applicable √ Not applicable 11 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 VI Investment in derivative financial instruments √ Applicable □ Not applicable Unit: RMB’0,000 Amount of Proportion of the the closing Actual Related-party Type of Opening Closing investment Initial investment Purchased Sold amount provision gain/loss in Operator Relation transaction derivative Beginning date Ending date investment for investment amount in the amount amount reporting or not investment amount impairment amount Company’s period losses closing net assets (%) Forward 30 September Bank No No 29,825.70 1 January 2016 27,816.19 2,003.43 28,488.78 1,336.92 2.27 122.45 exchange 2016 Total 29,825.70 27,816.19 2,003.43 28,488.78 1,336.92 2.27 122.45 Capital source for derivative investment Self-owned funds Lawsuit situations (if applicable) N/A Disclosure date of the board announcement approving 2013/3/12 the 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 net 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, the business operation and risk management mechanisms for derivative investment. operation 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 Board of Directors annually. The Company and its subsidiaries only need to submit to the Board of Directors of the subsidiaries. (5) Loss limit: The investment loss on a single derivative and all the investment loss shall not exceed 20% of the total investment amount. 12 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 (6) Audit system: The audit department audits derivative product trading periodically and submits audit reports to relevant units. (1) Profit/loss on delivered derivative financial instruments was RMB-7.2370 million in the Reporting Period, and evaluated loss on undelivered Changes of market prices or fair values in the reporting derivatives was RMB8.4615 million in the Reporting Period, including the reversed evaluated loss of RMB8.4625 million on undelivered period of the invested derivatives. And the analysis on forward exchange instruments of last year. the fair value of the derivatives should include the (2) The former contracted bank provided monthly sheets of estimated exchange rates for the undue contracted forward exchanges on the last specific use methods and the relevant assumptions and trading day of the month. 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 reporting derivatives in the reporting period compared to the period and those in the last reporting period. previous reporting period The Company has carried out a strict internal assessment for the financial derivative business and has established a corresponding supervision Specific opinion from independent directors on the mechanism. We are of the opinion that the financial derivative business conducted by the Company is fairly necessary in its routine operation Company’s derivatives investment and risk control and is in compliance with relevant laws and regulations, with the risks controllable. 13 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 VII Visits paid to the Company for purposes of research, communication, interview, etc. during the Reporting Period √ Applicable □ Inapplicable Date of visit Way of visit Type of visitor About Inquiry the reform of B share, and the Company’s equity 2016-02-01 By phone Individual transfer of TsannKuen China (Shanghai) Enterprise Co., Ltd. Inquiry the Company’s equity transfer of TsannKuen China 2016-02-02 By phone Individual (Shanghai) Enterprise Co., Ltd. Inquiry the financial problem of the Report for the First Quarter 2016-05-09 By phone Individual of 2016, and the equity transfer of TsannKuen China (Shanghai) Enterprise Co., Ltd., material was not offered. Inquiry the equity transfer of TsannKuen China (Shanghai) 2016-05-13 By phone Individual Enterprise Co., Ltd., material was not offered. Inquiry the operation situation of the Company, material was 2016-05-17 By phone Individual not offered. 1.Investor: Known about the main business of the Company Reply by the Company: so far, the main business of the Company was the manufacture of small household appliance product, and the categories respectively were: baked device iron motor coffee pot 2. Investor: Known about the client relations Reply by the Company: so far, the product of the Company mainly was export sales, 90% of the total, the main clients were from Europe, America and Asia. 3.Investor: Known about the influence of RMB devaluation to the Company Reply by the Company: it is benefit for the export enterprise, 2016-09-22 Field research Individual however, foreign will bargain due to RMB devaluation. 