Abstract of 2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd. Stock code: 200512 Stock name: TKC-B Announcement No.: 2019-032 TSANN KUEN (CHINA) ENTERPRISE CO., LTD. ABSTRACT OF 2019 SEMI-ANNUAL REPORT I. Important reminders This Abstract is based on the full text of the Semi-Annual Report. In order for a full understanding of the operating results, financial condition and future development planning of the Company, investors are kindly reminded to read the full text carefully on the media designated by China Securities Regulatory Commission (the “CSRC”). This Abstract is prepared in both Chinese and English. Should there be any discrepancy between the two versions, the Chinese version shall prevail. Independent auditor ’s modified opinion □ Applicable √ Inapplicable Preplan for profit distribution to common shareholders or turning capital reserve into share capital for Reporting Period which has been reviewed and approved at board meeting □ Applicable √ Not applicable The Company plans not to distribute cash dividends or bonus shares or turn capital reserve into share capital. Preplan for profit distribution to preference shareholders for reporting period which has been reviewed and approved at board meeting: □ Applicable √ Not applicable II. Company profile 1. Stock profile Stock name TKC-B Stock code 200512 Stock exchange Shenzhen Stock Exchange For contact Board Secretary Securities Representative Name Sun Meimei Dong Yuanyuan TSANN KUEN Industrial Park, Taiwanese TSANN KUEN Industrial Park, Taiwanese Office address Investment Zone, Zhangzhou, Fujian Province, Investment Zone, Zhangzhou, Fujian Province, P.R.China P.R.China Tel. 0596-6268161 0596-6268103 E-mail address mm_sun@tkl.tsannkuen.com yy_dong@tkl.tsannkuen.com 2. Accounting and financial highlights Whether the Company performed any retrospective adjustment to or restatement of its accounting data due to change of accounting policy, correction of accounting error, etc. √ Yes □ No Reason for retrospective adjustment or restatement 1 Abstract of 2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd. Change of accounting policy Unit: RMB Yuan Same period of Item Reporting Period YoY +/-(%) last year Operating revenue 929,448,983.38 691,510,505.23 34.41 Net profit attributable to shareholders of the 47,292,567.95 -28,341,686.77 266.87 Company Net profit attributable to shareholders of the 9,863,734.45 -31,209,045.03 131.61 Company before extraordinary gains and losses Net cash flows from operating activities 4,167,209.43 -119,821,570.49 103.48 Basic EPS (RM B Yuan/share) 0.26 -0.15 273.33 Diluted EPS (RM B Yuan/share) 0.26 -0.15 273.33 Weighted average ROE (%) 7.02 -4.47 11.49 As at the end of last As at the end of the +/- (%) Item year Reporting Period Original Restated Total assets 1,866,046,665.40 1,842,514,750.64 1.28 Net assets attributable to shareholders of the 689,643,586.10 648,801,684.35 6.29 Company Total shares of the Company as at closure of the last trading day before the disclosure of this Report: Total shares of the Company as at closure of the last trading day before the 185,391,680 disclosure of this Report (share) Fully diluted EPS based on the latest total shares (RMB Yuan/share) 0.26 3. Shareholders and their shareholdings Unit: share Total number of common Total number of preference shareholders with 16,023 0 shareholders at the period-end resumed voting rights at the period-end Greater than 5% or top 10 common shareholders Total Number Pledged or Increase/dec Number of frozen shares common of Nature of Shareholdin rease during unrestricted Name of shareholder shares held restricted Status Numb shareholder g percentage the reporting common at the common of er of period shares period-end shares shares shares FORDCHEE Foreign 29.10% 53,940,530 No change 0 53,940,530 N/A 0 DEVELOPM ENT LIM ITED corporation EUPA INDUSTRY Foreign 13.09% 24,268,840 No change 0 24,268,840 N/A 0 CORPORATION LIM ITED corporation GUOTAI JUNAN Foreign SECURITIES(HONGKONG) 4.95% 9,181,382 -15,067 0 9,181,382 N/A 0 corporation LIM ITED FILLM AN INVESTM ENTS Foreign 2.49% 4,621,596 No change 0 4,621,596 N/A 0 LIM ITED corporation SHENWAN HONGYUAN Foreign SECURITIES (H.K.) 1.09% 2,016,752 60,000 0 2,016,752 N/A 0 corporation LIM ITED Domestic CHEN YONGQUAN 1.03% 1,900,776 No change 0 1,900,776 N/A 0 individual Foreign CHEN YONGQING 0.83% 1,538,949 No change 0 1,538,949 N/A 0 individual 2 Abstract of 2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd. Foreign CHEN LIJUAN 0.75% 1,381,334 No change 0 1,381,334 N/A 0 individual Domestic DING XIAOLUN 0.63% 1,173,500 25,500 0 1,173,500 N/A 0 individual Domestic FAN JIE 0.38% 697,185 New 0 697,185 N/A 0 individual Strategic investor or general corporation becoming a top ten shareholder due to N/A placing of new shares The first, the second and the fourth shareholders are the Company ’s corporate controlling Related parties or acting-in-concert parties shareholders. It is unknown whether the other shareholders of tradable shares are related among the shareholders above parties or acting-in-concert parties as prescribed in the Administrative M et hods for Disclosure of the Shareholding Changes of the Listed Company ’s Shareholders. Top ten