2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
TSANN KUEN (CHINA) ENTERPRISE CO., LTD.
2019 SEMI-ANNUAL REPORT
(Unaudited)
August 2019
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2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section I. Important Statements, Contents & Terms
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.
Investors are kindly reminded to read the full text of this Report carefully and pay special attention
to the risks mentioned in “X. Risks facing the Company and countermeasures” under “Section IV.
Performance Discussion & Analysis”.
The Company plans not to distribute cash dividends or bonus shares or turn capital reserve into
share capital.
Mr. Pan Zhirong, company principal, and Mr. Wu Jianhua, 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.
English translation is for reference only. Should there be any discrepancy between the two versions,
the Chinese version shall prevail.
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2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Contents
Section I. Important Statements, Contents & Terms...................................................... 2
Section II. Company Profile & Financial Highlights.....................................................5
Section III. Business Highlights..................................................................................... 8
Section IV. Performance Discussion & Analysis......................................................... 10
Section V. Significant Events........................................................................................21
Section VI. Change in Shares & Shareholders.............................................................30
Section VII. Preference Shares..................................................................................... 33
Section VIII. Directors, Supervisors & Senior Management Staff..............................33
Section IX. Corporate Bonds........................................................................................34
Section X. Financial Report..........................................................................................34
Section XI. Documents Available for Reference..........................................................35
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2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Terms
Term Refers to Contents
Xiamen Tsann Kuen, TKC-B, Company,
Refers to Tsann Kuen (China) Enterprise Co., Ltd.
the Company, TKC
Tsann Kuen Zhangzhou, TKL Refers to Tsann Kuen (Zhangzhou) Enterprise Co., Ltd.
Tsann Kuen Shanghai, TKS Refers to Tsann Kuen China (Shanghai) Enterprise Co., Ltd.
Tsann Kuen (Zhangzhou) South Port Electronics Enterprise Co.,
South Port Electronics, TKN Refers to
Ltd.
STD Refers to Shanghai Canxing Trading Co., Ltd.
East Sino Refers to East Sino Development Limited
SCI Refers to Pt.Star Comgistic Indonesia
Orient Star Investments Refers to Orient Star Investments Limited
TKEI Refers to Tsannkuen Edge Intelligence Co., Ltd.
SCPDI Refers to Pt.Star Comgistic Property Development Indonesia
TKI Refers to Tsann Kuen (Zhangzhou) Investment Co., Ltd.
TKW Refers to Xiamen Tsannkuen Property Services Co., Ltd.
RMB Refers to RMB YUAN
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2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section II. Company Profile & Financial Highlights
I. Basic information about the Company
Stock name TKC-B Stock code 200512
Stock exchange Shenzhen Stock Exchange
Chinese name of the
厦门灿坤实业股份有限公司
Company
Abbr. of the Chinese name
闽灿坤
of the Company
English name of the
TSANNKUEN(CHINA) ENTERPRISE CO. LTD
Company
Abbr. of the English name
TKC
of the Company
Legal representative of the
Pan Zhirong
Company
II. Contact information
Board Secretary Securities Representative
Name Sun Meimei Dong Yuanyuan
TSANN KUEN Industrial Park, TSANN KUEN Industrial Park,
Contact address Taiwanese Investment Zone, Zhangzhou, Taiwanese Investment Zone, Zhangzhou,
Fujian Province, P.R.China Fujian Province, P.R.China
Tel. 0596-6268161 0596-6268103
Fax 0596-6268104 0596-6268104
E-mail mm_sun@tkl.tsannkuen.com yy_dong@tkl.tsannkuen.com
III. Other information
1. Ways to contact the Company
Did any change occur to the registered address, office address and their postal codes, website address and email address of the
Company during the Reporting Period?
□ Applicable √ Not applicable
2. About information disclosure and where this Report is placed
Did any change occur to information disclosure media and where this Report is placed during the Reporting Period?
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2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
□ Applicable √ Not applicable
3. Other relevant information
Did any change occur to other relevant information during the Reporting Period?
□ Applicable √ Not applicable
IV. 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
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 (RMB Yuan/share) 0.26 -0.15 273.33
Diluted EPS (RMB 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 disclosure of this Report (share) 185,391,680
Fully diluted EPS based on the latest total shares (RMB Yuan/share) 0.26
V. Differences between accounting data under domestic and overseas accounting standards
1. Differences of net profit and net assets disclosed in financial reports prepared under international and
Chinese accounting standards
□ Applicable √ Not applicable
No difference in the Reporting Period.
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2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2. Differences of net profit and net assets disclosed in financial reports prepared under overseas and
Chinese accounting standards
□ Applicable √ Not applicable
No difference in the Reporting Period.
3. Explain reasons for the differences between accounting data under domestic and overseas accounting
standards
□ Applicable √ Not applicable
VI. Items and amounts of extraordinary gains and losses
√ Applicable □ Not applicable
Unit: RMB Yuan
Item Amount for H1 2019 Explanation
Gains/losses on the disposal of non-current assets (including the offset part of asset
63,398,419.60
impairment provisions)
Tax rebates, reductions or exemptions due to approval beyond authority or the lack
of official approval documents
Government grants recognized in the current period, except for those acquired in the
ordinary course of business or granted at certain quotas or amounts according to the 23,779,943.00
country’s unified standards
Capital occupation charges on non-financial enterprises that recorded into current
gains and losses
Gains due to that the investment costs for the Company to obtain subsidiaries,
associates and joint ventures are lower than the enjoyable fair value of the
identifiable net assets of the investees when making the investments
Gain/loss on non-monetary asset swap
Gain/loss on entrusting others with investments or asset management
Asset impairment provisions due to acts of God such as natural disasters
Gain/loss on debt restructuring
Expenses for business reorganization, such as expenses for staffing, reorganization
etc.
Gain/loss on the part over the fair value due to transactions with distinctly unfair
prices
Current gains and losses of subsidies acquired from business combination under the
same control as from period-begin to combination date
Gain/loss on contingent events irrelevant to the Company’s normal business
Gains on sale of forward
Gains and losses on change in fair value from tradable financial assets and tradable
exchange contracts, fair
financial liabilities, as well as investment income from disposal of tradable financial
4,167,688.97 value changes and other
assets and tradable financial liabilities and financial assets available for sales except
current assets (wealth
for effective hedging related with normal businesses of the Company
management instruments)
Reversal of provision for impairment that made impairment test independently
Gain/loss on loans obtained by entrusting others
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2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item Amount for H1 2019 Explanation
Gain/loss on change of the fair value of investing real estate of which the subsequent
measurement is carried out adopting the fair value method
Effect on current gains/losses when a one-off adjustment is made to current
gains/losses according to requirements of taxation, accounting and other relevant
laws and regulations
Custody fee income when entrusted with operation
Other non-operation income and expenses other than the above 4,999,132.67
Other gain/loss items that meet the definition of an extraordinary gain/loss
Less: Income tax effects 22,906,660.95
Minority interests effects (after tax) 36,009,689.79
Total 37,428,833.50
Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Extraordinary Gains and
Losses, or classifies any extraordinary gain/loss item mentioned in the said explanatory announcement as a recurrent gain/loss item
□ Applicable √ Not applicable
Section III. Business Highlights
I. Main business during the 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 the Company’s products in China and to other countries and regions as well as
provision of relevant after-sales service; wholesale, retail (only in the Company’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.
Is the Company subject to any disclosure requirements for special industries?
No.
II. Material changes in main assets
1. Material changes in main assets
Main assets Material change
Down 51.52% from the opening amount of the year, mainly because of smaller assessed
Financial assets at fair value through profit/loss
gains on forward forex contracts
Up 133.56% from the opening amount of the year, mainly because of a prepayment for
Advances to suppliers
aluminum ingots in the current period
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2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Main assets Material change
Down 100% from the opening amount of the year, mainly because of the completion of
Assets held for sale
asset disposal in the current period
Equity assets No such assets
Investing real estate No material change
Fixed assets No material change
Up 125.59% from the opening amount of the year, mainly because building repairs had
Construction in progress
not yet been examined for acceptance
Intangible assets No material change
Long-term deferred expenses No material change
Deferred income tax assets No material change
Other non-current assets No material change
2. Main assets overseas
√ Applicable □ Not applicable
Unit: RMB Yuan
Any
major
Measures taken In the
Operation impair
Asset Nature Value Location to protect asset Earnings Company’s net
status ment
safety assets (%)
risk or
not
Pt.Star Comgistic
Investment 117,685,273.89 Indonesia Normal Periodic review -10,665,886.45 17.06 No
Indonesia
Tsannkuen Edge Equity
20,039,316.31 Taiwan Normal Periodic review -991,957.28 2.91 No
Intelligence Co., Ltd. acquisition
Other information N/A
III. Core competitiveness analysis
Is the Company subject to any disclosure requirements for special industries?
No.
As a manufacturer of small home appliances, most of our products are exported. And our core competitive edges mainly lie in the
capability to develop new products in a timely manner according to market needs due to our strength in technology and R&D, so as
to build a world-class life technology business primarily through design and integration, as well as to upgrade and become the first
choice partner for first-class customers mainly through design and intelligent manufacturing.
In the reporting period, we obtained 35 patents in R&D, including 7 invention patents, 11 utility model patents and 17 design patents.
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2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
There are also dozens of patents being applied for. These patents can help better protect our intellectual property rights, give play to
our competitive edge in independent property rights, keep a leading position in technology and increase our core competitiveness.
In addition, the R&D efforts of Tsannkuen Edge Intelligence Co., Ltd. (“TKEI”), a sub-subsidiary, will be a great help in our medium
and long-term strategy for Smart Home, IOT (Internet of Things), ICT (Information and Communication Tech) and AI (Artificial
Intelligence). We always focus on R&D and human resources as the main driving forces for development, just as we always focus on
building the most competitive design and integration ability for small domestic appliances. In view of the rising consumer needs as
the world embraces smart appliances, we will increase our investment in R&D, improve our design system covering Mainland China
and Taiwan to promote synergies, and join strong business alliances in the two regions to make use of external advanced design
resources and platforms as a way to build our own unique innovative industrial eco-system.
Section IV. Performance Discussion & Analysis
I. Overview
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.
II. Main business analysis
1. Overview
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
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2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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.
2. YoY changes in major financial data
Unit: RMB Yuan
Same period of last
Item Reporting Period +/-% Main reasons for changes
year
Operating revenue 929,448,983.38 691,510,505.23 34.41 Increase in operating revenue
Operating costs 796,332,577.48 625,449,017.39 27.32
Taxes and surtaxes 5,679,950.02 5,691,534.94 -0.20
Selling expenses 32,613,304.09 27,581,504.82 18.24
Administrative expenses 38,769,244.52 40,516,928.84 -4.31
Financial costs -2,740,414.93 -1,231,441.78 -122.54 Decrease in unrealized assessed exchange losses
Decrease in inventory valuation allowances made
Asset impairment losses 1,919,355.87 4,823,333.42 -60.21
for the current period
Other income 2,617,767.00 1,562,092.00 67.58 Increase in governmental subsidy
Investment income 8,313,038.97 9,876,900.98 -15.83
Decrease in assessed loss on forward forex
Gains on fair value changes -4,145,350.00 -9,934,400.00 58.27
contracts in the current period
Assets disposal income from the policy relocation
Assets disposal income 63,398,419.60 376,183.60 16,753.05 of the phase II plant of subsidiary TKS in the
current period
Subsidy for the policy relocation of the phase II
Non-business revenue 26,181,811.37 2,467,573.87 961.03
plant of subsidiary TKS in the current period
Non-business expenses 20,502.70 37,214.69 -44.91 Decrease in donations
Deferred income tax liabilities recognized on the
assets disposal income from the policy relocation
Income tax expenses 29,820,980.12 -1,038,509.51 2,971.52
of the phase II plant of subsidiary TKS in the
current period
R&D expense 36,699,200.50 34,122,824.80 7.55
The overall profit increased year-on-year
primarily driven by a subsidy for the
expropriation of the phase II plant of subsidiary
Net profit 86,699,969.95 -40,093,551.93 316.24
Tsann Kuen China (Shanghai) Enterprise Co.,
Ltd. (“TKS”), lead time adjustments by certain
customers on their orders and the receipt of more
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2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Same period of last
Item Reporting Period +/-% Main reasons for changes
year
purchase orders in the current period.
Subsidy for the policy relocation of the phase II
Net cash flows from operating plant of subsidiary TKS in the current period
4,167,209.43 -119,821,570.49 103.48
activities against the rent paid for the plant in the same
period of last year
Net cash flows from investing
-150,107,116.07 -171,845,120.19 12.65
activities
Net cash flows from financing
-9,723,111.90 -19,294,734.68 49.61 Decrease in secured loans
activities
Subsidy for the policy relocation of the phase II
Net increase in cash and cash plant of subsidiary TKS in the current period
-157,057,583.56 -315,846,864.07 50.27
equivalents against the rent paid for the plant in the same
period of last year
Major changes to the profit structure or sources of the Company during the Reporting Period:
□ Applicable √ Not applicable
No such cases.
3. Breakdown of main business
Unit: RMB Yuan
Increase/decrease Increase/decrease
Increase/decrease
Gross of operating of gross profit
of operating costs
Item Operating revenue Operating costs profit rate revenue over same rate over same
over same period
(%) period of last year period of last
of last year (%)
(%) year (%)
Classified by industry
Small home
appliance 894,953,908.40 780,300,389.90 12.81% 35.82% 27.13% 5.96%
manufacturing
Total 894,953,908.40 780,300,389.90 12.81% 35.82% 27.13% 5.96%
Classified by product
Cooking utensils 557,292,464.28 492,182,551.87 11.68% 39.23% 32.39% 4.56%
Everyday home
200,821,213.92 179,178,952.34 10.78% 21.75% 12.28% 7.53%
appliances
Tea and coffee
126,054,808.02 104,010,181.13 17.49% 49.38% 31.49% 11.23%
makers
Other 10,785,422.18 4,928,704.56 54.30% 15.45% 48.09% -10.07%
Total 894,953,908.40 780,300,389.90 12.81% 35.82% 27.13% 5.96%
Classified by region
Americas 389,942,699.15 339,045,613.58 13.05% 57.87% 45.39% 7.46%
Europe 265,055,223.83 228,545,258.16 13.77% 31.95% 19.48% 9.00%
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2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Increase/decrease Increase/decrease
Increase/decrease
Gross of operating of gross profit
of operating costs
Item Operating revenue Operating costs profit rate revenue over same rate over same
over same period
(%) period of last year period of last
of last year (%)
(%) year (%)
Asia 194,421,962.17 175,866,670.95 9.54% 20.05% 21.16% -0.83%
Australia 38,523,514.39 31,277,519.69 18.81% 0.40% -9.62% 9.00%
Africa 7,010,508.86 5,565,327.52 20.61% -34.79% -41.67% 9.37%
Total 894,953,908.40 780,300,389.90 12.81% 35.82% 27.13% 5.96%
III. Analysis of non-core business
√ Applicable □ Not applicable
Unit: RMB Yuan
Ratio to the total
Recurring
Items Amount profits amount Notes of the causes
or not
(%)
Asset impairment losses 1,919,355.87 1.65 Inventory valuation allowances made No
Gains on fair value changes -4,145,350.00 -3.56 Assessed losses on forward forex contracts No
Income from settled forward forex contracts and
Investment income 8,313,038.97 7.13 No
wealth management instruments
Assets disposal income from the policy relocation of
Assets disposal income 63,398,419.60 54.41 the phase II plant of subsidiary TKS in the current No
period
Government subsidy in relation to production and
Other income 2,617,767.00 2.25 No
operation
Assets disposal income from the policy relocation of
Non-business revenue 26,181,811.37 22.47 the phase II plant of subsidiary TKS in the current No
period
Non-business expenses 20,502.70 0.02 Asset retirement losses and fines No
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2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
IV. Assets and liabilities
1. Significant changes in asset composition
Unit: RMB Yuan
At end of same period of last
At end of Reporting Period Change
year
in
As a As a
Item percent Reason for any significant change
percentage percentage
Amount Amount age
of total of total
(%)
assets (%) assets (%)
Monetary funds 419,946,354.54 22.50 438,035,096.81 27.67 -5.17
Financial assets at fair Assessed losses on forward forex contracts in
698,450.00 0.04 0.00 0.00 0.04
value through profit/loss the same period of last year
Notes and accounts
295,146,383.76 15.82 208,402,211.03 13.16 2.66 Increase in operating revenue
receivable
Prepayments 6,233,274.10 0.33 12,683,301.03 0.80 -0.47 Decrease in prepayments for aluminum ingots
Other receivables 23,715,857.80 1.27 28,747,849.19 1.82 -0.55 Decreased export tax rebates
Inventories 234,449,594.86 12.56 228,857,043.21 14.46 -1.90
Other current assets 604,009,135.87 32.37 377,710,035.73 23.86 8.51 Increase in wealth management instruments
Investment property 24,272,428.54 1.30 30,415,709.80 1.92 -0.62
Fixed assets 186,656,542.39 10.00 173,586,284.79 10.97 -0.97
Building repairs at the beginning of the year
Construction in progress 2,020,699.59 0.11 2,996,491.22 0.19 -0.08 were accepted upon examination in the current
period
Intangible assets 31,206,433.60 1.67 28,124,283.40 1.78 -0.11
Long-term deferred
6,760,955.66 0.36 8,096,749.00 0.51 -0.15
expenses
Deferred income tax assets 26,613,551.53 1.43 22,867,553.35 1.44 -0.01
Die-casting equipment prepaid for in the same
Other non-current assets 4,277,003.16 0.23 22,528,676.87 1.42 -1.19 period of last year have not yet been examined
for acceptance
Short-term borrowings 10,449,572.62 0.56 17,909,899.30 1.13 -0.57 Decrease in secured loans
Financial liabilities at fair Decrease in assessed losses on forward forex
3,403,100.00 0.18 6,008,550.00 0.38 -0.20
value through profit/loss contracts
Notes and accounts Increase in accounts payable for procurement
591,605,271.55 31.70 452,432,071.05 28.58 3.12
payable along with the increase in operating revenue
Accounts received in 9,787,514.28 0.52 11,941,937.58 0.75 -0.23
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2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
At end of same period of last
At end of Reporting Period Change
year
in
As a As a
Item percent Reason for any significant change
percentage percentage
Amount Amount age
of total of total
(%)
assets (%) assets (%)
advance
Payroll payable 40,140,088.97 2.15 39,119,018.68 2.47 -0.32
Increase in corporate income tax and output
Tax payable 9,893,046.00 0.53 4,674,769.16 0.30 0.23
tax provisions
Other accounts payable 63,377,139.52 3.40 63,606,957.90 4.02 -0.62
Long-term payroll
387,284.51 0.02 178,526.85 0.01 0.01 Increase in retirement pensions payable
payables
Subsidy for the policy relocation of the phase I
Specific payables 0.00 0.00 109,137,778.28 6.89 -6.89
plant of TKS at the end of 2017
Deferred income tax liabilities recognized on
Deferred income tax the assets disposal income from the policy
48,402,014.96 2.59 970,006.50 0.06 2.53
liabilities relocation of the phase II plant in the current
period
Other comprehensive Increased income from foreign-currency
6,083,310.09 0.33 4,580,506.61 0.29 0.04
income translation differences
2. Assets and liabilities measured at fair value
√ Applicable □ Not applicable
Unit: RMB Yuan
Profit/loss on Cumulative Impairment
fair value fair value provided in
Opening Purchased in this Sold in this Closing
Item changes in this changes this
balance Reporting Period Reporting Period balance
Reporting charged to Reporting
Period equity Period
Financial assets
1. Financial assets at fair value
through profit/loss (excluding 0.00 0.00 0.00 0.00 0.00 0.00 0.00
derivative financial assets)
2. Derivative financial assets 1,440,700.00 -742,250.00 0.00 0.00 82,882,050.00 234,567,600.00 698,450.00
3. Available-for-sale financial
0.00 0.00 0.00 0.00 0.00 0.00 0.00
assets
Subtotal of financial assets 1,440,700.00 -742,250.00 0.00 0.00 82,882,050.00 234,567,600.00 698,450.00
Investment property 0.00 0.00 0.00 0.00 0.00 0.00 0.00
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2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Profit/loss on Cumulative Impairment
fair value fair value provided in
Opening Purchased in this Sold in this Closing
Item changes in this changes this
balance Reporting Period Reporting Period balance
Reporting charged to Reporting
Period equity Period
Productive living assets 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Others 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total of the above 1,440,700.00 -742,250.00 0.00 0.00 82,882,050.00 234,567,600.00 698,450.00
Financial liabilities 0.00 -3,403,100.00 0.00 0.00 255,857,400.00 67,290,300.00 3,403,100.00
Did any significant changes occur to the measurement attributes of the Company’s main assets in the Reporting Period?
□ Yes √ No
3. Restricted asset rights as of the end of this Reporting Period
√ Applicable □ Not applicable
There was RMB14,200,000 of bank’s term deposit receipts in pledge for U.S. dollar loan.
V. Investments made
1. Total investments made
√ Applicable □ Not applicable
Unit: RMB Yuan
Investments made in same period of
Investments made in Reporting Period +/-%
last year
1,500,000.00 0.00 100.00
2. Significant equity investments made in this Reporting Period
□ Applicable √ Not applicable
3. Significant non-equity investments ongoing in this Reporting Period
□ Applicable √ Not applicable
4. Financial investments
(1) Securities investments
□ Applicable √ Not applicable
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2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(2) Investment in derivative financial instruments
√ Applicable □ Not applicable
Unit: RMB’0,000
Ratio of
investment
Type of amount at the
Investment Sold in Investment
Related-party investment in Initial Pursed in this Amount end of the Actual
Operating Commencement Termination amount at the this amount
Relation transaction or derivative investment reporting provided for period to the profit/loss for
party date date beginning of reporting at the end of
not financial amount period impairment Company's net the period
the period period the period
instruments asset at the end
of the period
(%)
Non-rel
Bank No Forward forex 56,652.19 1 January 2019 30 June 2019 22,778.24 33,873.95 30,185.79 26,466.40 38.38 17.88
ated
Total 56,652.19 22,778.24 33,873.95 30,185.79 26,466.40 38.38 17.88
Source of investment funds Self-owned funds
Lawsuits N/A
Disclosure date of the announcement about the board’s consent
12 March 2013
for the investment
Disclosure date of the announcement about the general meeting’s
18 May 2013
consent for the investment
17
2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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 operation of the Company in the coming year.
Risk analysis and risk control measures for positions held in (2) Staff requirements: Personnel taking part in the investment shall all fully understand the risks of derivative investment and strictly execute the business operation and risk
derivatives in this reporting period (including but not limited to management mechanisms for derivative investment.
market risk, liquidity risk, credit risk, operational risk, legal risk, (3) Operation standardization: Before making a derivative investment, the Company shall rationally equip itself with professional personnel for investment decision-making,
etc.) 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.
(6) Audit system: The audit department audits derivative product trading periodically and submits audit reports to relevant units.
(1) Gains on delivered derivatives in the Reporting Period were RMB4.3241 million, and assessed losses on those undelivered were RMB4.1453 million, among which
Changes in market price or fair value of derivatives invested in
assessed gains of RMB1.4407 million on undelivered forward forex contracts last year were reversed.
this reporting period (specific methods used and relevant
(2) The former contracted bank provided monthly sheets of estimated exchange rates for the undue contracted forward exchanges on the last trading day of the month.
assumption and parameter settings shall be disclosed for analysis
(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
of fair value of derivatives)
exchange rate and the currency amount when bought in.
Significant changes in the Company’s accounting policies and
specific accounting principles for derivatives in this reporting No significant changes
period as compared to the prior period
Special opinions expressed by independent directors The Company has carried out a strict internal assessment for the financial derivative business and has established a corresponding supervision mechanism. We are of the
concerning the Company’s derivatives investment and risk opinion that the financial derivative business conducted by the Company is fairly necessary in its routine operation and is in compliance with relevant laws and regulations,
control with the risks controllable.
18
2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
VI. Sale of major assets and equity interests
1. Sale of major assets
□ Applicable √ Not applicable
2. Sale of major equity interests
□ Applicable √ Not applicable
VII. Main controlled and joint stock companies
Main subsidiaries and joint stock companies
Unit: RMB Yuan
Relationship
Registered Operating
Company name with the Main business scope Total assets Net assets Operating profit Net profit
capital revenues
Company
USD160
Tsann Kuen (Zhangzhou) Enterprise Co., Ltd. Subsidiary Small home appliance manufacturing 1,974,579,177.00 1,286,069,333.35 884,551,699.73 41,761,449.39 37,058,705.83
million
USD40
Tsann Kuen China (Shanghai) Enterprise Co., Ltd. Subsidiary Small home appliance manufacturing 276,012,607.20 225,146,739.60 537,628.52 62,190,400.01 62,334,333.43
million
USD30
Pt.Star Comgistic Indonesia Subsidiary Small home appliance manufacturing 117,685,273.89 81,722,763.57 42,766,092.00 -10,663,867.66 -10,665,886.45
million
NTD300
Tsannkuen Edge Intelligence Co., Ltd. Subsidiary Industrial design 20,039,316.31 16,680,130.68 4,062,649.39 -1,013,857.68 -991,957.28
million
Subsidiaries obtained or disposed in this Reporting Period
√ Applicable □ Not applicable
19
2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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.
VIII. Structured bodies controlled by the Company
□ Applicable √ Not applicable
IX. Predict the operating results of January-September 2019
Warning of possible loss or considerable YoY change of the accumulated net profit made during the period-begin to the end of the
next Reporting Period according to prediction, as well as explanations on the reasons:
□ Applicable √ Not applicable
X. Risks facing the Company and countermeasures
1. International
Influenced by Sino-US Trade War, parts of the countries began to adopt trade protectionism and 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 and non-tariff barrier with the more complicated international environment faced with the
electrical home appliances.
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
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 2019.
As for the risks of the culture difference: 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
Y2019 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. The domestic and oversea environment in 2019 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 the
customers’ 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
The Company’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
Factors such as increase of local minimum wage standard, decrease of labor supply and the seasonal human resource demand of
surrounding enterprises, have resulted in increase of labor costs of the Company year by year. The Company reduces operation staff
on site by promoting procurement modularization and lean automation to improve compensation & benefits of the employees to
reduce employee turnover rate. Performance-orientated retention policy has been adopted to enhance retention rate of the employees.
20
2019 Semi-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, and with the introduce of the
new environmental protection materials, the input of the automation and the technical promotion of the environmental manufacture
processing, the environment protection of products of the Company will be continuously promoted.
Section V. Significant Events
I. List of the Annual Meeting of Shareholders and Special Meeting of Shareholders held
during the Reporting Period
1. List of Meeting of Shareholders during the Reporting Period
Time Type Participation ratio Date of meeting Date of disclosure Disclosure index
The 1st
Extraordinary Extraordinary
45.01% 11 January 2019 12 January 2019 www.cninfo.com.cn
General Meeting of General Meeting
2019
The 2018 Annual
Annual Meeting of
Meeting of 45.71% 17 May 2019 18 May 2019 www.cninfo.com.cn
Shareholders
Shareholders
2. Preferred shareholders with the restoration of voting rights made a request for the Special Meeting of
Shareholders
□ Applicable √ Not applicable
II. Pre-plan for profit allocation and turning capital reserve into share capital during the
Reporting period
□ Applicable √ Not applicable
The Company planned not to distribute cash dividend and bonus share, and not to convert capital reserves into share capital in half
year.
III. Commitments of the Company’s actual controller, shareholders, related parties and
acquirer, as well as the Company and other commitment makers, fulfilled in this reporting
period or ongoing at the period-end
√ Applicable □ Not applicable
Time of Period of
Commitment Commitment
Commitment Contents making commitme Fulfillment
maker type
commitment nt
Commitment on share
reform
Commitment in the
acquisition report or the
report on equity changes
Commitments made upon
the assets replacement
Commitments made upon
21
2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Time of Period of
Commitment Commitment
Commitment Contents making commitme Fulfillment
maker type
commitment nt
first issuance or refinance
Commitment on equity
incentive
Based on the confidence on
the continuous and stable
development of the Company,
it committed to increase the
shareholding if the The Company’s
Company’s stock price lower stocks resumed
than HKD2.40 per share after trading on 31
the implementation of the Dec. 2012, but
shares contraction and trading the Company’s
resumption, and it would stock price hasn’t
increase no more than 2% met the condition
shares (i.e. 3.7078 million (closing price
FILLMAN Commitment shares) of the total shares was lower than
Other commitments made INVESTME on issued by the Company 28 December Long-term HKD2.40) for
to minority shareholders NTS shareholding within one year since the date 2012 effective shareholding
LIMITED increase of initial shareholding increase since the
increase. If the plan on date of trading
increasing holding 2% shares resumption,
of the total shares is FILLMAN
completed within 12 months, Investment
and the stock price has also Limited hasn’t
reached the target price, it implemented the
will perform relevant shareholding
approval procedures, and increase plan.
propose to CSRC on
continuous implementation of
shareholding increase by
exemption of offering.
Executed on time or not Yes
During the Reporting Period, there were no Commitments of the Company’s actual controller, shareholders, related parties and
acquirer, as well as the Company and other commitment makers, fulfilled in this reporting period or ongoing at the period-end.
IV. Engagement and disengagement of CPAs firm
Whether the semi-annual financial report has been audited
□ Yes √ No
The semi-annual financial report of the Company has not been audited
V. Notes for “non-standard audit report” of CPAs firm during the Reporting Period by board
of directors and supervisory board
□ Applicable √ Not applicable
VI. Notes for the related information of “non-standard audit reports” last year by board of
directors
□ Applicable √ Not applicable
VII. Bankruptcy and restructuring
□ Applicable √ Not applicable
22
2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
VIII. Litigations and arbitrations
Significant litigations and arbitrations
□ Applicable √ Not applicable
Other lawsuits
√ Applicable □ Not applicable
Unit: RMB’0,000
Situation of
Lawsuit Whether Trial results
Basic situation of execution of
amount form into and influences Disclosure Disclosure
lawsuit Process of lawsuit (arbitration) judgment of
(RMB Ten estimated of lawsuit date index
(arbitration) lawsuit
thousand) liabilities (arbitration)
(arbitration)
Tsann Kuen China (Zhangzhou)
Enterprise Co., Ltd. filed a plaint
The case of the at Kobe District Court on 9 May
controlling 2014; the judgment of first
subsidiary Tsann instance that the claim of Tsann
Kuen China Kuen China (Zhangzhou)
(Zhangzhou) Enterprise Co., Ltd. was rejected
1,770.26 No Had no result No No No
Enterprise Co., was received on 1 April 2019. An
Ltd. sued Japan appeal was instituted within the
UCC Ueshima statutory period. Up to now, the
Coffee Co., Ltd. appeal letter of UCC has been
(contract disputes) received and the time of the first
oral argument in the second trial
is 6 September 2019.