4. Investor: Known about the structure of small household appliance industry. Reply by the Company: the fierce competition structure of small household appliance industry had formed, only consistently innovate and form scale, enterprise can continue exist. 5. Investor: Known about the future development plan of the Company Reply by the Company: the Company keep stable and healthy operation model, enlarge R&D and the promotion of new products. 6. Guide researcher visit the production line 7. Material was not offered. Inquiry the production and operation situation of the Company, 2016-09-25 By phone Individual and the rental situation of the factory of the Company in Xiamen. VIII Illegal provision of guarantees for external parties □ Applicable √ Not applicable IX Occupation of the Company’s funds for non-operating purposes by the controlling shareholder and its related parties □ Applicable √ Not applicable 14 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 Section IV Financial Statements I Financial statements 1. Consolidated balance sheet Prepared by Tsann Kuen (China) Enterprise Co., Ltd. Unit: RMB Item Closing balance Opening balance Current assets: Monetary funds 526,886,316.72 756,223,544.72 Settlement reserves Intra-group lendings Financial assets measured at fair value of which changes are recorded in current profits and losses Derivative financial assets Notes receivable 1,179,064.09 1,483,710.00 Accounts receivable 352,359,192.16 219,609,267.40 Accounts paid in advance 12,226,627.46 16,919,366.87 Premiums receivable Reinsurance premiums receivable Receivable reinsurance contract reserves Interest receivable 1,744,323.00 1,135,305.55 Dividend receivable Other accounts receivable 32,213,545.17 50,308,515.39 Financial assets purchased under agreements to resell Inventories 195,299,866.47 264,377,787.95 Assets held for sale Non-current assets due within 1 year Other current assets 292,407,364.10 89,858,232.99 Total current assets 1,414,316,299.17 1,399,915,730.87 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 43,042,608.63 46,185,216.68 Fixed assets 177,318,162.84 177,049,198.02 Construction in progress 913,971.74 210,796.20 Engineering materials Disposal of fixed assets Production biological assets Oil-gas assets 15 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 Item Closing balance Opening balance Intangible assets 18,004,255.56 14,136,233.55 R&D expense Goodwill Long-term deferred expenses 3,464,232.48 3,874,638.99 Deferred income tax assets 14,267,558.33 14,981,243.65 Other non-current assets 1,310,775.41 6,264,771.15 Total of non-current assets 258,361,564.99 262,742,098.24 Total assets 1,672,677,864.16 1,662,657,829.11 Current liabilities: Short-term borrowings 112,854,820.00 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 changes are 1,000.00 8,462,500.00 recorded in current profits and losses Derivative financial liabilities Notes payable 22,353,751.51 26,974,641.74 Accounts payable 491,148,634.33 575,930,730.06 Accounts received in advance 8,618,079.41 15,828,556.71 Financial assets sold and repurchased Handling charges and commissions payable Payroll payable 44,696,054.11 43,460,873.84 Tax payable 8,520,634.41 6,158,817.21 Interest payable 422,850.67 Dividend payable Other accounts payable 59,558,033.06 65,108,735.70 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 748,173,857.50 741,924,855.26 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 249,658.70 242,702.95 16 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 Item Closing balance Opening balance Other non-current liabilities Total non-current liabilities 249,658.70 242,702.95 Total liabilities 748,423,516.20 742,167,558.21 Owners’ equity: Share capital 185,391,680.00 185,391,680.00 Other equity instruments Of which: preference shares Perpetual bonds Capital reserves 296,808,965.78 282,916,698.67 Less: Treasury stock Other comprehensive income 5,551,286.95 3,231,050.04 Specific reserves Surplus reserves 20,962,521.51 20,962,521.51 Provisions for general risks Retained profits 80,897,487.01 69,522,460.31 Total equity attributable to owners of the Company 589,611,941.25 562,024,410.53 Minority interests 334,642,406.71 358,465,860.37 Total owners’ equity 924,254,347.96 920,490,270.90 Total liabilities and owners’ equity 1,672,677,864.16 