Abstract of the 2015 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd. Stock code: 200512 Stock abbreviation: TKC B Announcement No.: 2016-004 TSANN KUEN (CHINA) ENTERPRISE CO., LTD.
Abstract of the 2015 Annual Report
1. Important reminders
This Abstract is based on the full text of the 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.
Non-standardauditor’s 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□ Inapplicable
Share capital increase from capital reserve
□ Yes√ No
Preplan for profit distribution to common shareholders for reporting period which has been reviewed and approved at board meeting: Based on the total 185,391,680 shares, a cash dividend of RMB1.00 (tax included) will be distributed for every 10 shares held by shareholders. No bonus shares will be granted and no capital reserve will be turned into share capital.
Preplan for profit distribution to preference shareholders for reporting period which has been reviewed and approved at board meeting:
□ Applicable√ Inapplicable
Company profile
||||||
|-|-|-|-|-|
|Stock abbr.|TKC B|Stock code||200512|
|Stock exchange|Shenzhen Stock Exchange||||
|For contact|Company Secretary||Securities Affairs Representative||
|Name|Sun Meimei||||
||TSANN KUEN Industrial Park, TaiwaneseInvestment Zone, Zhangzhou, FujianProvince||||
|Office address|||||
|Fax|0596-6268104||||
|Tel.|0596-6268161||||
|E-mail address|mm_sun@tkl.tsannkuen.com||||

II. Brief introduction to main business or products in reporting period
Development and manufacture of household appliances, electronics, light industrial products, modern office supplies; design and manufacture of molds for those products; Sale of theCompany’s products in China and to other countries and regions as well as provision of relevant after-sales service; wholesale, retail (only in theCompany’s own shops), import& export and relevant supporting business of household appliances, electronic products, electrical equipment, office supplies, kitchen utensils and pre-packaged food as well as provision of relevant after-sales service (the aforesaid business scope of the Company does not involve state trading commodities; where quota permission or a license is required, it shall be obtained according to the regulations of the country before operation). No material changes occurred to the business model of the Company in the reporting period.
Abstract of the 2015 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd. III. Accounting and financial highlights
1. Accounting and financial highlights for past three years
Does the Company adjust retrospectively or restate accounting data of previous years due to change of the accounting policy or correction of any accounting error?
□ Yes√ No
Unit: RMB Yuan
||||||
|-|-|-|-|-|
|Item|2015|2014|Increase/decrease ofcurrent year overlast year|2013|
|Operating revenue|1,968,728,531.55|2,008,161,297.50|-1.96|2,037,382,839.55|
|Net profit attributable to shareholders ofthe Company|36,782,299.50|51,348,795.39|-28.37|47,069,386.29|
|Net profit attributable to shareholders ofthe Company after extraordinary gains andlosses|25,526,229.90|41,759,659.26|-38.87|16,537,966.34|
|Net cash flows from operating activities|83,438,590.84|45,016,298.98|85.35|165,776,987.42|
|Basic EPS (RMB Yuan/share)|0.20|0.28|-28.57|0.25|
|Diluted EPS (RMB Yuan/share)|0.20|0.28|-28.57|0.25|
|Weighted average ROE (%)|6.31|9.66|-3.35|9.36|
|Item|As at 31 Dec. 2015|As at 31 Dec. 2014|Increase/decrease ofcurrent year-endthan last year-end|As at 31 Dec. 2013|
|Total assets|1,656,036,577.21|1,651,024,619.41|0.30|1,690,801,284.83|
|Net assets attributable to shareholders ofthe Company|559,728,743.98|546,574,409.55|2.41|520,693,211.26|

2. Accounting highlights by quarter
Unit: RMB Yuan
||||||
|-|-|-|-|-|
|Item|Q1|Q2|Q3|Q4|
|Operating revenue|453,454,308.58|441,739,849.49|579,140,206.32|494,394,167.16|
|Net profit attributable to shareholders of the Company|7,995,185.44|7,115,839.74|12,960,350.00|8,710,924.32|
|Net profit attributable to shareholders of the Companyafter extraordinary gains and losses|2,993,743.17|672,763.97|19,466,416.78|2,393,305.98|
|Net cash flows from operating activities|-36,982,666.95|-13,580,972.86|-53,558,201.77|187,560,432.42|