The case of the
controlling
subsidiary Tsann
Kuen China
(Zhangzhou)
Enterprise Co., SUPERIOR COURT OF
CALIFORNIA COUNTY OF
Ltd. sued MTN 1,429.40 No Had no result No No No
LOS ANGELES had put on
Products, Inc./
record on 23 November 2016
Water Solutions
（Hong Kong）
Ltd. (disputes of
defaulting on
loans)
The first
instance of
judgment from Zhangzhou
Zhangzhou Intermediate
Intermediate People’s
People’s Court Court put on
was received record the
The contract
on June 11, case and
disputes case of
2018: 1. consent to
the controlling
Defendants of the
subsidiary Tsann
Sanda and application of
Kuen China
Lianyuan enforcement
(Zhangzhou)
returned on 21
Enterprise Co., Ltd
Receive the judgment of second payments for January
sued Sanda 333.00 No No No
instance on 11 December 2018 80,603 motors 2019; the
Electric
of RMB execution
Machinery Co.,
2,435,368.34 money of
Ltd. and Boluo
to Tsann Kuen RMB
County Lianyuan
China 1,771,541.08
Industrial
(Zhangzhou); was received
Technology Co.,
2. Defendants from
Ltd.
of Sanda and Zhangzhou
Lianyuan Intermediate
returned total People’s
RMB895,062. Court on 21
3 for labor cost March 2019.
of checking,
dismantling,
23
2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Situation of
Lawsuit Whether Trial results
Basic situation of execution of
amount form into and influences Disclosure Disclosure
lawsuit Process of lawsuit (arbitration) judgment of
(RMB Ten estimated of lawsuit date index
(arbitration) lawsuit
thousand) liabilities (arbitration)
(arbitration)
and sorting out
the defective
motors,
material fees
for evidence
preservation
and cost of
photography.
The judgment
of second
instance from
Fujian
Provincial
Higher
People’s
Court: affirm
the original
judgment and
reject the
appeal.
Ningbo Intermediate People’s
Court opened the court session
The patent
for the first time on 9 November
infringement cases
2018. The application for
of the Company Close the case
withdrawal of the case was
sued Huayu by means of
100.00 No submitted to Ningbo Intermediate No No No
Electrical action
People’s Court on 29 January
Appliance Group withdrawal
2019. The withdrawal judge was
Co., Ltd.
received from Ningbo
Intermediate People’s Court on
13 April 2019.
The contract
Applying for out-of-court
disputes case of
settlement and extension of trial
the Company sued
time-limit on 27 August 2018.
Zhongshan Jalja 34.00 No Had no result No No No
Applying to Xiamen People’s
Electric Appliance
Court for withdrawing charges on
Technology Co.,
16 May 2019.
Ltd.
The patent
infringement cases
of the Company
sued Ningbo Ningbo Intermediate People’s
Golden Age 50.00 No Court opened the court session on Had no result No No No
Electric Co., Ltd 28 January 2019.
and Ningbo
Zhonghao Electric
Co., Ltd
The patent
infringement case Guangzhou Intellectual Property
of the Company Court opened the court session
50.00 No Had no result No No No
sued Ningbo for the second time on 29 May
Kaibo Group Co., 2019
Ltd
The patent
infringement cases
of the controlling On 12 December 2018, the court
subsidiary Tsann judged that the case should be
Kuen China transferred to Shenzhen
(Zhangzhou) Intermediate People’s Court for
50.00 No Had no result No No No
Enterprise Co., filing; Shenzhen Intermediate
Ltd. sued Zhejiang People’s Court opened the court
Tmall Network session for the first time on 25
Co., Ltd., April 2019.
Shenzhen
ZhengXiang
24
2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Situation of
Lawsuit Whether Trial results
Basic situation of execution of
amount form into and influences Disclosure Disclosure
lawsuit Process of lawsuit (arbitration) judgment of
(RMB Ten estimated of lawsuit date index
(arbitration) lawsuit
thousand) liabilities (arbitration)
(arbitration)
Electrical
Industrial Co., Ltd
and Shenzhen
Aierde Household
Furnishings Co.,
Ltd.
IX. Punishments and rectifications
□ Applicable √ Inapplicable
No such cases in the Reporting Period.
X. Credit conditions of the Company as well as its controlling shareholder and actual
controller
□ Applicable √ Not applicable
XI. Implementation of any equity incentive plan, employee stock ownership plan or other
incentive measures for employees
□ Applicable √ Not applicable
25
2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
XII. Significant related-party transactions
1. Related-party transactions relevant to routine operation
√ Applicable □ Not applicable
Unit: RMB’0,000
Pricing
principle Proportion Whether Settlement
Type of the Content of the of the Transa Transact in same Approved exceeded method of Similar
Disclosur Disclosure
Related party Relationship related-party related-party related-p ction ion kind of transactio the the market
e date index
transaction transaction arty price amount transactio n quota approved related-party price
transacti ns (%) quota transaction
on
Company
directly Purchase of
Thermaster Electronic controlled by commoditie Purchase of
1,661.59 2.53% 3,658.00 No
(Xiamen) Ltd. actual controller s from the raw parts
and their close related party
family members
Based
Under the Purchase of on the
Tsann Kuen control of the commoditie Purchase of market 0.07 0.00% 5.00 No
Enterprise Co., Ltd. same actual s from the raw parts
price
controller related party Settled
and both
according to www.cnin
Under the Purchase of parties 19 March
N/A the contract N/A fo.com.cn
Gold Mining Chain control of the commoditie Purchase of abide 2019
0.06 0.00% 1.00 No signed by
Co., Ltd. same actual s from the raw parts by the
both parties
controller related party fair and
reasonab
Purchase of
Ultimate le
Star Comgistic commoditie Purchase of
controlling principle 0.45 0.00% 0.00 Yes
Capital Co., Ltd. s from the raw parts
company
related party
Sales of
Ultimate Sales of parts
Star Comgistic commoditie
controlling and finished 591.56 0.64% 1,866.00 No
Capital Co., Ltd. s to the
company products
related party
Total 2,253.73 5,530.00
26
2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Pricing
principle Proportion Whether Settlement
Type of the Content of the of the Transa Transact in same Approved exceeded method of Similar
Disclosur Disclosure
Related party Relationship related-party related-party related-p ction ion kind of transactio the the market
e date index
transaction transaction arty price amount transactio n quota approved related-party price
transacti ns (%) quota transaction
on
N/A
Details of large amount of sales returns
As for the prediction on the total amount of routine related-party N/A
transactions to be occurred in the reporting period by relevant types, the
actual performance in the reporting period
Reason for significant difference between the transaction price and the N/A
market price
2. Related-party transactions regarding purchase and sales of assets or equity
□ Applicable √ Not applicable
3. Related-party transitions with joint investments
□ Applicable √ Not applicable
4. Significant credits and liabilities with related parties
√ Applicable □ Not applicable
Whether exist non-operating credits and liabilities with related parties?
□ Yes √ No
5. Other significant related-party transactions
□ Applicable √ Not applicable
27
2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
XIII. Occupation of the Company’s funds for non-operating purposes by the controlling
shareholder and its related parties
□ Applicable √ Not applicable
XIV. Significant contracts and execution
1. Particulars about trusteeship, contract and lease
(1) Trust
□ Applicable √ Not applicable
(2) Contract
□ Applicable √ Not applicable
(3) Lease
□ Applicable √ Not applicable
2. Significant guarantees
√ Applicable □ Not applicable
(1) Guarantees
Unit: RMB’0,000
Guarantees subsidiaries
Actual
Guarantee
Disclosure occurrence
Actual for a
date of the Line of date (date Type of Term of Due
Guaranteed party guarantee related
guarantee line guarantee of guarantee guarantee or not
amount party or
announcement agreement
not
signing)
Tsann Kuen Edge
08/08/2018 515.60 08/07/2018 0.00 Pledged 1 year No No
Intelligence
PT.STAR
COMGISTIC 08/08/2018 2,062.41 08/07/2018 1,031.20 Pledged 1 year No No
INDONESIA
Total actual guarantee
Total guarantee line for subsidiaries amount for subsidiaries
0.00 0.00
approved during this Reporting Period during this Reporting
Period
Total actual guarantee
Total approved guarantee line for
balance for subsidiaries at
subsidiaries at the end of this Reporting 1,031.20
2,578.01 the end of this Reporting
Period
Period
Total guarantee amount (total of the above-mentioned three kinds of guarantees)
28
2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Total actual guarantee
Total guarantee line approved during this
0.00 amount during this 0.00
Reporting Period
Reporting Period
Total actual guarantee
Total approved guarantee line at the end
2,578.01 balance at the end of this 1,031.20
of this Reporting Period
Reporting Period
Proportion of the total actual guarantee amount in net assets of the
1.50%
Company
Of which:
Amount of guarantees provided for shareholders, the actual
0.00
controller and their related parties
Amount of debt guarantees provided directly or indirectly for
0.00
entities with a liability-to-asset ratio over 70%
Portion of the total guarantee amount in excess of 50% of net assets 0.00
Total amount of the three kinds of guarantees above 0.00
Explanation on undue guarantee or possible joint liquidated liability
None
undertaken
Explanation on providing external guarantee violating established
None
procedures
(2) Illegal Provision of Guarantees for External Parties
□ Applicable √ Not applicable
3. Other significant contracts
□ Applicable √ Not applicable
XV. Social responsibilities
1. Significant environmental protection
□ Applicable √ Not applicable
2. Targeted measures taken to help people lift themselves out of poverty
□ Applicable √ Not applicable
XVI. Other significant events
□ Applicable √ Not applicable
There was no such situation during the Reporting period.
XVII. Significant events of subsidiaries
□ Applicable √ Not applicable
29
2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section VI. Change in Shares & Shareholders
I. Changes in shares
1. Changes in shares
Unit: share
Before the change Increase/decrease in the change (+,-) After the change
Issuance Capitalization
Bonus
Number Proportion of new of public Other Subtotal Number Proportion
shares
shares reserve fund
I. Unlisted tradable
0 0.00% 0 0 0 0 0 0 0.00%
shares
1. Founders’ shares
Among which:
shares held by
State
Shares held by
domestic
corporation
Shares held by
foreign
corporations
Other
2. Raised
corporation shares
3. Staff shares
4. Preferred shares
or other
II. Listed tradable
185,391,680 100.00% 0 0 0 0 0 185,391,680 100.00%
shares
1. RMB ordinary
shares
2. Domestically
listed foreign 185,391,680 100.00% 0 0 0 0 0 185,391,680 100.00%
shares
3. Foreign capital
stocks listed
abroad
4. Other
III. Total shares 185,391,680 100.00% 0 0 0 0 0 185,391,680 100.00%
Reasons for change in share capital
□ Applicable √ Not applicable
Particulars about the approval of the change in share capital
□ Applicable √ Not applicable
The transfer of change in share capital
□ Applicable √ Not applicable
30
2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Change in share capital’s impacts on basic EPS and diluted EPS in recent year and recent issue, and net assets per share attributed to
equity shareholder and financial index etc.
□ Applicable √ Not applicable
Other contents was necessary to the company or the securities regulators required to be disclosed
□ Applicable √ Not applicable
2. Changes in restricted shares
□ Applicable √ Not applicable
II. Issuance and listing of securities
□ Applicable √ Not applicable
III. Total number of shareholders and their shareholdings
Unit: share
Total number of common shareholders at Total number of preference shareholders with
16,023 0
the period-end resumed voting rights at the period-end
Greater than 5% or top 10 common shareholders
Total Number Pledged or
Number of frozen shares
Shareholdi common Increase/decrease of
Name of Nature of unrestricte
ng shares held during the restricted Status Numbe
shareholder shareholder d common
percentage at the reporting period common of r of
shares
period-end shares shares shares
FORDCHEE
Foreign
DEVELOPMENT 29.10% 53,940,530 No change 0 53,940,530 N/A 0
corporation
LIMITED
EUPA INDUSTRY
Foreign
CORPORATION 13.09% 24,268,840 No change 0 24,268,840 N/A 0
corporation
LIMITED
GUOTAI JUNAN
SECURITIES(HO Foreign
4.95% 9,181,382 -15,067 0 9,181,382 N/A 0
NGKONG) corporation
LIMITED
FILLMAN
Foreign
INVESTMENTS 2.49% 4,621,596 No change 0 4,621,596 N/A 0
corporation
LIMITED
SHENWAN
HONGYUAN Foreign
1.09% 2,016,752 60,000 0 2,016,752 N/A 0
SECURITIES corporation
(H.K.) LIMITED
CHEN Domestic
1.03% 1,900,776 No change 0 1,900,776 N/A 0
YONGQUAN individual
CHEN
Foreign individual 0.83% 1,538,949 No change 0 1,538,949 N/A 0
YONGQING
CHEN LIJUAN Foreign individual 0.75% 1,381,334 No change 0 1,381,334 N/A 0
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
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2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
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 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
53,940,530 Domestically listed foreign shares 53,940,530
LIMITED
EUPA INDUSTRY CORPORATION
24,268,840 Domestically listed foreign shares 24,268,840
LIMITED
GUOTAI JUNAN
9,181,382 Domestically listed foreign shares 9,181,382
SECURITIES(HONGKONG) LIMITED
FILLMAN INVESTMENTS LIMITED 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.) LIMITED
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 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 parties or
shareholders and between the top ten acting-in-concert parties as prescribed in the Administrative Methods for Disclosure of the
unrestricted common shareholders and 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
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.
32
2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
IV. Change of the controlling shareholder or the actual controller
Change in controlling shareholder in the Reporting Period
□ Applicable √ Not applicable
There was no any change of the controlling shareholder in the Reporting Period.
Change of the actual controller during the Reporting Period
□ Applicable √ Not applicable
There was no any change of the actual controller during the Reporting Period
Section VII. Preference Shares
□ Applicable √ Not applicable
There was no preference stock during the Reporting Period.
Section VIII. Directors, Supervisors, Senior Management Staff &
Employees
I. Changes in shareholding of directors, supervisors and senior management staff
□ Applicable √ Not applicable
There was no change in shareholding of directors, supervisors and senior management staffs, for the specific information please refer
to the 2018 Annual Report.
II. Change of directors, supervisors and senior management staff
√ Applicable □ Not applicable
Name Office title Type of change Date Reason
Feng Zhiqing Financial chief Contract termination 22 March 2019 Personal career planning
Wu Jianhua Financial chief Engagement 29 March 2019 Engagement
Yang Shunlong Director Left 1 April 2019 Personal reason
Luo Qingxing Supervisory Board chairman Left 17 May 2019 Retirement
Election due to the left of
Xu Degeng Director Elected 17 May 2019
the former director
Election due to the left of
Xu Xiaowan Supervisory Board chairman Elected 17 May 2019 the former Supervisory
Board chairman
33
2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section IX. 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
Section X. Financial Report
I. Auditor’s Report
Whether the semi-annual report has been audited?
□Yes √No
The semi-annual report of the Company has not been audited.
II. Financial statements (attached)
1. Balance sheet
2. Income statement
3. Cash flow statement
4. Statement of Change in Owners’ Equity
5. Notes to the Financial Statements
34
2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section XI. Documents Available for Reference
1. This Report carrying the signature and seal of the Board Chairman.
2. The financial statements signed and sealed by the legal representative, the accounting head for this Report and the accounting head
of the Company.
3. The originals of all the Company’s documents and announcements which were disclosed on Securities Times, Hong Kong Ta
Kung Pao and http://www.cninfo.com.cn/ in the reporting period) designated by the CSRC.
The Board of Directors of Tsann Kuen (China) Enterprise Co., Ltd.
Board Chairman: Pan Zhirong
6 August 2019
35
2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
1. Consolidated balance sheet
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd. Unit: RMB
Item Notes 2019.6.30 2018.12.31
Current assets:
Monetary funds VI.1 419,946,354.54 469,692,295.47
Financial assets measured by fair value
with changes in fair value recognised in VI.2 698,450.00 1,440,700.00
profit or loss
Derivative financial assets
Notes receivable and accounts receivable: VI.3 295,146,383.76 280,796,130.89
Including: notes receivable 50,000.00 200,000.00
Accounts receivable 295,096,383.76 280,596,130.89
Accounts paid in advance VI.4 6,233,274.10 2,668,796.33
Other accounts receivable VI.5 23,715,857.80 29,944,042.47
Including: interest receivable 1,423,758.77
Dividends receivable
Inventories VI.6 234,449,594.86 243,262,500.58
Assets held for sale 4,311,436.92
Non-current assets due within 1 year
Other current assets VI.7 604,009,135.87 527,497,484.82
Total current assets 1,584,199,050.93 1,559,613,387.48
Non-current assets:
Available-for-sale financial assets VI.8 40,000.00 40,000.00
Held-to-maturity investments
Long-term accounts receivable
Long-term equity investment
Investing real estate VI.9 24,272,428.54 25,014,648.31
Fixed assets VI.10 186,656,542.39 191,073,302.46
Construction in progress VI.11 2,020,699.59 895,756.17
Production biological assets
Oil-gas assets
Intangible assets VI.12 31,206,433.60 27,771,236.03
R&D expense
Goodwill
Long-term deferred expenses VI.13 6,760,955.66 8,058,867.12
Deferred income tax assets VI.14 26,613,551.53 26,552,328.43
Other non-current assets VI.15 4,277,003.16 3,495,224.64
Total of non-current assets 281,847,614.47 282,901,363.16
Total assets 1,866,046,665.40 1,842,514,750.64
36
2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(Continued)
Item Notes 2019.6.30 2018.12.31
Current liabilities:
Short-term borrowings VI.16 10,449,572.62 10,432,044.21
Financial liabilities measured at fair value
of which changes are recorded in current VI.17 3,403,100.00
profits and losses
Derivative financial liabilities
Notes payable and accounts payable VI.18 591,605,271.55 672,895,647.66
Accounts received in advance VI.19 9,787,514.28 9,747,158.90
Payroll payable VI.20 40,140,088.97 48,587,140.78
Tax payable VI.21 9,893,046.00 3,768,531.07
Other accounts payable VI.22 63,377,139.52 52,818,204.91
Including: interest payable 23,919.09
Dividends payable
Liabilities held for sale
Non-current liabilities due within 1 year
Other current liabilities
Total current liabilities 728,655,732.94 798,248,727.53
Non-current liabilities:
Long-term borrowings
Bonds payable
Of which: preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payables VI.23 387,284.51 361,923.23
Estimated liabilities
Deferred income
Deferred income tax liabilities VI.14 48,402,014.96 27,505,224.10
Other non-current liabilities
Total non-current liabilities 48,789,299.47 27,867,147.33
Total liabilities 777,445,032.41 826,115,874.86
Shareholders’ equity:
Share capital VI.24 185,391,680.00 185,391,680.00
Other equity instruments
Of which: preferred shares
Perpetual bonds
Capital reserves VI.25 296,808,965.79 296,808,965.79
Less: Treasury stock
Other comprehensive income VI.26 6,083,310.09 5,924,132.67
Specific reserves
Surplus reserves VI.27 37,770,482.76 37,804,354.59
Provisions for general risks
Retained profits VI.28 163,589,147.46 122,872,551.30
Total equity attributable to shareholders of the
689,643,586.10 648,801,684.35
Company
Minority interests 398,958,046.89 367,597,191.43
Total shareholders’ equity 1,088,601,632.99 1,016,398,875.78
Total liabilities and shareholders’ equity 1,866,046,665.40 1,842,514,750.64
Legal Representative: Pan Zhirong Person in Charge of Accounting Work: Wu Jianhua Person in Charge of Financial Department: Wu Jianhua
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2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2. Balance sheet of the Company
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd. Unit: RMB
Item Notes 2019.6.30 2018.12.31
Current Assets:
Monetary funds 6,265,097.49 6,985,345.44
Financial assets measured at fair value of
which changes are recorded in current profits
and losses
Derivative financial assets
notes receivable and accounts receivable XIV. 1 5,016,869.01 16,443,882.91
Including: notes receivable 50,000.00 200,000.00
Accounts receivable 4,966,869.01 16,243,882.91
Accounts paid in advance 108,000.00 260,472.55
Other accounts receivable XIV. 2 2,563,559.67 2,213,373.51
Including: interest receivable
Dividends receivable
Inventories 4,402,526.88 9,339,180.06
Assets held for sale
Non-current assets due within 1 year
Other current assets 411,624.09 381,431.15
Total current assets 18,767,677.14 35,623,685.62
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 XIV. 3 923,414,701.56 921,914,701.56
Investing real estate 28,698,034.05 29,863,349.12
Fixed assets 1,097,168.10 1,189,309.65
Construction in progress 321,884.70
Production biological assets
Oil-gas assets
Intangible assets 15,749.99 29,249.99
R&D expense
Goodwill
Long-term deferred expenses
Deferred income tax assets 11,596,412.54 10,946,860.01
Other non-current assets 53,879.31
Total of non-current assets 965,183,950.94 964,037,349.64
Total assets 983,951,628.08 999,661,035.26
38
2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(Continued)
Item Notes 2019.6.30 2018.12.31
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 and accounts payable 38,677,915.58 58,463,830.39
Accounts received in advance 1,965,997.46 1,708,795.17
Payroll payable 4,495,596.29 5,338,618.00
Tax payable 825,662.03 666,695.14
Other accounts payable 250,560,979.21 262,786,311.87
Including: interest payable
Dividends payable
Liabilities held for sale
Non-current liabilities due within 1 year
Other current liabilities
Total current liabilities 296,526,150.57 328,964,250.57
Non-current liabilities:
Long-term borrowings
Bonds payable
Of which: preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payables
Estimated liabilities
Deferred income
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities 296,526,150.57 328,964,250.57
Shareholders’ equity:
Share capital 185,391,680.00 185,391,680.00
Other equity instruments
Of which: preferred shares
Perpetual bonds
Capital reserves 271,490,289.82 271,490,289.82
Less: Treasury stock
Other comprehensive income
Specific reserves
Surplus reserves 37,770,482.76 37,804,354.59
Provisions for general risks
Retained profits 192,773,024.93 176,010,460.28
Total shareholders' equity 687,425,477.51 670,696,784.69
Total liabilities and shareholders' equity 983,951,628.08 999,661,035.26
Legal Representative: Pan Zhirong Person in Charge of Accounting Work: Wu Jianhua Person in Charge of Financial Department: Wu Jianhua
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2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
3. Consolidated income statement
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd. Unit: RMB
Item Notes Reporting period Same period of last year
I. Total operating revenues VI.29 929,448,983.38 691,510,505.23
Including: Sales income VI.29 929,448,983.38 691,510,505.23
II. Total operating costs 907,353,861.68 732,130,369.01
Including: Cost of sales VI.29 796,332,577.48 625,449,017.39
Taxes and associate charges VI.30 5,679,950.02 5,691,534.94
Selling and distribution expenses VI.31 32,613,304.09 27,581,504.82
Administrative expenses VI.32 38,769,244.52 40,516,928.84
R&D expenses VI.33 36,699,200.50 34,122,824.80
Financial expenses VI.34 -2,740,414.93 -1,231,441.78
Including: Interests expenses 431,740.73 287,648.29
Interests incomes 4,370,937.15 4,483,457.96
Add: Other income and gain VI.37 2,617,767.00 1,562,092.00
Gain/(loss) from investment (“-” means loss) VI.36 8,313,038.97 9,876,900.98
Including: share of profits in associates and joint ventures
Gain/(loss) from change in fair value (“-” means loss) VI.38 -4,145,350.00 -9,934,400.00
Asset impairment loss(“-” means loss) VI.35 -1,919,355.87 -4,823,333.42
Gains on disposal of assets (“-” means loss) VI.39 63,398,419.60 376,183.60
III. Business profit (“-” means loss) 90,359,641.40 -43,562,420.62
Add: non-operating income VI.40 26,181,811.37 2,467,573.87
Less: non-operating expense VI.41 20,502.70 37,214.69
IV. Total profit (“-” means loss) 116,520,950.07 -41,132,061.44
Less: Income tax expense VI.42 29,820,980.12 -1,038,509.51
V. Net profit (“-” means loss) 86,699,969.95 -40,093,551.93
(I) Classified by business continuity
1. Net profit from continued operations (“-” means loss) 86,699,969.95 -40,093,551.93
2. Net profit from discontinued operations (“-” means loss)
(II) Classified by ownership
1. Minority shareholders’ income (“-” means loss) 39,407,402.00 -11,751,865.16
2. Net profit attributable to shareholder of the Company (“-” means
47,292,567.95 -28,341,686.77
loss)
VI. After-tax net amount of other comprehensive incomes VI.43 199,440.37 -52,419.01
After-tax net amount of other comprehensive incomes attributable to
149,580.28 -39,314.26
shareholders 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
149,580.28 -39,314.26
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 149,580.28 -39,314.26
6. Other
After-tax net amount of other comprehensive incomes attributable to
49,860.09 -13,104.75
minority shareholders
VII. Total comprehensive incomes 86,899,410.32 -40,145,970.94
Attributable to shareholders of the Company 47,442,148.23 -28,381,001.03
Attributable to minority shareholders 39,457,262.09 -11,764,969.91
VIII. Earnings per share
(I) Basic earnings per share 0.26 -0.15
(II) Diluted earnings per share 0.26 -0.15
Legal Representative: Pan Zhirong Person in Charge of Accounting Work: Wu Jianhua Person in Charge of Financial Department: Wu Jianhua
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2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
4. Income statement of the Company
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd. Unit: RMB
Item Notes Reporting period Same period of last year
I. Total sales XIV.4 37,149,218.41 57,021,722.96
Less: cost of sales XIV.4 31,012,503.76 45,432,601.10
Business taxes and surcharges 916,698.27 1,143,445.76
Distribution expenses 2,375,066.13 3,658,807.44
Administrative expenses 2,894,602.95 2,058,893.07
R&D expenses
Financial expenses -38,149.46 163,280.68
Including: Interests expenses
Interests incomes 84,577.68 80,426.11
Add: Other income and gain
Gain/(loss) from investment (“-” means loss) XIV.5 25,443,358.87 33,547,555.83
Including: share of profits in associates and joint ventures
Gain/(loss) from change in fair value (“-” means loss)
Asset impairment loss(“-” means loss) -1,847,692.39 -180,831.29
Gains on disposal of assets (“-” means loss)
II. Business profit (“-” means loss) 23,584,163.24 37,931,419.45
Add: non-operating income 362,268.59 1,032,019.56
Less: non-operating expense 4,632.00
III. Total profit (“-” means loss) 23,946,431.83 38,958,807.01
Less: Income tax expense -536,646.45 70,369.57
IV. Net profit (“-” means loss) 24,483,078.28 38,888,437.44
(I) Net profit from continued operations (“-” means loss) 24,483,078.28 38,888,437.44
(II) Net profit from discontinued operations ( -” means loss)
V. After-tax net amount of other comprehensive incomes
(I) Other comprehensive incomes that will not be reclassified
into gains and losses
1. Changes in net liabilities or assets with a defined benefit
plan upon re-measurement
2. Enjoyable shares in other comprehensive incomes in
investees that cannot be reclassified into gains and losses
under the equity method
(II) Other comprehensive incomes that will be reclassified
into gains and losses
1. Enjoyable shares in other comprehensive incomes in
investees that will be reclassified into gains and losses under
the equity method
2. Gains and losses on fair value changes of available-for-sale
financial assets
3. Gains and losses on reclassifying held-to-maturity
investments into available-for-sale financial assets
4. Effective hedging gains and losses on cash flows
5. Foreign-currency financial statement translation difference
6. Other
VI. Total comprehensive incomes 24,483,078.28 38,888,437.44
Legal Representative: Pan Zhirong Person in Charge of Accounting Work: Wu Jianhua Person in Charge of Financial Department: Wu Jianhua
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2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
5. Consolidated cash flow statement
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd. Unit: RMB
Item Notes Reporting period Same period of last year
I. Cash flows from operating activities:
Cash received from sale of commodities and rendering of
910,416,818.85 741,100,978.85
service
Tax refunds received 88,288,251.27 84,150,245.73
Other cash received relating to operating activities VI. 44 (1) 55,614,951.61 30,549,731.71
Subtotal of cash inflows from operating activities 1,054,320,021.73 855,800,956.29
Cash paid for goods and services 807,860,269.08 765,631,339.82
Cash paid to and for employees 141,016,204.69 130,024,671.94
Various taxes paid 11,725,429.89 10,123,845.80
Other cash payment relating to operating activities VI. 44 (2) 89,550,908.64 69,842,669.22
Subtotal of cash outflows from operating activities 1,050,152,812.30 975,622,526.78
Net cash flows from operating activities 4,167,209.43 -119,821,570.49
II. Cash flows from investing activities:
Cash received from withdrawal of investments 242,197,004.77 79,608,500.00
Cash received from return on investments 4,614,149.35 2,945,209.34
Net cash received from disposal of fixed assets, intangible
67,204,817.83 463,696.00
assets and other long-term assets
Net cash received from disposal of subsidiaries or other
business units
Other cash received relating to investing activities VI. 44 (3) 92,427,273.64 246,417,500.00
Subtotal of cash inflows from investing activities 406,443,245.59 329,434,905.34
Cash paid to acquire fixed assets, intangible assets and other
35,149,944.63 25,362,525.53
long-term assets
Cash paid for investment 314,533,270.69 40,000,000.00
Net cash paid to acquire subsidiaries and other business units
Other cash payments relating to investing activities VI. 44 (4) 206,867,146.34 435,917,500.00
Subtotal of cash outflows from investing activities 556,550,361.66 501,280,025.53
Net cash flows from investing activities -150,107,116.07 -171,845,120.19
III. Cash Flows from Financing Activities:
Cash received from capital contributions
Including: Cash received from minority shareholder
investments by subsidiaries
Cash received from borrowings 18,814,040.00 18,881,758.13
Cash received from issuance of bonds
Other cash received relating to financing activities VI. 44 (5) 7,000,000.00
Subtotal of cash inflows from financing activities 25,814,040.00 18,881,758.13
Repayment of borrowings 19,397,105.19 11,471,166.48
Cash paid for interest expenses and distribution of dividends
16,140,046.71 26,263,665.11
or profit
Including: dividends or profit paid by subsidiaries to
8,481,119.62 11,182,518.60
minority shareholders
Other cash payments relating to financing activities VI. 44 (6) 441,661.22
Sub-total of cash outflows from financing activities 35,537,151.90 38,176,492.81
Net cash flows from financing activities -9,723,111.90 -19,294,734.68
IV. Effect of foreign exchange rate changes on cash and cash
-1,394,565.02 -4,885,438.71
equivalents
V. Net increase in cash and cash equivalents -157,057,583.56 -315,846,864.07
Add: Opening balance of cash and cash equivalents 448,492,295.47 564,381,960.88
VI. Closing balance of cash and cash equivalents 291,434,711.91 248,535,096.81
Legal Representative: Pan Zhirong Person in Charge of Accounting Work: Wu Jianhua Person in Charge of Financial Department: Wu Jianhua
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2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
6. Cash flow statement of the Company
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd. Unit: RMB
Item Notes Reporting period Same period of last year
I. Cash flows from operating activities:
Cash received from sale of commodities and rendering
30,544,622.02 41,028,955.45
of service
Tax refunds received
Other cash received relating to operating activities 22,188,848.35 27,809,810.32
Subtotal of cash inflows from operating activities 52,733,470.37 68,838,765.77
Cash paid for goods and services 33,069,029.79 47,257,580.90
Cash paid to and for employees 1,557,848.56 3,011,754.07
Various taxes paid 2,665,636.52 2,342,544.65
Other cash payment relating to operating activities 32,590,375.24 33,484,456.62
Subtotal of cash outflows from operating activities 69,882,890.11 86,096,336.24
Net cash flows from operating activities -17,149,419.74 -17,257,570.47
II. Cash flows from investing activities:
Cash received from retraction of investments
Cash received from return on investments 25,443,358.87 33,547,555.83
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 25,443,358.87 33,547,555.83
Cash paid to acquire fixed assets, intangible assets and
62,500.00
other long-term assets
Cash paid for investment 1,500,000.00
Net cash paid to acquire subsidiaries and other
business units
Other cash payments relating to investing activities
Subtotal of cash outflows from investing activities 1,562,500.00 0.00
Net cash flows from investing activities 23,880,858.87 33,547,555.83
III. Cash Flows from Financing Activities:
Cash received from capital contributions
Cash received from borrowings
Cash received from issuance of bonds
Other cash received relating to financing activities