unrestricted common shareholders Number of unrestricted Type of shares Name of shareholder common shares held at the period-end Type Number FORDCHEE DEVELOPM ENT LIM ITED 53,940,530 Domestically listed foreign shares 53,940,530 EUPA INDUSTRY CORPORATION LIM ITED 24,268,840 Domestically listed foreign shares 24,268,840 GUOTAI JUNAN 9,181,382 Domestically listed foreign shares 9,181,382 SECURITIES(HONGKONG) LIM ITED FILLM AN INVESTM ENTS LIM ITED 4,621,596 Domestically listed foreign shares 4,621,596 SHENWAN HONGYUAN 2,016,752 Domestically listed foreign shares 2,016,752 SECURITIES (H.K.) LIM ITED CHEN YONGQUAN 1,900,776 Domestically listed foreign shares 1,900,776 CHEN YONGQING 1,538,949 Domestically listed foreign shares 1,538,949 CHEN LIJUAN 1,381,334 Domestically listed foreign shares 1,381,334 DING XIAOLUN 1,173,500 Domestically listed foreign shares 1,173,500 FAN JIE 697,185 Domestically listed foreign shares 697,185 Explanation on associated relationship or/and The first, the second and the fourth shareholders are the Company ’s corporate persons acting in concert among the top ten controlling shareholders. It is unknown whether the other shareholders of public shares unrestricted common shareholders and between are related parties or acting-in-concert parties as prescribed in the Administrative the top ten unrestricted common shareholders M ethods for Disclosure of the Shareholding Changes of the Listed Company ’s and the top ten common shareholders Shareholders. Explanation on the top 10 common shareholders N/A participating in the margin trading business Did any of the top ten common shareholders or the top ten unrestricted common shareholders of the Company conduct any promissory repo during the Reporting Period? □ Yea √ No No such cases in the Reporting Period. 4. Change of the controlling shareholder or the actual controller Change of the controlling shareholder in the Reporting Period □ Applicable √ Not applicable The controlling shareholder did not change in the Reporting Period. Change of the actual controller in the Reporting Period □ Applicable √ Not applicable The actual controller did not change in the Reporting Period. 3 Abstract of 2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd. 5. Number of preference shareholders and shareholdings of top 10 of them □ Applicable √ Not applicable 6. Corporate bonds Are there any corporate bonds publicly offered and listed on the stock exchange, which were undue before the approval date of this Report or were due but could not be redeemed in full? No. III. Performance discussion & analysis 1. Performance review for the Reporting Period Is the Company subject to any disclosure requirements for special industries? No. For the reporting period, we achieved operating revenue of RMB929 million, up 34.41% from RMB692 million of the same period of last year, and a net profit of RMB47 million, up 266.87% from RMB-28 million of the same period of last year. The overall profit increased year-on-year primarily driven by a subsidy for the expropriation of the phase II plant of subsidiary Tsann Kuen China (Shanghai) Enterprise Co., Ltd. (“TKS”), lead time adjustments by certain customers on their orders and the receipt of more purchase orders in the current period. We will carry on with the simplification and transformation strategies. We are checking the structures and functions of our departments of development, procurement, manufacturing and marketing to make sure the implementation of lean production. Meanwhile, new raw materials, techniques and manufacturing equipment are being brought in to increase our yield rate and production efficiency. Upholding the strategy of innovation-driven transformation and strengthening execution in innovation, output and differentiation to deal with competition, we aim to provide products with multi-functions, high added value and high quality for customers. As the smart control technology grows more mature and is being used more widely and people’s living standards are improving, they are looking for better home appliances, which makes the rapid development of smart appliances a must. Consumers are no longer looking for merely the functions of the appliances, but also a quality in the appliances to improve their living standards. The household appliance industry is all about how to help people live a better life. Only by providing convenient, smart, health-improving and delicious-food-cooking solutions, can a household appliance manufacture keeps on developing. Meanwhile, in view of the rapid growth in the domestic market driven by the international trade environment, we promote innovation in R&D to create more intimacy with customers, support domestic sales with overseas manufacturing bases, and create market demand by developing smart-home and low-carbon products, which effectively expands our market share and strengthens our operating revenue and profitability. 