1,662,657,829.11 Legal representative: Pan Zhirong Chief of the accounting work: Feng Zhiqing Chief of the accounting organ: Feng Zhiqing 17 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 2. Balance sheet of the Company Unit: RMB Item Closing balance Opening balance Current Assets: Monetary funds 6,220,181.61 7,750,025.58 Financial assets measured at fair value and of which changes are recorded into current gains and losses Derivative financial assets Notes receivable 628,006.96 589,835.00 Accounts receivable 30,469,313.96 23,997,156.18 Accounts paid in advance 184,085.02 1,202,214.48 Interest receivable Dividend receivable Other accounts receivable 1,671,574.82 3,010,844.58 Inventories 13,856,225.80 11,151,650.93 Assets held for sale Non-current assets due within 1 year Other current assets 156,146.92 55,278.38 Total current assets 53,185,535.09 47,757,005.13 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 922,914,701.56 985,814,030.83 Investing real estate 36,501,059.09 38,994,677.59 Fixed assets 2,041,650.10 2,328,116.94 Construction in progress Engineering materials Disposal of fixed assets Production biological assets Oil-gas assets Intangible assets 89,999.99 110,249.99 R&D expense Goodwill Long-term deferred expenses 153,866.24 405,866.33 Deferred income tax assets 1,821,382.64 18,053,868.00 Other non-current assets Total of non-current assets 963,562,659.62 1,045,746,809.68 Total assets 1,016,748,194.71 1,093,503,814.81 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 82,363,371.14 66,922,540.32 Accounts received in advance 463,827.62 2,664,965.52 Payroll payable 2,521,315.44 3,390,321.73 18 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 Item Closing balance Opening balance Tax payable -21,118.68 966,665.47 Interest payable Dividend payable Other accounts payable 301,868,241.52 461,663,363.89 Liabilities held for sale Non-current liabilities due within 1 year Other current liabilities Total current liabilities 387,195,637.04 535,607,856.93 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 387,195,637.04 535,607,856.93 Owners’ equity: Share capital 185,391,680.00 185,391,680.00 Other equity instruments Of which: preference shares Perpetual bonds Capital reserves 271,490,289.82 271,490,289.82 Less: Treasury stock Other comprehensive income Specific reserves Surplus reserves 20,962,521.51 20,962,521.51 Retained profits 151,708,066.34 80,051,466.55 Total owners’ equity 629,552,557.67 557,895,957.88 Total liabilities and owners’ equity 1,016,748,194.71 1,093,503,814.81 Legal representative: Pan Zhirong Chief of the accounting work: Feng Zhiqing Chief of the accounting organ: Feng Zhiqing 19 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 3. Consolidated income statement for the Reporting Period Unit: RMB Item Jul.-Sept. 2016 Jul.-Sept. 2015 I. Operating revenues 530,619,224.33 579,140,206.32 Including: Sales income 530,619,224.33 579,140,206.32 Interest income Premium income Handling charge and commission income II. Operating costs 510,540,658.88 550,398,995.16 Including: Cost of sales 436,505,858.96 496,371,056.95 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 2,117,191.24 1,188,384.99 Selling and distribution expenses 21,592,482.33 22,086,718.55 Administrative expenses 38,444,945.51 43,158,926.15 Financial expenses -2,839,400.73 -15,713,245.07 Asset impairment loss 14,719,581.57 3,307,153.59 Add: Gain/(loss) from change in fair value (“-” means loss) 2,816,450.00 -11,830,300.00 Gain/(loss) from investment (“-” means loss) -2,794,098.65 11,533.67 Including: share of profits in associates and joint ventures Foreign exchange gains (“-” means loss) III. Business profit (“-” means loss) 20,100,916.80 16,922,444.83 Add: non-operating income 1,411,057.97 1,625,298.40 Including: Gains on disposal of non-current assets 234,014.13 611,012.33 Less: non-operating expense 634,553.26 16,648.18 Including: Losses on disposal of non-current assets 633,914.10 12,219.06 IV. Total profit (“-” means loss) 20,877,421.51 18,531,095.05 Less: Income tax expense 5,735,890.00 2,435,769.58 V. Net profit (“-” means loss) 15,141,531.51 16,095,325.47 Of which: net profit achieved by the merged parties before the -1,506,531.88 business mergers Net profit attributable to owners of the Company 12,124,393.34 11,830,451.09 Minority shareholders’ income 3,017,138.17 4,264,874.38 VI. After-tax net amount of other comprehensive incomes 1,037,492.82 3,731,285.52 After-tax net amount of other comprehensive incomes attributable to 778,119.62 2,798,464.14 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 778,119.62 2,798,464.14 gains and losses 20 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 Item Jul.