2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
TSANN KUEN (CHINA) ENTERPRISE CO., LTD.
2023 ANNUAL REPORT
March 2024
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2023 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 information,
misleading statements or material omissions. And they shall be jointly and severally liable for that.
Cai Yuansong, company principal, and 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.
All directors attended the board meeting for reviewing this Report.
Any forward-looking statement such as those involving the future operational plans in this Report
shall not be considered as virtual promises of the Company to investors. And investors are kindly
reminded to pay attention to possible risks.
The Company’s profit distribution preplan upon review and approval of this board meeting: Based
on the total 185,391,680 shares, a cash dividend of RMB2.5 (tax included) will be distributed for
every 10 shares held by shareholders. No bonus shares will be granted and no capital reserve will be
turned into share capital.
This Report is prepared in both Chinese and English. Should there be any discrepancy between the
two versions, the Chinese version shall prevail.
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2023 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. Management Discussion & Analysis.........................................................................10
Section IV. Corporate Governance............................................................................................... 30
Section V. Environmental & Social Responsibility......................................................................51
Section VI. Significant Events..................................................................................................... 52
Section VII. Change in Shares & Shareholders............................................................................61
Section VIII. Preference Shares................................................................................................... 66
Section IX. Bonds.........................................................................................................................66
Section X. Financial Report......................................................................................................... 66
Documents Available for Reference
1. The financial statements signed and sealed by the company principal and the head of the
accounting work & the accounting division (head of accounting) of the Company;
2. The original Auditor’s Report sealed by the CPA firm, as well as signed and sealed by the CPAs;
and
3. The originals of all the Company’s documents and announcements which were disclosed on the
website designated by the CSRC in the reporting period.
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Terms
Term Refers to Content
Xiamen Tsann Kuen, MCKB, 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.
East Sino Development 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
TKW Refers to Xiamen Tsannkuen Property Services Co., Ltd.
Yuan Refers to RMB Yuan
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section II. Company Profile & Financial Highlights
I. Basic information of the Company
Stock name TKC-B Stock code 200512
Stock exchange Shenzhen Stock Exchange
Company name in 厦门灿坤实业股份有限公司
Chinese
Abbr. 闽灿坤
Company name in TSANN KUEN (CHINA) ENTERPRISE CO., LTD.
English
Abbr. TKC
Legal representative Cai Yuansong
Registered address No.88 Xinglong Road, Huli Industrial Park, Xiamen, Fujian Province, P.R. China
Zip code 361006
Office address TSANN KUEN Industrial Park, Taiwanese Investment Zone, Zhangzhou, Fujian
Province
Zip code 363107
Internet website www.eupa.cn
Email address mm_sun@tkl.tsannkuen.com
II. Contact us
Board Secretary Securities Representative
Name Sun Meimei Dong Yuanyuan
TSANN KUEN Industrial Park, TSANN KUEN Industrial Park, Taiwanese
Contact address Taiwanese Investment Zone, Zhangzhou, Investment Zone, Zhangzhou, Fujian
Fujian Province Province
Tel. 0596-6268161 0596-6268103
Fax 0596-6268104 0596-6268104
E-mail address mm_sun@tkl.tsannkuen.com yy_dong@tkl.tsannkuen.com
III. About information disclosure and where this Report is placed
Stock exchange website where this Report is disclosed Shenzhen Stock Exchange http://www.szse.cn
Media and website where this Report is disclosed Securities Times (domestic) www.cninfo.com.cn
TSANN KUEN Industrial Park, Taiwanese Investment
Where this Report is placed
Zone, Zhangzhou, Fujian Province
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
IV. Changes in the registered information
Unified Social Credit Code 91350200612002170L
Changes of the main business since listing No changes
Changes of the controlling shareholder No changes
V. Other information
The CPAs firm hired by the Company:
Name RSM China CPA LLP
901-22 to 901-26, Tower 1-Wai Jing Mao Building, 22 Fuchengmen Wai
Office address
Street, Xicheng District, Beijing, China
Signing CPAs Wu Xiaolei, Huang Huijun
Sponsor engaged by the Company to conduct sustained supervision during the reporting period
Applicable Inapplicable
Financial consultant engaged by the Company to conduct sustained supervision during the reporting period
Applicable Inapplicable
VI. Accounting and financial highlights
Does the Company adjust retrospectively or restate accounting data of previous years?
Yes No
Unit: RMB Yuan
Increase/decrease of
2023 2022 current year over 2021
last year (%)
Operating revenue (RMB Yuan) 1,495,632,805.41 1,584,267,529.08 -5.59 2,347,280,300.56
Net profit attributable to shareholders
87,937,274.85 94,283,302.93 -6.73 122,249,955.82
of the Company (RMB Yuan)
Net profit attributable to shareholders
of the Company before extraordinary 64,205,388.70 73,172,417.28 -12.25 86,639,602.54
gains and losses (RMB Yuan)
Net cash flows from operating
123,045,935.61 164,775,609.26 -25.33 148,525,571.88
activities (RMB Yuan)
Basic EPS (RMB Yuan/share) 0.47 0.51 -7.84 0.66
Diluted EPS (RMB Yuan/share) 0.47 0.51 -7.84 0.66
Weighted average ROE (%) 8.35 9.46 -1.11 13.47
Increase/decrease of
current year-end
As at 31 Dec. 2023 As at 31 Dec. 2022 As at 31 Dec. 2021
than last year-end
(%)
Total assets (RMB Yuan) 2,590,275,267.50 2,607,540,908.00 -0.66 2,785,902,354.47
Net assets attributable to shareholders
1,074,939,227.19 1,040,523,297.91 3.31 956,326,734.42
of the Company (RMB Yuan)
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
The lower of the company's net profit before and after extraordinary gains and losses in the last three fiscal years
was negative, and the audit report of the last year shows that the company's ability to continue as a going concern
is uncertain
Yes No
Whether the lower of the net profit attributable to shareholders of the Company before and after extraordinary
gains and losses was negative
Yes No
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
185,391,680
the disclosure of this Report (share)
Fully diluted EPS based on the latest total shares:
Dividends paid to preference shareholders 0
Interest paid for perpetual bonds (RMB Yuan) 0
Fully diluted EPS based on the latest total shares (RMB Yuan/share) 0.47
VII. 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 Inapplicable
2. Differences of net profit and net assets disclosed in financial reports prepared under overseas and
Chinese accounting standards
Applicable Inapplicable
3. Explain reasons for the differences between accounting data under domestic and overseas accounting
standards
Applicable Inapplicable
VIII. Financial highlights by quarter
Unit: RMB Yuan
Q1 Q2 Q3 Q4
Operating revenue 311,772,497.46 313,637,991.69 482,567,767.10 387,654,549.16
Net profit attributable to shareholders of the
10,507,389.79 17,810,471.11 37,604,491.95 22,014,922.00
Company
Net profit attributable to shareholders of the
3,588,518.18 15,022,703.22 24,276,706.46 21,317,460.84
Company before extraordinary gains and losses
Net cash flows from operating activities -56,101,692.30 26,354,194.90 41,671,282.27 111,122,150.74
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Any material difference between the financial indicators above or their summations and those which have been
disclosed in quarterly or semi-annual reports?
Yes No
IX. Extraordinary gains and losses
Applicable Inapplicable
Unit: RMB Yuan
Item 2023 2022 2021 Note
Gain/loss on the disposal of non-current assets
(including the offset part of the asset impairment 12,195,899.75 730,715.85 2,101,750.59
provisions)
Government grants recognized in the current
period, except for those acquired in the ordinary
course of business or continually granted at 3,727,263.16 7,993,459.91 4,786,030.51
certain quotas or amounts according to the
government’s policies and standards
Mainly gains on sale of
Gains and losses from changes in fair value of investments in forward
financial assets and liabilities held by
non-financial corporations and gains and losses exchange contracts,
from the disposal of financial assets and 18,116,561.09 24,698,675.41 48,392,884.92 gains on changes in fair
liabilities, except for effective hedging value and gains on
operations related to the Company's normal
business operations wealth management
products
Capital occupation charges on non-financial
enterprises that are recorded into current gains
and losses
Gain/loss on entrusting others with investments
or asset management
Gain/loss on entrustment loans
Asset losses due to acts of God such as natural
disasters
Impairment provision reversal of accounts
receivable on which the impairment test is
carried out separately
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
Current net gains and losses of subsidiaries
acquired in business combination under the
same control from period-begin to combination
date
Gain/loss on non-monetary asset swap
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Item 2023 2022 2021 Note
Gain/loss on debt restructuring
One-off costs incurred by the enterprise as a
result of the relevant business activities no
longer continuing, such as expenses for
relocating employees
One-time effect on profit or loss for the period
due to adjustments in tax, accounting and other
laws and regulations
One-time recognition of share-based payment
expense due to cancellation and modification of
equity incentive plans
For cash-settled share-based payments, gains
and losses arising from changes in the fair value
of employee compensation payable after the date
on which the right is exercisable
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
Gains arising from transactions at significantly
unfair prices
Gains and losses arising from contingencies
unrelated to the Company's normal business
operations
Custody fee income when entrusted with
operation
Non-operating income and expense other than
5,515,235.74 3,068,167.50 4,876,463.40
the above
Other gain and loss items that meet the
128,459.45 5,901.34
definition of an extraordinary gain/loss
Less: Income tax effects 6,566,012.29 6,436,822.09 10,199,627.23
Minority interests effects (after tax) 9,385,520.75 8,949,212.27 14,347,148.91
Total 23,731,886.15 21,110,885.65 35,610,353.28
The Company had no other gain and loss items that meet the definition of an extraordinary gain/loss.
The Company did not classify as a recurrent gain/loss item any extraordinary gain/loss item mentioned in the
Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the
Public—Extraordinary Gains and Losses.
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section III. Management Discussion & Analysis
I. Overview of the industry in which the Company operates in the reporting period
In the context of high inflation, Fed rate hikes, geopolitical conflicts, and accelerated reshaping of the global
supply chain, global economic growth slowed further in 2023, the risk of country-specific divergence
continued to increase, and the performance of global trade was in the doldrums. The overseas market of
Chinese home appliances suffered from multiple unfavorable factors such as inventory cycle, weakening
price-pull effect, transfer of production capacity overseas, and fluctuations in currency exchange rates, which
brought many uncertainties to the development of enterprises and slowed down the rapid development of the
home appliance industry. The company adheres to the development strategy of "innovative design,
specialized manufacturing, smart home appliances, international brand", focuses on the investment in
professional design and specialized manufacturing. On the basis of expanding the global small home
appliance market, the company increases the expansion of the domestic market in China, adheres to the close
interaction and strategic cooperation with customers and innovative research and development, so that to
enhance product value through innovation to meet customers’ needs, create new market demand and face the
industry competition.