Subtotal of cash inflows from financing activities 0.00 0.00
Repayment of borrowings
Cash paid for interest expenses and distribution of
7,429,586.19 14,831,334.40
dividends or profit
Other cash payments relating to financing activities
Sub-total of cash outflows from financing activities 7,429,586.19 14,831,334.40
Net cash flows from financing activities -7,429,586.19 -14,831,334.40
IV. Effect of foreign exchange rate changes on cash and
-22,100.89 -171,904.81
cash equivalents
V. Net increase in cash and cash equivalents -720,247.95 1,286,746.15
Add: Opening balance of cash and cash equivalents 6,985,345.44 5,342,389.95
VI. Closing balance of cash and cash equivalents 6,265,097.49 6,629,136.10
Legal Representative: Pan Zhirong Person in Charge of Accounting Work: Wu Jianhua Person in Charge of Financial Department: Wu Jianhua
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2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
7. Consolidated statement of changes in shareholders’ equity
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd. Unit: RMB
Reporting period
Equity attributable to owners of the Company
Item Other equity instruments Less: Other Minority Total owners’
Specific General risk interests equity
Share capital Preferred Perpetua Capital reserve treasury comprehensiv Surplus reserve Retained profit
Other reserve reserve
shares l bonds stock e incomes
I. Balance at the end of the previous year 185,391,680.00 296,808,965.79 5,924,132.67 37,804,354.59 122,872,551.30 367,597,191.43 1,016,398,875.78
Add: change of accounting policy 9,597.14 -33,871.83 839,695.41 384,712.99 1,200,133.71
Correction of errors in previous periods
Business mergers under the same control
Other
II. Balance at the beginning of the year 185,391,680.00 296,808,965.79 5,933,729.81 37,770,482.76 123,712,246.71 367,981,904.42 1,017,599,009.49
III. Increase/ decrease in the period “-”means
149,580.28 39,876,900.75 30,976,142.47 71,002,623.50
decrease)
(I) Total comprehensive incomes 149,580.28 47,292,567.95 39,457,262.09 86,899,410.32
(II) Capital increased and reduced by owners
1. Common shares increased by
shareholders
2. Capital increased by holders of
other equity instruments
3. Amounts of share-based payments
recognized in owners’ equity
4. Other
(III) Profit distribution -7,415,667.20 -8,481,119.62 -15,896,786.82
1. Appropriations to surplus reserves
2. Appropriations to general risk
provisions
3. Appropriations to owners (or
-7,415,667.20 -8,481,119.62 -15,896,786.82
shareholders)
4. Other
(IV) Internal carry-forward of owners’
equity
1. New increase of capital (or share
capital) from capital public reserves
2. New increase of capital (or share
capital) from surplus reserves
3. Surplus reserves for making up losses
4. Change amount of defined
benefit plans that carry forward retained
earnings
5. Other
(V) Specific reserve
1. Withdrawn for the period
2. Used in the period
(VI) Other
IV. Closing balance 185,391,680.00 296,808,965.79 6,083,310.09 37,770,482.76 163,589,147.46 398,958,046.89 1,088,601,632.99
44
2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(Continued)
Same period of last year
Equity attributable to owners of the Company
Item Other equity instruments Other Total owners’
Less: treasury Specific General risk Minority interests
Share capital Preferred Perpetual Capital reserve comprehensiv Surplus reserve Retained profit equity
Other stock reserve reserve
shares bonds e incomes
I. Balance at the end of the previous year 185,391,680.00 296,808,965.79 4,619,820.87 33,888,636.90 90,105,224.21 332,457,266.32 943,271,594.09
Add: change of accounting policy
Correction of errors in previous periods
Business mergers under the same control
Other
II. Balance at the beginning of the year 185,391,680.00 296,808,965.79 4,619,820.87 33,888,636.90 90,105,224.21 332,457,266.32 943,271,594.09
III. Increase/ decrease in the period ( “ - ”
-39,314.26 -43,173,021.17 -22,947,488.53 -66,159,823.96
means decrease)
(I) Total comprehensive incomes -39,314.26 -28,341,686.77 -11,764,969.91 -40,145,970.94
(II) Capital increased and reduced by
owners
1. Common shares increased by
shareholders
2. Capital increased by holders of
other equity instruments
3. Amounts of share-based payments
recognized in owners’ equity
4. Other
(III) Profit distribution -14,831,334.40 -11,182,518.60 -26,013,853.00
1. Appropriations to surplus reserves
2. Appropriations to general risk
provisions
3. Appropriations to owners (or
-14,831,334.40 -11,182,518.60 -26,013,853.00
shareholders)
4. Other
(IV) Internal carry-forward of owners’
equity
1. New increase of capital (or share
capital) from capital public reserves
2. New increase of capital (or share
capital) from surplus reserves
3. Surplus reserves for making up
losses
4. Change amount of defined
benefit plans that carry forward retained
earnings
5. Other
(V) Specific reserve
1. Withdrawn for the period
2. Used in the period
(VI) Other -0.02 -0.02
IV. Closing balance 185,391,680.00 296,808,965.79 4,580,506.61 33,888,636.90 46,932,203.04 309,509,777.79 877,111,770.13
Legal Representative: Pan Zhirong Person in Charge of Accounting Work: Wu Jianhua Person in Charge of Financial Department: Wu Jianhua
45
2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
8. Statement of changes in shareholders’ equity of the Company
Prepared by: Tsann Kuen (China) Enterprise Co., Ltd. Unit: RMB
Reporting period
Item Other equity instruments Less: Other
Specific Surplus General risk
Share capital Preferred Perpetual Capital reserve treasury comprehensive Retained profit Total shareholders’ equity
Other reserve reserve reserve
shares bonds stock incomes
I. Balance at the end of the previous year 185,391,680.00 271,490,289.82 37,804,354.59 176,010,460.28 670,696,784.69
Add: change of accounting policy -33,871.83 -304,846.43 -338,718.26
Correction of errors in previous periods
Other
II. Balance at the beginning of the year 185,391,680.00 271,490,289.82 37,770,482.76 175,705,613.85 670,358,066.43
III. Increase/ decrease in the period (“-” means decrease) 17,067,411.08 17,067,411.08
(I) Total comprehensive incomes 24,483,078.28 24,483,078.28
(II) Capital increased and reduced by shareholderss
1. Common shares increased by shareholders
2. Capital increased by holders of other equity
instruments
3. Amounts of share-based payments recognized in
shareholders’ equity
4. Other
(III) Profit distribution -7,415,667.20 -7,415,667.20
1. Appropriations to surplus reserves
2. Appropriations to general risk provisions
3. Appropriations to shareholders -7,415,667.20 -7,415,667.20
4. Other
(IV) Internal carry-forward of shareholders’ equity
1. New increase of capital (or share capital) from capital
public reserves
2. New increase of capital (or share capital) from
surplus reserves
3. Surplus reserves for making up losses
4. Change amount of defined
benefit plans that carry forward retained earnings
5. Other
(V) Specific reserve
1. Withdrawn for the period
2. Used in the period
(VI) Other
IV. Closing balance 185,391,680.00 271,490,289.82 37,770,482.76 192,773,024.93 687,425,477.51
46
2019 Semi-Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(Continued)
Same period of last year
Other equity instruments
Item Less: Other
Specific General risk Total shareholders’
Share capital Preferred Perpetual Capital reserve treasury comprehensive Surplus reserve Retained profit
Other reserve reserve equity
shares bonds stock incomes
I. Balance at the end of the previous year 185,391,680.00 271,490,289.82 33,888,636.90 155,600,335.50 646,370,942.22
Add: change of accounting policy
Correction of errors in previous periods
Other
II. Balance at the beginning of the year 185,391,680.00 271,490,289.82 33,888,636.90 155,600,335.50 646,370,942.22
III. Increase/ decrease in the period (“-” means decrease) 24,057,103.04 24,057,103.04
(I) Total comprehensive incomes 38,888,437.44 38,888,437.44
(II) Capital increased and reduced by shareholderss
1. Common shares increased by shareholders
2. Capital increased by holders of other equity
instruments
3. Amounts of share-based payments recognized in
shareholders’ equity
4. Other
(III) Profit distribution -14,831,334.40 -14,831,334.40
1. Appropriations to surplus reserves
2. Appropriations to general risk provisions
3. Appropriations to shareholders -14,831,334.40 -14,831,334.40
4. Other
(IV) Internal carry-forward of shareholders’ equity
1. New increase of capital (or share capital) from capital
public reserves
2. New increase of capital (or share capital) from surplus
reserves
3. Surplus reserves for making up losses
4. Change amount of defined
benefit plans that carry forward retained earnings
5. Other
(V) Specific reserve
1. Withdrawn for the period
2. Used in the period
(VI) Other
IV. Closing balance 185,391,680.00 271,490,289.82 33,888,636.90 179,657,438.54 670,428,045.26
Legal Representative: Pan Zhirong Person in Charge of Accounting Work: Wu Jianhua Person in Charge of Financial Department: Wu Jianhua
47
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements for H1 2019
(All amounts are expressed, unless otherwise stated, in Renminbi (CNY).)
Note 1: Company Profile
TsannKuen (China) Enterprise Co., Ltd. (hereafter “the Company or TKC”) was established in the
People’ Republic of China ( the PRC” in 1988 as a wholly owned foreign investment enterprise,
the Company named in TsannKuen China (Xiamen) Ltd., firstly, invested by the Fordchee
(Hongkong) Co., Ltd., EUPA Industry Corporation Limited and Hong Kong Fillman investment
Co.,Ltd. . On 16 February 1993, with the approval of the Ministry of Foreign Trade and Economic
Co-operation, the Company was reorganized into an incorporated company and was renamed as
TsannKuen (China) Enterprise Co., Ltd. In June 1993, the Company issued 40,000,000 new shares
pursuant to an international placing and public offer and these new shares (“B shares”) were then
listed on the Shenzhen Stock Exchange on 30 June 1993. According to the “ Intended
Implementation of Share Reducing Proposal” of the 5th extraordinary board of director of 2012
and the 3rd extraordinary shareholders’ general meeting of 2012, obtained the consent from the
Investment Promotion Bureau of Xiamen which is authorized by the Ministry of Commerce and the
approval documents ”The Approval by Investment Promotion Bureau of Xiamen to Consent the
Capital Reduction of TsannKuen (China) Enterprise Co., Ltd”(IPB audit [2012] NO. 698), as the
base 1,112,350,077 shares of the total original share capital, for implementation of share reducing
model that all registered shareholders who was recorded on 28 December 2012 with the proportion
6:1 to reduce the shares. After the implementation of share reducing model, total share capital was
reduced from 1,112,350,077 shares to 185,391,680 shares of the company. As at 30 June 2019, the
Company’s registered capital is CNY 185,391,680.
Follow The Ministry of Commerce of the People ’ s Republic of China approved (The No.
[2005]3107 “Agreed in Principle to the Ministry of Commerce on TsannKuen (China) Enterprise
Co., Ltd. Shares Traded Sponsor of the Approval”）, On 6 December 2006, the Company received
the [2006] No.266 file “ The notice of TsannKuen (China) Enterprise Co., Ltd, concerning the
Approval of non-listed Foreign Shares Traded ” from China Securities Regulatory Commission.
The China Securities Regulatory Commission agreed 700,476,830 unlisted shares (account for
62.97% of the share capital) hold by the Company ’ s shareholders, EUPA Industry Corporation
Limited, Fordchee Development Limited and Fillman Investment Limited to transfer into B shares.
On 29 November 2007 these B shares could be listed and exercised on Shenzhen Stock Exchange.
As at 30 June 2019, total B shares hold by the three legal shareholders (EUPA Industry Corporation
Limited, Fordchee Development Limited and Fillman Investment Limited) are 82,830,966 shares
48
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
after the implementation of share reducing model. (Account for 44.68% of the share capital).
Legal representative: Pan, Zhirong
Place of registration: No.88 Xinglong Road, Huli Industrial District, Xiamen, Fujian Province
The parent: STAR COMGISTIC CAPITAL CO.,LTD.
The Company operates within the electrical machinery and equipment manufacturing industry.
The industry of the company: electrical machinery and equipment manufacturing.
The approved business scope: the main business is to develop, manufacture household appliances,
electronics, light industrial products, modern office supplies. Design and manufacture of molds
associated with these products in domestic and international sales of the company's products and
after-sales service. Wholesale and retail household appliances, electronic products, electrical
equipment, office supplies, kitchen utensils, pre-packaged food (limited to branches), import and
export related business and provide after-sales service (the above description do not involve state
trading commodity goods, involving quota license management products are according to the
relevant provisions of the State for the regulations application).
12 subsidiaries are included in the consolidated financial statements of the Company as of 30 June
2019, please see Note 8 “The equity in other main entities”. The consolidated scope increases 1
subsidiary during the reporting period, please see Note 7 “Change of consolidated scope”.
Note 2: Basis for preparation of the financial statements
The financial statements of company have been prepared on basis of going concern in conformity
with Chinese Accounting Standards for Business Enterprises and the Accounting Systems for
Business Enterprises issued by the Ministry of Finance of People’s Republic of China (Ministry of
Finance issued order No.33, the Ministry of Finance revised order No.76) on15 February 2006, and
revised Accounting Standards (order 42 of the Ministry of Finance) and Compilation Rules for
Information Disclosure by Companies Offering Securities to the Public No.15 – General
Provisions on Financial Reports (2014 Revision) issued by the China Securities Regulatory
Commission (CSRC).
According to the relevant accounting regulations in Chinese Accounting Standards for Business
Enterprises, the company has adopted the accrual basis of accounting. Except for certain financial
instruments which are measured by at fair value, the Company adopts the historical cost as the
principle of measurement in the financial statements. Where assets are impaired, allowances for
asset impairment are made in accordance with relevant requirements.
49
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
Note 3: Statement of Compliance with Enterprise Accounting Standards
The financial statements of the company are recognized and measured in accordance with the
regulations in the Chinese Accounting Standards for Business Enterprises and they give a true and
fair view of the financial position, business result and cash flow of the Company as of 30 June 2019.
In addition, the financial statements of the company comply, in all material respects, with the
revised disclosing requirements for financial statements and the Compilation Rules for Information
Disclosure by Companies Offering Securities to the Public No.15—General Provisions on Financial
Reports (2014 Revision) issued by China Securities Regulatory Commission (CSRC) in 2014.
Note 4: Important Accounting Principles and Accounting Estimates
The Company and subsidiaries are principally engaged in the production and operation. The
Company and subsidiaries in accordance with the actual production and management features,
according to the relevant provisions of Accounting Standards, to make a number of specific
accounting policies and accounting estimates for other transactions and events of revenue
recognition, see Note 4.23 “Revenue” for the description. For description of significant accounting
judgments and estimates made by management, see Note 4.28 “Significant accounting
judgments and estimates”.
4.1 Accounting period
The accounting period of the Company is classified as interim period and annual period. Interim
period refers to the reporting period shorter than a complete annual period. The accounting period
of the Company is the calendar year from January 1 to December 31.
4.2 Operating cycle
Normal business cycle is realized by the Company in cash or cash equivalents from the purchase of
assets for processing until. The company has a 12 -month operating cycle, and its assets and
liabilities as liquidity criteria for the classification.
4.3 Monetary Unit
Yuan (CNY) is the currency of the primary economic environment in which the Company and its
domestic subsidiaries operate. Therefore, the Company and its domestic subsidiaries choose CNY
as their functional currency, the overseas subsidiaries decide the HKD, USD, NTD or IDR as their
functional currency in accordance with the business in which currency of the primary economic
environment. The Company adopts CNY to prepare its functional statements.
4.4 Business combination
A business combination is a transaction or event that brings together two or more separate entities
into one reporting entity. Business combinations are classified into business combinations involving
enterprises under common control and business combinations not involving enterprises under
50
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
common control.
4.4.1 Business combination involving entities under common control
A business combination involving enterprises under common control is a business combination in
which all of the combining enterprises are ultimately controlled by the same party or parties both
before and after the combination, and that control is not transitory.
For a business combination involving enterprises under common control, the party that, on the
combination date, obtains control of another enterprise participating in the combination is the
absorbing party, while that other enterprise participating in the combination is a party being
absorbed. Combination date is the date on which the absorbing party effectively obtains control of
the party being absorbed.
The assets and liabilities obtained are measured at the carrying amounts as recorded by the
enterprise being combined at the combination date. The difference between the carrying amount of
the net assets obtained and the carrying amount of consideration paid for the combination (or the
total face value of shares issued) is adjusted to the capital premium (or share premium) in the
capital reserve. If the balance of the capital premium (or share premium) is insufficient, any excess
is adjusted to retained earnings.
The cost of a combination incurred by the absorbing party includes any costs directly attributable to
the combination shall be recognised as an expense through profit or loss for the current period when
incurred.
4.4.2 Business combination involving entities not under common control
A business combination involving enterprises not under common control is a business combination
in which all of the combining enterprises are not ultimately controlled by the same party or parties
both before and after the business combination.
For a business combination not involving enterprises under common control, the party that, on the
acquisition date, obtains control of another enterprise participating in the combination is the
acquirer, while that other enterprise participating in the combination is the acquiree. Acquisition
date is the date on which the acquirer effectively obtains control of the acquiree.
For a business combination not involving enterprise under common control, the combination cost
including the sum of fair value, at the acquisition date, of the assets given, liabilities incurred or
assumed, and equity securities issued by the acquirer. The intermediary expenses incurred by the
acquirer in respect of auditing, legal services, valuation and consultancy services etc and other
associated administrative expenses attributable to the business combination are recognised in profit
or loss when they are incurred.
The transaction cost arose from issuing of equity securities or liability securities shall be initially
recognised as equity securities or liability securities.
The contingent consideration related to the combination shall be booked as combination cost at the
51
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
fair value at the acquisition date. If, within the 12 months after acquisition, additional information
can prove the existence of related information at acquisition date and the contingent consideration
need to be adjusted, goodwill can be adjusted.
Combination cost of the acquirer’s interest and identifiable net assets of the acquirer acquired
through the business combination shall be measured by the fair value at the acquisition date. Where
the cost of combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable
net assets, the difference shall be recognised as goodwill. Where the cost of combination is less than
the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference shall
be accounted for according to the following requirements: (i) the acquirer shall reassess the
measurement of the fair values of the acquiree’s identifiable assets, liabilities and contingent
liabilities and measurement of the cost of combination; (ii) if after that reassessment, the cost of
combination is still less than the acquirer’s interest in the fair values of the acquiree’s identifiable
net assets, the acquirer shall recognise the remaining difference immediately in profit or loss for the
current period.
Where the temporary difference obtained by the acquirer was not recognised due to inconformity
with the conditions applied for recognition of deferred income tax, if, within the 12 months after
acquisition, additional information can prove the existence of related information at acquisition date
and the expected economic benefits on the acquisition date arose from deductible temporary
difference by the acquiree can be achieved, relevant income tax assets can be recognised, and
goodwill offset. If the goodwill is not sufficient, the difference shall be recognised as profit of the
current period.
Apart from above, the differences shall be taken into profit or loss of the current period if the
recognition of deferred income tax assets is related to the combination.
For a business combination not involving enterprise under common control, which achieved in
stages that involves multiple exchange transactions, according to “The notice of the Ministry of
Finance on the issuance of Accounting Standards Interpretation No. 5” (CaiKuai [2012] No. 19) and
Article55 of “Accounting Standards for Business Enterprises No.33 - Consolidated Financial
Statements” on the “package deal” criterion (see Note 4.5.2), to judge the multiple exchange
transactions whether they are the "package deal". If it belong to the “package deal” in reference to
the preceding paragraphs of this section and the Notes described in 4.13 “long-term investment”
accounting treatment, if it does not belong to the “package deal” to distinguish the individual
financial statements and the consolidated financial statements related to the accounting treatment:
In the individual financial statements, the total value of the book value of the acquiree's equity
investment before the acquisition date and the cost of new investment at the acquisition date, as the
initial cost of the investment, the acquiree's equity investment before the acquisition date involved
in other comprehensive income, in the disposal of the investment will be in other comprehensive
52
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
income associated with the use of infrastructure and the acquiree directly related to the disposal of
assets or liabilities of the same accounting treatment (that is, except in accordance with the equity
method of accounting in the defined benefit plan acquiree is remeasured net changes in net assets or
liabilities other than in the corresponding share of the lead, and the rest into the current investment
income).
In the combination financial statements, the equity interest in the acquiree previously held before
the acquisition date re-assessed at the fair value at the acquisition date, with any difference between
its fair value and its carrying amount is recorded as investment income. The previously-held equity
interest in the acquiree involved in other comprehensive income and other comprehensive income
associated with the purchase of the foundation should be used party directly related to the disposal
of assets or liabilities of the same accounting treatment (that is, except in accordance with the equity
method of accounting in the acquiree is remeasured defined benefit plans other than changes in net
liabilities or net assets due to a corresponding share of the rest of the acquisition date into current
investment income).
4.5 Preparation of the consolidated financial statements
4.5.1 The scope of consolidation
The scope of consolidation for the consolidated financial statements is determined on the basis of
control. Control is the power to govern the financial and operating policies of an enterprise so as to
obtain benefits from its operating activities. The scope of consolidation includes the Company and
all of the subsidiaries. Subsidiary is an enterprise or entity under the control of the Company.
Once the change in the relevant facts and circumstances leading to the definition of the relevant
elements involved in the control of the change, the company will be re-evaluated.
4.5.2 Preparation of the consolidated financial statements
The subsidiary of the Company is included in the consolidated financial statements from the date
when the control over the net assets and business decisions of the subsidiary is effectively obtained,
and excluded from the date when the control ceases.
For a subsidiary disposed of by the Company, the operating results and cash flows before the date of
disposal (the date when control is lost) are included in the consolidated income statement and
consolidated statement of cash flows, as appropriate. For a subsidiary disposed during the period,
no adjustment is made to the opening balance of the consolidated financial statements.
For a subsidiary acquired through a business combination not under common control, the operating
results and cash flows from the acquisition (the date when the control is obtained) are included in
the consolidated income statement and consolidated statement of cash flows, as appropriated; no
adjustment is made to the opening balance and comparative figures in the consolidated financial
statements.
Where a subsidiary was acquired during the reporting period, through a business combination
53
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
involving enterprises under common control, the financial statements of the subsidiary are included
in the consolidated financial statements. The results of operations and cash flow are included in the
consolidated balance sheet and the consolidated income statement, respectively, based on their
carrying amounts, from the date that common control was established, and the opening balances and
the comparative figures of the consolidated financial statements are restated.
When the accounting period or accounting policies of a subsidiary are different from those of the
Company, the Company makes necessary adjustments to the financial statements of the subsidiary
based on the Company’s own accounting period or accounting policies. Where a subsidiary was
acquired during the reporting period through a business combination not under common control, the
financial statements was reconciliated on the basis of the fair value of identifiable net assets at the
date of acquisition. Intra-Group balances and transactions, and any unrealised profit or loss arising
from intra-Group transactions, are eliminated in preparing the consolidated financial statements.
Minority interest and the portion in the net profit or loss not attributable to the Company are
presented separately in the consolidated balance sheet within shareholders’/ owners’ equity and net
profit. Net profit or loss attributable to minority shareholders in the subsidiaries is presented
separately as minority interest in the consolidated income statement below the net profit line item.
When the amount of loss for the current period attributable to the minority shareholders of a
subsidiary exceeds the minority shareholders’ portion of the opening balance of
shareholders’/equity of the subsidiary, the excess is allocated against the minority interests.
When the Company loses control of a subsidiary due to the disposal of a portion of an equity
investment or other reasons, the remaining equity investment is re-measured at its fair value at the
date when control is lost. The difference between 1) the total amount of consideration received from
the transaction that resulted in the loss of control and the fair value of the remaining equity
investment and 2) the carrying amounts of the interest in the former subsidiary’s net assets
immediately before the loss of the control is recognised as investment income for the current period
when control is lost. Other comprehensive income related to the former subsidiary's equity
investment, using the foundation and the acquiree directly related to the disposal of the same assets
or liabilities are accounted when the control is lost (ie, in addition to the former subsidiary is
remeasured at the net defined benefit plan or changes in net assets and liabilities resulting from, the
rest are transferred to the current investment income). The retained interest is subsequently
measured according to the rules stipulated in the - “Chinese Accounting Standards for Business
Enterprises No.2 - Long-term equity investment” or “Chinese Accounting Standards for Business
Enterprises No.22 - Determination and measurement of financial instruments”. See Note 4.13
Long-term equity investments and Note 4.9 Financial instruments for details.
The company get through multiple transactions step deal with disposal of the subsidiary's equity
investment until the loss of control, need to distinguish between equity until the disposal of a
54
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
subsidiary's loss of control over whether the transaction is package deal. Terms of the transaction
disposition of equity investment in a subsidiary, subject to the following conditions and the
economic impact of one or more of cases, usually indicates that several transactions should be
accounted for as a package deal:①these transactions are considered simultaneously, or in the case
of mutual influence made; ②these transactions as a whole in order to achieve a complete business
results; ③the occurrence of a transaction depends on occurs at least one other transaction; ④a
transaction look alone is not economical, but when considered together with other transaction is
economical. If they does not belong to the package deal, each of them separately, as the case of a
transaction in accordance with “without losing control over the disposal of a subsidiary part of a
long-term equity investments“(see Note 4.13.2.4)) and “due to the disposal of certain equity
investments or other reasons lost control of a subsidiary of the original” (see previous paragraph)
principles applicable accounting treatment. Until the disposal of the equity investment loss of
control of a subsidiary of the transactions belonging to the package deal, the transaction will be
used as a disposal of a subsidiary and the loss of control of the transaction. However, before losing
control of the price of each disposal entitled to share in the net assets of the subsidiary’s investment
corresponding to the difference between the disposals, recognised in the consolidated financial
statements as other comprehensive income, loss of control over the transferred together with the
loss of control or loss in the period.
4.6 Joint arrangement
A joint arrangement is an arrangement of which two or more parties have joint control. A joint
arrangement is either a joint operation or a joint venture, depending on the rights and obligation of
the Company in the joint arrangement. A joint operation is a joint arrangement whereby the parties
that have joint control of the arrangement have rights to the assets, and obligations for the liabilities,
relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have
joint control of the arrangement have rights to the net assets of the arrangement.
The Company accounts for joint ventures using the equity method, see Note 4.13.2.2 for details.
The company, a joint operator, recognises in relation to its interest in a joint operation: (a) its assets,
including its share of any assets held jointly; (b) its liabilities, including its share of any liabilities
incurred jointly ;(c) its revenue from the sale of its share of the output arising from the joint
operation ;(d) its share of the revenue from the sale of the output by the joint operation; and (e) its
expenses, including its share of any expenses incurred jointly.
When the Company enters into a transaction with a joint operation in which it is a joint operator,
such as a sale or contribution of assets, the Company, prior to disposal of the assets to a third party,
recognises gains and losses resulting from such a transaction only to the extent of the other parties'
interests in the joint operation. When such transactions provide evidence of a reduction in the net
realizable value of the assets to be sold or contributed to the joint operation, which is in line with
55
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
provision stipulated by CAS 8 - Assets Impairment, those losses shall be recognised fully by the
Company. When there is evidence of a reduction in the net realizable value of the assets to be
purchased from the joint operation, the Company shall recognise its share of the losses.