-Sept. 2016 Jul.-Sept. 2015 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 778,119.62 2,798,464.14 6. Other After-tax net amount of other comprehensive incomes attributable to 259,373.20 932,821.38 minority shareholders VII. Total comprehensive incomes 16,179,024.33 19,826,610.99 Attributable to owners of the Company 12,902,512.96 14,628,915.23 Attributable to minority shareholders 3,276,511.37 5,197,695.76 VIII. Earnings per share (I) Basic earnings per share 0.06 0.06 (II) Diluted earnings per share 0.06 0.06 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 RMB0.00, with the corresponding amount for the last period being RMB-1,506,531.88. Legal representative: Pan Zhirong Chief of the accounting work: Feng Zhiqing Chief of the accounting organ: Feng Zhiqing 21 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 4. Income statement of the Company for the Reporting Period Unit: RMB Item Jul.-Sept. 2016 Jul.-Sept. 2015 I. Operating revenues 29,536,460.04 13,495,092.82 Less: cost of sales 23,381,737.26 9,569,195.18 Business taxes and surcharges 237,633.66 Sales expense 3,573,257.71 1,260,115.65 Administrative expenses 3,274,027.19 3,823,193.17 Financial expenses -27,930.83 -34,646.87 Asset impairment loss 1,107,423.60 310,192.06 Add: Gain/(loss) from change in fair value (“-” means loss) Gain/(loss) from investment (“-” means loss) Including: share of profits in associates and joint ventures II.Business profit -1,772,054.89 -1,670,590.03 Add: non-operating income 20,599.04 36,918.98 Including: Gains on disposal of non-current assets 23,533.98 Less: non-operating expense 12,952.66 Including: Losses on disposal of non-current assets 12,952.66 III. Total profit (“-” means loss) -1,751,455.85 -1,646,623.71 Less: Income tax expense 67,228.41 -410,371.60 IV. Net profit (“-” means loss) -1,818,684.26 -1,236,252.11 V. After-tax net amount of other comprehensive incomes After-tax net amount of other comprehensive incomes 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 (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 VI. Total comprehensive incomes -1,818,684.26 -1,236,252.11 VII. Earnings per share (I) Basic earnings per share (II) Diluted earnings per share Legal representative: Pan Zhirong Chief of the accounting work: Feng Zhiqing Chief of the accounting organ: Feng Zhiqing 22 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 5. Consolidated income statement for the period from the year-beginning to the end of the Reporting Period Unit: RMB Item Jan.-Sept. 2016 Jan.-Sept. 2015 I. Operating revenues 1,328,727,913.60 1,474,334,364.39 Including: Sales income 1,328,727,913.60 1,474,334,364.39 Interest income Premium income Handling charge and commission income II. Operating costs 1,287,099,381.09 1,442,079,902.65 Including: Cost of sales 1,099,323,024.06 1,267,854,353.96 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 5,093,070.40 4,272,747.17 Selling and distribution expenses 62,334,643.87 63,210,847.87 Administrative expenses 119,195,585.58 127,250,048.77 Financial expenses -12,805,713.25 -24,918,982.50 Asset impairment loss 13,958,770.43 4,410,887.38 Add: Gain/(loss) from change in fair value (“-” means loss) 8,461,500.00 -3,029,390.15 Gain/(loss) from investment (“-” means loss) -7,228,536.60 6,042,202.49 Including: share of profits in associates and joint ventures Foreign exchange gains (“-” means loss) III. Business profit (“-” means loss) 42,861,495.91 35,267,274.08 Add: non-operating income 5,760,107.37 4,854,787.57 Including: Gains on disposal of non-current assets 776,541.14 1,520,804.68 Less: non-operating expense 696,278.23 134,843.80 Including: Losses on disposal of non-current assets 651,267.92 129,414.68 IV. Total profit (“-” means loss) 47,925,325.05 39,987,217.85 Less: Income tax expense 8,493,215.93 5,736,527.36 V. Net profit (“-” means loss) 39,432,109.12 34,250,690.49 Of which: net profits realized by combined party before -2,224,231.59 -2,591,172.52 combination Net profit attributable to owners of the Company 29,914,194.70 26,127,995.79 Minority shareholders’ income 9,517,914.42 8,122,694.70 VI. After-tax net amount of other comprehensive incomes 3,093,649.21 3,553,546.43 After-tax net amount of other comprehensive incomes attributable to 2,320,236.91 2,665,159.82 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 23 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 Item Jan.