II. Main business during the reporting period
Develop, produce and manufacture small home appliances of gourmet cooking, home helper, tea and coffee;
design and manufacture molds related to the above products, sell the products at home and abroad, and
provide after-sales service.
III. Core competitiveness analysis
No material change occurred to the core competitiveness of the Company during the reporting period.
The company has been adhering to the corporate culture of research and development, established a
professional research and development technology service system, deepened the product platform of
professional design on the basis of 45 years of small home appliance design and manufacturing, and created
market value with the global brands and customers; adhere on close interaction and strategic cooperation
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
with customers and innovative research and development, so that to enhance the product value from
innovation to meet customers' needs, create new market demand and face the industry competition. Launch
the upgrading construction of Tsann Kuen Industrial Park, improve the supply chain strategic cooperation
supporting ecosystem.
The company adheres to the two development routes of innovation research and development and
technology application, the double cycle strategy of global market and Chinese domestic market. On the
basis of expanding the global international market, the company increases the development of the domestic
market in China.
The product focuses on the research and development direction of product function, smart home appliance
and the application of scene IOT technology, providing high added value of solid function, intelligent
operation, green energy saving. The company creates new market demand and faces the industry competition
around the products of appearance level, quality and value.
In the reporting period, the Company obtained 19 patents in R&D, including 7 invention patents, 4 utility
model patents and 8 design patents. The acquisition of patents will help improve the protection of the
Company’s intellectual property rights, give play to its competitive edge in independent property rights, keep
a leading position in technology and increase its core competitiveness.
IV. Main business analysis
1. Overview
For the reporting period, the operating revenue of the Company amounted to RMB1,496 million, decreasing
5.59% from last year; the profit before tax of the Company amounted to RMB130 million, decreasing 6.85%
from last year; the net profit attributable to shareholders of the Company amounted to RMB87.9373 million,
decreasing 6.73% from last year; and the basic earnings per share of the Company is RMB0.47, RMB0.04
lower than that of last year.
The changes in the above indicators are mainly due to the decrease in revenue for the current period as
compared to the same period of the previous year, which is mainly due to the further slowdown in the global
economic growth, the impact of inventory cycle and currency exchange rate changes in the overseas market
for home appliances, resulting in an overall reduction in market demand for orders. The company will
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
continue to interact closely with customers and through innovative research and development to expand the
momentum of orders to enhance revenue and profitability.
2. Revenues and costs
(1) Breakdown of operating revenues
Unit: RMB Yuan
2023 2022
Item In total operating In total operating +/-%
Amount Amount
revenues (%) revenues (%)
By segments
Small home
appliance 1,416,916,663.23 94.74 1,500,156,144.12 94.69 -5.55
manufacturing
Other services 78,716,142.18 5.26 84,111,384.96 5.31 -6.41
Total 1,495,632,805.41 100.00 1,584,267,529.08 100.00 -5.59
By products
Cooking utensils 876,649,556.62 58.61 944,835,478.47 59.64 -7.22
Everyday home
423,317,994.57 28.30 366,208,675.06 23.12 15.59
appliances
Tea and coffee
107,759,750.66 7.21 169,414,501.98 10.69 -36.39
makers
Other products 9,189,361.38 0.62 19,697,488.61 1.24 -53.35
Other services 78,716,142.18 5.26 84,111,384.96 5.31 -6.41
Total 1,495,632,805.41 100.00 1,584,267,529.08 100.00 -5.59
By areas
America 644,953,338.13 43.12 622,677,921.09 39.30 3.58
Europe 433,422,726.13 28.98 419,003,051.04 26.45 3.44
Asia 377,290,956.01 25.22 470,653,480.27 29.71 -19.84
Africa 20,888,061.42 1.40 35,772,966.67 2.26 -41.61
Australia 19,077,723.72 1.28 36,160,110.01 2.28 -47.24
Total 1,495,632,805.41 100.00 1,584,267,529.08 100.00 -5.59
(2) Segments, products or areas contributing over 10% of operating revenues or profit
Applicable Inapplicable
Unit: RMB Yuan
Operating
Cost of sales: Gross profit
Gross profit revenue:
Item Operating revenue Cost of sales +/-% from last margin: +/-%
margin (%) +/-% from
year from last year
last year
By segments
Small home 1,416,916,663.23 1,200,616,079.86 15.27 -5.55 -6.24 0.63
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Operating
Cost of sales: Gross profit
Gross profit revenue:
Item Operating revenue Cost of sales +/-% from last margin: +/-%
margin (%) +/-% from
year from last year
last year
appliance
manufacturing
Other services 78,716,142.18 21,724,636.16 72.40 -6.41 -14.77 2.71
Total 1,495,632,805.41 1,222,340,716.02 18.27 -5.59 -6.41 0.71
By products
Cooking utensils 876,649,556.62 740,036,637.13 15.58 -7.22 -8.50 1.18
Everyday home
423,317,994.57 367,608,077.02 13.16 15.59 15.18 0.31
appliances
Tea and Coffee
107,759,750.66 87,621,207.90 18.69 -36.39 -37.64 1.62
makers
Other products 9,189,361.38 5,350,157.81 41.78 -53.35 -55.89 3.35
Other services 78,716,142.18 21,724,636.16 72.40 -6.41 -14.77 2.71
Total 1,495,632,805.41 1,222,340,716.02 18.27 -5.59 -6.41 0.71
By areas
America 644,953,338.13 551,073,582.25 14.56 3.58 2.55 0.86
Europe 433,422,726.13 362,539,500.90 16.35 3.44 3.61 -0.14
Asia 377,290,956.01 277,063,237.30 26.57 -19.84 -23.02 3.04
Africa 20,888,061.42 16,172,452.85 22.58 -41.61 -43.18 2.15
Australia 19,077,723.72 15,491,942.72 18.80 -47.24 -48.95 2.73
Total 1,495,632,805.41 1,222,340,716.02 18.27 -5.59 -6.41 0.71
In the event that the statistical caliber of the Company's main business data is adjusted during the reporting period,
the Company's main business data for the latest 1 year is adjusted to the caliber at the end of the reporting period
Applicable Inapplicable
(3) Are the Company’s goods selling revenue higher than the service revenue?
Yes No
Segment Item Unit 2023 2022 YoY +/-%
Sales volume Unit 14,185,499 15,716,824 -9.74
Small home appliance
Output Unit 14,076,108 15,977,286 -11.90
manufacturing
Stockholding Unit 820,854 930,245 -11.76
Reasons for any over-30% YoY movement of the data above:
Applicable Inapplicable
(4) Execution of signed significant sales contracts of the Company up to the reporting period
Applicable Inapplicable
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(5) Breakdown of cost of sales
By segments and products
Unit: RMB Yuan
2023 2022
YoY
By segments Item In total cost In total cost
Amount Amount +/-%
of sales (%) of sales (%)
Small home
appliance Operating cost 1,200,616,079.86 98.22 1,280,524,186.68 98.05 -6.24
manufacturing
Other business Other 21,724,636.16 1.78 25,490,844.72 1.95 -14.77
Total 1,222,340,716.02 100.00 1,306,015,031.40 100.00 -6.41
2023 2022
YoY
By products Item In total cost In total cost
Amount Amount +/-%
of sales (%) of sales (%)
Cooking utensils Operating cost 740,036,637.13 60.54 808,741,287.29 61.92 -8.50
Everyday home
Operating cost 367,608,077.02 30.07 319,155,173.77 24.44 15.18
appliances
Tea and Coffee
Operating cost 87,621,207.90 7.17 140,499,683.64 10.76 -37.64
makers
Other products Operating cost 5,350,157.81 0.44 12,128,041.98 0.93 -55.89
Other business Other 21,724,636.16 1.78 25,490,844.72 1.95 -14.77
Total 1,222,340,716.02 100.00 1,306,015,031.40 100.00 -6.41
(6) Whether there were changes of the consolidation scope during the reporting period
Yes No
In June 2023, the Company cancelled its subsidiary, Tsannkuen Edge Intelligence Co., Ltd. (TKEI). From the date
of completion of the cancellation, Tsannkuen Edge Intelligence Co., Ltd. (TKEI) will no longer be included in the
scope of consolidated statements.
(7) List of the significant changes or adjustment of the industries, products or services of the Company
during the reporting period
Applicable Inapplicable
(8) List of the major trade debtors and major suppliers
List of the major trade debtors of the Company
Total sales of the top 5 customers (RMB Yuan) 1,052,662,144.47
Ratio of the total sales of the top 5 customers to the annual total sales (%) 74.29
Ratio of the total sales of related parties among the top 5 customers to the 0.00
annual total sales (%)
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Information of the top 5 customers of the Company
Name of
Serial No. Sales amount (RMB Yuan) Proportion in annual total sales (%)
customer
1 1 297,785,282.90 21.02
2 2 236,733,807.36 16.71
3 3 202,270,805.85 14.27
4 4 161,389,544.96 11.39
5 5 154,482,703.40 10.90
Total 1,052,662,144.47 74.29
Notes of the other situation of the major customers
Applicable Inapplicable
List of the major suppliers of the Company
Total purchase from the top 5 suppliers (RMB Yuan) 210,163,666.96
Ratio of the total purchase from the top 5 suppliers to the annual total purchase (%) 21.93
Ratio of the total purchase from related parties among the top 5 suppliers to the
2.90
annual total purchase (%)
Information of the top 5 suppliers of the Company
Purchase amount (RMB Ratio to the annual
No. Name of supplier
Yuan) purchase amount (%)
1 1 110,765,902.71 11.56
2 2 27,803,373.75 2.90
3 3 27,186,282.60 2.84
4 4 24,159,603.60 2.52
5 5 20,248,504.30 2.11
Total 210,163,666.96 21.93
Notes of the other situation of the major suppliers
Applicable Inapplicable
3. Expenses
Unit: RMB Yuan
YoY
Item 2023 2022 Notes of the significant changes
+/- (%)
Selling expenses 27,727,538.87 22,718,269.59 22.05
Administrative expenses 71,563,168.70 71,930,327.01 -0.51
Mainly as a result of loss on foreign
Finance expenses 20,028,975.20 390,110.88 5,034.17
exchange in the period.