4.7 Cash equivalent
Cash and cash equivalents of the Company include cash on hand, ready usable deposits and
investments having short holding term (normally will be due within three months from the day of
purchase), with strong liquidity and easy to be exchanged into certain amount of cash that can be
measured reliably and have low risks of change.
4.8 Foreign exchange
4.8.1 Translation in foreign exchange transactions
The foreign currency transactions are recorded, on initial recognition in the functional currency, by
applying (the spot exchange rate on the date of the transaction / an exchange rate that approximates
the actual spot exchange rate on the date of transaction). The exchange of foreign currency and
transactions related to the foreign exchange are translated at the spot exchange rate.
4.8.2 Translation of monetary foreign currency and non-monetary foreign currency
At the balance sheet date, foreign currency monetary items are translated using the spot exchange
rate at the balance sheet date. All the exchange differences thus resulted are taken to profit or loss,
except for ①those relating to foreign currency borrowings specifically for construction and
acquisition of qualifying assets, which are capitalized in accordance with the principle of
capitalization of borrowing costs ; ②hedging accounting, the exchange difference related to
hedging instruments for the purpose of net oversea operating investment is recorded in the
comprehensive income till the date of disposal and recognised in profit or loss of the period;
exchange difference from changes of other account balance of foreign currency monetary items;
③available-for-trade is recorded into profit or loss except for amortized cost.
Non-monetary foreign currency items measured at historical cost shall still be translated at the spot
exchange rate prevailing on the transaction date, and the amount denominated in the functional
currency is not changed. Non-monetary foreign currency items measured at fair value are translated
at the spot exchange rate prevailing at the date when the fair values are determined. The exchange
difference thus resulted are recognised in profit or loss for the current period or as capital reserve.
4.8.3 The translation of financial statement in foreign currency
When the consolidated financial statements include foreign operation(s), if there is a foreign
currency monetary item constituting a net investment in a foreign operation, exchange difference
arising from changes in exchange rates are recognised as “exchange differences arising on
translation of financial statements denominated in foreign currencies” in owner’s equity, and in
profit or loss for the period upon disposal of the foreign operation.
The Group translates the financial statements of its foreign operations into CNY by following rules.
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
Assets and liabilities in the balance sheet are translated at the spot exchange rate prevailing at the
balance sheet date; all equity items except for retained earnings are translated at the spot exchange
rates at the dates on which such items occur; income and expenses in income statement are
translated at the spot exchange rates at the date of transaction; the opening retained earnings is the
closing retained earnings of the last period after translation; the closing balance of retained earnings
is calculates and presented in the basis of each translated income statements and profit distribution
item; the difference arising between the assets and liabilities and shareholders’ equity shall be
booked as translation difference of foreign currency statements, and shall be presented as a separate
component of equity in the balance sheet. On a loss of control over Group’s oversea operation due
to disposal, the Company transfers the accumulated or proportionate share of the accumulated
exchange difference arising on translation of financial statements of this oversea operation
attributable to the owners’ equity of the Company and presented under shareholders’ equity, to
profit or loss in the period in which the disposal occurs.
Foreign currency cash flows and cash flow of oversea subsidiaries are translated at the spot
exchange rates on the date of cash flows. The effect of exchange rate changes on cash is separately
presented as an adjustment item in the cash flow statement.
The opening and actual amount of last year are presented in the financial statement after translation.
At the disposal of all of the company's ownership interest in a foreign operation, or due to the
disposal of part of the equity investment or other reasons, the loss of control over a foreign
operation, the project owner's equity in the balance sheet listed under the relevant overseas
operations attributable to statements of the parent company's shareholders' equity of foreign
currency translation differences, all transferred to the disposal of the income statement.
At the disposal of part of the equity investment or other causes lower hold percentage overseas
business interests, but does not lose control over a foreign operation, and disposal of the foreign
operation section related to foreign currency translation differences attributable to minority interests,
is not transferred to the income statement. At the disposal of a foreign operation as part of the equity
joint venture or joint ventures, foreign currency financial statements of the foreign operation and the
associated translation difference in proportion to dispose of the foreign operation into the disposal
of the income statement.
4.9 Financial instruments
When the Company becomes a party to a financial instrument, it shall recognize a financial asset or
financial liability.
4.9.1 Classification, recognition and measurement of financial assets
The Company classifies the financial assets into financial assets measured at amortized cost,
financial assets measured by the fair value and the changes recorded in other comprehensive income
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
and financial assets at fair value through profit or loss based on the business model for financial
assets management and characteristics of contractual cash flow of financial assets
Financial assets initially recognized shall be measured at their fair values. For financial assets
measured at their fair values and of which the variation is recorded into the profit or loss of the
current period, the transaction expenses thereof shall be directly included into the current profit or
loss; for other financial assets, the transaction expenses thereof shall be included into the initially
recognized amount. For accounts receivable and notes receivable generated from sales of
commodities or provision of labor services, excluding or without regard to major financing, the
expected consideration amount the Company has the right to collect will be taken by the Company
as the initially recognized amount.
1) Financial assets measured by the amortized cost
The business mode of the Company to manage the financial assets targets at collecting the
contractual cash flow. What's more, the contractual cash flow characteristics of the financial assets
are consistent with the basic lending arrangement, that is, the cash flow generated in the specific
date is the payment of the interest based on the principal and outstanding principal amount. This
kind of financial assets of the Company shall be subsequently measured based on the amortized cost
and effective interest method, and the gains or losses arising from the amortization, impairment
shall be included into current profit and loss.
2) Financial assets measured at the fair value with its changes included into other comprehensive
profits and losses
Business mode for managing financial assets of the Company takes contract cash flow collected as
target and selling as target and contract cash flow characteristics of such financial assets are
consistent with basic lending arrangement. The company calculates such financial assets as per fair
value whose change is included into corresponding comprehensive income, but impairment loss or
gain, exchange gain or loss and interest income calculated as per actual interest rate method are
included into the current profit and loss.
Furthermore, the Company designates partial non-tradable equity vehicle investment as the
financial asset measured with fair value whose change is included into other comprehensive income.
The Company includes the related dividend income of such financial assets into the current profit
and loss with the change in fair value included into other comprehensive income. At the time of
derecognition of such financial assets, accumulated gain or loss included into other comprehensive
income before will be shifted to retained earnings from other comprehensive incomes but not
included into the current profit and loss.
3) Financial assets measured at the fair value with its changes included into the current profit and
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
loss.
The Company classifies financial assets except for above-mentioned financial assets measured with
amortized cost and financial assets measured with fair value whose change is included into other
comprehensive income into financial assets measured at the fair value with its changes included into
the current profit and loss. Furthermore, at the time of the initial recognition, to eliminate or
significantly reduce the accounting mismatch, the Company specifies partial financial assets as the
financial assets measured at the fair value and changes of which are included into the current profit
and loss. For such financial assets, the Company adopts the fair value for the subsequent
measurement, and the changes in fair value are included into current profit and loss.
4.9.2 Classification, recognition and measurement of financial liabilities
The Group’s financial liabilities are, on initial recognition, classified into financial liabilities at fair
value through profit or loss and other financial liabilities. For financial liabilities at fair value
through profit or loss, relevant transaction costs are immediately recognised in profit or loss for the
current period, and transaction costs relating to other financial liabilities are included in the initial
recognition amounts.
1) Financial liabilities measured by the fair value and the changes recorded in profit or loss
Financial liabilities measured by the fair value and the changes recorded in profit or loss include
financial liabilities held-for-trade (including the derivative instruments belonging to financial
liabilities) and financial liabilities designated at the initial recognition to be measured by the fair
value and their changes are recorded in the current profit or loss.
Financial liabilities held-for-trade (including the derivative instruments belonging to financial
liabilities) are subsequently measured at fair value, and the changes of fair value except those
related to hedge accounting) shall be recorded in the current profit or loss.
For the financial liability measured at fair value and with its change included into the current profit
and loss, the change of such liability's fair value arising from changes in the Company's own credit
risk is included into other comprehensive incomes. And when the liability is derecognized, the
accumulative change amount of its fair value arising from the change of own credit risk included
into other comprehensive incomes is transferred to the retained earnings. The changes of the
remaining fair value are included in the current profit and loss. If the treatment of change effects in
own credit risk of such financial liability in the above method may cause or expand the accounting
mismatching in the profit or loss, the Company will include all gains or losses (including the
amount influenced due to the changes in own credit risk of the enterprise) of such financial liability
into the current profit and loss.
2) Other financial liabilities
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
Other financial liabilities except for those formed due to transfer of financial assets failing to
comply with derecognition condition or continuously getting involved in transferred financial assets
and financial guarantee contract are classified into financial liabilities measured with amortized cost
and subject to subsequent measurement based on amortized cost. Gains or losses generated from
derecognition or amortization are included into the current profit and loss.
4.9.3 Recognition and measurement of financial assets transfer
The Group derecognises a financial asset when one of the following conditions is met:
1) the rights to receive cash flows from the asset have expired;
2) the enterprise has transferred its rights to receive cash flows from the asset to a third party under
a pass-through arrangement; or
3) the enterprise has transferred its rights to receive cash flows from the asset and either (a) has
transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor
retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
If the enterprise has neither retained all the risks and rewards from the financial asset nor control
over the asset, the asset is recognised according to the extent it exists as financial asset, and
correspondent liability is recognised. The extent of existence refers the level of risk by the financial
asset changes the enterprise is facing.
For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, (a). the
carrying amount of the financial asset transferred; and (b) the sum of the consideration received
from the transfer and any cumulative gain or loss that had been recognised in other comprehensive
income, is recognised in profit or loss.
If a part of the transferred financial asset qualifies for derecognition, the carrying amount of the
transferred financial asset is allocated between the part that continues to be recognised and the part
that is derecognised, based on the relative fair value of those parts. The difference between (a) the
carrying amount allocated to the part derecognised; and (b) the sum of the consideration received
for the part derecognised and any cumulative gain or loss allocated to the part derecognised which
has been previously recognised in other comprehensive income, is recognised in profit or loss.
If the Company endorses the financial assets sold by right of recourse and holding financial assets,
it needs to confirm that whether almost all risks and remuneration in the ownership of financial
assets have been transferred or not. Where an enterprise has transferred nearly all of the risks and
rewards related to the ownership of the financial asset to the transferee, it shall stop recognizing the
financial asset ； If it retained nearly all of the risks and rewards related to the ownership of the
financial asset, it shall not stop recognizing the financial asset. If the Company does not transfer or
retain nearly all of the risks and rewards related to the ownership of the financial asset, then it
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
continuously judges that whether the Company retain the control of the assets, and conducts
accounting treatment according to the principles described in former paragraphs.
4.9.4 Derecognition of financial liabilities
In case of current obligation of financial liabilities (or partial financial liabilities) being terminated,
derecognition of such financial liabilities (or partial financial liabilities) is conducted by the
Company. If the Company (borrower) concludes an agreement with the lender to replace original
financial liabilities with new ones and contact terms of new financial liabilities are different from
those of original financial liabilities, derecognition of original financial liabilities and recognition of
new financial liabilities shall be conducted. In case of material alteration of contract terms of
original financial liabilities (partial financial liabilities) by the Company, derecognition of original
financial liabilities and recognition of new financial liabilities as per modified terms shall be
conducted. In case of derecognition of financial liabilities (partial financial liabilities), the Company
includes the balance between its book value and payment consideration (including non-cash assets
transferred out or borne liabilities) into the current profit and loss.
4.9.5 Offsetting financial assets and financial liabilities
When the Company has a legal right that is currently enforceable to set off the recognised financial
assets and financial liabilities, and intends either to settle on a net basis, or to realise the financial
asset and settle the financial liability simultaneously, a financial asset and a financial liability shall
be offset and the net amount is presented in the balance sheet. Except for the above circumstances,
financial assets and financial liabilities shall be presented separately in the balance sheet and shall
not be offset.
4.9.6 Determination of financial assets and liabilities’ fair value
Fair value is the amount for which an asset could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm’s length transaction. For a financial instrument which has
an active market, the Company uses quoted price in the active market to establish its fair value. The
quoted price in the active market refers to the price that can be regularly obtained from exchange
market, agencies, industry associations, pricing authorities; it represents the fair market trading
price in the actual transaction. For a financial instrument which does not have an active market, the
Company establishes fair value by using a valuation technique. Valuation techniques include using
recent arm’s length market transactions between knowledgeable, willing parties, reference to the
current fair value of another instrument that is substantially the same, discounted cash flow analysis
and option pricing models. The Company measures initially and subsequently the fair value of an
interest rate swap at the value of a competitor’s interest rate swap quoted by a recognised financial
institution as at the Company’s balance sheet date in accordance with the principle of consistency.
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
In valuation, the Company adopts applicable valuation techniques supported by sufficient utilizable
data and other information in current circumstances, selects input values consistent with asset or
liability characteristics considered in relevant asset or liability transactions of market participators
and prioritizes the applying relevant observable input values. Unobservable input values shall not be
applied unless relevant observable input values are not accessible or feasible.
4.9.7 Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company
after deducting all of its liabilities. The consideration received from issuing equity instruments, net
of transaction costs, are added to shareholders’ equity. All types of distribution (excluding stock
dividends) made by the Company to holders of equity instruments are deducted from shareholders’
equity. The Group does not recognise any changes in the fair value of equity instruments.
An equity instrument distributing dividends during the period of continued existence (including the
“ interest ” generated from those classified as equity instrument) shall be treated as profit
distribution.
4.10 Financial assets impairment
The financial assets on which the Company needs to recognize impairment losses comprise
financial assets at amortized cost, as well as investments in debt instruments and lease receivables at
fair value through other comprehensive income, including notes receivable, accounts receivable,
other receivables, investments in debt obligations, investments in other debt obligations, long-term
receivables, etc. Meanwhile, the Company also establishes impairment allowances and recognizes
credit impairment losses on contract assets and certain financial guarantee contracts in accordance
with the accounting policies as stated in this section.
4.10.1 Recognition of impairment allowances
Based on expected credit losses, the Company establishes impairment allowances and recognizes
credit impairment losses on the aforesaid items according to the expected credit loss measurement
method (general or simplified) applicable for these items.
Credit losses refer to the difference between all the contract cash flows receivable discounted on the
original actual interest rates and the expected incoming cash flows, i.e. the present value of all the
cash shortages. Meanwhile, a purchased or originated financial asset that has incurred credit
impairment is discounted on the credit-adjusted actual interest rate of the financial asset.
The general measurement method of an expected credit loss refers to the Company assessing on
each balance sheet date whether the credit risk of a financial assets (including contract assets and
other applicable items, the same hereinafter) has increased significantly since the initial recognition.
In the case of a significantly increased credit risk since the initial recognition, the Company
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
measures the loss allowance according to the expected credit loss for the entire duration; and if the
credit risk has not increased significantly since the initial recognition, the Company measures the
loss allowance according to the expected credit loss for the future 12 months. When assessing an
expected credit loss, the Company considers all reasonable and valid information, including
forward-looking information.
For a financial instrument with a low credit risk on the balance sheet date, the Company assumes
that its credit risk has not increased significantly since the initial recognition and chooses to
measure the loss allowance according to the expected credit loss for the future 12 months.
4.10.2 Basis for judging whether the credit risk has increased significantly since the initial
recognition
A significantly higher probability of default on a financial asset for the expected duration given on
the balance sheet date than in the initial recognition indicates a significant increase in the credit risk
of the financial asset. Except in special cases, the Company considers it a reasonable estimate to
take the default risk change in the future 12 months as for the entire duration, so as to determine
whether the credit risk has increased significantly since the initial recognition.
4.10.3 Assessment of expected credit risks on the group basis
The Company separately assesses the credit risks on financial assets with significantly different
credit risks such as receivables from related parties for which no bad debt allowance is established
unless the related party is unable to repay, security deposits and the like for which no bad debt
allowance is established because there is no objective evidence proving its impairment, accounts
receivable with any obvious sign showing that the debtor is very unlikely to repay, etc.
Except those with separate evaluation of credit risk, the Company classifies financial assets into
various groups based on common risk characteristics and evaluates the credit risk on the basis of
groups.
4.10.4 Accounting Treatment Methods of Financial Assets Impairment
At the end of the Period, the Company will account the expected credit losses of various financial
assets. If the expected credit loss of a financial asset is more than the carrying value of its
impairment allowance, the difference will be recognized as the impairment losses; if less, the
difference will be recognized as the impairment gains.
4.10.5 Determination Methods of Credit Losses of Various Financial Assets
1) Notes receivable
As for notes receivable, the Company measures the provision for loss based on the amount of
expected credit losses for the entire duration.
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
2) Accounts receivable
As for accounts receivable and contract assets excluding material financing components, the
Company measures the provision for loss based on the amount of expected credit losses for the
entire duration.
As for accounts receivable, contract assets and lease receivables including material financing
components, the Company decides to consistently measure the provision for loss based on the
amount of expected credit losses for the entire duration.
3) Other receivables
The Company measures the provision loss based on the amount of expected credit losses over the
next 12 months or for the entire duration, in accordance with whether the credit loss of other
receivables has remarkable increase since the initial recognition.
4.11 Inventories
4.11.1 Classification of inventory
Inventories are classified into materials in transit, raw materials, work-in-progress, finished goods,
materials and goods of consignment, consignment goods and revolving materials etc.
4.11.2 Valuation method of inventories
Inventories are initially carried at the planed cost, to record the difference between planned cost and
actual cost through the cost variances account, and carryover the cost variances of issued inventory
on schedule, to adjust the planned cost to actual cost. Cost of issue is measured using the weighted
average method.
4.11.3 Basis for determining net realizable value of inventories and provision methods for decline in
value of inventories
Net realizable value is the estimated selling price in the ordinary course of business less the
estimated costs of completion, the estimated costs necessary to make the sale and relevant taxes.
Net realizable value is determined on the basis of clear evidence obtained, and takes into
consideration the purpose of holding inventories and effect of post balance sheet events.
At the balance sheet date, inventories are measured at the lower of the cost and net realizable value.
If the net realizable value is below the cost of inventories, a provision for decline in value of
inventories is made. The provision for inventories decline in value is determined normally by the
difference of the cost of individual item less its realizable value. For large quantity and low value
items of inventories, Provision for decline in value is made based on categories of inventories. For
items of inventories relating to a product line that are produced and marketed in the same
geographical area, have the same or similar end users or purposes, and cannot be practicably
evaluated separately from other items in that product line provision for decline in value is
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
determined on an aggregate basis.
After the provision for decline in value of inventories is made, if the circumstances that previously
caused inventories to be written down below cost no longer exist so that the net realizable value of
inventories is higher than their cost, the original provision for decline in value is reversed and the
reversal is included in profit or loss for the period.
4.11.4 The perpetual inventory system is maintained for stock system.
4.11.5 Amortization method for low cost and short-lived consumable items and packaging
materials.
Low cost and short-lived consumable items are amortized using immediate write-off methods.
4.12. Assets held for sale and disposal group
The company classifies a non-current asset or disposal group as held for sale if its carrying amount
will be recovered principally through a sale transaction rather than through continuing use. For this
to be the case, the following conditions shall be met: a) the asset (or disposal group) must be
available for immediate sale in its present condition subject to terms that are usual and customary
for sales of such assets or disposal groups; b) the company has made the resolution on the disposal
plan and must be committed to a plan to sell the asset (or disposal group); c) the sale is expected to
be completed within one year from the date of classification. A disposal group is a group of assets to
be disposed of, by sale or otherwise, together as a group in a single transaction, and liabilities
directly associated with those assets that will be transferred in the transaction. The group shall
include goodwill acquired in a business combination if the group is a cash-generating unit to which
goodwill has been allocated in accordance with the requirements of Accounting Standard for
Business Enterprises No. 8 – Impairment of assets.
The company measure a non-current asset or disposal group classified as held for sale at the lower
of its carrying amount and fair value less costs to sell on initial recognition and subsequent
remeasuremnt on the balance sheet date. An impairment loss is recognised when the carrying
amount is higher than the fair value less costs to sell, and allowance for impairment is recognised
accordingly. For the disposal group, the recognised impairment loss on assets is offset against the
carrying amount of the goodwill in the disposal group, and then reduced in proportion of the book
value of the non-current assets applicable to "Accounting Standard for Business Enterprises No. 42
- Non-current Assets Held for Sale, Disposal Group and Discontinued Operations (hereinafter
referred to as "held for sale accounting principle") measurement requirements. The company shall
recognise a gain during the period for any subsequent increase in fair value less costs to sell of an
asset, but not in excess of the cumulative impairment loss that has been recognised after the
reclassification to non-current assets held for sale. The book value of assets in the disposal group is
increased proportionately according to the proportion of the book value of each non-current asset
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
except for goodwill. Impairment loss recognised before the reclassification to non-current assets
held for sell shall not be recovered.
Non-current asset or non-current asset in the disposal group classified as held for sale is not subject
to depreciation or amortization. The interest and other expenses on liabilities held in the disposal
group for sale are continuously recognised.
Non-current assets or disposal group that no longer meet the conditions of non-current asset held for
sell shall be removed from the category, and shall be measured at the lower of the following: (a)
The carrying amount before classification as held for sale after adjustment of depreciation,
amortization or impairment that should be recognised if it is not classified as non-current assets held
for sell; (b) recoverable amount.
4.13. Long-term equity investments
Long-term equity investments referred to in this section refer to the Company invested entity has
control, joint control or significant influence over the long-term equity investments. The Company
invested does not have control, joint control or significant influence over the long-term equity
investments as financial assets available for sale or at fair value and the changes included financial
assets through profit or loss, which refer to the accounting policies in Note 4.9 “ financial
instruments”.
Joint control is the Company control over an arrangement in accordance with the relevant
stipulations are common, related activities and the arrangement must be after sharing control
participants agreed to the decision-making. Significant influence is the Company s financial and
operating policies of the entity has the right to participate in decision-making, but cannot control or
with other parties joint control over those policies.
4.13.1 Determination of Investment cost
The cost of a long-term equity investment acquired through business combination under common
control is measured at the acquirer's share of the combination date book value of the acquiree's net
equity in the ultimate controller's consolidated financial statements. The difference between the cost
and book value of cash paid, non-monetary assets transferred and liabilities assumed is adjusted to
capital reserves, and to retained earnings if capital reserves is insufficient. If the consideration is
transferred by way of issuing equity instruments, the face value of the equity instruments issued is
recognised in share capital and the difference between the cost of the face value of the equity
instruments issued is adjusted to capital reserves, and to retained earnings if capital reserves is
insufficient. Where a business combination under common control is achieved by multiple
acquisition of the acquiree's shareholding, the multiple acquisitions shall be assessed to determine
whether the multiple acquistions shall be viewed as one single transaction. If the multiple
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
acquistions shall be viewed as one single transaction, the multiple acquistions shall be accounted for
as one single transaction accordingly. If the multiple acquisitions shall not be viewed as one single
transaction, the difference between the cost of combination and the sum of the book value of the
investment in the acquiree immediately before the combination and the book value of the
consideration transferred to acquire additional shareholding is adjusted to capital reserves, and to
retained earnings if capital reserves is insufficient. Cumulative other comprehensive income
associated with the investment recognised as a result of the treatment of equity method or
available-for-sale financial assets prior to the combination is not affected by the combination.
The cost of a long-term equity investment acquired through business combination not under
common control is the fair value of the assets transferred, liabilities incurred or assumed and equity
instruments issued. Where a business combination not under common control is achieved by
multiple acquisition of the acquiree's shareholding, the multiple acquisitions shall be assessed to
determine whether the multiple acquistions shall be viewed as one single transaction. If the multiple
acquistions shall be viewed as one single transaction, the multiple acquistions shall be accounted for
as one single transaction accordingly. If the multiple acquisitions shall not be viewed as one single
transaction, the cost of combination is measured at the sum of book value of the investment in the
acquiree immediately before the combination and cost of acquisition of additional shareholding. If
the investment prior to the combination is measured by fair value, cumulative other comprehensive
income associated with the investment prior to the combination is not affected by the combination.
If the investment prior to the combination is measured as an available-for-sale financial asset, the
difference between the fair value and the book value of the investment immediately before the
combination and the associated cumulative other comprehensive income recognised prior to the
combination are carried to profit or loss.
All expenses incurred directly associated with the acquisition by the acquirer, including expenditure
of audit, legal services, valuation and consultancy and other administrative expenses, are recognised
in profit or loss for the period during which the acquisition occurs.
Long-term equity investments acquired not through business combination are measured at cost on
initial recognition. Depending on the way of acquisition, the cost of acquisition can be the total cash
paid, the fair value of equity instrument issued, the contract price, the fair value or book value of the
assets given away in the case of non-monetary asset exchange, or the fair value of the relevant
long-term equity investments. The cost of acquisition of a long-term equity investment acquired not
through business combination also includes all directly associated expenses, applicable taxes and
fees, and other necessary expenses. The cost of a long-term equity investment, which enables the
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
Company has significant influence or joint control over the acquiree which is achieved through
additional investment, is measured as the fair value determined in accordance with CAS 22 -
Financial Instruments: Recognition and Measurement plus the cost of additional investment.
4.13.2 Subsequent Measurement
To be invested joint control (except constitute common operator) or long-term equity investments
significant influence are accounted for using the equity method. In addition, the Company's
financial statements using the cost method of accounting for long-term equity can exercise control
over the investee.
1) Cost method of accounting for long-term equity investments
Under the cost method, a long-term equity investment is measured at initial investment cost. Except
for cash dividends or profits declared but not yet paid that are included in the price or consideration
actually paid upon acquisition of the long-term equity investment, investment income is recognised
in the period in accordance with the attributable share of cash dividends or profit distributions
declared by the investee.
2) Equity method of accounting for long-term equity investments
Where the initial investment cost of a long-term equity investment exceeds the investing enterprise’
s interest in the fair values of the investee’s identifiable net assets at the time of acquisition, no
adjustment shall be made to the initial investment cost.
The carrying amount of a long-term equity investment measured using the equity method is
adjusted by the Company's share of the investee's net profit and other comprehensive income, which
is recognised as investment income and other comprehensive income respectively. The carrying
amount of a long-term equity investment measured using the equity method is reduced by profit
distribution or cash dividends announced by the investee. The carrying amount of a long-term
equity investment measured using the equity method is also adjusted by the investee's equity
movement other than net profit, other comprehensive income and profit distribution, which is
adjusted to capital reserves. The net profit of the investee is adjusted by the fair value of the
investee's identifiable assets as at acquistion. The financial statements and hence the net profit and
other comprehensive income of an investee which does not adopt accounting policies or accounting
period uniform with the Company is adjusted by the Company's accounting policies and accounting
period. The Company's share of unrealised profit or loss arising from related party transactions
between the Company and an associate or joint venture is deducted from investment income.
Unrealised loss arising from related party transactions between the Company and an associate or
joint venture which is associated with asset impairment is not adjusted. Where assets transferred to
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
an associate or joint venture which form part of the Company's investment in the investee but which
does not enable the Company obtain control over the investee, the cost of the additional investment
acquired is measured at the fair value of assets transferred and the difference between the cost of the
additional investment and the book value of the assets transferred is recognised in profit or loss.
Where assets transferred to an associate or joint venture form an operation, the difference between
the consideration received and the book value of the assets transferred in recognised in profit or loss.
Where assets transferred from an associate or joint venture form an operation, the transaction is
accounted for in accordance with CAS 20 - Business Combination, any gain or loss is reocgnised in
profit or loss.
The Company's share of an investee's net loss is limited by the sum of the book value of the
long-term equity investment and other net long-term investments in the investees. The Company
has obligation to share additional net loss of the investee, the estimated share of loss recognised as
accrued liabilities and investment loss. Where the Company has unrecognised share of loss of the
investee when the investee generates net profit, the Company's unrecognised share of loss is
reduced by the Company's share of net profit and when the Company's unrecognised share or loss is
eliminated in full, the Company's share of net profit, if any, is recognised as investment income.
For long-term equity investments in associates and joint ventures which had been held by the
Company before its first time adoption of Accounting Standards for Business Enterprises, where the
initial investment cost of a long-term equity investment exceeds the Company ’ s interest in the
investee’s net assets at the time of acquisition, the excess is amortized and is recognised in profit or
loss on a straight line basis over the original remaining life.
3) Acquisition of minority interest
The difference between newly increased equity investment due to acquisition of minority interests
and portion of net asset cumulatively calculated from the acquisition date is adjusted as capital
reserve. If the capital reserve is not sufficient to absorb the difference, the excess are adjusted
against returned earnings.
4) Disposal of long-term equity investment
The parent company disposes long-term investment in a subsidiary without a change in control, the
difference in the net asset between the amount of disposed long-term investment and the amount of
the consideration paid or received is adjusted to the owner’s equity. If the disposal of long-term
investment in a subsidiary involves loss of control over the subsidiary, the related accounting
policies in Note 4.5.2 applies. For disposal of long-term equity investments in any situation other
than the fore-mentioned situation, the difference between the book value of the investment disposed
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
and the consideration received is recognised in profit or loss.
The long-term equity investment is measured by the equity method both before and after part
disposal of the investment, cumulative other comprehensive income relevant to the investment
recognised prior to the acquistion is treated in the same manner that the investee disposes the
relevant assets or liabilities proportionate to the disposal. The investee's equity movement other than
net profit, other comprehensive income and profit distribution is reocgnised in profit or loss
proportionate to the disposal.
The long-term equity investment is measured at cost both before and after part disposal of the
investment, cumulative other comprehensive income relevant to the investment recognised, as a
result of accounting by equity method or recognition and measurement principles applicable to
financial instruments, prior to the Company's acquisition of control over the investee is treated in
the same manner that the investee disposes the relevant assets or liabilities and recognised in profit
or loss proportionate to the disposal. The investee's equity movement other than net profit, other
comprehensive income and profit distribution, as a result of accounting by equity method, is
reocgnised in profit or loss proportionate to the disposal.