Any material difference between the financial indicators above or their summations and those which have been disclosed in quarterly
or semi-annual reports?
□ Yes√ No
Abstract of the 2015 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd. IV. Share capital and shareholders
1. Numbers of common shareholders and preference shareholders with resumed voting rights as well as shareholdings of top 10 shareholders
Unit: share
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Total number of commonshareholders at period-end|||||||||Total number of|||
|||Total number of||||||||||
|||||||Total number of|||preference|||
|||common||||||||||
|||||||preference|||shareholders with|||
|||shareholders at||||||||||
|||||||shareholders|||resumed voting|||
||17,702|pervious||17,817||||0|||0|
|||||||with resumed|||rights at pervious|||
|||month-end of this||||||||||
|||||||voting rights at|||month-end of this|||
|||Report’s||||||||||
|||||||period-end|||Report’s|||
|||disclosure||||||||||
||||||||||disclosure|||
|Shareholdings of top 10 shareholders||||||||||||
||||||||Number of|||Pledged or frozen shares||
||Nature of||Shareholding||Total shares held|||||||
|Name of shareholder|||||||restricted shares|||Status of|Number of|
||shareholder||percentage||at period-end|||||||
||||||||held|||shares|shares|
|FORDCHEEDEVELOPMENT LIMITED|Overseascorporation||29.10%||53,940,530||0|||||
|||||||||||No|0|
|EUPA INDUSTRYCORPORATION LIMITED|Overseascorporation||13.09%||24,268,840||0|||||
|||||||||||No|0|
|GUOTAI JUNANSECURITIES(HONGKONG)LIMITED|Overseascorporation||6.21%||11,509,505||0|||||
|||||||||||No|0|
|FILLMAN INVESTMENTSLIMITED|Overseascorporation||2.49%||4,621,596||0|||||
|||||||||||No|0|
|WU CHI LI|Overseaindividual||1.06%||1,968,000||0|||||
|||||||||||No|0|
|CHEN YONGQUAN|Domesticindividual||1.02%||1,888,819||0|||||
|||||||||||No|0|
|CHEN YONGQING|Overseaindividual||0.77%||1,436,149||0|||||
|||||||||||No|0|
|GU KUNYI|Domesticindividual||0.70%||1,300,862||0|||||
|||||||||||No|0|
|CHEN LIJUAN|Overseaindividual||0.69%||1,287,817||0|||||
|||||||||||No|0|
|XIE QINGJUN|Domesticindividual||0.60%||1,112,276||0|||||
|||||||||||No|0|
||||The first, the second and the fourth shareholders are the Company’s corporate|||||||||
||||controlling shareholders. It is unknown whether the other shareholders of tradable|||||||||
|Related or acting-in-concert parties among||||||||||||
||||shares are related parties or acting-in-concert parties as prescribed in the|||||||||
|shareholders above||||||||||||
||||Administrative Methods for Disclosure of the Shareholding Changes of the Listed|||||||||
||||Company’s Shareholders.|||||||||

2. Number of preference shareholders and shareholdings of top 10 of them
□ Applicable√ Inapplicable
No preference shareholders in reporting period
Abstract of the 2015 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd. 3. Relation between the Company and its actual controller in form of diagram
||
|-|
|TsaiShuhui|