R&D expenses 61,202,300.78 61,922,089.98 -1.16
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
4. R&D investment
Applicable Inapplicable
Progress Expected impact on
Major R&D Objectives to be
Purpose of the project of the the company's
project name achieved
project future development
Developing products in line with the smart
Expand market Expand market
Innovative home and low-carbon environmental
share, improve share, improve
research and protection, as well as the development of Ongoing
company revenue company revenue
development automatic coffee machines and clothing care
and profit and profit
products
R&D personnel of the Company
2023 2022 +/- (%)
Number of the R&D personnel (person) 378 341 10.85
Ratio to the R&D personnel (%) 10.13 10.79 -0.66
Educational background of the R&D personnel
Master or above 4 2 100.00
Undergraduate 85 69 23.19
College graduates and below 289 270 7.04
Age structure of the R&D personnel
Below 30 141 114 23.68
30~40 115 105 9.52
Above 40 122 122 0.00
R&D investment of the Company
2023 2022 +/- (%)
Investment amount of the R&D (RMB Yuan) 61,202,300.78 61,922,089.98 -1.16
Ratio of the R&D investment to the operating revenue (%) 4.09 3.91 0.18
Amount of the capitalized R&D investment (RMB Yuan) 0.00 0.00 0.00
Ratio of the capitalized R&D investment to the R&D
0.00 0.00 0.00
investment
Reason for any significant change in the R&D personnel structure, as well as the impact:
Applicable Inapplicable
Reason of remarkable changes over the last year of the ratio of the total R&D investment amount to the operating
revenue
Applicable Inapplicable
Explanation of the reasons for the significant change in the capitalization rate of R&D investment and its
reasonableness
Applicable Inapplicable
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
5. Cash flow
Unit: RMB Yuan
Item 2023 2022 +/- (%)
Subtotal of cash inflows from operating activities 1,555,144,708.80 1,909,382,845.61 -18.55
Subtotal of Cash outflows for operating activities 1,432,098,773.19 1,744,607,236.35 -17.91
Net cash flows from operating activities 123,045,935.61 164,775,609.26 -25.33
Subtotal of cash inflows from investing activities 1,152,098,314.62 1,184,676,439.46 -2.75
Subtotal of cash outflows from investing activities 1,181,021,968.66 1,473,142,410.58 -19.83
Net cash flows from investing activities -28,923,654.04 -288,465,971.12 89.97
Subtotal of cash inflows from financing activities 29,733,034.09 223,150,697.05 -86.68
Subtotal of cash outflows from financing activities 136,761,356.83 301,304,952.16 -54.61
Net cash flows from financing activities -107,028,322.74 -78,154,255.11 -36.94
Net increase of cash and cash equivalents -13,701,382.29 -195,339,519.76 92.99
Notes of the major effects on the YoY significant changes occurred of the data above
Applicable Inapplicable
Net cash flows from investing activities: mainly due to the decrease in the purchase of financial products during
the period.
Net cash flows from financing activities: mainly due to the increase in dividend distribution during the period.
Reason for any big difference between the net operating cash flow and the net profit for the reporting period
Applicable Inapplicable
V. Analysis of the non-core business
Applicable Inapplicable
Unit: RMB Yuan
Ratio to the total Recurring or
Amount Notes of the causes
profits amount (%) not
Income from settled forward forex contracts
Investment income 34,242,870.37 26.43 and financial products, as well as accrued Not
interest on term deposits
Mainly due to losses on the evaluation of
Gain from changes in
-1,484,755.55 -1.15 forward foreign exchange and financial Not
fair value
products.
Loss on credit Withdrawal of impairment allowances for
-2,010,093.67 -1.55 Not
impairment accounts receivable
Loss on asset Increase in inventory valuation allowances
-7,001,664.06 -5.40 Not
impairment and fixed asset impairment allowances
Mainly due to the reduction in the carrying
Gain on disposal of value of right-of-use assets due to the
12,237,257.34 9.44 Not
assets reduction in the scope of leases as a result
of changes in leases in accordance with
17
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Ratio to the total Recurring or
Amount Notes of the causes
profits amount (%) not
ASBE No. 21 - Leases, the recognition of
gains related to partial termination in profit
or loss of RMB9.61 million and gains on
disposal of property, plant and equipment in
the current period.
Mainly due to the transfer of no-transaction
customer advance receipts clearance, order
cancellation customer compensation
Non-operating income 6,015,235.74 4.64 Not
income, and the receipt of Tang Hai case
settlement money by the subsidiary Tsann
Kuen Shanghai(TKS)
Non-operating
541,357.59 0.42 Mainly due to the donation Not
expenses
VI. Assets and liabilities
1. Significant changes in asset composition
Unit: RMB Yuan
31 December 2022 1 January 2022
As a As a Change in
Item percentage percentage percentage Reason for any significant change
Amount Amount (%)
of total of total
assets (%) assets (%)
Cash and cash
567,162,576.77 21.90 576,867,829.77 22.12 -0.22
equivalents
Mainly due to the increase in accounts
receivable as a result of the increase in
Accounts
196,956,220.12 7.60 95,950,882.88 3.68 3.92 revenue in the fourth quarter of the
receivable
current period as compared to the
same period last year
Contract assets
Mainly due to an increase in export tax
Other receivables 23,318,410.66 0.90 15,425,312.61 0.59 0.31
refunds receivable
Inventories 192,409,333.82 7.43 180,065,428.49 6.91 0.52
Mainly due to the purchase of
Debenture three-year fixed deposits in the current
100,076,779.20 3.86 0.00 0.00 3.86
investment period, which was not the case in the
same period last year
Investment
18,464,309.18 0.71 19,148,198.30 0.73 -0.02
properties
Long-term equity
18
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
31 December 2022 1 January 2022
As a As a Change in
Item percentage percentage percentage Reason for any significant change
Amount Amount (%)
of total of total
assets (%) assets (%)
investments
Fixed assets 157,096,267.26 6.06 147,946,111.81 5.67 0.39
Mainly due to the acceptance and
Construction in completion of machinery and
1,773,322.12 0.07 2,656,954.05 0.10 -0.03
progress equipment contracted out during the
period
Use rights assets 368,563,991.68 14.23 525,637,136.84 20.16 -5.93
Mainly attributable to the net
presentation of deferred tax assets and
deferred tax liabilities recognised in
Deferred tax assets 8,384,808.67 0.32 13,678,256.72 0.52 -0.20
accordance with Accounting Standard
for Business Enterprises Interpretation
No. 16
Mainly due to the prepayment of
Other non-current equipment at the beginning of the
136,429.00 0.01 813,512.56 0.03 -0.02
assets period, which was accepted and
completed during the period
Short-term
0.00 0.00 0.00 0.00 0.00
borrowings
Mainly due to the increase in
purchases in the fourth quarter of the
Notes payable 9,137,361.03 0.35 2,630,056.46 0.10 0.25 current period compared to the same
period last year and the increase in the
issuance of bankers' acceptances
Receipts in Mainly caused by the reduction of
2,624,268.27 0.10 7,880,418.84 0.30 -0.20
advance advance received in this period
Contract liabilities 16,485,904.83 0.64 21,522,608.04 0.83 -0.19
Mainly due to the transfer of five-year
deferred income tax from the deferred
Taxes payable 58,404,241.58 2.25 39,426,557.19 1.51 0.74 income tax liabilities account for the
policy demolition and relocation of
Tsann Kuen Shanghai Phase II
Non-current Mainly as a result of the decrease in
liabilities due 883,368.79 0.03 9,494,026.90 0.36 -0.33 the one-year lease liability recognized
within one year in the current period
Long-term
borrowings
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
31 December 2022 1 January 2022
As a As a Change in
Item percentage percentage percentage Reason for any significant change
Amount Amount (%)
of total of total
assets (%) assets (%)
Lease liabilities 392,170,104.23 15.14 534,850,528.45 20.51 -5.37
Mainly due to the decrease in pending
Projected liabilities 0.00 0.00 480,930.00 0.02 -0.02
litigation during the period
Mainly due to the presentation of
deferred tax assets and deferred tax
Deferred tax liabilities recognized by it on a net
0.00 0.00 24,232,846.42 0.93 -0.93
liabilities basis in accordance with ASBE
Interpretation No. 16 in the current
period
Overseas assets account for a higher percentage:
Applicable Inapplicable
Unit: RMB Yuan
Measures
In the
taken to Any major
Operation Company’s
Asset Nature Value Location protect Earnings impairment risk
status net assets
asset or not
(%)
safety
Provision for
impairment of
Small
long term equity
home
Periodic investment has
SCI Investment 175,119,545.24 Indonesia appliance -8,123,532.60 16.29
review been made for a
manufactu
significant
ring
amount of loss in
FY2023.
1) East Sino established an impairment allowance of HKD40,250,855 for the long-term equity investment in SCI in 2023.
Other 2) TKL established impairment allowances of RMB36,476,129.82 in total for the long-term equity investments in East Sino in
information 2023.
The impairment allowances above had no impact on the consolidated profit/loss of the Company.
2. Assets and liabilities measured at fair value
Applicable Inapplicable
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Unit: RMB Yuan
Cumulati Impairme
Profit/loss on ve fair nt
fair value value provided Purchased in this Sold in this Other
Item Opening balance Closing balance
changes in this changes in this reporting period reporting period changes
reporting period charged reporting
to equity period
Financial assets
1. Held-for-tradin
g financial assets
(excluding 568,354,888.89 -778,655.55 517,000,000.00 615,000,000.00 469,576,233.34
derivative
financial assets)
2. Derivative
1,138,900.00 -706,100.00 432,800.00
financial assets
3. Other debt
investments
4. Other equity
instrument 40,000.00 40,000.00
investments
5. Other
non-current
financial assets
Subtotal of
569,533,788.89 -1,484,755.55 517,000,000.00 615,000,000.00 470,049,033.34
financial assets
Investment
properties
Productive
biological assets
Others
Total of the above 569,533,788.89 -1,484,755.55 517,000,000.00 615,000,000.00 470,049,033.34
Financial liabilities
Any significant changes in the major assets’ measurement attributes of the Company in the Reporting Period?
Yes No
3. Restricted asset rights as of the end of the reporting period
Among other monetary funds, RMB5,352,305.24 is the letter of credit deposit. Other than the mentioned restricted
funds, the Company does not have other funds with restrictions or potential recovery risks due to mortgage,
pledge, or freezing in the currency funds at the end of the period.