The Company's control over an investee is lost due to partial disposal of investment in the investee
and the Company continues to have significant influence over the investee after the partial disposal,
the investment in measured by the equity method in the Company's separate financial statements;
the Company's control over an investee is lost due to partial disposal of investment in the investee
and the Company ceases to have significant influence over the investee after the partial disposal, the
investment in measured in accordance with the recognition and measurement principles applicable
to financial instruments in the Company's separate financial statements and the difference between
the fair value and the book value of the remaining investment at the date of loss of control is
recognised in profit or loss. Cumulative other comprehensive income relevant to the investment
recognised, as a result of accounting by equity method or recognition and measurement principles
applicable to financial instruments, prior to the Company's acquisition of control over the investee
is treated in the same manner that the investee disposes the relevant assets or liabilities on the date
of loss of control. The investee's equity movement other than net profit, other comprehensive
income and profit distribution, as a result of accounting by equity method, is recognised in profit or
loss when control is lost. Where the remaining investment is measured by equity method, the
fore-mentioned other comprehensive income and other equity movement are recognised in profit or
loss proportionate to the disposal; Where the remaining investment is measured in accordance with
the recognition and measurement principles applicable to financial instruments, the fore-mentioned
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
other comprehensive income and other equity movement are recognised in profit or loss in full.
The Company's joint control or significant influence over an investee is lost due to partial disposal
of investment in the investee, the remaining investment in the investee is measured in accordance
with the recognition and measurement principles applicable to financial instruments, the difference
between the fair value and the book value of the remaining investment at the date of loss of joint
control or significant influence is recognised in profit or loss.Cumulative other comprehensive
income relevant to the investment recognised, as a result of accounting by equity method, prior to
the partial disposal is treated in the same manner that the investee disposes the relevant assets or
liabilities on the date of loss of joint control or significant influence. The investee's equity
movement other than net profit, other comprehensive income and profit distribution is recognised in
profit or loss when joint control or significant influence is lost.
The Company's control over an investee is lost through multiple disposals and the multiple
disposals shall be viewed as one single transaction, the multiple disposals is accounted for one
single transaction which result in the Company's loss of control over the investee. Each difference
between the consideration received and the book value of the investment disposed is recognised in
other comprehensive income and reclassified in full to profit or loss at the time when control over
the investee is lost.
4.14 Investment property
Investment property is held to earn rentals or for capital appreciation or for both. Investment
property includes leased or ready to transfer after capital appreciation land use rights and leased
buildings. In addition, the Company holds for future operating lease vacant buildings, if the board
of directors (or similar body) to make a written resolution, made it clear that their intention for rent
and shall not occur in the short term change, but also as an investment real estate
presentation .Investment property is initially measured at cost. Subsequent expenditures related to
an investment real estate are likely to flow about the economic benefits of the asset and its cost can
be measured reliably, is included in the cost of investment real estate. Other subsequent expenditure
is record in to the profit or loss when it incurred.
The Group uses the cost model for subsequent measurement of investment property, and in
accordance with the depreciation or amortization of buildings or land use rights policy.
Investment property impairment test method and impairment accrual method described in Note 4.20
“Non-current and non-financial assets impairment ".
Occupied real estate for investment property or investment property is transferred to
owner-occupied real estate or stock conversion as the recorded value after the conversion, according
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
to the book value before the conversion.
When an investment property is changed for personal use, since the change of date, the investment
property is transferred to fixed assets or intangible assets. Owner-occupied property is changed to
earn rentals or for capital appreciation, change the date, will be converted to fixed assets or
intangible investment property. When the transition occurs, the conversion to the use of investment
property cost model, the carrying value before conversion as the book value after conversion,
convert to investment property measured at fair value model, the fair value of the conversion date as
the conversion after the recorded value.
When the investment property is disposed of or permanently withdrawn from use and no future
economic benefits are expected from the disposal, derecognition of the investment property.
Investment property is sold, transferred, retired or damaged, the disposal income after deducting the
book value and related taxes and profit or loss.
4.15 Fixed assets
4.15.1 The conditions of recognition
Fixed assets refers to the tangible assets that are held for the sake of producing commodities,
rendering labor service, renting or business management and their useful life is in excess of one
fiscal year. Fixed assets only in the economic benefits associated with it will flow to the company
and the cost can be measured reliably only are confirmed. Fixed assets are stated at cost and
considering the expected costs of abandoning the initial measurement.
4.15.2 The method for depreciation
Fixed assets are stated at cost and consider the impact of expected costs of abandoning the initial
measurement. From the following month of state of intended use, depreciation method of the
straight-line method is used for different categories of fixed assets to take depreciation. The
recognition of the classification, useful life and estimated residual rate are as follows:
Estimated residual
Category Expected useful life Depreciation(%)
value(%)
Houses and building 7.00-10.00 20 4.50-4.65
Machineries 0.00 5-15 6.67-20.00
Electronic device、furniture and 0.00 5-6 16.67-20.00
modules
Vehicles 0.00 6 16.67
Improvement expense of leased fixed 0.00 the shorter of lease term and beneficial lives
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
assets
Expected net residual value of fixed assets is the balance of the Company currently obtained from
the disposal of the asset less the estimated costs of disposal amount, assuming the asset is out of
useful life and state the expected service life in the end.
4.15.3 Measurement and recognition of fixed assets impairment
Impairment and provisions of fixed assets are disclosed on Note 4.20 “Impairment of long-term
assets”.
4.15.4 Fixed Assets under finance leases
A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership
of an asset. Title may or may not eventually be transferred. Fixed assets that are held under finance
leases shall be depreciated by applying the same policy as that for the fixed assets owned by the
Company. If it can be reasonably determined that the ownership of the leased assets can be obtained
at the end of the lease period, the leased assets are depreciated over their useful lives; otherwise, the
leased assets are depreciated over the shorter of the lease terms and the useful lives of the leased
assets.
4.15.5 Others
A fixed asset is recognised only when the economic benefits associated with the asset will probably
flow to the Company and the cost of the asset can be measured reliably. Subsequent expenditure
incurred for a fixed asset that meet the recognition criteria shall be included in the cost of the fixed
asset, and the carrying amount of the component of the fixed asset that is replaced shall be
derecognised. Otherwise, such expenditure shall be recognised in profit or loss in the period in
which they are incurred.
The revenue from selling or transferring, or disposing a fixed asset is booked into profit and loss
after deduction of carrying value and related tax.
The Company conducts a review of useful life, expected net realizable value and depreciation
methods of the fixed asset at least at the end of the reporting period. Any change is regarded as
change in accounting estimates.
4.16 Construction in progress
Construction in progress is measured at its actual cost. The actual costs include various construction
expenditures during the construction period, borrowing costs capitalized before it is ready for
intended use and other relevant costs. Construction in progress is transferred to a fixed asset when it
is ready for intended use.
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
Testing method for provision impairment of construction in progress and accrued method for
provision impairment please refer to Note 4.20 “Impairment of long-term assets”..
4.17 Borrowing costs
Borrowing costs include interest, amortization of discounts or premiums related to borrowings,
ancillary costs incurred in connection with the arrangement of borrowings, and exchange
differences arising from foreign currency borrowings. The borrowing costs that are directly
attributable to the acquisition, construction or production of a qualifying asset are capitalized. The
amounts of other borrowing costs incurred are recognised as an expense in the period in which they
are incurred. Qualifying assets are asset (fixed assets, investment property and inventories, etc.) that
necessarily take a substantial period of time for acquisition, construction or production to get ready
for their intended use or sale.
Where funds are borrowed for a specific-purpose, the amount of interest to be capitalized is the
actual interest expense incurred on that borrowing for the period less any bank interest earned from
depositing the borrowed funds before being used on the asset or any investment income on the
temporary investment of those funds. Where funds are borrowed for a general-purpose, the amount
of interest to be capitalized on such borrowings is determined by applying a weighted average
interest rate to the weighted average of the excess amounts of accumulated expenditure on the asset
over and above the amounts of specific-purpose borrowings.
During the capitalization period, exchange differences related to a specific-purpose borrowing
denominating in foreign currency are all capitalized. Exchange differences in connection with
general-purpose borrowings are recognised in profit or loss in the period in which they are incurred.
Assets qualified for capitalization are the fixed assets, investment properties or inventories which
need a long time of construction or production activities before ready for intended used or sale.
Capitalization of borrowing costs is suspended during periods in which the acquisition, construction
or production of a qualifying asset is interrupted by activities other than those necessary to prepare
the asset for its intended use or sale, when the interruption is for a continuous period of more than 3
months. Borrowing costs incurred during these periods recognised as an expense for the current
period until the acquisition, construction or production is resumed.
4.18 Intangible assets
4.18.1 Intangible asset
The term “intangible asset” refers to the identifiable non-monetary assets without physical shape,
possessed or controlled by enterprises.
The intangible assets are initially measured by its cost. Expenses related to intangible assets, if the
economic benefits related to intangible assets are likely to flow into the enterprise and the cost of
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
intangible assets can be measured reliably, shall be recorded as cost of intangible assets. The
expenses other than this shall be booked in the profit or loss when they occur.
Land use rights that are purchased by the Company are accounted for as intangible assets. Buildings,
such as plants that are developed and constructed by the Company, and relevant land use rights and
buildings, are accounted for as intangible assets and fixed assets, respectively. Payments for the
land and buildings purchased are allocated between the land use rights and the buildings; if they
cannot be reasonably allocated all of the land use rights and buildings are accounted for as fixed
assets.
When an intangible asset with a definite useful life is available for use, its original cost less net
residual value and any accumulate impairment losses is amortized over its estimated useful life
using the straight-line method. An intangible asset with an indefinite useful life is not amortized.
For an intangible asset with a definite useful life, the Company reviews the useful life and
amortization method at the end of the period, and makes adjustment when necessary. An additional
review is also carried out for useful life of the intangible assets with indefinite useful life. If there is
evidence showing the foreseeable limit period of economic benefits generated to the enterprise by
the intangible assets, then estimate its useful life and amortize according to the policy of intangible
assets with definite useful life.
4.18.2 Research and development cost
Cost of research and development is distinguished into the research phase and the development
phases.
Cost of the research phase is recognised in the profit or loss in the period in which it is incurred.
Unless the following conditions are satisfied, cost of the development phase is recognised in the
profit or loss in the period in which it is incurred:
1) it is technically feasible to complete the intangible asset so as to use it or sell it;
2) it is clearly invented to complete the intangible asset in order to use it or sell it;
3) it is probable that the intangible asset is capable of generating future economic benefit, such as
the market for the product produced by the intangible asset or the intangible asset itself, it is
objectively evidential that the intangible asset is economically usable if it is going to be used
internally;
4) there are sufficient technical, financial and other resources to complete the intangible asset and to
use it or sell it;
5) the cost of the development of the intangible can be measured reliably.
If the cost cannot be distinguished into the search phase and the development phase, it is recognised
in the profit or loss for the period in which it is incurred.
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
4.18.3 Impairment of intangible assets
Impairment and provisions of intangible assets are disclosed on Note 4.20 “ Impairment of
long-term assets”.
4.19 Long-term deferred expenditure
An item long-term deferred expenses is an expense which has been incurred and which has a
beneficial period (a period during which an expense is expected to bring economic benefits to an
entity) which is longer than one year and which includes at least part of the reporting period during
which the expense was incurred and subsequent reporting periods. An item of long-term deferred
expenses is recognised at the actual amount of the expense incurred and allocated in each month of
the beneficial period using the straight line method.
4.20 Impairment of long-term assets
Non-financial assets with non-current nature include fixed assets, construction in progress,
intangible assets with definite useful lives, investment properties measured by cost methods and
long-term equity investment on subsidiaries, jointly operations. The Company assesses whether
there are any indicators of impairment for all non-financial assets at the balance sheet date, and
impairment test is carried out and recoverable value is estimated if such an indicator exits. Goodwill
and intangible assets with indefinite useful lives, as well as intangible assets not ready for use, are
tested for impairment annually regardless of indicators of impairment.
Impairment of loss is calculated and provisions taken by the difference if the recoverable value of
the assets is lower than the book value. The recoverable value is the higher of estimated present
value of the future expected cash flows from the asset and net fair value of the asset less disposed
cost. The fair value of asset is determined by the sales agreement price within an arm ’ s length
transaction. In case there is no sales agreement, but there is active market of assets, the fair value
can be determined by the selling price. If there is neither sales agreement nor active market, the fair
value of the asset can be estimated based on the best information obtained. Disposal expenses
include expenses related to the legislation, taxes, transportations and the direct expense for the asset
to be ready for sale. When calculating the present value of expected future cash flows from an asset
or asset Group, the management shall estimate the expected future cash flows from the asset or
asset Group and choose a suitable discount rate in order to calculate the present value of those cash
flows. Provision for asset impairment is calculated and determined on the individual basis. If the
recoverable of individual asset is hard to estimate, the recoverable amount can be determined by the
asset Group where subject asset belongs. Asset Group is the smallest set of assets that can have cash
flow in independently.
The Company determines whether goodwill is impaired at least on an annual basis. This requires an
estimation of the present value of the future expected cash flows from the asset Groups or sets of
asset Groups to which the goodwill is allocated. Estimating the present value requires the Company
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
to make an estimate of the expected future cash flows from the asset Groups or sets of asset Groups
and also choose a suitable discount rate in order to calculate the present value of those cash flows.
Once the loss from above asset impairment is recognized, the recoverable part cannot be reserved in
the subsequent periods.
After the asset impairment loss is determined, recoverable value amounts would not be returned in
future
4.21 Employee Benefits
The employee benefits of the company include short-term employee benefits, post-employment
benefits, termination benefits and other long-term employee benefits:
Short-term employee benefits includes wages, bonuses, allowances and subsidies, welfare, health
insurance , maternity insurance, work injury insurance, housing funds, labor union funds, employee
education funds, non-monetary benefits and etc. The company provides services accounting period
in which an employee of the company will be short-term employee benefits are recognised as
liabilities actually incurred and loss account or the costs associated with the asset. The non
-monetary benefits are measured at fair value.
Post-employment benefits mainly include basic old-age insurance, unemployment insurance and
annuities. Post-employment benefits include defined contribution plans and defined benefit plans.
Relevant contribution amount in the defined contribution plan shall be recognised as cost of related
assets or profit or loss during the year. The defined benefit plan in the company is old-age insurance.
Projected unit credit cost method ( “PUC ” ) was used by independent actuaries engaged by the
Company to determine the present value of the defined benefit obligations with unbiased and
consistent actuarial assumptions regarding population variables and financial variables. Defined
benefit obligation was presented with the present value and the related current service cost was
accounted into current profit or loss.
When the Company terminates the labor relationship with employees prior to the employment
contracts, or encourages employees to accept voluntary redundancy compensation proposals in
this company, a provision shall be recognised for the compensation arising from the termination of
employment relationship with employees at the time when the Company can not unilaterally
withdraw layoff proposal termination benefits provided due to termination of employment, or the
company ensures the costs related to the payment for termination benefits related to the
restructuring, which one is early to confirm employee benefits liabilities, and recorded as profit or
loss. However, if termination benefits can not be fully paid after twelve months of the reporting date,
the liability shall be processed in accordance with other long-term employee benefits.
Retirement plan adopts the same principles as the termination benefits. The salaries and insurance
to be paid from the date when employees stop providing services to the date of normal retirement
shall be recognised in profit or loss (termination benefits) when satisfying the requirements of a
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
provision.
Other long-term employee benefits provided by the company to employees that is in line with
defined contribution plans shall adopt the accounting treatment in accordance with defined
contribution plans, otherwise the accounting treatment of defined benefit plans.
4.22 Accrued liabilities
Recognition of accrued liabilities:
Obligation with contingency factor such as external hypothecate, lawsuit or arbitrage in dispute,
guarantee on quality of product, cut-down plan, loss of contract, recombine obligation, obligation
on abandon fixed asset, and meet the follow condition simultaneously would determine as
liabilities:
①This obligation is current obligation of the Company; and,
② The performance of this obligation will probably cause economic benefits outflow of the
Company; and,
③The amount of this obligation can be reliably measured.
On balance sheet date the Company performs relate obligation that consider risk, incertitude, time
value of currency of contingency factor. According to the best estimate of the expenditure required
to settle the present obligation for estimated liabilities measured.
If the expenditure required to settle the liability is expected to be fully or partly compensated by a
third party, to determine the amount of compensation will be received at the basic, separately
recognised as an asset, and is recognised in the amount of compensation does not exceed the
carrying value of estimated liabilities.
4.23 Revenue
4.23.1 Revenue from sales of goods
Revenue from sales of goods is recognised when significant risks and rewards attached to the
ownership of the goods sold are passed to the buyer, when neither continual involvement in the
rights normally associated with the ownership of the goods sold nor effective control over the goods
controls are retained, when revenue arising from the goods sold is reliably measurable, when inflow
of future economic benefits is probable, and when cost incurred or to be incurred associated with
the goods sold is reliably measurable.
For the export sales of the products of the Company, no matter what the sales pattern adopt,
recognition of revenue according to the sales contract or conventions listed in the orders. For the
export product sales is mainly used the FOB ports settlement, and the realization of the sales
revenue is confirmed after the products are shipped and the export declaration and export
procedures are completed.
Accounting treatment for sales return: in accordance with the international trade prevailing rules,
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
the FOB settlement employed, indicate to the buyer has inspected and accepted those purchased
commodities at the shipment dock, after acceptance and shipping the relevant risks has been
transferred to buyer, therefore the Company has no individually recognised for the events, but the
amount shall be recognised when incurred and accounted through in profit and loss in current
period. Accounting treatment for product claims: calculate the claim indemnity rate, according to
the proportion of actually payment for those product claims during recently two years account for
the corresponding period sales revenue, at the end of period, on the basis of current period sales
revenue and the claim indemnity rate to recognise the claim indemnity expense.
4.23.2 Revenue from rendering of service
Revenue arising from rendering of services is recognised on the balance date using the percentage
of completion method when the outcome of the services rendered can be reliably estimated. The
percentage of completion of the services rendered is calculated by dividing the cost to date by the
budgeted total cost.
The outcome of the services rendered can be reliably estimated when revenue from the services
render can be reliably measured, when the inflow of associated future economic benefits is probable,
when the percentage of completion can be reliably measure, and when the cost incurred or to be
incurred associated with the services can be reliably measured.
When the outcome of the services rendered cannot be reliably estimate, revenue is recognised as
cost reimbursement received or to be received, if any, and cost incurred is recognised in profit or
loss for the period in which the cost is incurred. No revenue is recognised if cost reimbursement is
not probable.
When a contract between the group and another entity involves both sales of goods and rendering
for services, the sales of goods and rendering of services are accounted for separately if they are
distinguishable and separately measurable; the contract is accounted for as if it is a contract
involves only sales of goods if the sales of goods and rendering of services are either
indistinguishable or distinguishable but not separately measurable.
4.23.3 Revenue from construction contracts
When the outcome of a construction contract can be estimated reliably, contract revenue and
contract costs associated with the construction contract should be recognised as revenue and
expenses according to the percentage of completion at the balance sheet date.
The outcome of a construction contract can be estimated reliably when all the following conditions
are satisfied: ①total contract revenue can be measured reliably; ②it is probable that the economic
benefits associated with the contract will flow to the enterprise; ③the contract costs attributable to
the contract can be clearly identified and measured reliably so that actual contract costs incurred can
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
be compared with prior estimates; and, ④both the contract costs to complete the contract and the
stage of contract completion at the balance sheet date can be measured reliably.
When the outcome of a construction contract cannot be estimated reliably, but revenue should be
recognised only to the extent of contract costs incurred that it is probable will be recoverable; and If
the cost cannot be recovered, contract costs should be recognised as an expense in the period in
which they are incurred and the contract revenue cannot be recognised. When the uncertainty that
makes the outcome of the construction unable to be estimated reliably disappears, the revenue and
cost are recognised according to the percentage of completion.
An expected loss on the construction contract should be recognised as an expense during the year
when the total contract cost is expected to be higher than the total contract revenue.
The incurred cost and accumulated gross profit (loss) and the settled price of the construction
contract are disclosed as a net amount in the balance sheet. The excess amount of the incurred cost
and accumulated gross profit (loss) over the settled price of the construction contract is disclosed as
inventory, while the excess amount of the settled price over the incurred cost and accumulated gross
profit (loss) of the construction contract is disclosed as advance from customers.
4.23.4 Royalty Revenue
According to the contract or agreement, the revenue is recognised on an accrual basis.
4.23.5 Interest Income
The amount of interest revenue should be measured and confirmed in accordance with the length of
time for which the enterprise's cash is used by others and the actual interest rate.
4.24 Government Grants
Government grants are transfer of monetary assets and non-monetary assets from the government to
the Company at no consideration, excluding the capital invested by the government as equity owner.
Government grant can be classified as grant related to the assets and grants related to the income.
The government grants which were acquired by the Company will be used to purchase or otherwise
form become long-term assets will be defined as grant related to the assets; the others will be
defined as grants related to the income. If the files have not clearly defined government grants
objects, it will be divided in the following manner compartmentalize the grants related to the assets
and grants related to the income: (1) government documents defined specific projects targets,
according to the relative proportion of the budgets of specific items included the expenditure of to
form assets and the expenditure will be charged into expense to be divided, the division ratio
required at each balance sheet date for review and make changes if necessary; (2) government
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
documents to make a general presentation purposes only, does not specify a particular project, as
grants related to the income.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount
received or receivable. If a government grant is in the form of a non-monetary asset, it is measured
at fair value. If the fair value cannot be reliably determined, it is measured at a nominal amount. A
government grant measured at a nominal amount is recognised immediately in profit or loss for the
period.
When received the government grants actually, recognised and measured them by the actual amount
received. However, there is strong evidence that the end of fiscal support policies able to meet the
conditions specified in the relevant funds are expected to be able to receive financial support,
measured at the amount receivable. Government grants are measured according to the amount
receivable shall also comply with the following conditions: (1)grants receivable of government
departments issued a document entitled have been confirmed, or could reasonably are estimated in
accordance with the relevant provisions of its own official release of financial resources
management approach, and the expected amount of a material uncertainty which does not exist; (2)
it is based on the local financial sector to be officially released and financial support for the project
and its financial fund management approach voluntarily disclosed in accordance with the provisions
of “Regulations on Disclosure Government Information” and the management approach should be
(inclusive of any compliance business conditions may apply), and not specifically formulated for
specific businesses;(3) related grants approval has been clearly committed the deadline, and is
financed by the proceeds of a corresponding budget as a guarantee, so that will be received within
the prescribed period with the a reasonable assurance; (4) according to the specific circumstances of
the Company and the subsidy matter, should satisfy the other conditions (if any).
A government grant related to an asset is recognised as deferred income, and evenly amortized to
profit or loss over the useful life of the related asset in a reasonable and systematic manner. For a
government grant related to income, if the grant is a compensation for related expenses or losses to
be incurred in subsequent period, the grant is recognised as deferred income, and recognised in
profit or loss over the periods in which the related costs are recognised. If the grant is a
compensation for related expenses or losses already incurred, the grant is recognised immediately in
profit or loss for the period.
Government subsidies including both assets-related parts and income-related parts should be treated
separately. If it is difficult to seperate, the government subsidies as a whole will be classified as
income-related government grants.
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
The government grants related to the daily activities of the Company are included in other income
or offset the related costs according to the essence of the economic business. The government grants
unrelated to the daily activities are included in the non-operating income and expenses.
When government subsidy needs to be returned, if the related deferred income balance exists, the
book value of related deferred income shall be offset and the excess part shall be included in the
current profit or loss; if it is other cases, it shall be directly carried to the current profits and losses.
4.25 Deferred tax assets and deferred tax liabilities
4.25.1 Income tax for the current period
At the balance sheet date, current income tax liabilities or assets for the current and prior periods,
are measured at the amount expected to be paid (or recovered) according to the requirements of tax
laws. The calculation for income tax expenses in the current period is based on the taxable income
according to the related tax laws after adjustment to the accounting profit of the reporting period.
4.25.2 Deferred income tax assets and liabilities
The difference between the book value of some assets and liabilities and their tax basis, and the
temporary difference which is not recognized as assets and liabilities but can be recognized by the
difference between the book value of tax basis items and their tax basis according to taxation
regulation, will be recognized as deferred income tax assets and deferred income tax liabilities by
adopting liabilities method of balance sheet.
Related to the initial recognition of goodwill, taxable temporary difference related to the initial
recognition of assets and liabilities produced from the transaction that is not business merger also
will not influence accounting profit and taxable income(or deductible loss) when incurred, will not
be recognized as the related deferred income tax liabilities. In addition, the taxable temporary
difference related to subsidiaries, associated company, and joint venture will also be not recognized
as the related deferred income tax liabilities if the Company can control the time of temporary
difference reverse and the temporary difference may not be reversed in the foreseeable future.
Except the above exceptional examples, the Company recognizes deferred income tax liabilities
from all other taxable temporary difference.
Deductible temporary difference related to the initial recognition of assets and liabilities produced
from the transaction that is not business merger also will not influence accounting profit and taxable
income(or deductible loss) when incurred, will not be recognized as the related deferred income tax
assets. In addition, the deductible temporary difference related to subsidiaries, associated company,
and joint venture will also be not recognized as the related deferred income tax assets if the
temporary difference may not be reversed in the foreseeable future or taxable income of deductible
temporary difference used for deduction may not be gained in the future. Except the above
exceptional examples, the Company recognizes deferred income tax assets from other deductible
82
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
temporary difference with the limit that the Company probably gain taxable income used for
deducting deductible temporary difference.
The deductible loss tax deduction that can be carried forward to subsequent years, will be
recognized as deferred income tax assets with the limit that the Company probably gain future
taxable income used for deducting deductible loss tax deduction.
Deferred income tax assets and deferred income tax liabilities will be measured on the balance sheet
date by applicable tax rate during the period of receiving related assets and paying related liabilities
according to taxation regulation.
The Company rechecks the carrying amount of deferred tax asset at the balance sheet date. If it’s
probable that sufficient taxable profit will not be available against which the deductible temporary
difference can be utilized, the Company shall write down the carrying amount of deferred tax asset,
or reverse the amount written down later when it’s probable that sufficient taxable profit will be
available.
4.25.3 Income tax expenses
Income tax expenses consist of current income tax and deferred income tax.
The expenses from income tax and deferred income tax, as well as the revenue, shall be recorded
into profit or loss in current accounting period, except expense for income tax of the current period
and deferred income tax that booked into other income or equity and adjusted carrying value of
deferred income tax goodwill arose from business combination.
4.25.4 Income tax offset
When we have the legal right, and have intended to, to make settlement with net amount, or through
the asset acquisition and liability fulfillment simultaneously, the Company shall present the net
value from the offset between current income tax asset and current income tax liability in the
financial statement.
When the Company has the legal right to make a settlement with the current income tax asset and
current income tax liability, and the deferred income tax asset and deferred income tax liability are
related to the same taxable subject under the same tax payer, or related to different taxable subject,
but the intension of net value settlement in regard of the current income tax asset and current
income tax liability, the Company shall present net value after the offset of deferred income tax
asset and deferred income tax liability.
4.26 Leases
A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership
of an asset. Title may or may not eventually be transferred. An operating lease is a lease other than a
finance lease.
4.26.1 The Company as Lessee under operating Lease
83
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
Lease payments under an operating lease are recognised by a lessee on a straight-line basis over the
lease term, and either included in the cost of the related asset or charged to profit or loss for the
current period. The contingent rents shall be recorded in the profit or loss of the period in which
they actually arise.
4.26.2 The Company as Leasor under operating Lease
Lease income from operating leases shall be recognised by the leasor in profit or loss on a
straight-line basis over the lease term. Initial direct cost of significance in amount shall be
capitalized when incurred. If another basis is more systematic and rational, that basis may be used.
Contingent rents are credited to profit or loss in the period in which they actually arise.
4.26.3 Financial lease to which the Company is the leasee
At the commencement of a financial lease to which the Company is the Leasee, the lower of the
lease-commencement-date fair value of the leased asset and the present value of the minimum lease
payment is recognised as the cost of the leased asset; the minimum lease payment is recognised as a
long-term payable; and the excess of the long-term payable over the amount recognised as the cost
of the leased asset is recognised as unrecognised lease expenditure. Expenses incurred during the
negotiation and signing of the lease contract for activities directly attributable to the lease are
recognised as part of the cost of the leased asset. The residual amount after deducting the
unrecognised lease expenditure from the long-term payable is divided into non-current liability and
non-current liability due within one year depending on maturity and presented on (consolidated)
financial statements separately.
The unrecognised lease expenditure is amortised over the lease term using the effective interest rate
method and the amortisation is recognised as lease expense in profit or loss for the relevant period.
Contingency lease rental is recognised in profit or loss when it is incurred.
4.26.4 Financial lease to which the Company is the leasor
At the commencement of a financial lease to which the Company is the leasor, the sum of the
minimum lease rental receivable and the initial expenses incurred for activities directly attributable
to the lease is recognised as the initial amount of the respective financial lease rental receivable;
unguaranteed residual value is recorded, if any; the excess of the present value of the sum of the
minimum lease rental receivable, the initial expenses incurred for activities directly attributable to
the lease and the unguaranteed residual value over the sum itself is recognised as unrecognised
lease income. The residual amount after deducting the unrecognised lease income from the financial
lease rental receivable is divided into non-current receivable and non-current receivable due within
one year depending on maturity and presented on (consolidated) financial statements separately.
The unrecognised lease income is amortised over the lease term using the effective interest rate
84
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
method and the amortisation is recognised as lease income in profit or loss for the relevant period.
Contingency lease rental income is recognised in profit or loss when it is received or becomes
receivable.
4.27 Significant changes in accounting policies and accounting estimates
4.27.1 Changes in accounting policies
4.27.1.1 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 Business 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 transferred 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,
85
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
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.
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: CNY
Affected financial statements
Before adjustment Adjustment After adjustment
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 shareholders
648,801,684.35 815,420.72 649,617,105.07
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 shareholders’
1,842,514,750.64 1,200,133.71 1,843,714,884.35
equity
86
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
4.27.2 Change of accounting estimates
No change of accounting estimates need to be disclosed for the current period.
4.28 Significant account judgment and estimates
The Company is required to make judgments, estimates and assumptions about the carrying
amounts of items in the financial statements that cannot be measured accurately, due to the internal
uncertainties of operation activities. These judgments, estimates and assumptions are based on
historical experiences of the Company’s management as well as other factors that are considered to
be relevant. These judgments, estimates and assumptions may affect value of the financial
statements in revenue, expenses, assets and liabilities and the disclosure of contingency at the
balance sheet date. However, the result derived from those uncertainties in estimates may lead
significant adjustments to the carrying amounts of the assets or liabilities affected in the future.