||
|-|
|HUCHUNMEI|

||
|-|
|WuTsannKuen|

|||
|-|-|
||TsaiYuanSong|
|16.25%||

Abstract of the 2015 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd. increase our operating efficiency and effectiveness, and provide elaborately designed multifunctional small household appliances with high green, low-carbon technological contents which are exactly what the market needs, trying to increase our profitability. Meanwhile, as smart houses are becoming a trend and people are pursuing more convenient and comfortable life, we will focus, in our efforts for product development and innovation, on smart household appliances to satisfypeople’s needs for a fully smart house. We will try to effectively enlarge our share in the market where smart household appliances have been considered a necessary element for a comfortable life.
(II) Future development strategies
1. Strategy of domestic market development
Owning to the reforming of the strategy of domestic market development, the development main spindle of the future products will aim at China, which is the world largest home appliances market as the springboard; and will spread out the brand planning and marketing which focuses on the coffee, home helper and green energy saving. Strengthen the China brand strategy.
2. Intimate consumer relation management
To construct a sound platform of sales service and offer the structured solution plan to the customers standing in their position, to make real gene modification; cost leadership is not the core strategy of an enterprise, is the foundation of an enterprise. The true core strategy for an enterprise is to create more intimacy with customers, provide products that satisfycustomers’ needs and build up differentiate competitive edges.
3. Leading creatively and the deployment of green industry
Increase the design resources investment, and relocate and plan for the design team bases on the green industry, environmental protection, energy saving, global innovation platform at the same time, so thus to insist in the design integration interdisciplinary and the innovation of the marketing mode as well as the brand concept. Lead and drive theCompany’s transformation and the deployment of the products such as the new careers, new fields, home helpers and the digital lighting solutions with innovation and originality.
4. Continue strengthen of the overseas manufacturing deployment and enhance of manufacturing enterprises competitiveness Considering the rapid growth of emerging economies and the rise of the surrounding economies of Southeast Asia, the Company will, with the advantageous costs of the overseas production base, accelerate the chain integration, promote our own brands with knock-out products, set up overseas marketing organs, attend overseas fairs, place advertisements in target markets and speed up the development of the Asian market in 2016.
(III) Development trends and outlook of the industry
As the wireless, IT and intelligent era comes, the trend of intelligent home appliances boosts intelligence, healthiness, fashion, combination and culture and technology, cross-field integration of design, innovation and marketing modes and brand concepts, and to count in the business development of e-commerce. The market that the Company will face in 2016 has the following features: 1. Profound change will happen to the global market structure of household appliances in 2016. Emerging markets such as Southeast Asia, Middle East and North America will achieve a high-speed growth, with growth in some African countries expectedly reaching over15% and growth in Asia12%. Mature markets like Europe and North America will also show a tendency of positive growth. 2. In terms of the main export markets, China exports more household appliances to developed countries than emerging economies and the US is still the biggest market forChina’s export of household appliances. In 2016, the global economy will continue to grow,
Abstract of the 2015 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd. as well as the developed economies in America and Europe, which will provide bigger export markets for China. The export growth potential brought by the new demand from emerging economies will become a hotspot for the growth of the small household appliance market in the future.
3. China is still considered a strong market. The home appliance industry of China has entered an era featuring brand as the winning trump. Different from the traditional home appliances, the small home appliances are still in a developing stage in terms of sale. As the way of spending changes, more new products enter the market and old appliances are being renewed, domestic demand for small home appliances will soar and the industry will enjoy good prospects. Actually, it is expected that the coming few years will be a golden period for the development of the small home appliance market of China.
4. New urbanization gives us a fresh view aboutChina’s city pattern and direction of future development. Growing, positive cities at the second and third tiers with strong purchasing power are becoming high-end markets in an unprecedented speed. We believe the “new first-tier markets” growing from the markets at the second and third tiers will make a strong engine forChina’s economic growth in the future.
5. Due to the impact of e-commerce, the physical stores of household appliances are experiencing declining revenue with a falling consumer demand.What’s more, considerately growing rent and labor cost put more pressure on these offline stores. Therefore, e-commerce has become an important strategy for home appliance makers and sellers. Stimulated by the e-commerce strategy, online stores have home appliances in more varieties to offer, with improving logistics and after-sales services. Meanwhile, with an increasingly mature online shopping concept of consumers, the online market of home appliances expands quickly.
6. As more and more strong as well as large appliance brands and international brands are stepping into the small home appliance industry, competition will become fiercer. The small home appliance business will step in the operation of professional, systematic and branding, in order to fight for more market shares. Depending on its capital andR&D advantages, it will gradually eliminate a batch of small brand enterprises which are comparatively feeble, lack of research and cost advantage and the market networks management advantage. It is noteworthy that, under the dual demand stimulus of the improvement of theconsumers’ consciousness of energy conservation and environmental protection as well as the purchasing of the living quality, the consumption of old for new service of the future urban market will put more emphasis on the higher technical content and better quality high-end home appliances, which will offer powerfully market power to the industrial upgrading of the electric utility of our nation.