VII. Investments made
1. Total investments made
Applicable Inapplicable
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2. Significant equity investments made in this reporting period
Applicable Inapplicable
3. Significant non-equity investments ongoing in this reporting period
Applicable Inapplicable
4. Financial investments
(1) Securities investments
Applicable Inapplicable
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(2) Investment in derivative financial instruments
Applicable Inapplicable
1) Investments in derivatives for hedging purposes during the reporting period
Applicable Inapplicable
Unit: RMB’0,000
Types of Derivatives Initial Amount at Gains or losses Accumulated Amount Amount sold Amount at Investment amount as a percentage
Investments investment begin of period on changes in fair fair value acquired during during the end of of the company's net assets at the
amount value during the changes the reporting reporting period end of the reporting period (%)
period included in period period
equity
Forward foreign
46,316.63 6,361.56 -70.61 0.00 39,955.07 39,194.04 7,122.59 6.63
exchange
Total 46,316.63 6,361.56 -70.61 0.00 39,955.07 39,194.04 7,122.59 6.63
A description of the accounting policies and specific
principles of accounting for hedging operations during the
N/A
reporting period, and whether there have been any
significant changes from the previous reporting period
Actual profit or loss for the reporting period The loss on the delivered portion of the investment derivatives for the reporting period was RMB1,038.9 thousand and the
assessed loss on the undelivered portion was RMB706.1 thousand, of which the assessed gain on the undelivered forward
exchange of the investment derivatives for the previous year was RMB1,138.9 thousand.
Illustration of hedging effectiveness The Company uses hedging as a means to avoid and prevent the risk of exchange rate fluctuations for the purpose of carrying out
derivatives trading business is conducive to avoiding the risk of exchange rate fluctuations and enhancing financial soundness.
Sources of funding for derivative investments Own funds
Risk analysis of derivative positions and description of 1. Risk analysis of derivative positions: exchange gains or losses arising from the difference between the contracted exchange
control measures for the reporting period (including but rate on the delivery date and the market rate on the delivery date.
not limited to market risk, liquidity risk, credit risk, 2. Control measures.
operational risk, legal risk, etc.) (1) Principles: The Company's financial derivative operations are all for hedging purposes and it is not allowed to engage in
non-hedging transactional operations; the Company shall not engage in complex derivative transactions beyond the actual needs
of its operations and shall not engage in derivative speculation under the pretext of hedging; the total amount of the Company's
overall hedging contracts shall not exceed the net exposure of existing assets and liabilities plus the net exposure of the
Company's assets and liabilities arising from its operations in the coming year.
(2) Job requirements: Personnel involved in investments should fully understand the risks of derivative investments and strictly
implement the business operation and risk management system for derivative investments.
(3) Operational norms: Before the company carries out derivative investments, it should be reasonably equipped with
professional personnel in investment decision-making, business operation and risk control, and should compare and request
quotations between multiple markets and multiple products. The company should strictly control the types and scale of
derivative investments and use OTC-traded derivatives as far as possible.
(4) Regular evaluation: Derivative investments shall be evaluated at least twice a month and the evaluation report shall be sent to
the senior management authorized by the Board of Directors. A report on the status of the Company's financial derivative
investment transactions must be submitted to the Board of Directors once a year. Each subsidiary of the Company is only
required to report to the Board of Directors of that subsidiary.
(5) Stop Loss Point: The maximum loss limit of a single derivative investment and the maximum loss limit of all investments
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
shall not exceed 20% of the total amount of the investment.
(6) Audit system: The audit department of the Company shall audit derivative transactions on a regular basis and prepare reports
and hand in to the relevant units.
Changes in the market price of the invested derivative or (1) The impact loss on the delivered portion of the investment derivatives for the reporting period was RMB1,038.9 thousand
the fair value of the product during the reporting period, and the assessed loss on the undelivered portion was RMB706.1 thousand, of which the assessed gain on the undelivered
and the analysis of the fair value of the derivative should forward exchange of the investment derivatives for the previous year was RMB1,138.9 thousand.
disclose the specific methodology used and the setting of (2) The original contracted banks provided bank estimates of the current exchange rate of the contracted outstanding forward
relevant assumptions and parameters exchange settlement transactions on the last trading day of each month.
(3) Gains or losses on changes in fair value are recognized on the basis of the difference between the contracted amount
outstanding as at the end of the month * the exchange rate in the estimation table.
Litigation involved N/A
Date of Disclosure of Board Announcement for Approval
2023-3-7
of Derivative Investments
Date of disclosure of announcement of shareholders'
meeting for approval of derivative investments 2023-5-20
Special Opinion of Independent Directors on the The Company has conducted rigorous internal assessments for its financial derivatives business and established corresponding
Company's Derivative Investments and Risk Control regulatory mechanisms. We are of the view that the financial derivatives business conducted by the Company is closely related
to its daily operation needs, with controllable risks and in compliance with the relevant provisions of the relevant laws and
regulations.
(2) Derivative investments for speculative purposes during the reporting period
Applicable Inapplicable
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
5. Use of funds raised
Applicable Inapplicable
VIII. Sale of major assets and equity interests
1. Sale of major assets
Applicable Inapplicable
2. Sale of major equity interests
Applicable Inapplicable
IX. Main controlled and joint stock companies
Applicable Inapplicable
Main subsidiaries and joint stock companies with over 10% effect on the Company’s net profit
Unit: RMB Yuan
Relationship
Company Main business Registered Operating Operating
with the Total assets Net assets Net profits
name scope capital revenues profits
Company
Small home
USD160
TKL Subsidiary appliance 2,330,577,511.67 1,368,755,707.09 1,352,725,459.57 77,514,753.82 73,243,840.32
million
manufacturing
Subsidiaries obtained or disposed in this reporting period
Applicable Inapplicable
Name of company Mode of acquisition and disposal of Impact on overall production
subsidiaries during the reporting period operations and results
Tsannkuen Edge Cancelled The impact on the net profit of the
Intelligence Co., Ltd. listed company for the reporting
period was RMB153,965.57 Yuan.
X. Structured bodies controlled by the Company
Applicable Inapplicable
XI. Outlook of the Company’s future development
A. Future Development Strategy
(1) Strategic customer deep-dive and expansion of new clients
Integration of merchandising, sales, research and development of three core systems, the establishment of
professional R&D technical service system, precipitation of 45 years of small household appliances design and
25
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
manufacturing based on the deep-rooted professional design of the product platform. In-depth study of consumer
habits and culture in various regions of the world, from the perspective of merchandising to provide customers
with optimised solutions to meet market demand and even lead the market demand, the core strategy of the
enterprise is to work closely with customers to create a competitive advantage in product value, and to launch
products to meet the needs of customer markets. In the customer market management, to achieve resource focus
on strategic customer co-operation and input, customer market-oriented input, effective resources into the strategic
customers in line with our future development, the formation of mutually beneficial win-win business partners. At
the same time to expand new markets and new customer order opportunities, cultivate potential emerging
customers.
(2) Expansion of Tsann Kuen EPA brand management in the Chinese market
Enhance the references of intelligent operation, scene IOT, 5G and other technologies to meet people's demand for
high-quality and convenient life, launch convenient, intelligent, personal and healthy home appliance product
series, establish an independent R&D system for domestic sales products, and focus on investment in brand
strategy and the development of intelligent home appliances.
China market development: online and offline marketing pipelines go hand in hand, OBM and ODM product
segregation jointly promote the development of focusing on new consumer groups, new channels, new customer
expansion, consumer-centric brand building strategy.
Tsann Kuen EPA: Professional, value, premium, quality.
(3) Specialising in manufacturing upgrades and strategic supply chain placement
With the integration of customer area and product line, we focus on the core parts of intelligent manufacturing
upgrading and transformation, deep ploughing into product technology and production process, focusing on
professional manufacturing to win the recognition and satisfaction of customers and consumers. The company
adopts digital system upgrade management, introduces new material, new technology, new technology, new
equipment, lean manufacturing equipment, improve production yield and efficiency, achieve the specialized
manufacturing production, drive the park supply chain manufacturing capacity and supporting capacity upgrade;
at the same time, start the upgrade construction of Tsann Kuen Industrial Park, cultivate supply chain strategic
cooperation ecosystem, achieve precise matching of supply and demand, organization of high-efficiency synergy,
IT system support, and make a solid foundation for the future development of the enterprise. The future
development of the enterprise to make a solid foundation.
(4) Expanding Tsann Kuen Group's domestic and international business development with innovative
design and specialized manufacturing based on small home appliances as its core business
Global supply chain system fission and restructuring, the company firmly grasp the 45 years of small household
appliances innovative design and specialized manufacturing for the industry, strong development of Xiamen Huli
and Shanghai Jiading two places of the business structure, to provide a strong business support platform for the
Chinese market, and at the same time, using Xiamen Huli and Shanghai Jiading local development of regional
advantageous industries to form the Tsann Kuen business development model; the implementation of the
26
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
decentralized market regional decentralization strategy, and further development of Indonesia Tsann Kuen
overseas manufacturing base, accelerate the supply chain of Indonesia manufacturing base and the integration of
the independent market, and actively deal with international trade barriers, make full use of the advantages of
regional cooperation of the "One Belt, One Road" strategy, seize the opportunity of overseas market development,
construct and improve the Tsann Kuen Group's domestic and foreign manufacturing and commercial development
of the model of integration and mutual promotion.
B. Key risk factors for future development
(1) International aspects
Global supply chain system restructuring and reshaping, Russia-Ukraine war situation is unclear, international
trade protectionism rises, tariffs and other barriers such as technical standards, intellectual property protection,
anti-dumping and other barriers to intensification of the international environment faced by the small home
appliance industry is more complex.
By the slow recovery of the international economy, increased exchange rate fluctuations, rising comprehensive
manufacturing costs, global inflationary pressures and other impacts are difficult to alleviate in the short term, the
international market demand, the decline in consumer power, will be faced with the risk of a decline in demand in
the international market resulting in sales revenue is not as good as growth expectations.
At the same time, the company will further develop the overseas manufacturing base of Indonesia Tsann Kuen,
accelerate the integration of supply chain and independent market of Indonesia manufacturing base, fully use the
advantages of regional cooperation of the "Belt and Road" strategy, and seize the development opportunities of
overseas market.
(2) Domestic aspects
The increasing cost of domestic labor, coupled with the age structure of the manufacturing workforce, and the
shift of human resources to the manufacturing sector, has affected the complete inheritance structure and upgrade
development of manufacturing capabilities, exacerbated the fracturing of the global supply chain and weakened
the dominant position of Chinese manufacturing and reduced competitiveness in the international market. The
company to promote the specialized automated manufacturing system, drive the supply chain supporting upgrade,
and constantly improve the production and manufacturing operating environment, promote the talent training and
retention policy and strengthen the corporate culture construction, the construction of the core organization talent
force structure construction.