The Company has reviews the judgments, estimates and assumptions regularly on the basis of going
concern. Where the changes in accounting estimates only affect the period when changes occurred,
and they are recognised within the same period. Where the changes in accounting estimates affect
both current period and future period, the changes are recognised within the period of change and
future period.
At balance sheet date, the followings are the significant areas where the Company needs to make
judgment, estimates and assumptions over the value of items in the financial statements:
4.28.1 Income recognition - construction contract
When the results of construction contract may be estimated reliably, the Company uses the
percentage-of-completion method to confirm the contract income on the balance sheet date. The
percentage of completion method of the contract is recognized in the "income" recognition method
specified in Notes IV, 23, which will be calculated accumulatively in the accounting years of
implementing the construction contract.
Major judgments need to be made when determining the percentage of completion, contract costs
incurred, estimated total contract revenue and total cost, and contract recoverability. The project
management makes judgments mainly relying on the past experience and works. The estimate
changes in the anticipated total incomes and costs and contract execution results may influence or
materially influence the operating income, operating cost and profits and losses in current period or
future period of changes.
4.28.2 Classification of lease
The Company classifies leases as operating lease and financing lease according to the rule
stipulated in the Accounting Standard for Business Enterprises No. 21--Leasing. The management
87
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
shall make analysis and judgment on whether the risks and rewards related to the title of leased
assets has been transferred to the leaser, or whether the Company has substantially held the risks
and rewards related to the ownership of leased assets.
4.28.3 Financial assets impairment
If the Company adopts the expected credit loss model to evaluate financial instrument impairment,
it's necessary to make significant judgments and estimates on the expected credit loss model, and all
reasonable and well-founded information needs to be taken into account, including forward-looking
information. When such judgments and estimates are made, the expected changes in the debtor's
credit risk are inferred based on historical data in combination with economic policies,
macroeconomic indicators, industry risks, external market conditions, technological environment,
and changes in customer circumstances.
4.28.4 Impairment of inventories
The Company measures inventories by the lower of cost and realizable net value according to the
accounting policies in regard of inventories and provisions for decline in value of inventories is
made if the cost is higher than their net realizable value, and obsolete and slow-movement
inventories. Inventories decline in value to net realizable value is the estimated selling price in the
ordinary course of business. Net realizable value is determined on the basis of clear evidence
obtained, and takes into consideration the purposes of holding inventories and effect of post balance
sheet events. The difference between the actual result and the original estimates shall have impact
on reverse of the carrying amount of the inventories and their decline in value or provisions during
the period of change.
4.28.5 The fair value of financial instruments
For a financial instrument which has no active market, the Company establishes fair value by using
various valuation methods, including of discounted cash flow analysis model. The Company needs
to estimate future cash flow, credit risk, volatility and relationship during the valuation and choose
appropriate discount rate. Such assumptions have uncertainties and their changes shall have impact
on the fair value of financial instruments. For equity instrument investment or contracts with public
offers, the cost will not be taken as the optimal estimation of the fair value by the Company.
4.28.6 Impairment of non-financial, non-current assets
The Company assesses whether there are any indicators of impairment for all non-current assets
other than financial assets at the balance sheet date. For an intangible asset that has indefinite useful
life, impairment test is made in addition to the annual impairment test if there is any indication of
impairment. For non-current assets other than financial assets, impairment test is made when there
is any indication that its account balance cannot be recovered.
88
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
Impairment exists when the recoverable amount of an asset is the higher of its fair value less cost of
disposal and present value of the future cash flows expected to be derived from the asset.
Net value between the difference of fair value and disposal cost is determined by reference of the
price of similar product in a sale agreement in an arm’s length transaction or an observable market
price less the additional cost directly attributable to the disposal of the asset.
When estimating the present value of future cash flow, significant judgments are made over the
asset’ production, selling price and relevant operating expenses, and discount rate used to calculate
present value. All available materials that are considered to be relevant shall be used in the
estimation of recoverable value. These materials include estimations of production, selling price and
operating expenses based on reasonable and supportable assumptions.
The Company makes an impairment test for goodwill at least at each year end. This requires an
estimation of present value of future cash flow of the assets or assets group where goodwill has
been allocated. The Company shall makes estimation on the future cash flow derived from assets or
assets group and determine an appropriate discount rate for the present value of future cash flow
when the estimation of present value of future cash flow is made.
4.28.7 Depreciation and amortization
Investment property, fixed assets and intangible assets are depreciated and amortized using the
straight-line method over their useful lives after taking into account residual value. The useful lives
are regularly reviewed to determine the depreciation and amortization costs charged in each
reporting period. The useful lives are determined based on historical experience of similar assets
and the estimated technical changes. If there is an indication that there has been a change in the
factor used to determine the depreciation or amortization, the rate of depreciation or amortization is
revised.
4.28.8 Deferred tax assets
The group shall recognise all unused tax losses as deferred tax assets to the extent that it is probable
that future taxable profit will be available against which the unused tax losses and unused tax
credits can be utilized. This requires the management of the Company make a lot of judgments over
the estimation of time period, value and tax planning strategies when future taxable profit incurs so
that the value of deferred tax assets can be determined.
4.28.9 Income tax
There are some transactions where ultimate tax treatments and calculations have uncertainties in the
Company’s everyday operation. Whether there are possible for some items to make expenditure
before tax needs approval from competent tax authorities. If there is any difference between
finalized determination value and their initial estimations value, the difference shall have the impact
89
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
on the income tax and deferred income tax of the current period during the final determination.
4.28.10 Accrued liabilities
According with the terms of the contract, the existing knowledge and historical experience, product
quality assurance and expected contract losses, delay in delivery of liquidated damages are
estimated and recognised as accrued liabilities. In these matters has been the formation of a current
obligation, and fulfilling the duty is likely to lead to the outflow of economic benefits of the
Company, the Company or the best estimate of the current obligation expenditure required
recognised as a accrued liabilities. Recognition and measurement of accrued liabilities is dependent
on the judgment of management. In the processing of judgment the company needed to appraise the
related risks, uncertainties and time value of money and other factors.
The Company will sell, repair and renovation of goods sold to provide customers with quality
after-sales service commitment is accrued liabilities. Accrued liabilities have considered the recent
experience in the maintenance data, but recent maintenance experience may not reflect future
maintenance. Any increase or decrease in the accrued liabilities may affect the profit or loss in
future.
4.28.11 Fair value measurement
Some of the Company's assets and liabilities are measured at fair value in the financial statements.
The Board of the Company has set up the Valuation Committee which is followed the lead of the
CFO of the Company, so as to determine appropriate valuation technique and input value for fair
value measurement. In estimating the fair value of an asset or liability, the Company adopts
available observable market data. If first level of input value cannot be obtained, the company will
hire third-party qualified appraisers to perform the valuation. The Valuation Committee closely
cooperated with qualified appraisers from outside to determine appropriate valuation technique and
input value of related models. The CFO shall quarterly report findings from the Valuation
Committee to the Board of the Company so as to explain the reason for fluctuations of the fair value
of related assets and liabilities. See Note 10 for disclosure of the valuation techniques and input
values used in determining the fair value of various types of assets and liabilities.
Note 5: Taxation
5.1 Taxes and surcharges applicable to the Company
Taxes and surcharges Tax base Tax rate%
According to the revenues from sales to calculate the output
Value added tax tax, and use the balance after deduct the deductible input tax 5, 6, 9, 10, 11, 13, 16, 17
to pay the VAT
90
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
Taxes and surcharges Tax base Tax rate%
Urban maintenance Sum of VAT payable, consumption duty payable and
and construction business tax payable for the reporting period, and exempt 7
surcharge and deductible tax
Sum of VAT payable, consumption duty payable and
Education surcharge business tax payable for the reporting period, and exempt 3
and deductible tax
Sum of VAT payable, consumption duty payable and
Local education
business tax payable for the reporting period, and exempt 2
surcharge
and deductible tax
Corporate income tax Taxable profits 25
5.2 Taxes and surcharges applicable to the primary subsidiaries
5.2.1 TsannKuen (Zhangzhou) Enterprise Co., Ltd. (hereafter, TKL)
Taxes and surcharges Tax base Tax rate%
According to the revenues from sales to calculate the output tax,
Value added tax and use the balance after deduct the deductible input tax to pay 0, 5, 6, 9, 10, 11, 13, 16, 17
the VAT
Urban maintenance
Sum of VAT payable, consumption duty payable and business tax
and construction 5
payable for the reporting period, and exempt and deductible tax
surcharge
Sum of VAT payable, consumption duty payable and business tax
Education surcharge 3
payable for the reporting period, and exempt and deductible tax
Local education Sum of VAT payable, consumption duty payable and business tax
2
surcharge payable for the reporting period, and exempt and deductible tax
Corporate income tax Taxable profits 15
Products, raw materials export sales applied the policy of exemption, reduction and refund of VAT,
the rate is 0%.
5.2.2 TsannKuen China (Shanghai) Enterprise Co., Ltd. (hereafter, TKS)
Taxes and surcharges Tax base Tax rate%
According to the revenues from sales to calculate the output tax,
Value added tax and use the balance after deduct the deductible input tax to pay 5, 9, 10, 11, 13, 16, 17
the VAT
91
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
Taxes and surcharges Tax base Tax rate%
Urban maintenance Sum of VAT payable, consumption duty payable and business
and construction tax payable for the reporting period, and exempt and deductible 1
surcharge tax
Sum of VAT payable, consumption duty payable and business
Education surcharge tax payable for the reporting period, and exempt and deductible 3
tax
Sum of VAT payable, consumption duty payable and business
Local education
tax payable for the reporting period, and exempt and deductible 2
surcharge
tax
Corporate income tax Taxable profits 25
5.2.3 Tsannkuen Edge Intelligence Co., Ltd. (hereafter, TKEI)
Taxes and surcharges Tax base Tax rate%
According to the revenues from sales to calculate the output tax,
Value added tax and use the balance after deduct the deductible input tax to pay 5
the VAT
Corporate income tax Taxable profits 20
5.2.4 Pt.Star Comgistic Indonesia (hereafter, SCI)
Taxes and surcharges Tax base Tax rate%
According to the revenues from sales to calculate the output tax, and
Value added tax 10
use the balance after deduct the deductible input tax to pay the VAT
Corporate income tax Taxable profits 25
5.3 Tax concessions and government approvals
According to the principle of “The Notice Regarding to Fujian Province 2017 Second Group of
High Technology Enterprise Review ” (Mingkegao No. [2018]1), TKL was identified as Fujian
Province High Technology Enterprise (The certification No. GR201735000565), the validity is from
the year 2017 to 2019. The current income tax is 15%.
92
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
VI. Notes to significant elements of consolidated financial statements
1. Monetary funds
Items 2019.06.30 2018.12.31
Cash on hand 851,894.37 729,204.57
Bank deposits 290,582,817.54 447,763,090.90
Other monetary funds 128,511,642.63 21,200,000.00
Total 419,946,354.54 469,692,295.47
Including: The total amount of deposit abroad 15,174,573.70 20,593,490.50
Note: The amount of restricted cash of the company is CNY 128,511,642.63, of which CNY
14,200,000 is the bank deposit pledged by the company for the purpose of obtaining US loan, and
CNY 114,311,642.63 is time deposit in financial institutions for the purpose of earning interest
income.
2. Financial assets measured by fair value and which changes is recorded in profit or loss
(1) Category
Item 2019.06.30 2018.12.31
Transactional financial assets 698,450.00 1,440,700.00
Including: Derivative financial assets 698,450.00 1,440,700.00
Total 698,450.00 1,440,700.00
(2) Explanation
The derivative financial asset is forward foreign exchange contract signed with financial
institutions.
3. Notes and accounts receivable
Item 2019.06.30 2018.12.31
Notes receivable 50,000.00 200,000.00
Accounts receivable 295,096,383.76 280,596,130.89
Total 295,146,383.76 282,796,130.89
(1) Notes receivable
① Disclosure by classification
Item 2019.06.30 2018.12.31
Bank acceptance 50,000.00 200,000.00
Total 50,000.00 200,000.00
93
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
(2) Accounts receivable
① Disclosure by age
Age 2019.06.30
Within 1 year 296,972,426.89
Including: 1 to 90 days 275,843,422.44
91 to 180 days 20,760,225.38
181 to 270 days 203,785.82
271 to 365 days 164,993.25
1 to 2 years 1,272,681.72
2 to 3 years 19,853.40
Over 3 years 7,785,640.22
Total 306,050,602.23
② Listed by method for measurement of allowance for bad debt
2019.06.30
Item Carrying amount Allowance for bad debt
Carrying value
Proportion Withdrawal
Amount Amount
(%) proportion (%)
Accounts receivable of individual significance
1,388,158.67 0.45 0.00 0.00 1,388,158.67
subject to individually assessment for impairment
Accounts receivable portfolio subject to impairment
304,662,443.56 99.55 10,954,218.47 3.60 293,708,225.09
by credit risk
Total 306,050,602.23 100.00 10,954,218.47 3.58 295,096,383.76
(Continued)
2018.12.31
Item Carrying amount Allowance for bad debt
Carrying value
Withdrawal
Proportion (%) Proportion (%) Amount
proportion (%)
Accounts receivable of individual significance subject
to individually assessment for impairment
Accounts receivable portfolio subject to impairment by 292,969,212.46 100.00 12,373,081.57 4.22 280,596,130.89
credit risk:
Portfolio by age 289,329,935.10 98.76 12,373,081.57 4.28 276,956,853.53
Portfolio by related parties 3,639,277.36 1.24 3,639,277.36
Accounts receivable of individually insignificance
subject to individually assessment for impairment
Total 292,969,212.46 100.00 12,373,081.57 4.22 280,596,130.89
A. Accounts receivable of individual significance subject to individually assessment for
impairment at the end of the Period
94
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
2019.06.30
Item
Carrying amount Allowance for bad debt Withdrawal proportion (%)
Related parties 1,388,158.67 0.00 0.00
Total 1,388,158.67 0.00 0.00
B. Accounts receivable portfolio subject to impairment by credit risk
2019.06.30
Item
Carrying amount Allowance for bad debt Withdrawal proportion (%)
Undue 249,005,538.56 10,506.42 0.00
Due 55,656,905.00 10,943,712.05 19.66
Total 304,662,443.56 10,954,218.47 3.60
③ Recognization, recovery and reversal of allowance for bad debt during the current period
Increase/decrease
Item Opening balance 2019.01.01 Recovery or Amount Amount influenced by Closing balance
withdrawal
reversal verified exchange rate
Accounts receivable
portfolio subject to
12,373,081.57 11,081,861.74 0.00 137,197.24 0.00 -9,553.97 10,954,218.47
impairment by credit
risk
Total 12,373,081.57 11,081,861.74 0.00 137,197.24 0.00 -9,553.97 10,954,218.47
④ Accounts receivable with actual verification during the current period
Item Amount verified
Accounts receivable with actual verification 0.00
⑤ Details of top five accounts receivable in closing balance
The total amount of top five accounts receivables in accounts receivable summarized by debtors as
at the end of the Reporting Period is RMB193,146,911.31, accounting for 63.11% of the total
accounts receivable as at the end of the Reporting Period.
4. Advances to suppliers
(1) Disclosure by age
2019.06.30 2018.12.31
Item
Amount Proportion (%) Amount Proportion (%)
Within 1 year 6,140,836.63 98.52 2,569,822.31 96.29
1 to 2 year 0.00 0.00 98,974.02 3.71
2 to 3 year 92,437.47 1.48 0.00 0.00
Total 6,233,274.10 100.00 2,668,796.33 100.00
95
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
(2) Details of top five advance to suppliers
The total amount of top five advance to suppliers as at the end of current period is CNY
4,682,119.24, accounting for 75.11% of the total advance to suppliers.
5. Other receivables
Item 2019.06.30 2018.12.31
Interest receivable 1,423,758.77 0.00
Dividends receivable 0.00 0.00
Other receivables 22,292,099.03 29,944,042.47
Total 23,715,857.80 29,944,042.47
(1) Other receivables
① Disclosure by age
Age 2019.06.30
Within 1 year 20,365,196.05
19,139,179.05
Including: 1 to 90 days
552,016.45
91 to 180 days
304,094.06
181 to 270 days
369,906.49
271 to 365 days
1 to 2 years 948,684.40
2 to 3 years 451,241.39
Over 3 years 2,552,414.01
Total 24,317,535.85
②Disclosure by nature of accounts
Nature 2019.06.30 2018.12.31
Margin 2,695,163.52 2,099,828.20
Accounts receivable of related parties 195,370.31 208,665.92
Other come-and-go accounts 21,427,002.02 29,434,784.85
Subtotal 24,317,535.85 31,743,278.97
Less: Allowance of bad debt 2,025,436.82 1,799,236.50
Total 22,292,099.03 29,944,042.47
96
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
③ Disclosure by withdrawal method of bad debt provision
First stage Second stage Third stage
Allowance of bad debt Expected credit loss over the next 12 Expected loss in the duration (credit Expected loss in the duration (credit Total
months impairment not occurred) impairment occurred)
Balance of 1 January 2019 561,088.03 0.00 1,238,148.47 1,799,236.50
Balance of other receivables on 1 January 2019
—— —— —— ——
in the current period
--Transfer to Second stage 0.00 0.00 0.00 0.00
--Transfer to Third stage 0.00 0.00 0.00 0.00
--Reverse to Second stage 0.00 0.00 0.00 0.00
--Reverse to Third stage 0.00 0.00 0.00 0.00
Withdrawal of the current period 226,200.32 0.00 0.00 226,200.32
Reversal of the current period 0.00 0.00 0.00 0.00
Write-offs of the current period 0.00 0.00 0.00 0.00
Verification of the current period 0.00 0.00 0.00 0.00
Other changes 0.00 0.00 0.00 0.00
Balance of 30 June 2019 787,288.35 0.00 1,238,148.47 2,025,436.82
④ Particulars of allowance of bad debt
Changes in the Reporting Period
Item Opening balance Closing balance
Withdrawal Reversal or recovery
Other receivables withdrawn bad debt provision by
1,799,236.50 226,200.32 0.00 2,025,436.82
group
Total 1,799,236.50 226,200.32 0.00 2,025,436.82
⑤ Other receivables with actual verification during the Reporting Period
Item Amount verified
Other receivables with actual verification 0.00
97
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
⑥ Details of top five accounts receivable
Closing balance
Nature of accou
Name Closing balance Age % of total of bad debt
nts
provision
Zhangzhou Longchi
Development zone State
Export tax rebate 12,000,000.00 Within 30 days 49.35 0.00
Administration of
Taxation
Rent fee,
Shanghai Tanghai
electricity and 1,238,148.47 Over 1 years 5.09 1,238,148.47
Investment Co., Ltd.
water bill
China Export & Credit
Insurance Corporation Deposit 648,450.00 Over 1 years 2.67 0.00
Fujian Branch
Zhangzhou Customs of
People ’ s Republic of Deposit 600,000.00 Within 30 days 2.47 0.00
China
State Grid Fujian Longhai
Others 571,001.14 Within 30 days 2.35 0.00
Power Supply Co., Ltd.
Total 15,057,599.61 61.93 1,238,148.47
6. Inventory
(1) Disclosure by classification
2019.06.30
Item
Carrying amount Impairment allowance Carrying value
Raw material 106,127,084.79 25,719,943.48 80,407,141.31
Goods in process 17,296,253.50 0.00 17,296,253.50
Entrusted processing materials 5,193,553.08 0.00 5,193,553.08
Self-manufactured semi-finished goods 14,130,306.09 1,680,377.22 12,449,928.87
Finished goods 127,947,330.70 11,166,550.47 116,780,780.23
Low-value consumables 1,109,082.53 0.00 1,109,082.53
Materials in transit 1,212,855.34 0.00 1,212,855.34
Total 273,016,466.03 38,566,871.17 234,449,594.86
Note: The new revenue standard is not implemented.
98
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
(Continued)
2018.12.31
Item
Carrying amount Impairment allowance Carrying value
Raw material 120,531,455.44 31,555,886.94 88,975,568.50
Goods in process 1,535,640.55 0.00 1,535,640.55
Self-manufactured semi-finished goods 26,783,292.38 1,680,377.22 25,102,915.16
Finished goods 134,736,708.94 9,530,554.60 125,206,154.34
Low-value consumables 1,083,138.58 0.00 1,083,138.58
Materials in transit 1,359,083.45 0.00 1,359,083.45
Total 286,029,319.34 42,766,818.76 243,262,500.58
(2) Impairment allowance for inventories
Increase in current period Decrease in current period
Item 2018.12.31 Impact of changes Reverse or write- Impact of changes in 2019.06.30
Withdrawal
in exchange rates off exchange rates
Raw material 31,555,886.94 0.00 0.00 5,833,285.54 2,657.92 25,719,943.48
Self-manufactured
Semi-finished 1,680,377.22 0.00 0.00 0.00 0.00 1,680,377.22
goods
Finished goods 9,530,554.60 1,819,781.83 0.00 183,785.96 0.00 11,166,550.47
Total 42,766,818.76 1,819,781.83 0.00 6,017,071.50 2,657.92 38,566,871.17
(3) The basis of recognizing impairment allowance and the reason of recovering or writing off
the impairment allowance for inventories
The reason of
The reasons for
recovering
The basis of recognition of impairment allowance inventory
Item impairment
for inventories impairment
allowance for
write-off
inventories
Market prices decrease, and resulting in raw
Raw material Sale or disposal
material’s net realizable value lower than cost
Market prices decrease, and resulting in
Self-manufactured
Self-manufactured semi-finished goods' net Sale or disposal
semi-finished goods
realizable value lower than cost
Market prices decrease, and resulting in finished
Finished goods Sale or disposal
goods' net realizable value lower than cost
7. Other current assets
Item 2019.06.30 2018.12.31
Input tax to be deducted 7,349,566.11 7,497,484.82
Financial products 596,659,569.76 520,000,000.00
Total 604,009,135.87 527,497,484.82
99
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
Note: The new revenue standard is not implemented.
8. Available-for-sale financial assets
(1) The situation of available-for-sale financial assets
2019.06.30 2018.12.31
Item Carrying am Depreciation r Carrying v Depreciation re
Carrying amount Carrying value
ount eserves alue serves
Available-for-sale equity
40,000.00 0.00 40,000.00 40,000.00 0.00 40,000.00
instruments
Including: measured by cost 40,000.00 0.00 40,000.00 40,000.00 0.00 40,000.00
Total 40,000.00 0.00 40,000.00 40,000.00 0.00 40,000.00
Note: The new revenue standard is not implemented.
(2) Available-for-sale financial assets measured at cost at the period-end
Carrying amount Depreciation reserves Shareholding
Cash bonus of
proportion
Investee 2018. Incre Decr 2019. 2018. Increas Decreas 2019.06 the Reporting
among the
ase ease e e .30 Period
12.31 06.30 12.31 investees (%)
Xiamen Association of
Enterprises with 40,000.00 40,000.00 1.48
Foreign Investment
Total 40,000.00 40,000.00 1.48
9. Investment property
(1) Investment property adopted the cost measurement mode
Construction in
Item Houses and buildings Land use right Total
progress
I. Original carrying value
1. Opening balance 72,075,695.00 29,260,577.51 0.00 101,336,272.51
2. Increased amount of the period 0.00 0.00 0.00 0.00
(1) Outsourcing 0.00 0.00 0.00 0.00
(2) Transferred from inventories/fixed
0.00 0.00 0.00 0.00
assets/construction in progress
(3) Proceeds from business combination 0.00 0.00 0.00 0.00
3. Decreased amount of the period 5,506,400.81 0.00 0.00 5,506,400.81
(1) Disposal 5,506,400.81 0.00 0.00 5,506,400.81
(2) Investment property transferred into fixed
0.00 0.00 0.00 0.00
assets
4. Closing balance 66,569,294.19 29,260,577.51 0.00 95,829,871.70
II. Accumulated depreciation and
accumulated amortization
100
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
Construction in
Item Houses and buildings Land use right Total
progress
1. Opening balance 62,041,542.46 14,280,081.74 0.00 76,321,624.20
2. Increased amount of the period 989,277.90 327,288.20 0.00 1,316,566.10
(1) Withdrawal or amortization 989,277.90 327,288.20 0.00 1,316,566.10
(2) Transferred from fixed assets 0.00 0.00 0.00 0.00
3. Decreased amount of the period 6,080,747.14 0.00 0.00 6,080,747.14
(1) Disposal 5,506,400.81 0.00 0.00 5,506,400.81
(2) Investment property transferred into fixed
574,346.33 0.00 0.00 574,346.33
assets
4. Closing balance 56,950,073.22 14,607,369.94 0.00 71,557,443.16
III. Depreciation reserves
1. Opening balance 0.00 0.00 0.00 0.00
2. Increase in the current period 0.00 0.00 0.00 0.00
(1) Withdrawal 0.00 0.00 0.00 0.00
3. Decreased amount of the period 0.00 0.00 0.00 0.00
(1) Disposal 0.00 0.00 0.00 0.00
(2) Other transferred out 0.00 0.00 0.00 0.00
4. Closing balance 0.00 0.00 0.00 0.00
IV. Carrying value
1. Closing carrying value 9,619,220.97 14,653,207.57 0.00 24,272,428.54
2. Opening carrying value 10,034,152.54 14,980,495.77 0.00 25,014,648.31
(2) Investment property with pending ownership registration
Item Carrying value Reason for pending
Lvyuan three country villa （ Building 16 ，
Building 20-22 ， Building 27-33 ， 645,985.38 Refer to Note
Building 35-43）
Note: Lvyuan three country villa is a limited property house purchased by the Company ’ s
subsidiary TKS in 1999 from Shanghai Lvsheng Real Estate Development Co., Ltd. without
expropriating and transferring the land. In January of 2006, the property was certified to belong to
TKS through the joint statement made by Shanghai Lvsheng Real Estate Development Co., Ltd. and
residents committee of Lvyuan community of Huangdu Town in Jiading District.
101
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
10. Fixed assets
(1) List of fixed assets
Houses and buildi Electronic device, Transportation Improvement expense
Item Machinery equipment Total
ngs modules and others equipment of leased fixed assets
I. Original carrying value
1. Opening balance 96,522,040.15 156,735,004.25 900,180,280.19 19,456,238.19 66,386,732.06 1,239,280,294.84
2. Increased amount of the period 169,181.91 1,547,617.51 15,809,075.95 259,240.76 303,974.40 18,089,090.53
(1) Purchase 0.00 288,327.08 1,072,907.39 0.00 48,233.44 1,409,467.91
(2)Transferred from project under
111,650.49 1,230,362.46 14,719,719.12 204,517.24 257,630.02 16,523,879.33
construction
(3) Transfer from investment property 0.00 0.00 0.00 0.00 0.00 0.00
(4) Impact of changes in exchange rates 57,531.42 28,927.97 16,449.44 54,723.52 -1,889.06 155,743.29
(5) Other 0.00 0.00 0.00 0.00 0.00 0.00
3. Decreased amount of the period 33,680.36 633,025.07 23,901,155.86 17,006.68 0.00 24,584,867.97
(1) Disposal or scrap 33,680.36 633,025.07 23,901,155.86 17,006.68 0.00 24,584,867.97
(2) Transferred from investment property 0.00 0.00 0.00 0.00 0.00 0.00
4. Closing balance 96,657,541.70 157,649,596.69 892,088,200.28 19,698,472.27 66,690,706.46 1,232,784,517.40
II. Accumulative depreciation
1.Opening balance 52,380,702.19 83,608,930.61 795,600,297.87 14,848,074.77 64,057,357.58 1,010,495,363.02
2.Increased amount of the period 1,836,421.64 3,802,403.45 14,801,755.92 538,953.45 378,284.38 21,357,818.84
(1) Withdrawal 1,829,164.71 3,787,974.54 14,786,258.46 529,647.58 372,351.52 21,305,396.81
(2) Transferred from investment property 0.00 0.00 0.00 0.00 0.00 0.00
(3) Impact of changes in exchange rates 7,256.93 14,428.91 15,497.46 9,305.87 5,932.86 52,422.03
3.Decreased amount of the period 24,145.07 765,818.80 21,675,398.20 15,681.03 0.00 22,481,043.10
(1) Disposal or Scrap 24,145.07 765,818.80 21,675,398.20 15,681.03 0.00 22,481,043.10
(2) Transfer from investment property 0.00 0.00 0.00 0.00 0.00 0.00
4.Closing balance 54,192,978.76 86,645,515.26 788,726,655.59 15,371,347.19 64,435,641.96 1,009,372,138.76
III. Depreciation reserves
1. Opening balance 0.00 19,728,505.65 17,912,323.93 43,417.90 27,381.88 37,711,629.36
2. Increased amount of the period 0.00 4,699.72 1,958.25 1,163.25 10,732.05 18,553.27
(1) Withdrawal 0.00 0.00 0.00 0.00 10,570.96 10,570.96
102
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
Houses and buildi Electronic device, Transportation Improvement expense
Item Machinery equipment Total
ngs modules and others equipment of leased fixed assets
(2) Impact of changes in exchange rates 0.00 4,699.72 1,958.25 1,163.25 161.09 7,982.31
3. Decreased amount of the period 0.00 0.00 973,040.62 1,305.76 0.00 974,346.38
(1) Disposal or Scrap 0.00 0.00 973,040.62 1,305.76 0.00 974,346.38
4.Closing balance 0.00 19,733,205.37 16,941,241.56 43,275.39 38,113.93 36,755,836.25
IV. Carrying value
1.Closing carrying value 42,464,562.94 51,270,876.06 86,420,303.13 4,283,849.69 2,216,950.57 186,656,542.39
2.Opening carrying value 44,141,337.96 53,397,567.99 86,667,658.39 4,564,745.52 2,301,992.60 191,073,302.46
103
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
(2) Fixed assets with pending ownership registration
Item Carrying value Reason for pending
Lvyuan three country villa（Building 18 193,795.61
Refer to Note
18、Building 23）
Jingying garden （ Room 1402 、 Room 150,179.00
Under processing
3210、Room 9211）
Note: Lvyuan three country villa is a limited property house purchased by the Company ’ s
subsidiary TKS in 1999 from Shanghai Lvsheng Real Estate Development Co., Ltd. without
expropriating and transferring the land. In January of 2006, the property was certified to belong to
TKS through the joint statement made by Shanghai Lvsheng Real Estate Development Co., Ltd. and
residents committee of Lvyuan community of Huangdu Town in Jiading District.