-Sept. 2016 Jan.-Sept. 2015 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 2,320,236.91 2,665,159.82 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 2,320,236.91 2,665,159.82 6. Other After-tax net amount of other comprehensive incomes attributable to 773,412.30 888,386.61 minority shareholders VII. Total comprehensive incomes 42,525,758.33 37,804,236.92 Attributable to owners of the Company 32,234,431.61 28,793,155.61 Attributable to minority shareholders 10,291,326.72 9,011,081.31 VIII. Earnings per share (I) Basic earnings per share 0.16 0.14 (II) Diluted earnings per share 0.16 0.14 Where business mergers under the same control occurred in the current period, the net profit achieved by the merged parties before the business mergers was RMB-2,224,231.59, with the corresponding amount for the same period of last year being RMB-2,591,172.52. Legal representative: Pan Zhirong Chief of the accounting work: Feng Zhiqing Chief of the accounting organ: Feng Zhiqing 24 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 6. Income statement of the Company for the period from the year-beginning to the end of the Reporting Period Unit: RMB Item Jan.-Sept. 2016 Jan.-Sept. 2015 I. Operating revenues 93,820,642.20 92,169,899.28 Less: cost of sales 74,793,216.91 73,644,929.63 Business taxes and surcharges 376,508.47 765,552.24 Sales expense 8,285,937.55 5,460,113.47 Administrative expenses 9,681,328.73 11,147,771.28 Financial expenses -18,902.91 451,509.01 Asset impairment loss 2,011,424.52 37,341.13 Add: Gain/(loss) from change in fair value (“-” means loss) Gain/(loss) from investment (“-” means loss) 107,582,142.80 28,286,287.22 Including: share of profits in associates and joint ventures II.Business profit 106,273,271.73 28,948,969.74 Add: non-operating income 193,831.54 96,763.54 Including: Gains on disposal of non-current assets 23,533.98 Less: non-operating expense 12,952.66 Including: Losses on disposal of non-current assets 12,952.66 III. Total profit (“-” means loss) 106,467,103.27 29,032,780.62 Less: Income tax expense 16,271,335.48 460,105.53 IV. Net profit (“-” means loss) 90,195,767.79 28,572,675.09 V. After-tax net amount of other comprehensive incomes After-tax net amount of other comprehensive incomes 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 (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 VI. Total comprehensive incomes 90,195,767.79 28,572,675.09 VII. Earnings per share (I) Basic earnings per share (II) Diluted earnings per share Legal representative: Pan Zhirong Chief of the accounting work: Feng Zhiqing Chief of the accounting organ: Feng Zhiqing 25 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 7. Consolidated cash flow statement for the period from the year-beginning to the end of the Reporting Period Unit: RMB Item Jan.-Sept. 2016 Jan.-Sept. 2015 I. Cash flows from operating activities: Cash received from sale of commodities and rendering of service 1,169,919,248.52 1,314,183,043.24 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 142,146,912.55 102,344,195.61 Other cash received relating to operating activities 50,653,102.85 46,931,326.34 Subtotal of cash inflows from operating activities 1,362,719,263.92 1,463,458,565.19 Cash paid for goods and services 1,061,333,471.03 1,181,254,376.36 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 187,990,699.88 201,712,346.71 Various taxes paid 18,642,612.06 18,030,903.40 Other cash payment relating to operating activities 156,652,891.47 168,197,798.76 Subtotal of cash outflows from operating activities 1,424,619,674.44 1,569,195,425.23 Net cash flows from operating activities -61,900,410.52 -105,736,860.04 II. Cash flows from investing activities: Cash received from withdrawal of investments -7,237,010.60 110,701,869.16 Cash received from return on investments 8,474.00 1,343,333.33 26 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 Item Jan.-Sept. 2016 Jan.