(3) Exchange rate fluctuation
The volatility of the RMB exchange rate is exacerbated by the volatility and uncertainty of the exchange rates of
major global currencies, as well as the huge liquidity of China's cross-border capital. At present, the company's
products are mainly exported and exchange rate fluctuations have a significant impact on the company's business
activities. The main measures taken are: using financial instruments to hedge exchange rate risks and taking into
full consideration the impact of exchange rate risks when receiving orders, as well as adopting RMB and foreign
27
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
currency transactions for purchasing materials to transfer and offset exchange rate risks.
(4) Energy supply structure and environmental protection and low carbon
Global energy saving, green, environmental protection and low carbon mainstream to promote the direction of
production processes and product development, to protect the environment and public health is the enterprise must
actively respond to the development trend; the company has been laid out to "green energy saving and health" as
the product development strategy, and at the same time continue to lean process included in the enterprise's core
strategy, the introduction of environmentally friendly new materials, automation investment and environmental
process technology to enhance the company's products green energy saving and healthy development. The
introduction of environmentally friendly new materials, investment in automation, and improvement of
environmentally friendly process technology continue to promote the green, energy-saving and healthy
development of the company's products.
(5) The impact of global trade restrictions and opening up
After the opening of the global trade face-to-face international business activities are reproduced frequently, the
global economy is gradually recovering, the global supply chain system has changed, people's consumerism and
consumption power has also been a big change, the development of enterprises to bring profound opportunities
and challenges. The company's business team has organized many American and European business activities,
actively participate in domestic and international home appliance exhibition and marketing platform, while
inviting a number of strategic customers to in-depth research and consultation of the factory, to carry out close
business cooperation, rooted in the innovative design of small household appliances and specialized in
manufacturing, and customers together with the expansion of the global sales market, and at the same time,
increase the strength of the development of the Chinese market.
C. Industry trends and market outlook
Entering the era of wireless, information and intelligence, smart home appliances have driven the development
and transformation of small household appliances.
(1) Europe and the United States for the main consumer market of small household appliances, the average
number of small household appliances per household with a large number and relatively short use cycle,
replacement demand market, Southeast Asia and the Middle East market has a high attractiveness and
development potential. Global small home appliance market demand long-term stable trend, at the same time with
the economic growth, people's living standards and international market environmental standards, the formation of
intelligent, large-scale and energy-saving and environmentally friendly small home appliances has become the
general trend.
(2) China is the main production base of small home appliances, in terms of labor, cost, technology and industrial
support advantages, to undertake the world's major small home appliance production business. Strength of the
major appliance manufacturers and international brands have invested in the small home appliance market, small
home appliance market competition is more intense, the business segment will enter the professional, systematic,
branded operation to compete for more market share. Relying on capital and R&D advantages, a number of
28
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
competing enterprises with relatively weak strength, lack of R&D and cost advantages as well as lack of market
management will be gradually eliminated.
(3) China's domestic market continues to be positive. China's home appliance industry has entered the era of brand
winning, unlike traditional home appliances, small home appliance sales in China is still in the growth stage, with
the change in consumer attitudes, the listing and popularization of more new products, and the upgrading of the
original products, small home appliances in the domestic market demand will continue to grow, China's small
home appliance industry has a broad market development prospect.
XII. Visits paid to the Company for purposes of research, communication, interview, etc. in
this reporting period
Applicable Inapplicable
Index to
Place of Type of
Date of visit Way of visit Visitor Contents and materials provided main inquiry
visit visitor
information
10 February The B-share reform issues, conversion status, no
By phone Individual Mr. Teng
2023 Company information provided.
10 February The Corporate finance issues, switchboard situation, no
By phone Individual Mr. Cai
2023 Company information provided.
Ask the company to send entity annual report.
29 March The
By phone Individual Mr. Ni b-share reform issue. Provide physical copies of
2023 Company annual reports for recent years.
29 March The Asked about the company's dividends, production
By phone Individual Mr. Yang
2023 Company and operations. No information provided.
Asked about the company's dividend, production
The
12 April 2023 By phone Individual Mr. Yang and operation. b-share reform issues. No
Company information provided.
Asked about the company's dividend, production
The
12 April 2023 By phone Individual Mr. Ding and operation, internal and external sales. b-share
Company reform issues. No information provided.
The company was asked whether the high
The
02 June 2023 By phone Individual Mr. Liu percentage of dividends was sustainable and no
Company information was provided.
Asked about the continuation of the company's
The
19 July 2023 By phone Individual Mr. Wang dividend, production and operations, and B-share
Company reform. No information provided.
Asked about the company's dividend policy, the
01 September The desire to maintain a high percentage of dividends,
By phone Individual Mr. Feng
2023 Company and the company's expansion of domestic sales
issues. No information provided.
Inquired about the company's production and
14 September The operation, zero transaction matters on 12
By phone Individual Mr. Li
2023 Company September, the impact of the appreciation of the
dollar on the company, no information provided.
Asked about the company's production and
19 September The
By phone Individual Mr. Jin operation, B-share reform issues. No information
2023 Company provided.
Inquired about the company's domestic market and
24 November The hoped that the company would strengthen its
By phone Individual Mr. Feng
2023 Company domestic market development. No information
provided.
29
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section IV. Corporate Governance
I. Basic details of corporate governance
During the reporting period, the Company standardize its operations strictly in accordance with requirements of
relevant law and rules of Company Law, Securities Law, Code of Corporate Governance for Listed Companies in
China, Rules for Listing Shares at Shenzhen Stock Exchange and so on, and endlessly amplified and perfected
administration structure and corporate system of the Company as well as established relatively accomplished
corporate governance structure. According to relevant regulations of CSRC, the Company completed the
establishment of Accountability System for Material Error in Annual Report Information Disclosure, and strictly
in line with relevant regulations in the process of disclosing this annual report. Currently, the situation of
corporate governance structure basically accorded with regulations stipulated in regulatory documents on
governance of listed companies reported by CSRC. There were no governance problems remained unsolved.
The governance of the Company is as follows:
1. Shareholders and Shareholders’ General Meeting
The Company convened Shareholders’ General Meeting in line with Articles of Association of the Company and
Rules of Procedures for Shareholders’ General Meeting, treated all shareholders with equity, guaranteed middle
and small shareholders enjoy equal status and ensured all shareholders be able to exercise their rights.
2. Controlling shareholders and the Company
Controlling shareholders were strictly in accordance with requirements to exercise rights of promoters and
assumed responsibilities. The Company realized independence between controlling shareholder and listed
companies in business, assets, agencies and finance; and independent operation between the Board of Directors of
the Company, the Supervisory Board and internal agency which ensured independence in accounting, assuming
responsibility and bearing risks, so as to ensure legal rights and interests of investors.
3. Directors and the Board of Directors
The Company strictly in accordance with election procedure of directors in Articles of Association of the
Company to elect directors that the number of directors and the structure of the Board of Directors were in line
with requirements of laws and regulations. The Board of Directors earnestly executed Rules of Procedure for the
Board of Directors so as to guaranteed efficient operation and scientific strategic decision. All directors of the
Company performed their responsibilities honestly, sincerely and assiduously, presented the Board of Directors,
the Shareholders’ General Meeting seriously, and participated in relevant trains actively.
4. Supervisors and the Supervisory Board
The Supervisory Board of the Company strictly in line with relevant provisions of Company Law and the Articles
of Association of the Company that the number of supervisors and the structure of the Supervisory Board were in
accordance with requirements of laws and regulations. All supervisors exercised the Rules of Procedure for the
30
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Supervisory Board, earnestly performed their responsibilities. In light of the responsibility for shareholders, all
supervisors conducted inspection and supervision to the legitimacy corporate finance of the Company and other
significant decisions, legally performed responsibilities to directors of the Company and senior management and
supervised the implement of resolutions of the Board of Directors and Shareholders’ General Meeting.
5. Information disclosure and transparency
The Company strictly in accordance with requirements of relevant provisions and regulatory documents such as
Rules for Listing Shares at Shenzhen Stock Exchange, Self-Regulatory Guidelines for Listed Companies No.5 -
Information Disclosure Management, performed responsibilities of information disclosure of the Company
truthfully, accurately, timely and completely, and then guaranteed the equal opportunity of all shareholders of the
Company to gain relevant information of the Company.
6. There isn’t any problem on horizontal competition of the Company
In the reporting period, the Company continuing and strictly in accordance with Company Law, Securities Law,
Basic Standards for Enterprise Internal Control, Supporting Guidelines for Corporate Internal Control as well as
requirements of regulated documents of corporate governance for listed companies published by CSRC, endlessly
accomplished corporate governance structure, actively enforced corporate governance work, and gradually
perfected corporate governance and internal control system, intensified supervision of internal control, promoted
operation efficiency, operation regulation and corporate governance level, endeavor to seek optimized profit and
earnestly protected legal profit of minority shareholders.
Whether there are material differences between the actual state of corporate governance and the provisions on
governance of listed companies issued by laws, administrative regulations and the CSRC
Yes No
II. Independence from the controlling shareholder and actual controller in asset, personnel,
finance, organization and business
The Company is independent from its controlling shareholder in aspects such as business, personnel, assets,
organization and finance.