4 Abstract of 2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd. 2. Matters related to financial reporting (1) Changes in accounting policy, accounting estimation and measurement methods compared to last accounting period √ Applicable □ Not applicable Changes in accounting policies ① Changes in accounting policies due to the implementation of the new Accounting Standards for Business Enterprises The Ministry of Finance issued the Accounting Standards for Business Enterprises No.22-Recognition and Measurement of Financial Instruments (revised in 2017) (CaiKuai [2017]No.7), Accounting Standards for Bus iness Enterprises No.23-Transfer of Financial Assets (revised in 2017) (CaiKuai[2017]No.8), and Accounting Standards for Business Enterprises No.24-Hedge Accounting (revised in 2017) (CaiKuai[2017]No.9) on 31 March 2017, and issued the Accounting Standards for Business Enterprises No.37-Presentation of Financial Instruments (revised in 2017) (CaiKuai[2017]No.14) on 2 May 2017(collectively referred to as “New Financial Instruments Standards”). Enterprises domestically listed are required to implement the New Financial Instruments Standards since 1 January 2019. On 16 March 2019, the Company held the second meeting of the Board in 2019 and the first meeting of the Supervisory Committee in 2019 on which the Proposal on Change of Accounting Policies was reviewed and approved and the independent directors and supervisors have given their independent opinions of consent on the proposal. All financial assets confirmed pursuant to New Financial Instrument Standards shall be measured as per the amortized cost or fair value subsequently. On the execution date of New Financial Instrument Standards, the business model of financial assets is evaluated and managed on the basis of existing fact and condition of the Company on that day and the contractual cash flow characteristics of the financial assets are evaluated on the basis of the fact and condition upon the initial recognition of financial assets. The financial assets are divided into three categories: The financial assets measured as per the amortized costs, measured as per the fair value with the change included in other comprehensive incomes, measured as per the fair value with the change included in the current profit and loss. Wherein, for the equity instrument investment measured as per the fair value with change included in other comprehensive incomes, when such financial assets carry out the derecognition, the accumulative gains or loss included in other comprehensive incomes previously will be transferr ed to the retained earnings from other comprehensive incomes and aren't included in the current profit and loss. Pursuant to New Financial Instrument Standards, the Company, on the basis of expected credit loss, calculates and withdraws the impairment reserve of the financial assets measured at the amortized cost, the debt instrument investment measured at fair value with change included in other comprehensive incomes, the lease receivables, contract assets and financial guarantee contract, and confirms the credit impairment loss. 5 Abstract of 2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd. The Company traces and applies the New Financial Instrument Standards, and may not conduct the restatement to the inconsistence between the previous comparative financial statement data involved in the classification and measurement (including the impairment) and New Financial Instrument Standards. Therefore, for the cumulative impact of the standard implementation for the first time, the Company adjusts the retained earnings or other comprehensive income at the beginning of 2019 and the amount of other related items in the financial statements, and the financial statements in 2018 were not restated. The impacts on the Company due to the implementation of the new Accounting Standards for Business Enterprises are as follows: Unit: RMB Yuan Affected financial statements Before retrospection Adjustment amount After retrospection items 200,000.00 0.00 200,000.00 Notes receivable 280,596,130.89 1,291,219.83 281,887,350.72 Accounts receivable Notes receivable and accounts 280,796,130.89 1,291,219.83 282,087,350.72 receivable Total current assets 1,559,613,387.48 1,291,219.83 1,560,904,607.31 Deferred tax assets 26,552,328.43 -91,086.12 26,461,242.31 Total non-current assets 282,901,363.16 -91,086.12 282,810,277.04 Total assets 1,842,514,750.64 1,200,133.71 1,843,714,884.35 Other comprehensive income 5,924,132.67 9,597.14 5,933,729.81 Surplus reserves 37,804,354.59 -33,871.83 37,770,482.76 Retained earnings 122,872,551.30 839,695.41 123,712,246.71 Equity attributable to 648,801,684.35 815,420.72 649,617,105.07 shareholders of the Parent Minority interests 367,597,191.43 384,712.99 367,981,904.42 Total shareholders ‘equity 1,016,398,875.78 1,200,133.71 1,017,599,009.49 Total liabilities and 1,842,514,750.64 1,200,133.71 1,843,714,884.35 shareholders’ equity (2) Retrospective restatements due to correction of significant accounting errors in Reporting Period □ Applicable √ Not applicable 6 Abstract of 2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd. (3) Changes in consolidation scope compared to last accounting period √ Applicable □ Not applicable In May 2019, Tsann Kuen (China) Enterprise Co., Ltd. incorporated a wholly-owned subsidiary Xiamen Tsannkuen Property Services Co., Ltd., which has been included in the Company’s consolidated financial statements since the day of its incorporation. 7