Abstract of 2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd. Stock code: 200512 Stock name: TKC-B Announcement No.: 2020-036 TSANN KUEN (CHINA) ENTERPRISE CO., LTD. ABSTRACT OF 2020 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, TSANN KUEN Industrial Park, Taiwanese Investment Zone, Taiwanese Investment Zone, Office address Zhangzhou, Fujian Province, 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 □ Yes√ No Unit: RMB Yuan Same period of last Item Reporting Period YoY +/-(%) year Operating revenue 793,014,584.36 929,448,983.38 -14.68 Net profit attributable to shareholders of the Company 39,220,703.16 47,292,567.95 -17.07 1 Abstract of 2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd. Same period of last Item Reporting Period YoY +/-(%) year Net profit attributable to shareholders of the Company 32,506,739.64 9,863,734.45 229.56 before extraordinary gains and losses Net cash flows from operating activities -28,011,876.14 4,167,209.43 -772.20 Basic EPS (RMB Yuan/share) 0.21 0.26 -19.23 Diluted EPS (RMB Yuan/share) 0.21 0.26 -19.23 Weighted average ROE (%) 5.10 7.02 -1.92 As at the end of the As at the end of last Item +/- (%) Reporting Period year Total assets 1,847,468,612.40 1,956,448,835.98 -5.57 Net assets attributable to shareholders of the Company 770,522,673.06 748,738,791.34 2.91 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: Fully diluted EPS based on the latest total shares (RMB Yuan/share) 0.21 3. Shareholders and their shareholdings Unit: share Total number of common shareholders at Total number of preference shareholders with 15,759 0 the period-end resumed voting rights at the period-end Greater than 5% or top 10 common shareholders Total Number Pledged or common Increase/decrease of Number of frozen shares Nature of Shareholding Name of shareholder shares held during the restricted unrestricted Status Number shareholder percentage at the reporting period common common shares of of period-end shares shares shares FORDCHEE Foreign 29.10% 53,940,530 Unchanged 0 53,940,530 0 DEVELOPMENT LIMITED corporation EUPA INDUSTRY Foreign 13.09% 24,268,840 Unchanged 0 24,268,840 0 CORPORATION LIMITED corporation GUOTAI JUNAN Foreign SECURITIES(HONGKONG) 5.00% 9,265,899 145,717 0 9,265,899 0 corporation LIMITED FILLMAN INVESTMENTS Foreign 2.49% 4,621,596 Unchanged 0 4,621,596 0 LIMITED corporation SHENWAN HONGYUAN Foreign SECURITIES (H.K.) 1.09% 2,016,752 Unchanged 0 2,016,752 0 corporation LIMITED Domestic CHEN YONGQUAN 1.03% 1,900,776 Unchanged 0 1,900,776 0 individual Foreign CHEN YONGQING 0.87% 1,607,178 45,929 0 1,607,178 0 individual Foreign CHEN LIJUAN 0.76% 1,401,134 Unchanged 0 1,401,134 0 individual 2 Abstract of 2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd. Domestic DING XIAOLUN 0.66% 1,223,400 49,900 0 1,223,400 0 individual Domestic XU QIANMING 0.34% 623,759 5,500 0 623,759 0 individual Strategic investor or general corporation becoming a top ten shareholder due to None placing of new shares The first, the second and the fourth shareholders are the Company’s corporate controlling Related or acting-in-concert parties shareholders. It is unknown whether the other public shareholders are related parties or among the shareholders above acting-in-concert parties as prescribed in the Administrative Methods for Disclosure of the Shareholding Changes of the Listed Company’s Shareholders. Top ten unrestricted common shareholders Number of unrestricted common Type of shares Name of shareholder shares held at the period-end Type Number FORDCHEE DEVELOPMENT Domestically listed foreign 53,940,530 53,940,530 LIMITED share EUPA INDUSTRY CORPORATION Domestically listed foreign 24,268,840 24,268,840 LIMITED share GUOTAI JUNAN Domestically listed foreign 9,265,899 9,265,899 SECURITIES(HONGKONG) LIMITED share Domestically listed foreign FILLMAN INVESTMENTS LIMITED 4,621,596 4,621,596 share SHENWAN HONGYUAN SECURITIES Domestically listed foreign 2,016,752 2,016,752 (HK) LIMITED share Domestically listed foreign CHEN YONGQUAN 1,900,776 1,900,776 share Domestically listed foreign CHEN YONGQING 1,607,178 1,607,178 share Domestically listed foreign CHEN LIJUAN 1,401,134 1,401,134 share Domestically listed foreign DINGG XIAOLUN 1,223,400 1,223,400 share Domestically listed foreign XU QIANMING 623,759 623,759 share Explanation on associated relationship or/and persons acting in concert among The first, the second and the fourth shareholders are the Company’s corporate controlling the top ten unrestricted common shareholders. It is unknown whether the other shareholders of public shares are related shareholders and between the top ten parties or acting-in-concert parties as prescribed in the Administrative Methods for unrestricted common shareholders and the Disclosure of the Shareholding Changes of the Listed Company’s Shareholders. top ten common shareholders Explanation on the top 10 common shareholders participating in the margin N/A trading business 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 2020 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. During the reporting period, American and European countries remained the primary countries we exported our home appliances to amid the turbulence caused by the COVID-19 pandemic, as well as the complex and changeable economic environment at home and abroad. And currently, global economic growth remains slow with the outbreak and spread of the pandemic overseas. Upon constant monitoring and assessment of the impact of the pandemic on the Company, we will make timely adjustments to various operating arrangements accordingly. Meanwhile, a variety of measures will be taken to increase revenue and reduce expenditure, with the objective of minimizing the negative impact of the pandemic on the Company. We carried on with the simplification and transformation strategies. New raw materials, techniques and manufacturing equipment were brought in, and manufacturing plants were refined to increase our yield rate and production efficiency, simplifying and improving our production. Upholding the strategy of innovation-driven transformation, we develop and manufacture differentiated products to compete in the industry. And 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. 