III. Horizontal competition
Applicable Inapplicable
IV. Annual and special meetings of shareholders convened during this reporting period
1. Meetings of shareholders convened during this reporting period
Investor participation Index to meeting
Meeting Type Convened date Disclosure date
ratio resolution
2022 Annual
Meeting of Annual 45.90% 19 May 2023 20 May 2023 www.cninfo.com.cn
Shareholders
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Investor participation Index to meeting
Meeting Type Convened date Disclosure date
ratio resolution
2023 First Interim
Interim 45.14% 28 July 2023 29 July 2023 www.cninfo.com.cn
General Meeting
2. Special meetings of shareholders convened at the request of preference shareholders with resumed voting
rights
Applicable Inapplicable
32
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
V. Directors, supervisors and executive officers
1. Basic information
Restricted Reasons
Opening Increase Decrease Other Closing
Stock shares in this in this for the
Starting date Ending date shareholding changes shareholding
Name Office title Incumbent/former Gender Age reporting reporting
of tenure of tenure options granted share
(share) period period (share) (share)
(share) (share) (share) changes
Chairman of
Cai Incumbent Male 67 2021-05-19 2026-5-18 0 0 0 0 0 0 0
the Board &
Yuansong
GM
Lin Jidian Director Incumbent Male 55 2020-04-24 2026-5-18 0 0 0 0 0 0 0
Wang Incumbent Male 55 2020-04-24 2026-5-18 0 0 0 0 0 0 0
Director
Youliang
Cai Incumbent Male 39 2022-05-13 2026-5-18 0 0 0 0 0 0 0
Director
Bingfeng
Ge Independent Incumbent Female 61 2017-04-06 2023-5-19 0 0 0 0 0 0 0
Xiaoping director
Independent Incumbent Male 54 2020-04-24 2026-5-18 0 0 0 0 0 0 0
Liu Luhua
director
Independent Incumbent Male 42 2020-04-24 2026-5-18 0 0 0 0 0 0 0
Wu Yibing
director
Tang Independent Incumbent Male 58 2023-05-19 2026-5-18 0 0 0 0 0 0 0
Jinmu director
Supervisory
Yang Incumbent Male 59 2020-04-24 2026-5-18 0 0 0 0 0 0 0
Board
Yongquan
chairman
Ding Incumbent Male 58 2019-10-22 2026-5-18 0 0 0 0 0 0 0
Supervisor
Hongming
Zheng Incumbent Female 48 2016-06-01 2026-5-18 0 0 0 0 0 0 0
Supervisor
Caiyun
Financial Incumbent Male 44 2019-03-29 0 0 0 0 0 0 0
Wu Jianhua
Chief
Sun Board Incumbent Female 50 2011-04-23 0 0 0 0 0 0 0
Meimei Secretary
Total -- -- -- -- -- -- --
33
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Indicate by tick mark whether the directors or supervisors left and executive officers were disengaged during the
tenure in this reporting period
Yes No
Ge Xiaoping, an independent director, retired on 19 May 2023 upon the expiry of her term of office.
Changes in directors, supervisors and executive officers
Applicable Inapplicable
Name Office title Type of change Date Reason
Departure on expiry
Ge Xiaoping Independent director 2023-05-19 Departure on expiry of term of office
of term of office
Tang Jinmu Independent director Voted 2023-05-19 Voted
2. Brief biographies
Main working experience of current directors, supervisors and senior management staff
Name Position Educational Main working experience and chief responsibilities in the Company
background
Cai Chairman Graduated 1978.11.2-1987.12 Tsann Kuen (Taiwan) Enterprise Co., Ltd. Manager, General
Yuansong of the from Manager, Home
Board Manchester Appliances/R&D
&GM State Department
University, 1988.1.1-1993.2.16 Tsann Kuen (Xiamen) Electric Appliance GM
Minnesota Co., Ltd.
with a degree
1993.2.16-2002.05.21 Tsann Kuen (China) Enterprise Co., Ltd. Managing director
in Business
Administrati 1997.9.2-now Thermaster Electronic (Xiamen) Ltd. Director
on
2002.5.22-2008.5.24 Tsann Kuen (China) Enterprise Co., Ltd. Chairman of the Board
2002.7.24-2008.7.25 Tsann Kuen (Zhangzhou) Enterprise Co., Chairman of the Board
Ltd.
2011.6-now Sekond Creative Design Co., Ltd. Chairman of the Board
(Taiwan)
2017.4.6-2021.5.19 Tsann Kuen (China) Enterprise Co., Ltd. Director
2017.4.21-2021.7.5 Tsann Kuen (Zhangzhou) Enterprise Co., Director
Ltd.
2018.8.14-now EUPA Industry Corporation Limited (HK) Director
2018.8.14-now Fillman Investments Limited (HK) Director
2018.8.14-now FORDCHEE Development Limited (HK) Director
2020.2.25-now STAR COMGISTIC CAPITAL CO., Director
LTD. (Taiwan)
2018.8.22-now Tsann Kuen Enterprise Co., Ltd. (Taiwan) Director
2020.4.1-now Tsann Kuen China (Shanghai) Enterprise Director
Co., Ltd.
2020.4.9-2022.5.30 Tsann Kuen Japan Co., Ltd. Chairman of the Board
2020.4.24-2021.10.25 Gold Mine Chain Enterprise Co., Ltd Director
2020.4.29-now WISE LAND PROPERTIES LIMITED Director
(HK)
2020.4.29-now WORLD KINGDOM PROPERTIES Director
34
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Name Position Educational Main working experience and chief responsibilities in the Company
background
LIMITED (HK)
2020.4.29-now East Sino Development Limited (HK) Director
2021.5.19-now Orient Star Investments Limited (HK) Director
2021.5.19-now Tsann Kuen (China) Enterprise Co., Ltd. Chairman of the Board &
GM
2021.7.5-now Tsann Kuen (Zhangzhou) Enterprise Co., Chairman of the Board
Ltd.
2021.7.5-2022.7.27 Tsann Kuen (Zhangzhou) South Port Chairman of the Board
Electronics Enterprise Co., Ltd.
2021.07.19-2022.3.17 Shanghai Canxing Trading Co., Ltd. Chairman of the Board
2021.8.04-now PT.STAR COMGISTIC INDONESIA Chairman of the Board
2018.6.23-now Tsann Kuen Investment Co., Ltd. Director
(Taiwan)
Lin Jidian Director Graduated 1996.06-1999.08 Changjia Construction Co., Ltd. Special assistant to GM,
from Audit specialist
Department 1999.08-2000.10
ADDA CORPORATION Manager of Auditing
of Business
Department, assistant to
Management
Chairman of the Board
Tatung
University 2000.10-2002.10 Royal DSM Manager of Auditing
Department, Special
assistant to GM
2002.10-2004.02 GO-IN Technology Co., Ltd. Special assistant to GM,
manager of Administrative
Department, speaker
2004.04-2013.04 General auditor of Yuen Foong Yu Paper Mfg. Co., Ltd, Chief
Administration Officer of YFY Packaging Inc. in East China,
Director of SinoPac Financial Holdings Company Limited, SinoPac
Paper Corporation, Union Paper Corporation, China Color Printing
Co., Ltd., Mitsukoshi Enterprise Co., Ltd., Yeon Technologies Co.,
Ltd., Huaci Bills Co., Ltd., FOONGTONE TECHNOLOGY CO.,
LTD., Belton Co., Ltd. (Taiwan, Japan), YFY Capital Co., Ltd., YFY
Paper Co., Ltd. (Shanghai, Nanjing, Suzhou, Jiaxing, Kunshan), YFY
Paper Mfg. Co., Ltd. (Yangzhou),
YUENFOONGYUFAMILYCARE(KUNSHAN)COLTD, Mitsukoshi
Environmental Protection Engineering Co., Ltd. (Kunshan), Ningbo
Beautone Co., Ltd., Beijing Yingge Digital Co., Ltd., Senior manager
of BOARDTEK ELECTRONICS CORPORATION, supervisor of
Applied Wireless IDentifications Group,Inc.(US) , HOPAX
2013.04-2019.01 Planning Research Department and Vice GM
Auditing Department of TaiPei 101
2019.04-2019.12 Planning Department of HSIN TUNG Vice GM of E-commerce
YANG Co., LTD. (Taiwan) of Business
2019.12-2020.05 Canxing International Travel Service Co., Chairman of the Board
Ltd (Taiwan)
2019.12.07-now Wing Yi International Investment Chairman of the Board
Corporation (Taiwan)
2019.12-2020.03.30 Tsann Kuen Enterprise Co., Ltd. (Taiwan) Vice GM
2020.03.31-now Tsann Kuen Enterprise Co., Ltd. (Taiwan) Chairman of the Board
2020.04.28-2022.12.31 Tsann Kuen Enterprise Co., Ltd. (Taiwan) CEO
2020.03.31-now STAR COMGISTIC CAPITAL CO., Chairman of the Board
35
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Name Position Educational Main working experience and chief responsibilities in the Company
background
LTD. (Taiwan)
2020.01.08-2021.04.01 Tsannkuen Edge Intelligence Co., Ltd. Supervisor
(Taiwan)
2020.04.01-2022.05.31 Tsann Kuen Japan Co., Ltd. Director
2020.04.01-2022.07.27 Tsann Kuen (Zhangzhou) South Port Supervisor
Electronics Enterprise Co., Ltd.
2020.04.01-now Tsann Kuen China (Shanghai) Enterprise Director
Co., Ltd.
2020.04.01-now Tsann Kuen (Zhangzhou) Enterprise Co., Vice Chairman of the
Ltd. Board
2020.04.21-2022.06.01 STARCOMGISTIC SINGAPORE Director
PTE.LTD.
2020.04.01-now Ka Wang Enterprises Limited (Hong Director
Kong)
2020.04.01-now Lung Tai Development Limited (Hong Director
Kong)
2020.04.01-now PROWORLDINTERNATIONALLIMITE Director
D
(BVI)
2020.04.01-now PT. TSANNKUEN PROPERTY Director
DEVELOPMENT INDONESIA
2020.04.21-2021.06.17 STARCOMGISTIC AUSTRALIA PTY Director
LTD
2020.04.20-now Wu Wha Ma International Co., Ltd. Director
(Taiwan)
2020.04.21-now China Global Limited (Hong Kong) Director
2020.04.24-now Gold mine chain enterprise Co., Ltd Chairman of the Board
2020.04.24-now Tsann Kuen (China) Enterprise Co., Ltd. Director
2021.03.11-now Dali Investment Co., Ltd. (Taiwan) Chairman of the Board
2022.06.01-now Tsann Kuen Japan Co., Ltd. Chairman of the Board
Wang Director Graduated 2001.12-2007.06 Tsann Kuen Enterprise Co., Ltd. (Taiwan) Accountant specialist,
Youliang from Griffith section head
University 2007.06-2020.10
Tsann Kuen Enterprise Co., Ltd. (Taiwan) Assistant accounting
with a degree
manager & Acting speaker
in
Accounting, 2010.10-2016.10 Tsann Kuen Enterprise Co., Ltd. (Taiwan) Financial manager
Finance and
Economics 2011.06-2021.03.10 Dali Investment Co., Ltd. (Taiwan) Director
2016.10-2018.12 Tsann Kuen Enterprise Co., Ltd. (Taiwan) Senior manager of Finance
Department
2018.06-now AXA Insurance Agent Co., Ltd. (Taiwan) Director
2018.12-now Tsann Kuen Enterprise Co., Ltd. (Taiwan) Assistant manager of
Finance Department
2019.09.25-now Wu Wha Ma International Co., Ltd. Supervisor
(Taiwan)
2019.01.31-now Wing Yi International Investment Supervisor
Corporation (Taiwan)
2020.04.24-now Gold mine chain enterprise Co., Ltd Supervisor
36
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Name Position Educational Main working experience and chief responsibilities in the Company
background
2021.03.11-now Dali Investment Co., Ltd. (Taiwan) Supervisor
2020.04.24-now Tsann Kuen (China) Enterprise Co., Ltd. Director
2022.11.18-now Tsann Kuen Japan Co., Ltd. Director
Cai Director Graduated 2013.04.22-2013.12.31 Thermaster Electronic (Xiamen) Ltd. Project staff
Bingfeng with an MSc
2014.01.02-2016.12.31 Tsann Kuen (Zhangzhou) Enterprise Co., Deputy Director of
in
International Ltd. Ministry of Commerce in
Business and European Region
Management 2017.01.01-2022.03.21
from Tsannkuen Edge Intelligence Co., Ltd. Deputy Director of
Bradford Ministry of Commerce in
University, European Region
Bradford, 2020.04.30-now Xiamen Tsannkuen Property Services Co., Chairman and GM
UK Ltd.