7. Intelligent and green small household appliances will enter serialization and mass production. Considering the stricter international environmental standards, China has launched a set of energy efficiency standards, strongly promoting the popularization of energy-saving products through tough measures including price reform and taxation. Small household appliances with energy-saving characteristic will become the mainstream in the sector sooner or later. And the Company also focuses its efforts on healthy, energy-saving and green appliances.
(IV) Expenditure plan
According to its development strategy planning, the Company will input more in high-tech products such as new energy, high-efficiency and environment-protecting household appliances, as well as in expansion of the Indonesian plant. And capital above RMB66 million is expected to be needed in the year 2016 for the production capacity expansion in the aforesaid fields.
(V) Major risk factors in future development
1. International
Influenced by the slowly recovery of the global economy, the enlarge of the exchange rate fluctuation, the enhance of the domestic comprehensive cost, and with global inflation pressure that cannot be eased in the short run and more and more non-economic
Abstract of the 2015 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd. obstacles from western countries in their trading with China, foreign trade of China will face, without doubt, a more complicated environment and more serious conflicts in 2016.
For protecting the domestic newly-developing electrical home appliances manufacturing enterprises, parts of the countries began to adopt trade protectionism and began to suppress the domestic electrical home appliances for the methods such as improve the import tariff. The outburst of the global financial crisis led to the rise of the international trade protection, the aggravation of the tariff barrier and the non-tariff barrier especially such as the technology standard, Intellectual property right protection and anti-dumping etc., as well as the export of the domestic electrical home appliance encountered more and more threatens tariff an non-tariff barrier with the more complicated international environment faced with the electrical home appliances.
As for the risks of the culture difference: the overseas expansion of the electrical home appliances desiderate the adjustment of culture and products; the culture difference between China and other countries affect the difference process of the sales process of the electrical home appliances at different degrees and different aspects, while the fusion of the culture and the adaptation of the products are the two key elements of the success of the enterprises and to blend in the cultural environment of different regions as well as to reduce the cost expenses brought by the unsteady elements as much as possible is the important content of the overseas expansion of the enterprises.
2. Domestic
Y2016 will be the key year of the entirely promotion of the domestic great reform and adjustment and the year that the new normalcy of domestic economy entirely step into the Crucial Period. Looking ahead to Y2016, the domestic and oversea environment is still of anfractuosity as well as the economy development is still facing with many difficulties and challenges. However, the basic conditions of the domestic economy development is still comparative good that will still provide favorable market environment and development space for the electrical home appliances.
In recent years, the domestic per capita income grew steadily with the rise range of the price of commodities declined, and at the same time influenced by the internal and external force factors such as the Chinese shopping spree, which stimulated the consuming intention boosted constantly; as the constantly deepen of the domestic economy transformation, the future economy will realize healthy and sustainable growth, which will depend on the consumption demands of each Chinese customers as the consumption driving force of the domestic economy has been strengthening.
Through the path of expanding domestic demand and the adjustment of the overall economic system, the domestic competition will become fiercer. As the development of the domestic production, the domestic home appliance is now facing the significant industrial consolidation phrase, which could only win in the competition and become the industry integrator with powerful financial strength and the ability to drive the domestic home appliance innovation enterprise. So the small home appliance enterprises are facing with serious competition and challenge. Faced with the quick changes of the domestic environment, the Company will be close to thecustomers’ requirements, to promote the brand image by taking the technology innovation as core, to build up self-own brand, and to develop green, intelligent home appliances to increase the occupation portion of the domestic market.
3. Exchange rate fluctuation
TheCompany’s products were export-oriented, so the influence of the exchange rate fluctuation on the Company was rather big. Facing with the negative influences of the appreciation of the RMB, the main methods are: to avoid the exchange risks by the financial tools and to fully considerate the influences of the exchange risks when receiving an order, thus to transfer the exchange risks.
4. Increase of the labor costs and the labor shortage
Influenced by the constantly rise of the labor cost, the Company reduced the employee turnover rate by improving the labor character and perfecting the benefits, promoted the purchasing modularization as well as lean automation, and improved the per capita GDP to deal with the labor shortage problem.
Abstract of the 2015 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd. 5. Environmental protection low-carbon
As the execution of the Environmental Protection Act, to prevent and remedy pollution and other public nuisance as well as to ensure the environmental and public health become the development tendency that the production processes of the enterprises must active deal with; the Company put the lean manufacturing into the core goal of the enterprises of this year, with the introduce of the new environmental protection materials, the input of the automation and the promotion of the environmental protection manufacturing that promoted the products of the Company developed orientated to the direction of environmental protection and the environment protection work.
2. Major changes in main business in reporting period
□ Yes√ No
3. Products contributing over10% of main business revenue or profit
√ Applicable□ Inapplicable
Unit: RMB Yuan
|||||||||
|-|-|-|-|-|-|-|-|
|Product|Operatingrevenue|Operating cost|Operating profit|Grossprofitmargin|Operatingrevenue:YoY +/-%|Operatingcost: YoY+/-%|Grossprofitmargin:YoY +/-%|
|Cooking tools|1,237,385,562.27|1,056,546,841.40|180,838,720.87|14.61|3.08|1.90|0.99|
|Home helper|414,423,298.75|373,447,044.88|40,976,253.87|9.89|-19.60|-20.49|1.00|
|Tea/Coffee makers|235,062,032.76|207,140,807.34|27,921,225.42|11.88|27.32|26.51|0.57|
|Other products|16,036,277.23|13,064,103.06|2,972,174.17|18.53|-39.52|-20.80|-19.26|
|Total|1,902,907,171.01|1,650,198,796.68|252,708,374.33|13.28|-1.25|-2.17|0.81|