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 manufacturer keeps on developing. Through being more intimate with customers and innovation in R&D, we create new 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 2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd. For the reporting period, we achieved a net profit attributable to shareholders of the Company of RMB39.22 million, with the corresponding amount being RMB47.29 million in the same period of last year. The change was primarily driven by: (1) The net profit attributable to shareholders of the Company of RMB47.29 million in the same period of last year comprised the effect of RMB29.54 million of an extraordinary gain (the asset disposal gain in respect of the relocation of controlled sub-subsidiary TKS’s phase II plant carried out according to the government policy), with no comparable gain in the reporting period. (2) Stringent anti-pandemic measures were adopted in the reporting period. We have resumed work/production in a safe and orderly manner according to the overall arrangements of governments at all levels while ensuring the safety of our employees against the pandemic. This impacted our production and sales to some degree during the reporting period, bringing our main business revenue down by 14.68% year-on-year. We were more prudent in purchases to control stocks and cash outflow. A hierarchical management system based on customers’ credit lines was carried out in respect of overdue amounts, order taking and shipment, and their credit line insurance coverage was increased. In addition, negotiations to bring down procurement costs, expense control, workforce simplification were carried out. Meanwhile, asset impairment allowances were established upon assessment of net realizable value of inventories and impairments of fixed assets, and financial gains increased. 2. Matters related to financial reporting (1) Changes in accounting policy, accounting estimation and measurement methods compared to last accounting period √ Applicable □ Not applicable ① Changes of accounting policies On 5 July 2017, the Ministry of Finance issued the Accounting Standards for Business Enterprises No.14-Revenue (Revised in 2017) (Accounting [2017] No. 22) (hereafter referred to as the “New Revenue Guidelines”), and domestic listed companies are required to implement it from 1 January 2020. The Company implements it on 1 January 2020 and adjusts relevant contents of accounting policies. See Note 4.24 “Revenue recognition principle and measurement method” for details. Requirements of the New Revenue Guidelines for adjusting the cumulative influence for implementing this standard: The amounts of retained earnings and other relevant items in the financial statement as at the beginning of the year of initial implementation (that is 1 January 2020) should be adjusted, and the information during the comparable period should not be adjusted. When implementing the New Revenue Guidelines, the Company only makes adjustment to the cumulative influence of contracts yet to be completed on the date of initial implementation. Adjustments to related items of the financial statements at the beginning of the first execution year of the New 5 Abstract of 2020 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd. Revenue Guidelines Consolidated balance sheet Currency: CNY Item 31 December 2019 1 January 2020 Adjusted Current assets Advances to suppliers 3,112,312.06 3,112,312.06 Contract assets Inapplicable Total current assets 1,685,193,347.55 1,685,193,347.55 Current liabilities Advances from customers 13,294,285.78 2,269,846.97 -11,024,438.81 Contract liabilities Inapplicable 11,024,438.81 11,024,438.81 Total current liabilities 739,918,342.31 739,918,342.31 0.00 Balance sheet of the Company Currency: CNY Item 31 December 2019 1 January 2020 Adjusted Current assets Advances to suppliers 96,278.32 96,278.32 Contract assets Inapplicable Total current assets 20,641,976.53 20,641,976.53 Current liabilities Advances from customers 1,826,178.67 -1,826,178.67 Contract liabilities Inapplicable 1,826,178.67 1,826,178.67 Total current liabilities 289,433,392.86 289,433,392.86 0.00 On 10 December 2019, the Ministry of Finance issued the Interpretation of the Accounting Standards for Business Enterprises No.13. The Company implements this interpretation since 1 January 2020 without any retroactive adjustment to previous years. ② Change of accounting estimates No change of accounting estimates need to be disclosed for the current period. (2) Retrospective restatements due to correction of significant accounting errors in Reporting Period □ Applicable √ Not applicable (3) Changes in consolidation scope compared to last accounting period √ Applicable □ Not applicable Tsann Kuen (Zhangzhou) Investment Co., Ltd. was de-registered in April 2020. 6