2020.05.09-2022.03.17 Shanghai Canxing Trading Co., Ltd. Director
2020.05.12-now Tsann Kuen (Zhangzhou) Enterprise Co., Director
Ltd.
2020.05.13-2022.07.27 Tsann Kuen (Zhangzhou) South Port Director
Electronics Enterprise Co., Ltd.
2021.08.19- 2023.6.7 Tsannkuen Edge Intelligence Co., Ltd. Chairman of the Board
2022.05.13-now Tsann Kuen (China) Enterprise Co., Ltd. Director
Liu Luhua Independ Graduated 1991.09-1992.12 Xiamen Intermediate People’s Court Clerk
ent from Xiamen
1992.12-1993.06 Orient (Xiamen) Golf Co., Ltd. Legal manager
director University
with a master 1993.06.now Fujian Tianyi Law Firm Partner, vice director
degree in
Civil and 2002.03-now Xiamen Arbitration Commission Arbitrator
Commerce
Law 2009.08-2016.03 Xiamen XGMA Machinery Co., Ltd. Independent director
2012.05-now Part-time associate
Xiamen University Tan Kah Kee College
professor
2013.04-2016.12 DAZHOU XINGYE HOLDINGS CO., Independent director
LTD
2014.04-2020.01 Xiamen Port Development Co.,Ltd Independent director
2020.07.31-now Xiamen Chengtun Mining Co., Ltd. Independent director
2020.04.24-now Tsann Kuen (China) Enterprise Co., Ltd. Independent director
Wu Independ Graduated 2010.08.26-2014.08.01 Accounting Department of School of Assistant professor
Yibing ent from Fudan Management, Xiamen University
director University 2014.08.01-now
Accounting Department of School of Associate professor
with a doctor
Management, Xiamen University
degree in
Accounting 2019.12.30-2022.4.1 Shanghai Kinlita Chemical Co., Ltd. Independent director
2019.07.18-now Leedarson IoT Technology Inc. Independent director
2019.12.28-now KUK RESOURCES-SAVING Independent director
TECHNOLOGY CO., LTD.
2020.04.24-now Tsann Kuen (China) Enterprise Co., Ltd. Independent director
2022.01.13-now G-bits Network Technology (Xiamen) Independent director
Co., Ltd.
Tang Independ Graduated 1988.7-1994.6 Xiamen Municipal Finance Bureau Section
37
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Name Position Educational Main working experience and chief responsibilities in the Company
background
Jinmu ent from Xiamen 1994.6-1998.12 Xiamen Accounting Firm Deputy director
director University,
PhD in 1996.7-1998.12 Xiamen Asset Appraisal Institute Head of Office
Finance, 1999.1-2001.12
Senior Xiamen Tianjian Huatian Accounting Director, Partner
Accountant Firm
2002.1-now Xiamen Asset Appraisal Association Secretary-general
2002.1-now Xiamen Association of Certified Public Secretary-general
Accountants
2023.5.-now Tsann Kuen (China) Enterprise Co., Ltd. Independent director
2015.1.-2019.11 Xingye Leather Technology Co. Independent director
2016.2-2021.3 Xiamen Guangpu Electronics Co. Independent director
2015.11 -2021.5 Xiamen Redphase Power Equipment Co. Independent director
2023.9.27-now Fujian Jinlin Forest Industry Co. Independent director
Yang Superviso Graduated 1996.07-2003.06 Deloitte Taiwan Audit manager
Yongquan r from School
2003.06-2003.10 Deloitte Taiwan Audit manager
of
Accounting 2003.10-2005.02 Tsann Kuen Enterprise Co., Ltd. (Taiwan) GM of Accounting
Department, Department
National
Taiwan 2005.03-2006.07 Tsann Kuen Enterprise Co., Ltd. (Taiwan) Senior manager of
University Accounting Department
2006.08-2007.10 Tsann Kuen Enterprise Co., Ltd. (Taiwan) Assistant manager of
Accounting Department
2007.11-2009.12 Tsann Kuen Enterprise Co., Ltd. (Taiwan) Senior assistant manager
of Accounting Department
2009.12- 2018.12 Tsann Kuen Enterprise Co., Ltd. (Taiwan) Vice GM of Accounting
Department
2012.07.24-2019.10.22 Tsann Kuen (China) Enterprise Co., Ltd. Supervisor
2014.06.11-2019.09.13 PT.STAR COMGISTIC INDONESIA Supervisor
2014.07.08-2019.09.09 Shanghai Canxing Trading Co., Ltd. Director
2015.01.21-2019.09.09 Tsann Kuen China (Shanghai) Enterprise Director
Co., Ltd.
2016.04.07-2020.01.07 Tsannkuen Edge Intelligence Co., Ltd. Supervisor
(Taiwan)
2016.08.04-2019.09.13 PT.STAR COMGISTIC PRORERTY Supervisor
DEVELOPMENT INDONESIA
2017.05.28-2019.09.09 Tsann Kuen (Zhangzhou) South Port Director
Electronics Enterprise Co., Ltd.
2018.06.15-2019.09.09 Tsann Kuen (Zhangzhou) Investment Co., Supervisor
Ltd.
2018.08.15-2019.04.08 Tsann Kuen (Zhangzhou) Enterprise Co., Supervisor
Ltd.
2018.12.14-2019.09.30 Tsann Kuen Enterprise Co., Ltd. (Taiwan) Vice GM of Business
Management Department
2019.04.08-2019.09.09 Tsann Kuen (Zhangzhou) Enterprise Co., Vice Chairman of the
Ltd. Board
38
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Name Position Educational Main working experience and chief responsibilities in the Company
background
2019.06.21-2019.09.05 Xiamen Tsannkuen Property Services Co., Chairman of the Board
Ltd.
2020.01.16-now Tsann Kuen Enterprise Co., Ltd. (Taiwan) Vice GM of Accounting
Department
2019.12.23-now STAR COMGISTIC CAPITAL CO., Vice GM of Business
LTD. (Taiwan) Management Department
2020.04.24-now Tsann Kuen (China) Enterprise Co., Ltd. Supervisory Board
chairman
Ding Superviso Graduated 1991.08.13-2002.10.09 Tsann Kuen Enterprise Co., Ltd. (Taiwan) QRA section manager
Hongming r from 2002.10.10-2003.08.31
Department Tsann Kuen (China) Enterprise Co., Ltd. Vice manager of glass
of Industrial factory
Engineering 2003.09.01-2005.05.26 Tsann Kuen China (Shanghai) Enterprise Vice manager of Motor
and Co., Ltd. business department
Management 2005.05.27-2007.01.12
of STUST Tsann Kuen (Zhangzhou) Enterprise Co., Vice manager of Cuisinart
Ltd. factory
2008.01.13-2009.08.31 Tsann Kuen (Zhangzhou) Enterprise Co., Vice manager of Iron
Ltd. business department
2009.09.01-2014.08.31 Tsann Kuen (Zhangzhou) Enterprise Co., Manager of Central Lab
Ltd.
2014.09.01-2015.08.31 PT.STAR COMGISTIC INDONESIA Operations manager
2015.09.01-2016.12.31 Tsann Kuen (Zhangzhou) Enterprise Co., Assistant manager of QRA
Ltd.
2017.01.01-2017.12.31 Tsann Kuen (Zhangzhou) Enterprise Co., Operations assistant
Ltd. manager of PSO
2018.01.01-now Tsann Kuen (Zhangzhou) Enterprise Co., Assistant manager of
Ltd. QRA/Purchasing
Department/laboratory
2019.10.22—now Tsann Kuen (China) Enterprise Co., Ltd. Supervisor
Zheng Superviso Graduated 2021.07.01-now Tsann Kuen (China) Enterprise Co., Ltd. Associate in Finance
Caiyun r from School 2011.06- 2021.07.01 Tsann Kuen (China) Enterprise Co., Ltd. Financial manager
of
Economics 2008.07-2011.05.31 Tsann Kuen (China) Enterprise Co., Ltd. Vice Financial Manager
and
1998.08-2008.06.30 Tsann Kuen (China) Enterprise Co., Ltd. Account Specialist
Management
, Fujian 2014.03.05-2020.4.28 Director
East Sino Development Limited (HK)
Forestry
College 2017.04.28-now Orient Star Investments Limited (HK) Director
2016.03.02-2018.10.30 Xiamen Tsann Kuen Home Appliance Supervisor
Design Co., Ltd.
2018.06.15-2020.4.20 Tsann Kuen (Zhangzhou) Investment Co., Director
Ltd.
2016.06.01-now Tsann Kuen (China) Enterprise Co., Ltd. Staff-representative
Supervisor
2019.9.10-2022.07.27 Tsann Kuen (Zhangzhou) South Port Director
Electronics Enterprise Co., Ltd.
2019.9.10-2020.4.1 Tsann Kuen (Zhangzhou) Enterprise Co., Vice chairman of the
Ltd. Board
2020.4.1-now Tsann Kuen (Zhangzhou) Enterprise Co., Director
39
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Name Position Educational Main working experience and chief responsibilities in the Company
background
Ltd.