(3) Temporarily idle fixed assets
Original carrying va Accumulated depreciat Depreciation reser
Item Carrying value
lue ion ves
Machinery equipment 43,827,946.79 26,985,378.16 16,792,061.27 50,507.36
Electronic device modules and
176,845,489.50 167,539,992.24 8,315,726.63 989,770.63
others
Transportation equipment 69,304.00 69,304.00 0.00 0.00
Improvement expense of leased
999,659.75 972,277.87 27,381.88 0.00
fixed assets
Total 221,742,400.04 195,566,952.27 25,135,169.78 1,040,277.99
11. Construction in progress
2019.06.30 2018.12.31
Item
Original carrying Depreciation rese Original carrying va Depreciation reser
Carrying value Carrying value
value rves lue ves
Sporadic
1,672,307.60 0.00 1,672,307.60 895,756.17 0.00 895,756.17
project
Other 348,391.99 0.00 348,391.99 0.00 0.00 0.00
104
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
Total 2,020,699.59 0.00 2,020,699.59 895,756.17 0.00 895,756.17
12. Intangible assets
Item Land use right Software Total
I. Original carrying value
1. Opening balance 18,300,959.04 36,256,825.70 54,557,784.74
2. Increased amount of the period 725,751.57 5,523,961.06 6,249,712.63
(1) Purchase 499,003.94 5,523,961.06 6,022,965.00
(2) Impact of changes in exchange rates 226,747.63 0.00 226,747.63
3. Decreased amount of the period 0.00 7,027.89 7,027.89
(1) Disposal 0.00 0.00 0.00
(2) Impact of changes in exchange rates 0.00 7,027.89 7,027.89
4. Closing balance 19,026,710.61 41,773,758.87 60,800,469.48
II. Accumulated amortization
1. Opening balance 3,677,664.21 23,108,884.50 26,786,548.71
2. Increased amount of the period 358,285.53 2,490,115.24 2,848,400.77
(1) Withdrawal 358,285.53 2,496,965.63 2,855,251.16
(2) Impact of changes in exchange rates 0.00 -6,850.39 -6,850.39
3. Decreased amount of the period 40,913.60 0.00 40,913.60
(1) Disposal 0.00 0.00 0.00
(2) Impact of changes in exchange rates 40,913.60 0.00 40,913.60
4. Closing balance 3,995,036.14 25,598,999.74 29,594,035.88
III. Depreciation reserves
1. Opening balance 0.00 0.00 0.00
2. Increased amount of the period 0.00 0.00 0.00
(1) Withdrawal 0.00 0.00 0.00
(2) Impact of changes in exchange rates 0.00 0.00 0.00
3. Decreased amount of the period 0.00 0.00 0.00
(1) Disposal 0.00 0.00 0.00
(2) Impact of changes in exchange rates 0.00 0.00 0.00
4. Closing balance 0.00 0.00 0.00
IV. Carrying value
1. Closing carrying value 15,031,674.47 16,174,759.13 31,206,433.60
2. Opening carrying value 14,623,294.83 13,147,941.20 27,771,236.03
13. Long-term deferred charges
Amortization
Item 2018.12.31 Increased amount Decrease 2019.06.30
amount
Houses and buildings
7,833,237.73 0.00 1,266,428.26 0.00 6,566,809.47
renovation expenses
Phase III Wall Project 225,629.39 0.00 31,483.20 0.00 194,146.19
105
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
Amortization
Item 2018.12.31 Increased amount Decrease 2019.06.30
amount
Total 8,058,867.12 0.00 1,297,911.46 0.00 6,760,955.66
106
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
14. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets without offsetting
2019.06.30 2018.12.31
Deductible
Item Deferred income tax Deductible temporary Deferred income tax
temporary
assets difference assets
difference
Assets impairment allowance 71,589,447.04 11,618,665.63 78,308,350.30 12,413,175.96
Accrued expenses 11,689,909.58 1,893,653.78 9,125,886.93 1,505,944.87
Transactional financial liabilities 3,403,100.00 510,465.00
Payroll liability 289,269.05 63,639.17 321,335.06 64,267.00
Unrealized profits from intergroup
568,893.00 142,223.25 736,143.60 184,035.90
transactions
Undistributed deficit 35,747,587.65 12,384,904.70 49,539,618.81 12,384,904.70
Other 0.00 0.00 0.00 0.00
Total 123,288,206.32 26,613,551.53 138,031,334.70 26,552,328.43
(2) Deferred tax liabilities without offsetting
2019.06.30 2018.12.31
Item Taxable temporary Deferred income tax Taxable temporary Deferred income tax
difference assets difference assets
Transactional financial assets 698,450.00 104,767.50 1,440,700.00 216,105.00
Policy relocation 193,170,474.36 48,292,618.59 109,137,778.28 27,284,444.57
Other 27,228.65 4,628.87 23,372.70 4,674.53
Total 193,896,153.01 48,402,014.96 110,601,850.98 27,505,224.10
(3) Details of unrecognized deferred tax assets
Item 2019.06.30 2018.12.31
Assets impairment allowance 17,002,184.63 16,342,415.89
Accrued expenses 30,115,955.11 19,164,421.53
Payroll liability 1,578,189.26 9,751,674.95
Undistributed deficit 85,093,779.88 108,813,092.06
Total 133,790,108.88 154,071,604.43
Note: Due to whether the availability of future to obtain sufficient taxable income is uncertain that
is listed in above, and therefore no deferred tax assets are recognized as deductible temporary
differences and recoverable losses.
107
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
(4) The deductible losses of unrecognized deferred tax assets shall be matured in the following
years
Year 2019.06.30 2018.12.31
Year 2019 503,735.05 7,616,045.12
Year 2020 469,174.42 10,341,578.00
Year 2021 34,359,980.68 42,160,374.19
Year 2022 4,779,439.06 4,828,378.89
Year 2023 15,427,022.84 15,495,274.18
Year 2024 to 2029 29,554,427.83 28,371,441.68
Total 85,093,779.88 108,813,092.06
Note: The annual loss of Tsannkuen Edge Intelligence Co., Ltd. continued to make up for a
maximum period of 10 years.
15. Other non-current assets
Item 2019.06.30 2018.12.31
Prepaid mold fee 465,300.43 1,332,192.80
Prepaid facilities etc. 3,811,702.73 2,163,031.84
Total 4,277,003.16 3,495,224.64
Note: The new revenue standard is not implemented.
16. Short-term loans
Item 2019.06.30 2018.12.31
Pledged loan 10,449,572.62 10,432,044.21
Total 10,449,572.62 10,432,044.21
For the types of mortgage assets and the amount of the pledged loan, please see Note 6.46
Restricted assets of ownership or usage rights.
17. Transactional financial liabilities
Item 2019.06.30 2018.12.31
Transactional financial liabilities 3,403,100.00 0.00
Including: Derivative financial liabilities 3,403,100.00 0.00
Total 3,403,100.00 0.00
108
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
18. Notes payable and accounts payable
Item 2019.06.30 2018.12.31
Notes payable 24,540,396.01 17,120,079.05
Accounts payable 567,064,875.54 655,775,568.61
Total 591,605,271.55 672,895,647.66
(1) Notes payable
Item 2019.06.30 2018.12.31
Bank acceptance 7,041,139.92 1,629,161.07
Commercial acceptance 17,499,256.09 15,490,917.98
Total 24,540,396.01 17,120,079.05
Note: There are no expired notes payable that have not been paid as at the period-end.
(2) Accounts payable
Item 2019.06.30 2018.12.31
Within 1 year 562,654,345.32 651,780,435.83
Over 1 year 4,410,530.22 3,995,132.78
Total 567,064,875.54 655,775,568.61
Details of significant accounts payable remaining unsettled for more than one year
2019.06.30 Reasons for unsettlement
Item
500,237.01
Ningbo Chaochao Electrical Equipment Co., Ltd. Quality disputes
290,220.38
Leqing Haitong Electronic Industrial Company Quality disputes
790,457.39
Total
19. Advances from customers
(1) Disclosure by classification
Item 2019.06.30 2018.12.31
Within 1 year 4,533,080.86 6,077,948.25
Over 1 year 5,254,433.42 3,669,210.65
Total 9,787,514.28 9,747,158.90
109
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
20. Employee benefits payable
(1) Disclosure by classification
Item 2018.12.31 Increase Decrease 2019.06.30
1. Short-term employee benefits 41,713,004.45 129,071,679.10 131,478,723.20 39,305,960.35
2. Post-employment benefits 723,650.33 5,754,531.85 5,753,146.56 725,035.62
3. Termination benefits 6,150,486.00 351,539.50 6,392,932.50 109,093.00
Total 48,587,140.78 135,177,750.45 143,624,802.26 40,140,088.97
(2) Disclosure by classification of short-term employee benefits
Item 2018.12.31 Increase Decrease 2019.06.30
1. Salary, bonus, and
29,186,607.80 113,057,730.70 116,336,018.62 25,908,319.88
subsidiaries
2. Employee welfare 2,218.05 7,710,158.27 6,152,861.89 1,559,514.43
3. Social insurance 724,520.14 5,433,432.71 5,038,116.20 1,119,836.65
Including: Medical insurance 466,648.35 3,874,660.99 3,506,339.68 834,969.66
Employment injury
257,076.29 1,308,521.34 1,307,978.34 257,619.29
insurance
Maternity insurance 795.50 250,250.38 223,798.18 27,247.70
4. Housing fund 9,757,892.95 2,641,165.68 3,430,447.31 8,968,611.32
5. Labor union budget and
0.00 198,910.13 198,910.13 0.00
employee education budget
6. Short-term absence with
2,041,765.51 30,281.61 322,369.05 1,749,678.07
payment
Total 41,713,004.45 129,071,679.10 131,478,723.20 39,305,960.35
(3) Disclosure by defined contribution plan
Item 2018.12.31 Increase Decrease 2019.06.30
1. Basic pension 723,232.93 5,607,382.82 5,606,072.13 724,543.62
2. Unemployment insurance 417.40 147,149.03 147,074.43 492.00
Total 723,650.33 5,754,531.85 5,753,146.56 725,035.62
The Company participates the endowment insurance and unemployment insurance plan established
by the government, and according to these plans, the Company pays planed fees to the company
location. In addition to the monthly fee deposit, the Company no longer bears further payment
obligations. Corresponding expenses are expensed as incurred or costs related assets.
110
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
21. Taxes payable
Item 2019.06.30 2018.12.31
Company income tax 7,201,701.68 1,314,697.77
Personal income tax 694,721.04 518,057.12
Education surcharge 681,634.20 668,997.40
Urban maintenance and construction surcharge 666,399.65 653,751.41
Other 648,589.43 613,027.37
Total 9,893,046.00 3,768,531.07
22. Other payables
Item 2019.06.30 2018.12.31
Interest payable 0.00 23,919.09
Dividends payable 0.00 0.00
Other payables 63,377,139.52 52,794,285.82
Total 63,377,139.52 52,818,204.91
(1) Interest payable
Item 2019.06.30 2018.12.31
Interest payables for short-term loan 0.00 23,919.09
Total 0.00 23,919.09
(2) Other payables
① Other accounts payable listed by nature of the account
Item 2019.06.30 2018.12.31
Within 1 year 45,579,000.05 41,912,027.59
Over 1 year 17,798,139.47 10,882,258.23
Total 63,377,139.52 52,794,285.82
② Other significant accounts payable with aging over one year
Item 2019.06.30 Unpaid/ Un-carry-over reason
Cash pledge 11,072,988.38 Repaid at the termination of contract
Total 11,072,988.38
111
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
23. Long-tem payroll payable
(1) List of long-term payroll payable
Item 2019.06.30 2018.12.31
I. Post-employment benefits - net liabilities of defined benefit plans 387,284.51 361,923.23
Total 387,284.51 361,923.23
(2) Changes of defined benefit plan
Item 2019.06.30 2018.12.31
I. Opening balance 361,923.23 156,540.09
II. Defined benefit cost recognized in profit or loss in the current period 38,084.84 56,036.04
III. Defined benefit cost recognized in other comprehensive income 0.00 164,825.72
IV. Other changes -12,723.56 -15,478.62
1. Consideration payment at the time of settlement 0.00 0.00
2. Benefit paid -9,187.69 -21,812.47
3. Contribution by employees 0.00 0.00
4. Other -3,535.87 6,333.85
V. Closing balance 387,284.51 361,923.23
24. Share capital
Changes during the current reporting period (+.－)
Item Opening balance Share Conversion Closing balance
Share issue Other Subtotal
donation from reserves
Total shares 185,391,680.00 185,391,680.00
25. Capital reserves
Item 2018.12.31 Increase Decrease 2019.06.30
Share premium 210,045,659.80 0.00 0.00 210,045,659.80
Other capital reserves 86,763,305.99 0.00 0.00 86,763,305.99
Total 296,808,965.79 0.00 0.00 296,808,965.79
112
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
26. Other comprehensive income
Reporting Period
Less: Recorded in
other
comprehensive After tax After tax
Item 2018.12.31 2019.1.1 Amount before 2019.06.30
income in prior Less: Income tax attributable to attributable to
income tax in
period and expense the parent minority
current period
transferred to profit company shareholders
or loss in current
period
I. Other comprehensive income that will not be
-47,037.70 -47,037.70 0.00 0.00 0.00 0.00 0.00 -47,037.70
reclassified into profit or loss
Including: Changes from remeasurement of net
-47,037.70 -47,037.70 0.00 -47,037.70
liabilities(assets) of defined benefit plan
The share of other comprehensive income that
cannot be reclassified into profit or loss under
the equity method
II. Other comprehensive income to be
5,971,170.37 5,980,767.51 199,440.37 0.00 0.00 149,580.28 49,860.09 6,130,347.79
subsequently reclassified into profit or loss
Including: The share of other comprehensive
income that can be reclassified into profit or loss
under the equity method
Gains and losses from changes in fair value of
available-for-sale financial assets
Gains and losses from available-for-sale
financial assets that is reclassified from
held-to-maturity investments
Effective portion of cash flow hedge gains and
losses
Balance from the translation of foreign currency
5,971,170.37 5,980,767.51 199,440.37 0.00 0.00 149,580.28 49,860.09 6,130,347.79
financial statements
Total 5,924,132.67 5,933,729.81 199,440.37 0.00 0.00 149,580.28 49,860.09 6,083,310.09
113
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
27. Surplus reserves
Item 2018.12.31 2019.1.1 Increase Decrease 2019.06.30
Statutory surplus reserves 37,804,354.59 37,770,482.76 0.00 0.00 37,770,482.76
Total 37,804,354.59 37,770,482.76 0.00 0.00 37,770,482.76
Note: According to the provisions of the Company Law and the Articles of Association of the
Company to accrual statutory surplus reserve of 10 % of net profit, and no longer to accrual the
statutory surplus reserve has reached more than 50% of the registered capital of the company.
After the Company has accrual the statutory surplus reserve, the Company can accrual any surplus
reserve fund. Upon approval, the discretionary surplus reserve fund may be used to cover future
losses or increase in share capital.
28. Retained profits
Item 2019.06.30 2018.12.31
Opening balance of retained profits before adjustments 122,872,551.30 90,105,224.21
Total opening balance of retained profits before adjustments (+ for increase, - for decrease) 839,695.41 39,682,756.40
Opening balance of retained profits after adjustments 123,712,246.71 129,787,980.61
Add: Net profit attributable to owners of the Company 47,292,567.95 11,831,622.78
Less: Withdrawal of statutory surplus reserves 0.00 3,915,717.69
Withdrawal of discretionary surplus reserves 0.00 0.00
Withdrawal of general risk reserve 0.00 0.00
Dividend of common stock payable 7,415,667.20 14,831,334.40
Dividend of common stock transfer into share capital 0.00 0.00
Closing retained profits 163,589,147.46 122,872,551.30
The Company adjusted retained profits of prior year by CNY 839,695.41 due to changes in
accounting policies.
29. Operating income and costs
(1) Operating income and costs
Item Reporting Period Same period of last year
Principal operating income 894,953,908.40 658,944,365.34
Other operating income 34,495,074.98 32,566,139.89
Total 929,448,983.38 691,510,505.23
Principal operating cost 780,300,389.90 613,781,412.65
Other operating cost 16,032,187.58 11,667,604.74
Total 796,332,577.48 625,449,017.39
114
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
Note: The new revenue standard is not implemented.
(2) Revenues from principal operating activities by business
Reporting Period Same period of last year
Item
Operating revenues Operating costs Operating revenues Operating costs
Household appliances industry 894,953,908.40 780,300,389.90 658,944,365.34 613,781,412.65
Total 894,953,908.40 780,300,389.90 658,944,365.34 613,781,412.65
(3) Revenues from principal operating activities by products
Reporting Period Same period of last year
Item
Operating revenues Operating costs Operating revenues Operating costs
Catering and cooking 557,292,464.28 492,182,551.87 400,273,785.96 371,762,439.06
Home helper 200,821,213.92 179,178,952.34 164,940,858.72 159,587,268.54
Tea/Coffee 126,054,808.02 104,010,181.13 84,387,695.78 79,103,482.40
Other 10,785,422.18 4,928,704.56 9,342,024.88 3,328,222.65
Total 894,953,908.40 780,300,389.90 658,944,365.34 613,781,412.65
(4) Revenues from principal operating activities by regions
Reporting Period Same period of last year
Area
Operating revenues Operating costs Operating revenues Operating costs
Australia 38,523,514.39 31,277,519.69 38,371,062.48 34,606,394.52
Africa 7,010,508.86 5,565,327.52 10,750,401.01 9,541,522.47
America 389,942,699.15 339,045,613.58 246,999,976.03 233,192,853.00
Europe 265,055,223.83 228,545,258.16 200,874,235.23 191,285,145.74
Asia 194,421,962.17 175,866,670.95 161,948,690.59 145,155,496.92
Total 894,953,908.40 780,300,389.90 658,944,365.34 613,781,412.65
(5) Details of operating revenues from top five clients
% of operating revenues in the same
Period Total amount of operating revenues from top five clients
period
Reporting Period 456,034,003.59 49.06
Same period of last year 316,048,452.50 45.70
115
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
30. Business tax and surcharges
Item Reporting Period Same period of last year
Education surcharge 2,189,434.17 1,947,014.86
Urban maintenance and construction tax 2,225,075.52 1,969,352.57
Property tax 626,643.29 1,011,074.55
Land holding tax 205,619.86 388,653.42
Stamp duty 432,898.16 375,368.80
Other 279.02 70.74
Total 5,679,950.02 5,691,534.94
Note: The detailed payment standards for various business tax and surcharges refer to Note V.
Taxation.
31. Sale expenses
Item Reporting Period Same period of last year
Export expenses 14,051,231.69 12,445,365.51
Employee remunerations 8,580,413.26 8,730,635.97
Claims experiment expenses 5,247,967.81 -843,486.81
Sales commission and after sales service fees 1,539,728.58 938,142.65
Assets lease expenses 199,523.99 193,079.70
Travel expenses 1,196,187.09 1,126,786.43
Advertising expenses for promotion 1,066,521.60 3,899,934.81
Office expenses 91,939.32 162,720.93
Transportation charges 150,645.04 419,913.34
Other 489,145.71 508,412.29
Total 32,613,304.09 27,581,504.82
32. Administrative expenses
Item Reporting Period Same period of last year
Employee remunerations 16,306,722.89 16,339,628.35
Depreciation and amortization 4,128,173.27 4,716,020.57
Rental expenses 5,614,824.57 6,682,219.28
Insurance expenses 1,124,034.83 926,369.87
Office expenses 699,955.44 742,909.31
Travel expenses 1,862,203.63 1,956,806.91
Consultant fees 2,301,131.21 1,742,392.73
Maintenance expenses 2,941,621.47 2,995,650.24
Other 3,790,577.21 4,414,931.58
Total 38,769,244.52 40,516,928.84
116
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
33. R&D expenses
Item Reporting Period Same period of last year
Employee remunerations 22,780,501.64 20,494,247.30
Experimental expenses 3,584,206.48 3,373,586.25
Depreciation and amortization of assets 3,197,870.02 3,028,022.17
Certification expenses 1,678,876.83 1,419,408.44
Rental expenses 1,336,501.82 1,367,338.37
Patent expenses 1,349,210.14 1,439,834.44
Travel expenses 880,299.74 835,049.82
Maintenance expenses 462,359.89 406,194.09
Consultant fees 194,608.92 492,917.75
Other 1,234,765.02 1,266,226.17
Total 36,699,200.50 34,122,824.80
34. Financial costs
Item Reporting Period Same period of last year
Interest expenses 431,740.73 287,648.29
Less: Interest income 4,370,937.15 4,483,457.96
Exchange gain and loss 606,201.37 2,505,899.01
Bank charges 592,580.12 458,468.88
Total -2,740,414.93 -1,231,441.78
35. Impairment loss on assets
Item Reporting Period Same period of last year
Bad debt loss -89,003.08 1,904,490.44
Impairment loss on inventories -1,819,781.83 -6,727,823.86
Impairment loss on fixed assets -10,570.96 0.00
Total -1,919,355.87 -4,823,333.42
Note: The new revenue standard is not implemented.
36. Investment income
Item Reporting Period Same period of last year
Investment income from disposal of financial assets
measured by fair value with changes in fair value 4,324,100.00 9,608,500.00
recognized in profit or loss
Investment income from financial products 3,988,938.97 268,400.98
Total 8,313,038.97 9,876,900.98
117
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
37. Other income
Reporting Per Same period of last yea Amount included in the current
Item
iod r non-recurring gains and losses
Subsidy for export credit insurance 672,767.00 702,892.00 672,767.00
Patent subsidies 0.00 32,400.00 0.00
Subsidies for technological innovation 100,000.00 0.00 100,000.00
Subsidy for exhibition 0.00 25,000.00 0.00
Subsidy for investment in enterprise
820,200.00 0.00 820,200.00
technology and equipment
Subsidy for online transactions in technology 0.00 108,800.00 0.00
Subsidy for R & D 1,024,800.00 693,000.00 1,024,800.00
Total 2,617,767.00 1,562,092.00 2,617,767.00
38. Gain from changes in fair value
Source of fair value change Reporting Period Same period of last year
Financial assets measured by fair value with changes in fair value recognized in profit or loss -742,250.00 0.00
Including: Derivative financial assets -742,250.00 0.00
Financial liabilities measured by fair value with changes in fair value recognized in profit or loss -3,403,100.00 -9,934,400.00
Including: Derivative financial assets -3,403,100.00 -9,934,400.00
Total -4,145,350.00 -9,934,400.00
39. Income from assets disposal
Amount included in the
Item Reporting Period Same period of last year current non-recurring gains
and losses
Income from fixed assets
63,398,419.60 376,183.60 63,398,419.60
disposal
Total 63,398,419.60 376,183.60 63,398,419.60
40. Non-operating income
Amount included in the
Item Reporting Period Same period of last year current non-recurring
gains and losses
Income from indemnities 3,916,460.62 0.00 3,916,460.62
Government grants (see the following table
21,162,176.00 283,761.00 21,162,176.00
for detail: Details for government grants)
Unable to pay overdue accounts payable 0.00 676,788.07 0.00
Other 1,103,174.75 1,507,024.80 1,103,174.75
Total 26,181,811.37 2,467,573.87 26,181,811.37
118
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
Details of government grants which are recognized into profit or loss during current year
Same period of last Related with
Item Reporting Period
year assets/income
Other 0.00 283,761.00 Related with income
Government relocation compensation 21,162,176.00 0.00 Related with income
Total 21,162,176.00 283,761.00
41. Non-operating expenses
Amount included in the
Same period of last
Item Reporting Period current non-recurring
year
gains and losses
Losses caused by damage and scrap of non-current
15,056.57 12,582.69 15,056.57
assets
Fines 4,162.92 4,632.00 4,162.92
Donations 1,283.20 20,000.00 1,283.20
Losses from relocation 0.00 0.00 0.00
Other 0.01 0.00 0.01
Total 20,502.70 37,214.69 20,502.70
42. Income tax expenses
(1) Lists of income tax expense
Item Reporting Period Same period of last year
Current income tax expense 9,076,498.48 -377,202.20
Deferred income tax 20,744,481.64 -661,307.31
Total 29,820,980.12 -1,038,509.51
(2) Reconciliation of account profit and income tax expenses
Item Reporting Period
Profit before tax 116,520,950.07
Income tax computed in accordance with the applicable tax rate 27,790,470.35
Impact of differing tax rates applicable to subsidiaries -4,059,009.26
Impact of adjustment for prior period tax expenses 243,656.87
Impact of non-taxable income 0.00
Impact of non-deductible costs, expenses and losses 687,232.17
Impact of utilization of prior period deductible temporary differences and taxable temporary
0.00
differences for which no deferred tax asset has been recognized
Impact of current period deductible temporary differences and taxable temporary differences for
7,102,916.14
which no deferred tax asset has been recognized
Changes in balance of deferred tax asset and deferred liabilities due to tax rate adjustment 0.00
Impact of additional deduction for R&D expenses -1,944,286.15
Income tax expenses 29,820,980.12
119
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
43. Other comprehensive income
See Note 6.26 for details.
44. Cash flow statement
(1) Other cash received relating to operating activities
Item Reporting Period Same period of last year
Government subsidies 23,779,943.00 1,845,853.00
Interest income 2,281,606.28 1,153,304.46
Rent income 23,793,654.59 27,398,244.83
Funds in current account and others 5,759,747.74 152,329.42
Total 55,614,951.61 30,549,731.71
(2) Other cash payments relating to operating activities
Item Reporting Period Same period of last year
Penalties and donations paid 5,465.68 0.00
Bank charges 732,318.67 429,816.67
Sales expenses and general and administrative expenses paid by cash 78,237,467.17 63,057,620.24
Current accounts and others 10,575,657.12 6,355,232.31
Total 89,550,908.64 69,842,669.22
(3) Other cash received relating to investing activities
Item Same period of last
Reporting Period
year
To recover the maturity time deposits that for purpose to earn interest income in
92,427,273.64 246,417,500.00
financial institutions
Total 92,427,273.64 246,417,500.00
(4) Other cash payments relating to investing activities
Item Reporting Period Same period of last year
Deposits in financial institutions for the purpose of earning interest income 206,867,146.34 435,917,500.00
Total 206,867,146.34 435,917,500.00
(5) Other cash received relating to financing activities
Item Reporting Period Same period of last year
Recovery of margin for pledged loans 7,000,000.00 0.00
Total 7,000,000.00 0.00
120
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
(6) Other cash payments relating to financing activities
Item Reporting Period Same period of last year
Inter-bank lending of capital of related parties 0.00 441,661.22
Total 0.00 441,661.22
45. Supplementary information to the statement of cash flows
(1) Supplementary information to the statement of cash flows
Supplemental information Reporting Period Same period of last year
1. Reconciliation of cash flows from operating activities to net
profit:
Net profit 86,699,969.95 -40,093,551.93
Add: Allowance for assets impairment 1,919,355.87 4,823,333.42
Depreciation of fixed assets, oil and gas assets, biological assets held
22,621,962.91 21,740,680.68
for production
Amortization of intangible assets 2,855,251.16 2,370,588.02
Amortization of long-term deferred expenditure 1,297,911.46 1,065,969.03
Losses on disposal of fixed assets, intangible assets and other
-63,398,419.60 -376,183.60
long-term assets (gains: negative)
Loss on scrap of fixed assets (gains: negative) 15,056.57 12,582.69
Loss on fair value changes (gains: negative) 4,145,350.00 9,934,400.00
Financial cost (gains: negative) -183,999.42 454,499.85
Investment loss (gains: negative) -8,313,038.97 -9,876,900.98
Decrease in deferred income tax assets (increase presented by "-"
-152,309.22 -185,070.18
prefix)
Increase in deferred income tax liabilities (decrease presented by "-"
20,896,790.86 -461,498.58
prefix)
Decrease in inventory (increase presented by "-" prefix) 6,995,781.81 -34,785,431.30
Decrease of operating receivables (increase presented by "-" prefix) -10,395,326.14 70,275,283.97
Increase of operating payables (decrease presented by "-" prefix) -60,837,127.81 -144,720,271.58
Other 0.00 0.00
Net cash flows generated from operating activities 4,167,209.43 -119,821,570.49
2. Significant investing and financing activities involve no cash:
Debt-to-capital conversion
Convertible loan due within one year
121
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
Supplemental information Reporting Period Same period of last year
Fixed assets acquired under financial lease
3. Changes of cash and cash equivalents:
Closing balance of cash equivalents 291,434,711.91 248,535,096.81
Less: Cash at the beginning of the period 448,492,295.47 564,381,960.88
Add: Closing balance of cash equivalents
Less: Cash at the beginning of the period
Net increase in cash and cash equivalents -157,057,583.56 -315,846,864.07
(2) Composition of cash and cash equivalents
Item Reporting Period Same period of last year
I. Cash 291,434,711.91 248,535,096.81
Including: Cash on hand 851,894.37 675,029.35
Demand bank deposit 290,582,817.54 247,860,067.46
Other demand monetary funds 0.00
Demand deposit in the central bank 0.00 0.00
Deposits in other bank 0.00 0.00
Call loans to banks 0.00 0.00
II. Cash equivalents 0.00 0.00
Including: Debt instrument matured within three months 0.00 0.00
III. Closing balance f cash and cash equivalents 291,434,711.91 248,535,096.81
Note 1: Cash and cash equivalents exclude the restricted cash and cash equivalents the Company
and the subsidiaries of the Group used.
Note 2: On 30 June 2019, the amount of cash and cash equivalents of statement of cash flows was
CNY 291,434,711.91, the balance of monetary funds of balance sheet was CNY 419,946,354.54,
and the difference was CNY 128,511,642.63, of which CNY 14,200,000 is the bank deposit pledged
by the company for the purpose of obtaining US loan, and CNY 114,311,642.63 is time deposit in
financial institutions for the purpose of earning interest income.