-Sept. 2015 Net cash received from disposal of fixed assets, intangible assets and other 6,333,188.47 3,340,201.65 long-term assets Net cash received from disposal of subsidiaries or other business units Other cash received relating to investing activities 105,156,640.61 836,698,575.78 Subtotal of cash inflows from investing activities 104,261,292.48 952,083,979.92 Cash paid to acquire fixed assets, intangible assets and other long-term 47,599,553.23 55,254,470.82 assets Cash paid for investment 206,278,499.22 330,000,000.00 Net increase of pledged loans Net cash paid to acquire subsidiaries and other business units Other cash payments relating to investing activities 244,896,840.00 804,443,814.41 Subtotal of cash outflows from investing activities 498,774,892.45 1,189,698,285.23 Net cash flows from investing activities -394,513,599.97 -237,614,305.31 III. Cash Flows from Financing Activities: Cash received from capital contributions Including: Cash received from minority shareholder investments by subsidiaries Cash received from borrowings 111,188,590.00 583,727,183.61 Cash received from issuance of bonds Other cash received relating to financing activities Subtotal of cash inflows from financing activities 111,188,590.00 583,727,183.61 Repayment of borrowings 434,082,752.61 Cash paid for interest expenses and distribution of dividends or profit 32,363,500.69 37,956,939.13 Including: dividends or profit paid by subsidiaries to minority 13,824,332.69 8,485,886.15 shareholders Other cash payments relating to financing activities Sub-total of cash outflows from financing activities 32,363,500.69 472,039,691.74 Net cash flows from financing activities 78,825,089.31 111,687,491.87 IV. Effect of foreign exchange rate changes on cash and cash equivalents 8,511,493.78 17,613,773.10 V. Net increase in cash and cash equivalents -369,077,427.40 -214,049,900.38 Add: Opening balance of cash and cash equivalents 675,803,904.11 469,965,448.01 VI. Closing balance of cash and cash equivalents 306,726,476.71 255,915,547.63 Legal representative: Pan Zhirong Chief of the accounting work: Feng Zhiqing Chief of the accounting organ: Feng Zhiqing 27 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 8. Cash flow statement of the Company for the period from the year-beginning to the end of the Reporting Period Unit: RMB Item Jan.-Sept. 2016 Jan.-Sept. 2015 I. Cash flows from operating activities: Cash received from sale of commodities and rendering of service 87,550,946.03 108,538,211.67 Tax refunds received Other cash received relating to operating activities 31,327,817.44 33,426,268.98 Subtotal of cash inflows from operating activities 118,878,763.47 141,964,480.65 Cash paid for goods and services 75,355,128.31 95,873,694.77 Cash paid to and for employees 9,492,255.28 9,089,806.07 Various taxes paid 4,660,056.78 5,331,450.02 Other cash payment relating to operating activities 182,830,976.43 25,969,329.55 Subtotal of cash outflows from operating activities 272,338,416.80 136,264,280.41 Net cash flows from operating activities -153,459,653.33 5,700,200.24 II. Cash flows from investing activities: Cash received from withdrawal of investments 130,000,000.00 Cash received from return on investments 41,481,472.07 28,286,287.22 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 171,481,472.07 28,286,287.22 Cash paid to acquire fixed assets, intangible assets and other 13,798.00 2,565,567.30 long-term assets Cash paid for investment 1,000,000.00 Net cash paid to acquire subsidiaries and other business units Other cash payments relating to investing activities Subtotal of cash outflows from investing activities 1,013,798.00 2,565,567.30 Net cash flows from investing activities 170,467,674.07 25,720,719.92 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 28 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 Item Jan.-Sept. 2016 Jan.-Sept. 2015 Subtotal of cash inflows from financing activities Repayment of borrowings Cash paid for interest expenses and distribution of dividends or 18,539,168.00 27,883,693.93 profit Other cash payments relating to financing activities Sub-total of cash outflows from financing activities 18,539,168.00 27,883,693.93 Net cash flows from financing activities -18,539,168.00 -27,883,693.93 IV. Effect of foreign exchange rate changes on cash and cash 1,303.29 10,618.40 equivalents V. Net increase in cash and cash equivalents -1,529,843.97 3,547,844.63 Add: Opening balance of cash and cash equivalents 7,750,025.58 3,236,270.65 VI. Closing balance of cash and cash equivalents 6,220,181.61 6,784,115.28 Legal representative: Pan Zhirong Chief of the accounting work: Feng Zhiqing Chief of the accounting organ: Feng Zhiqing 29 Tsann Kuen (China) Enterprise Co., Ltd. Third Quarter Report 2016 II Auditor’s report Is this Report audited? □ Yes √ No This Report is unaudited. 30