 4. Seasonal or periodic characteristics in operating performance that need special attention
□ Yes√ No
Main business data for the business year
√ Applicable□ Inapplicable
Unit: RMB Yuan
|||||
|-|-|-|-|
|Item|Current period|Last period|+/-%|
|Revenues|1,902,907,171.01|1,927,053,028.84|-1.25|
|Costs|1,650,198,796.68|1,686,769,448.84|-2.17|
|Sales|20,156,184.00|20,971,446.00|-3.89|
|Net profit|36,782,299.50|51,348,795.39|-28.37|
|Item|Current period-end|Last period-end|+/-%|
|Inventories|264,090,949.73|193,150,144.07|36.73|

 5. Major YoY changes in operating revenues, operating costs and net profit attributable to common shareholders or their composition
□ Applicable√ Inapplicable
6. Listing suspension or termination
□ Applicable√ Inapplicable
Abstract of the 2015 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd. VI. Matters related to financial reporting
1. YoY changes in accounting policy, accounting estimation and measurement methods
□ Applicable√ Inapplicable
2. Retrospective restatements due to correction of significant accounting errors in reporting period
□ Applicable√ Inapplicable
3. YoY changes in consolidation scope
In Feb. 2015, the controlled subsidiary of the Company Tsann Kuen (Zhangzhou) Enterprise Co., Ltd. written off its subsidiary Tsann Kuen (Zhangzhou) Profession and Technology Institute. Since the date that completed the written-off, Tsann Kuen (Zhangzhou) Profession and Technology Institute would be no longer included in the consolidated statement scope, while the income, expenses and profits before the completion of the written-off included in the consolidated income statement and the cash flow in the consolidated cash flow statement.
In Apr. 2015, the controlled subsidiary of the Company Tsann Kuen (Zhangzhou) Enterprise Co., Ltd. purchased the100% equities of Orient Star Investments Limited held by Bosco Consultancy Limited. And the Company included Orient Star Investments Limited into the consolidated scope of the financial report since the date when completed the purchase.
4. Explanation by Board of Directors and Supervisory Committee concerning “non-standardauditor’s report” issued by CPAs firm for reporting period
□ Applicable√ Inapplicable