46. Restricted assets of ownership or usage rights
Item Closing carrying value Reason for restriction
Monetary funds 14,200,000.00 Margin for pledge loans
Time deposit in financial institutions for the purpose of earning
Monetary funds 114,311,642.63
interest income
Total 128,511,642.63
47. Foreign currency monetary items
122
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
(1) Foreign currency monetary items
Item Closing foreign currency balance Exchange rate Closing convert to CNY balance
Monetary funds
Including: USD 8,692,747.92 6.8747 59,760,034.12
JPY 1,189,880.42 0.0638 75,933.41
IDR 1,509,628,164.38 0.0005 735,188.91
EUR 10,164.38 7.8170 79,454.96
GBP 9,519.60 8.7113 82,928.09
HKD 377,897.30 0.8797 332,421.14
HUF 81,016.00 0.0240 1,944.38
NTD 48,467,712.00 0.2213 10,724,741.44
Total 71,792,646.45
Short-term loans
Including: USD 1,520,000.00 6.8747 10,449,544.00
Total 10,449,544.00
Accounts receivable
Including: USD 42,734,248.13 6.8747 293,785,135.62
IDR 176,119,520.00 0.0005 85,770.21
JPY 34,839,890.00 0.0638 2,223,342.42
Total 296,094,248.25
Accounts payable
Including: USD 8,277,868.71 6.8747 56,907,864.02
EUR 258,082.44 7.8170 2,017,430.43
GBP 9,125.00 8.7113 79,490.61
HKD 615,329.10 0.8797 541,280.40
JPY -72,824.47 0.0638 -4,647.37
IDR 623,356,809.97 0.0005 303,574.77
NTD 6,434,930.00 0.2213 1,423,895.57
Total 61,268,888.43
Other accounts receivable
Including: HKD 74,736.07 0.8797 65,742.33
JPY 270,547.00 0.0638 17,265.23
USD 26,155.78 6.8747 179,813.14
IDR 1,301,803,222.00 0.0005 633,978.17
NTD 1,009,326.00 0.2213 223,339.62
Total 1,120,138.49
Other accounts payable
Including: JPY 27,061.00 0.0638 1,726.92
USD 140,134.84 6.8747 963,384.99
EUR 2,504.50 7.8170 19,577.68
IDR 820,856,488.43 0.0005 399,757.11
Total 1,384,446.70
123
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
(2) Description of overseas operating entities
The Company ’ s holding sub-subsidiaries company Pt. Star Comgistic Indonesia locates at West
Java province in Indonesia, due to Pt. Star Comgistic Indonesia is mostly settled in US dollars by
usual purchases and sales, so that it adopts the US dollar as its functional currency.
The Company ’ s holding sub-subsidiaries company SCPDI locates at West Java province in
Indonesia, due to SCPDI is mostly settled in IDR by usual purchases and sales, so that it adopts the
IDR as its functional currency.
The Company’ holding sub-subsidiaries company Tsannkuen Edge Intelligence Co., Ltd. locates at
Taiwan, due to Tsannkuen Edge Intelligence Co., Ltd. is mostly settled in NTD by usual purchases
and sales, so that it adopts the NTD as its functional currency.
The Company’ holding sub-subsidiaries company East Sino Development Limited locates at Hong
Kong, due to East Sino Development Limited is mostly settled in HKD by usual purchases and
sales, so that it adopts the HKD as its functional currency.
The Company’ holding sub-subsidiaries company Orient Star Investments Limited locates at Hong
Kong, due to Orient Star Investments Limited is mostly settled in USD by usual purchases and sales,
so that it adopts the USD as its functional currency.
VII． Changes of consolidated scope
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.
124
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
VIII．Equity in other main entities
1. The equity in subsidiaries
(1) The construction of the group
Place Holding percentage (%)
Place of Nature of
Subsidiaries of Acquired method
operation business Directly Indirectly
registration
Tsann Kuen (Zhangzhou) Manufacture
Acquired through
Enterprise Co., Ltd. (TKL) Zhangzhou Zhangzhou home electronic 75.00 75.00
establishment
appliance
Tsann Kuen China (Shanghai) Acquired through
Enterprise Co., Ltd. (TKS) Manufacture business
Shanghai Shanghai home electronic 46.875 62.50 combination under
appliance common
control
Tsann Kuen (Zhangzhou) South Manufacture
Acquired through
Port Electronics Enterprise Co., Zhangzhou Zhangzhou home electronic 56.25 75.00
establishment
Ltd. (TKN) appliance
Shanghai Canxing Trading Co., Sales of home Acquired through
Shanghai Shanghai 56.25 100.00
Ltd. (STD) electronic establishment
Tsann Kuen Property Services Property Acquired through
Xiamen Xiamen 100.00 100.00
Co., Ltd. (TKW) management establishment
East Sino Development Acquired through
Limited business
Hong Investment,
(East Sino) Hong Kong 75.00 100.00 combination under
Kong Trading
common
control
Pt.Star Comgistic Indonesia Acquired through
(SCI) Manufacture business
Indonesia Indonesia home electronic 75.00 100.00 combination under
appliance common
control
Pt.Star Comgistic Property
Real estate Acquired through
Development Indonesia Indonesia Indonesia 75.00 100.00
development establishment
(SCPDI)
Orient Star Investments Acquired through
Limited (OSI) business
Hong Investment,
Hong Kong 75.00 100.00 combination under
Kong Trading
common
control
Tsannkuen Edge Intelligence Acquired through
Co., Ltd. (TKEI) business
Taiwan Taiwan Industrial design 75.00 100.00 combination under
common
control
Tsann Kuen (Zhangzhou) Investment, Acquired through
Zhangzhou Zhangzhou 75.00 100.00
Investment Co., Ltd. (TKI) Trading establishment
125
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
(2) Significant non-wholly-owned subsidiary
Profit and loss
Dividends
Holding proportion attributable to Total amount of
attributable to
Subsidiaries of minority minority equity minority equity at
minority
shareholders (%) during current period-end
shareholders
period
Tsann Kuen (Zhangzhou)
25 9,264,676.46 8,481,119.62 321,517,333.34
Enterprise Co., Ltd.
Tsann Kuen (Shanghai) Enterprise
53.125 33,115,114.63 119,609,205.41
Co., Ltd.
Tsannkuen Edge Intelligence Co.,
25 -247,989.32 4,170,032.63
Ltd.
Pt.Star Comgistic Indonesia (SCI) 25 -2,666,471.62 20,430,690.89
(3) The main financial information of significant non-wholly-owned subsidiary
2019.06.30
Subsidiaries Non-current
Current assets Non-current assets Total Current liabilities Total
liabilities
Tsann Kuen
(Zhangzhou) 1,526,292,285.66 448,286,891.34 1,974,579,177.00 688,405,076.15 104,767.50 688,509,843.65
Enterprise Co., Ltd.
Tsann Kuen
(Shanghai) Enterprise 263,668,994.34 12,343,612.86 276,012,607.20 2,573,249.01 48,292,618.59 50,865,867.60
Co., Ltd.
Tsannkuen Edge
16,551,512.88 3,487,803.43 20,039,316.31 2,967,272.25 391,913.38 3,359,185.63
Intelligence Co., Ltd.
Pt.Star Comgistic
46,395,782.85 71,289,491.04 117,685,273.89 35,962,510.32 0.00 35,962,510.32
Indonesia (SCI)
(Continued)
2018.12.31
Subsidiaries Non-current
Current assets Non-current assets Total Current liabilities Total
liabilities
Tsann Kuen
(Zhangzhou) Enterprise 1,589,390,544.54 447,435,834.28 2,036,826,378.82 753,675,167.81 216,105.00 753,891,272.81
Co., Ltd.
Tsann Kuen (Shanghai)
180,423,244.43 12,266,644.24 192,689,888.67 2,593,037.93 27,284,444.57 29,877,482.50
Enterprise Co., Ltd.
Tsannkuen Edge
18,139,521.40 3,985,824.81 22,125,346.21 3,899,810.79 366,597.76 4,266,408.55
Intelligence Co., Ltd.
Pt.Star Comgistic
59,880,274.04 72,448,137.92 132,328,411.96 39,932,472.21 0.00 39,932,472.21
Indonesia (SCI)
126
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
Reporting Period
Subsidiaries Total amount of
Cash flow relating to
Operating revenue Net profit comprehensive
operating activities
income
Tsann Kuen (Zhangzhou) Enterprise Co.,
884,551,699.73 37,058,705.83 2,673,162.45
Ltd.
Tsann Kuen (Shanghai) Enterprise Co., Ltd. 537,628.52 62,334,333.43 20,108,849.49
Tsannkuen Edge Intelligence Co., Ltd. 4,062,649.39 -991,957.28 -921,407.08
Pt.Star Comgistic Indonesia (SCI) 42,766,092.00 -10,665,886.45 -783,976.44
Same period of last year
Subsidiaries Total amount of
Cash flow relating to
Operating revenue Net profit comprehensive
operating activities
income
Tsann Kuen (Zhangzhou) Enterprise Co.,
633,712,855.58 -31,822,389.67 -99,054,381.42
Ltd.
Tsann Kuen (Shanghai) Enterprise Co.,
460,356.27 -1,238,540.45 -2,584,983.96
Ltd.
Tsannkuen Edge Intelligence Co., Ltd. 5,186,214.49 -4,085,170.16 -6,159,899.06
Pt.Star Comgistic Indonesia (SCI) 57,156,180.74 -8,160,647.89 5,372,765.23
IX. The risk associated with financial instruments
The main financial instruments of the Company including equity investments, loans, accounts
receivable, accounts payable and etc., please see Note 6 for detail of related items. The risk
associated with financial instruments, and risk management policies which the company uses to
reduce these risks as described below. The management of the Company manages and supervises
the risks to ensure that the risks can be controlled within a limited range.
The Company analyzes the rationality of risk variables and possible impacts of possible changes on
current gain and loss or shareholders’ equity through sensitivity analysis. All risk variables rarely
can change in isolation, and the correlation between variables has great influence on the ultimate
amount generated from the change of some risk variable. Thus, the following is done on the
assumption that each variable changes in isolation.
(I) The targets and policies of risks management
The target of risks management is to obtain the proper balance between the risks and benefits, to
reduce the negative impact that caused by the risk of the Company to the lowest level, and to
maximize the benefits of shareholders and other equity investors. Based on the targets of risk
management, the basic strategy of the Company’s risk management is to identify and analyze the
risks which are faced by the Company, establish suitable risk tolerance baseline and precede the risk
management, and supervise a variety of risks timely and reliably, and control the risk within a
limited range.
127
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
1. Market risk
(1) Foreign exchange risk
Foreign exchange risk refers to the risk of loss due to exchange rate fluctuations generally. The
company bears the foreign exchange risk primarily concerned with USD, JPY, IDR, EUR, HKD and
NTD, in addition to the Company ’ s subsidiary SCI purchases and sales used by USD, SCPDI
purchases and sales used by IDR, TKEI purchases and sales used by NTD, the other main business
activities of the Company used by CNY. On 30 June 2019, except the following assets or liabilities
are recorded in foreign currency, the others are recorded in CNY. Foreign exchange risk of the
assets and liabilities in foreign currencies may have an impact on the Company’s performance of
operation.
Item Carrying amount as at 30/06/2019 Carrying amount as at 31/12/2018
Monetary funds 71,792,646.45 178,177,559.98
Accounts receivable 296,094,248.25 270,582,962.97
Other accounts receivable 1,120,138.49 1,211,986.43
Short-term loans 10,449,544.00 10,432,044.21
Accounts payable 61,268,888.43 75,359,292.22
Other accounts payable 1,384,446.70 2,762,052.62
The Group purchases foreign currency forward contracts to reduce the foreign exchange risk, and
foreign currency forward contracts shall be based on the amount of foreign currency assets.
2. Credit risk
That could cause the Company’s maximum credit risk of financial losses mainly from the losses of
financial assets, which are resulted by the other party of contract fails to fulfill the obligations, as at
30 June 2019.
In order to reduce credit risk, the Company set up a team responsible for determination of credit
limits, credit approvals and other monitoring procedures to ensure that the necessary measures be
taken to recover overdue debts. In addition, the Company reviews the recoverable amount of each
individual trade debt at each balance sheet date to ensure recognized fully provision for bad debts
for the money cannot be recovered. So that the Company’s management believes the Company’s
credit risk has been greatly reduced.
The Company ’s circulating funds deposited in banks which with high credit ratings, so that the
lower credit risk of circulating funds.
3. Liquidity risk
When managing liquidity risk, the Company ’ s management believes that maintaining adequate
cash and cash equivalents, and monitoring that at same time, in order to meet the needs of operation
of the Company, and to reduce the impact of fluctuations in cash flows. The management of the
Company monitors the use of bank borrowings and ensures to abide by loan agreements.
128
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
X. Disclosure of fair value
1. Year-end fair value of assets and liabilities that are measured by fair value
Closing fair value
Item First level Second level Third level
measurement of measurement of measurement Total
fair value fair value of fair value
I. Continuous measurement of fair value
(I) Financial assets measured by fair value whose 698,450.00 698,450.00
changes included in current period
1. Transactional financial assets 698,450.00 698,450.00
(1) Debt instruments investment
(2) Equity instrument investment
(3) Derivative financial assets 698,450.00 698,450.00
Total amount of asset that is continually 698,450.00 698,450.00
measured by fair value
(II) Transactional financial liabilities 3,403,100.00 3,403,100.00
Including: Issuance of transactional bonds
Derivative financial liabilities 3,403,100.00 3,403,100.00
Other 0.00 0.00
Total amount of liabilities that are continually 3,403,100.00 3,403,100.00
measured by fair value
2. The basis for determining the market price of continuous and non-continuous fair value
measurement items of the first level
Unadjusted quotations obtained on active markets from the same assets or liabilities on the balance
sheet date.
XI. Related party and related transaction
1. Details of the parent
Voting right
Place of Shareholding in
Parents Nature of business Registered capital in the Company
registration the Company (%)
(%)
STAR COMGISTIC CAPITAL Manufacture and sales NTD
Taiwan 42.90 44.68
CO., LTD. electrical equipment 3,000,000,000.00
2. Subsidiaries of the Company
See Note 8.1 The equity in subsidiaries.
129
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
3. Details of other related parties
Other related parties Relationship
The company directly controlled by the key management and closed
Thermaster Electronic (Xiamen) Ltd.
family members
Xiamen Wuhuama Restaurant Management Co., Ltd. Ultimate holding company have equity
Tsann Kuen Enterprise Co., Ltd. Same actual controller
Kuaisan Electric Business Services Limited Same actual controller
Gold mine chain enterprise Co., Ltd Same actual controller
Canxing International Travel Service Co., Ltd Same ultimate holding company
4. Transactions with related parties
(1) Transactions through purchase or sell goods and accept or supply services
①The situation of purchases goods
The approval Whether exceed Same period of last
Related parties Content Reporting Period
trade credit trade credit or not year
Thermaster Electronic (Xiamen)
Purchase of goods 16,615,879.99 36,580,000.00 No 13,847,118.67
Ltd.
Tsann Kuen Enterprise Co., Ltd. Purchase of goods 659.33 50,000.00 No 10,290.50
Gold mine chain enterprise Co., Ltd Purchase of goods 644.30 10,000.00 No 1,513.82
STAR COMGISTIC CAPITAL
Purchase of goods 4,518.01 0.00 Yes 4,964.08
CO., LTD.
Kuaisan Electric Business Services
Purchase of goods 0.00 0.00 No 643.50
Limited
Total 16,621,701.63 36,640,000.00 13,864,530.57
② The situation of sells goods
Related parties Content Reporting Period Same period of last year
STAR COMGISTIC CAPITAL CO., LTD. Sale of goods 5,915,611.17 5,762,835.97
Total 5,915,611.17 5,762,835.97
(2) Information of related lease
①The Company is as the leasor
Lease rental recognized in current Lease rental recognized in prior
Leasee Classification
period period
Xiamen Wuhuama Restaurant Management
Property 21,960.00 23,700.00
Co., Ltd.
Total 21,960.00 23,700.00
130
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
② The Company is as the leasee
Lease rental recognized in current Lease rental recognized in
Lessor Classification
period prior period
STAR COMGISTIC CAPITAL CO., LTD. Property 552,564.86 684,104.52
Total 552,564.86 684,104.52
(3) Assets transfer, Debt restructuring between related parties
Related parties Content Reporting Period Same period of last year
STAR COMGISTIC CAPITAL CO., LTD. Sale of fixed assets 7,103.88 8,844.00
Total 7,103.88 8,844.00
Thermaster Electronic (Xiamen) Ltd. Purchase of fixed assets 0.00 12,820.51
Total 0.00 12,820.51
(4) Inter-bank lending of capital of related parties
Related parties Content Reporting Period Same period of last year
STAR COMGISTIC CAPITAL CO., LTD. Borrowing capital 0.00 440,000.00
Interest from inter-bank borrowing and
STAR COMGISTIC CAPITAL CO., LTD. 0.00 1,661.22
lending
Total 0.00 441,661.22
(5) Other transactions with related parties
Related parties Content Reporting Period Same period of last year
Canxing International Travel Service Co., Ltd Accept service 155,794.48 425,218.20
Kuaisan Electric Business Service Co., Ltd. Accept service 0.00 480.48
Tsann Kuen Enterprise Co., Ltd. Provide service 0.00 27,680.84
Gold mine chain enterprise Co., Ltd Provide service 20,814.40 0.00
Total 176,608.88 453,379.52
131
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
(6) Remunerations of key management personals
Unit: CNY ten thousands
Item Reporting Period Same period of last year
Remunerations of key management personals 131.77 102.62
5. Receivables and payables of related parties
(1) Receivables
Closing balance Opening balance
Item Carrying amount Allowance for bad debt Carrying amount Allowance for b
ad debt
Accounts receivable:
STAR COMGISTIC CAPITAL CO.,
1,388,158.67 0.00 3,639,277.36 0.00
LTD.
Total 1,388,158.67 0.00 3,639,277.36 0.00
Other accounts receivable:
STAR COMGISTIC CAPITAL CO.,
195,370.31 0.00 208,665.92 0.00
LTD.
Total 195,370.31 0.00 208,665.92 0.00
(2) Payables
Item Closing balance Opening balance
Accounts payable:
Thermaster Electronic (Xiamen) Ltd. 6,607,856.62 7,417,343.11
Total 6,607,856.62 7,417,343.11
Advances from customers:
Xiamen Wuhuama Restaurant Management Co., Ltd. 2,299.20 4,026.00
Total 2,299.20 4,026.00
Other accounts payable:
Xiamen Wuhuama Restaurant Management Co., Ltd. 18,376.60 18,376.60
Tsann Kuen Enterprise Co., Ltd. 0.00 927.36
STAR COMGISTIC CAPITAL CO., LTD. 19,133.73 17,596.97
Kuaisan Electric Business Services Limited 0.00 65.89
Canxing International Travel Service Co., Ltd 13,453.58 16,487.05
Total 50,963.91 53,453.87
132
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
XII. Commitments and contingencies
1. Significant commitments
As of the end of balance sheet date, the irrevocable operating lease commitments that the Company
signed were as followed:
Unit: CNY ten thousands
Item Closing balance Opening balance
The minimum lease payments of irrevocable
operating lease contracts:
1st year after the balance sheet date 3,638.00 3,638.00
2nd year after the balance sheet date 3,638.00 3,638.00
3rd year after the balance sheet date 3,638.00 3,638.00
Subsequent years 112,771.00 116,409.00
Total 123,685.00 127,323.00
2. Contingencies
As MTN Products, Inc. / Water Solutions (Hong Kong) Ltd ( “ MTN / WSL ” ) did not pay the
relevant payment in time and fulfill the order according to the contract, the subsidiary of the
Company, Tsann Kuen (Zhangzhou) Enterprise Co., Ltd. submitted the indictment to the
SUPERIOR COURT OF CALIFORNIA COUNTY OF LOS ANGELES on 23 November 2016 to
sue MTN / WSL for payment of USD707,522.92 and USD1,402,940.00 for reserve losses, totaling
USD2,110,462.92. As of the reporting date, the case is still pending.。
XIII. Post reporting date events
No post reporting events need to be disclosed as of the approval date of the financial
statement.
XIV. Notes to the main elements in the financial statement of the Company
1. Notes receivable and accounts receivable
Item 2019.06.30 2018.12.31
Notes receivable 50,000.00 200,000.00
Accounts receivable 4,966,869.01 16,243,882.91
Total 5,016,869.01 16,443,882.91
133
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
(1) Notes receivable
① Disclosure by classification
Item 2019.06.30 2018.12.31
Bank acceptance 50,000.00 200,000.00
Total 50,000.00 200,000.00
(2) Accounts receivable
①Disclosure by age
Age 2019.06.30
Within 1 year 6,143,068.57
Including: 1 to 90 days 3,607,850.94
91 to 180 days 2,535,217.63
181 to 270 days 0.00
271 to 365 days 0.00
1 to 2 years 1,258,326.78
2 to 3 years 0.00
Over 3 years 5,645.49
Total 7,407,040.84
② Disclosure by withdrawal method of bad debt provision
2019.06.30
Carrying amount Allowance for bad debt
Item Withdrawal Carrying
Proportion value
Amount Amount proportion
(%)
(%)
Accounts receivable of individual significance
subject to individually assessment for 11,134.48 0.15 0.00 0.00 11,134.48
impairment
Accounts receivable subject to individually
7,395,906.36 99.85 2,440,171.83 32.99 4,955,734.53
assessment for impairment by group
Total 7,407,040.84 100.00 2,440,171.83 32.94 4,966,869.01
134
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
(Continued)
2018.12.31
Carrying value Allowance for bad debt
Item Withdrawal Carrying value
Amount Amount Amount proportion
(%)
Accounts receivable of individual significance
subject to individually assessment for
impairment
Accounts receivable portfolio subject to
18,235,745.59 100.00 1,991,862.68 10.92 16,243,882.91
impairment by credit risk:
Portfolio by age 18,211,345.83 99.87 1,991,862.68 10.94 16,219,483.15
Portfolio by related parties 24,399.76 0.13 0.00 0.00 24,399.76
Accounts receivable of individually
insignificance subject to individually
assessment for impairment
Total 18,235,745.59 100.00 1,991,862.68 10.92 16,243,882.91
A. Accounts receivable of individual significance subject to individually assessment for impairment
at the period-end
Closing balance
Name
Carrying amount Bad debt provision Withdrawal proportion (%)
Accounts receivable of
11,134.48 0.00 0.00
related parties
Total 11,134.48 0.00 0.00
B. Accounts receivable withdrawn bad debt provision by group
2019.06.30
Item
Carrying amount Bad debt provision Withdrawal proportion (%)
Undue 3,794,484.65 8,119.14 0.21
Overdue 3,601,421.71 2,432,052.69 67.53
Total 7,395,906.36 2,440,171.83 32.99
③ Bad debt provision withdrawal, reversed or recovered in the Reporting Period
Changes in the Reporting Period
Item Opening balance 2019.01.01 Reversal or Exchange Closing balance
Withdrawal Write-off
recovery rate
Accounts receivable
withdrawn bad debt 1,991,862.68 2,443,487.02 0.00 3,315.19 0.00 0.00 2,440,171.83
provision by group
Total 1,991,862.68 2,443,487.02 0.00 3,315.19 0.00 0.00 2,440,171.83
135
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
④ Accounts receivable with actual verification during the Reporting Period
Item Amount verified
Accounts receivable with actual verification 0.00
⑤ Details of top five accounts receivable in closing balance
The total amount of top five accounts receivables in closing balance summarized by debtors as at the
end of the Reporting Period is CNY 7,414,547.56, accounting for 100.10% of the total closing
balance of accounts receivable as at the end of the Reporting Period.
2. Other accounts receivable
Item 2019.06.30 2018.12.31
Interest receivable 0.00 0.00
Dividends receivable 0.00 0.00
Other accounts receivable 2,563,559.67 2,213,373.51
Total 2,563,559.67 2,213,373.51
① Disclosure by classification
Age 2019.06.30
Within 1 year 2,421,187.22
Including: 1 to 90 days 2,161,369.73
91 to 180 days 154,164.49
181 to 270 days 88,077.00
271 to 365 days 17,576.00
1 to 2 years 74,144.00
2 to 3 years 34,600.00
Over 3 years 108,769.10
Total 2,638,700.32
136
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
②Disclosure by nature of accounts
Nature 2019.06.30 2018.12.31
Margin 235,000.00 235,000.00
Accounts receivable of related parties 1,813,765.08 1,777,060.97
Other come-and-go accounts 589,935.24 245,227.44
Subtotal 2,638,700.32 2,257,288.41
Less: Allowance of bad debt 75,140.65 43,914.90
Total 2,563,559.67 2,213,373.51
③Disclosure by withdrawal method of bad debt provision
First stage Second stage Third stage
Allowance of bad debt Expected credit loss over the next 12 Expected loss in the duration Expected loss in the duration (credit Total
months (credit impairment not occurred) impairment occurred)
Balance of 1 January 2019 43,914.90 43,914.90
Balance of other receivables on 1
—— —— —— ——
January 2019 in the current period
--Transfer to Second stage 0.00
--Transfer to Third stage 0.00
--Reverse to Second stage 0.00
--Reverse to Third stage 0.00
Withdrawal of the current period 31,225.75 31,225.75
Reversal of the current period 0.00
Write-offs of the current period 0.00
Verification of the current period 0.00
Other changes 0.00 0.00 0.00 0.00
Balance of 30 June 2019 75,140.65 0.00 0.00 75,140.65
137
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
④ Particulars of bad debt provision
Changes in the Reporting Period
Item Opening balance Closing balance
Withdrawal Reversal or recovery
Accounts receivable withdrawn bad debt
provision by group
43,914.90 31,225.75 0.00 75,140.65
Total 43,914.90 31,225.75 0.00 75,140.65
3. Long-term equity investment
(1) Disclosure by classification
2019.06.30 2018.12.31
Item Allowance Allowance for
Carrying amount Carrying value Carrying amount Carrying value
for bad debt bad debt
Investment to the
923,414,701.56 0.00 923,414,701.56 921,914,701.56 0.00 921,914,701.56
subsidiary
Total 923,414,701.56 0.00 923,414,701.56 921,914,701.56 0.00 921,914,701.56
(2) Investment to the subsidiary
Withdrawn Closing
impairment balance of
Investee 2018.12.31 Increase Decrease 2019.06.30
provision in the impairment
Reporting Period provision
Tsann Kuen
(Zhangzhou) 921,914,701.56 921,914,701.56
Enterprise Co., Ltd.
Tsann Kuen Property
0.00 1,500,000.00 0.00 1,500,000.00 0.00 0.00
Services Co., Ltd.
Total 921,914,701.56 1,500,000.00 0.00 923,414,701.56 0.00 0.00
4. Operating revenues and costs
Reporting Period Same period of last year
Item
Revenues Operating costs Revenues Operating costs
Main operations 15,952,167.75 14,703,450.93 32,269,461.73 29,744,013.84
Other operations 21,197,050.66 16,309,052.83 24,752,261.23 15,688,587.26
Total 37,149,218.41 31,012,503.76 57,021,722.96 45,432,601.10
5. Investment income
Reporting Period Same period of last year
Item
Long-term equity investment income
25,443,358.87 33,547,555.83
under cost method
Total 25,443,358.87 33,547,555.83
138
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
XV. Supplementary information
1. Extraordinary gains or losses for the Reporting Period
Item Amount Explanation
Gains or losses arising from disposal of non-current assets(including Mainly was gains from
63,398,419.60
assets impairment withdrawn had been offset) disposal of assets
Tax rebates, reductions or exemptions due to approval beyond
authority or the lack of official approval documents
Government subsidies accounted for through profit or loss for the
current reporting period (excl. grants directly associated with the 23,779,943.00
Company’s operations and subject to national quotas)
Capital occupation charges on non-financial enterprises that are
recorded into current gains and losses
Gains from the investment costs paid less than the acquirer’s interest
in the fair value of the bargainer’s identifiable net assets ( During
acquire subsidiary, joint venture and associates)
Gains or losses arising from non-monetary assets exchange
Gains or losses on entrusting others with investments or asset
management
Impairment allowances arising from force majeure, such as natural
disasters
Gains or losses from debt restructuring
Restructuring expenses, such as employee settlement and relocation
costs and costs of integration
Gains or losses on the part over the fair value due to transactions with
distinctly unfair prices
Net profit or loss of subsidiaries acquired through business
combination under common control from the beginning of the current
reporting period to the combination dates.
Gains or losses arising from contingent events not associated with the
Company’s operating activities
Mainly was the income
Gains or losses arising from changes in the fair values of financial from sale of forward
instruments held for trading (excl. effective hedging instruments foreign exchange
associated with the Company’s operating activities) or disposal of contract investment,
4,167,688.97
financial instruments held for trading and available-for-sale financial change in fair value,
assets (excl. effective hedging instruments associated with the financial products and
Company’s operating activities) other current assets
returns
Recovery of impairment allowance for receivables subject to
individual assessment for impairment
Gains or losses arising from entrusted borrowings
Gains or losses arising from changes in the fair values of investment
property measured at fair value
139
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the Financial Statements for H1 2019
Item Amount Explanation
Impact of one-off adjustment required by tax laws, accounting
standards and relevant regulations on the profit or loss for the current
reporting period
Revenue arising from entrusted operation
Other non-operating income and expenses other than the above 4,999,132.67
Other gains or losses satisfying the definition of extraordinary gains or
losses
Less: Effect corporate income tax 22,906,660.95
Net amount attributable to minority interests (after tax) 36,009,689.79
Total 37,428,833.50
Note: Extraordinary gains or losses event use “+” express revenue and income, “-” express loss
and expenditure.
The Company recognized non-recurring categories of activities in accordance with the Explanatory
Announcement regarding Information Disclosure by Publicly Listed Company No. 1 -
Non-recurring Profit and Loss (Zhengjianhui Gonggao [2008] No. 43).
2. Yield rate of net assets and earnings per share
Weighted average Earnings per share
Profit as of Reporting Period yield rate of net
assets (%) Basic EPS Diluted EPS
Net profit attributable to ordinary shareholders of the Company 7.02% 0.26 0.26
Net profits attributable to ordinary shareholders after deduction
1.51% 0.05 0.05
of extraordinary gains or losses
140