2019.09.10-2020.4.1 Shanghai Canxing Trading Co., Ltd. Director
2020.4.1-2022.3.17 Shanghai Canxing Trading Co., Ltd. Supervisor
2019.10.14-now PT.STAR COMGISTIC INDONESIA Supervisor
2019.10.14-now PT.STAR COMGISTIC PRORERTY Supervisor
DEVELOPMENT INDONESIA
Sun Board China 2005.07-2011.04 Tsann Kuen (China) Enterprise Co., Ltd. Securities Representative
Meimei Secretary Institute of 2011.04.23-now
Information Tsann Kuen (China) Enterprise Co., Ltd. Board Secretary
Management
with a degree
in Business
Administrati
on
Wu Financial Graduated 2003.9.1-2006.6.30 Tsann Kuen (Zhangzhou) Enterprise Co., Accounting Department
Jianhua Chief from Ltd. clerk
Department 2006.7.1-2006.12.31
Tsann Kuen (Zhangzhou) Enterprise Co., Head of Cost Section of
of
Ltd. Accounting Department
Accounting
of Fuzhou 2007.1.1-2008.6.30 Tsann Kuen (Zhangzhou) Enterprise Co., Head of General Account
University Ltd. Section of Accounting
Department
2008.7.1-2010.5.31 Tsann Kuen (Zhangzhou) Enterprise Co., Head of Sales Section of
Ltd. Accounting Department
2010.06.01-2014.04.30 Tsann Kuen (Zhangzhou) Enterprise Co., Vice manager of Cost
Ltd. /Accounts Payable in
Accounting Department
2014.05.01-2019.03.21 Tsann Kuen (China) Enterprise Co., Ltd. Vice manager of Cost
/Accounts Payable in
Accounting Department
2019.03.22-now Tsann Kuen (China) Enterprise Co., Ltd. Accounting Department
manager
2019.03.29-now Tsann Kuen (China) Enterprise Co., Ltd. Financial Chief
2019.05.14-now Xiamen Tsann Kuen Property Service Supervisor
Co.,Ltd.
2019.09.10-2020.04.20 Tsann Kuen (Zhangzhou) Investment Co., Supervisor
Ltd.
2019.09.10-now Tsann Kuen (Zhangzhou) Enterprise Co., Supervisor
Ltd.
Posts concurrently held in shareholding entities
Applicable Inapplicable
Starting date of Ending date of Allowance from the
Name Shareholding entity Post
tenure tenure shareholding entity
Cai Yuansong EUPA Industry Corporation Limited (HK) Director 2018-08-14 No
Cai Yuansong Fillman Investments Limited (HK) Director 2018-08-14 No
Cai Yuansong Fordchee Development Limited (HK) Director 2018-08-14 No
40
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
STAR COMGISTIC CAPITAL CO., LTD.
Cai Yuansong Director 2020-02-25 Yes
(Taiwan)
Cai Yuansong Tsann Kuen (Taiwan) Investment Co., Ltd. Director 2018-06-23 No
Chairman of
Lin Jidian China Global Limited (HK) 2020-03-31 Yes
the Board
Lin Jidian Sino Global Development Ltd. (HK) Directort 2020-04-21 No
Deputy
General
Yang STAR COMGISTIC CAPITAL CO., LTD.
Manager, 2019-12-23 Yes
Yongquan (Taiwan)
Operations and
Management
Remark:
Posts held concurrently in other entities
Applicable Inapplicable
Ending Allowance
Starting date
Name Other entity Post date of from other
of tenure
tenure entity
Cai Yuansong Thermaster Electronic (Xiamen) Ltd. Director 1997-09-02 No
Chairman of the
Cai Yuansong Sekond Creative Design Co., Ltd. (Taiwan) 2011-06-01 Yes
Board
Tsann Kuen (Zhangzhou) Enterprise Co., Chairman of the
Cai Yuansong 2021-07-05 No
Ltd. Board
Cai Yuansong Tsann Kuen Enterprise Co., Ltd. (Taiwan) Director 2018-08-22 Yes
Tsann Kuen China (Shanghai) Enterprise
Cai Yuansong Director 2020-04-01 No
Co., Ltd.
2023-09-1
Cai Yuansong Wui Lung Properties Limited (Hong Kong) Director 2020-04-29 No
5
WISE LAND PROPERTIES LIMITED Director
Cai Yuansong 2020-04-29 No
(HK)
Cai Yuansong East Sino Development Limited (HK) Director 2020-04-29 No
Cai Yuansong Orient Star Investments Limited (HK) Director 2021-05-19 No
Chairman of the No
Cai Yuansong PT.STAR COMGISTIC INDONESIA 2021-08-04
Board
Cai Yuansong Tsannkuen Investment Co., Ltd. (Taiwan) Director 2018-06-23 No
Wing Yi International Investment Chairman of the
Lin Jidian 2019-12-27 No
Corporation (Taiwan) Board
Chairman of the
Lin Jidian Tsann Kuen Japan Co., Ltd. 2022-06-01 No
Board
Tsann Kuen China (Shanghai) Enterprise
Lin Jidian Director 2020-04-01 No
Co., Ltd.
Tsann Kuen (Zhangzhou) Enterprise Co., Vice chairman of
Lin Jidian 2020-04-01 No
Ltd. the Board
Lin Jidian Wu Wha Ma International Co., Ltd. (Taiwan) Director 2020-04-20 No
Gold mine chain enterprise Co., Ltd
Lin Jidian Director 2020-04-24 No
(Taiwan)
Chairman of the
Lin Jidian Dali Investment Co., Ltd. (Taiwan) 2021-03-11 No
Board
STAR COMGISTIC CAPITAL CO., LTD. Chairman of the
Lin Jidian 2020-03-31 Yes
(Taiwan) Board
41
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Lin Jidian Ka Wang Enterprises Limited (Hong Kong) Director 2020-04-01 No
Lung Tai Development Limited (Hong Director 2020-04-01 No
Lin Jidian
Kong)
PROWORLDINTERNATIONALLIMITED( Director 2020-04-01 No
Lin Jidian
BVI)
PT. TSANNKUEN PROPERTY Director 2020-04-01 No
Lin Jidian
DEVELOPMENT INDONESIA
Wang
AXA Insurance Agents Limited (Taiwan) Director 2018-06-01 No
Youliang
Wang Associate in
Tsann Kuen (Taiwan) Enterprise Co., Ltd. 2018-12-01 Yes
Youliang Finance
Wang
Wu Wha Ma International Co., Ltd. (Taiwan) Supervisor 2019-09-25 No
Youliang
Wang Wing Yi International Investment
Supervisor 2019-01-31 No
Youliang Corporation (Taiwan)
Wang Gold mine chain enterprise Co., Ltd
Supervisor 2020-04-24 No
Youliang (Taiwan)
Wang
Dali Investment Co., Ltd. (Taiwan) Supervisor 2021-03-11 No
Youliang
Wang
Tsann Kuen Japan Co., Ltd. Director 2022-11-18 No
Youliang
Xiamen Tsannkuen Property Services Co., Chairman and
Cai Bingfeng 2020-04-30 No
Ltd. Managing Director
Tsann Kuen (Zhangzhou) Enterprise Co.,
Cai Bingfeng Director 2020-05-12 No
Ltd.
Chairman of the 2023-06-0
Cai Bingfeng Tsannkuen Edge Intelligence Co., Ltd. 2021-08-19 No
Board 7
Partner, vice
Liu Luhua Fujian Tianyi Law Firm 1993-06-01 Yes
director
Liu Luhua Xiamen Arbitration Commission Arbitrator 2002-03-01 Yes
Part-time associate
Liu Luhua Xiamen University Tan Kah Kee College 2012-05-01 Yes
professor
Independent
Liu Luhua Xiamen Chengtun Mining Co., Ltd. 2020-07-31 Yes
director
Yuanxiang (Xiamen) International Airport Independent
Liu Luhua 2023-05-18 Yes
Co. director
Accounting Department of School of Associate
Wu Yibing 2014-08-01 Yes
Management, Xiamen University professor
Leedarson IoT Technology Inc. Independent
Wu Yibing 2019-07-18 Yes
director
KUK RESOURCES-SAVING Independent
Wu Yibing 2019-12-28 Yes
TECHNOLOGY CO., LTD. director
G-bits Network Technology (Xiamen) Co., Independent
Wu Yibing 2022-01-13 Yes
Ltd. director
Vice GM of
Yang
Tsann Kuen Enterprise Co., Ltd. (Taiwan) Accounting 2020-01-16 Yes
Yongquan
Department
Assistant manager
of Quality
Assurance
Ding Tsann Kuen (Zhangzhou) Enterprise Co.,
Department/Purch 2018-01-01 Yes
Hongming Ltd.
asing
Department/Labor
atory
Zheng Caiyun Orient Star Investments Limited (HK) Director 2017-04-28 No
Zheng Caiyun Tsann Kuen (Zhangzhou) Enterprise Co., Director 2020-04-01 No
42
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Ltd.
Zheng Caiyun PT.STAR COMGISTIC INDONESIA Supervisor 2019-10-14 No
PT.STAR COMGISTIC PRORERTY
Zheng Caiyun Supervisor 2019-10-14 No
DEVELOPMENT INDONESIA
Xiamen Tsannkuen Property Services Co.,
Wu Jianhua Supervisor 2019-05-14 No
Ltd.
Tsann Kuen (Zhangzhou) Enterprise Co.,
Wu Jianhua Supervisor 2019-09-10 No
Ltd.
Remark: None
Punishments imposed in the recent three years by the securities regulators on the incumbent directors, supervisors
and executive officers as well as those who left in this reporting period
Applicable Inapplicable
3. Remuneration of directors, supervisors and executive officers
Decision-making procedure, determination basis and actual remuneration payment of directors, supervisors and
executive officers
According to the Company Law, the Securities Law and other laws and regulations, the remuneration of the
directors and supervisors shall be decided by the Shareholders’ General Meeting, while the remuneration of the
senior management staffs shall be decided by the Board of Directors. And the remuneration of the directors,
supervisors and senior management staffs is decided by referring the market level and according to the Company’s
human resource management system.
Remuneration of directors, supervisors and executive officers in this reporting period
Unit: RMB’0,000
Total before-tax Remuneration
remuneration from related
Name Office title Gender Age Incumbent/former
from the parties of the
Company Company
Cai Yuansong Chairman of the Board & GM Male 67 Incumbent 229.85 Yes
Lin Jidian Director Male 55 Incumbent 3.60 Yes
Wang Youliang Director Male 55 Incumbent 3.60 Yes
Cai Bingfeng Director Male 39 Incumbent 3.60 No
Ge Xiaoping Independent director Female 61 leave 5.77 No
Tang Jinmu Independent director Male 58 Incumbent 7.42 No
Liu Luhua Independent director Male 54 Incumbent 12.00 No
Wu Yibing Independent director Male 42 Incumbent 13.85 No
Yang Yongquan Supervisor Board Chairman Male 59 Incumbent 2.40 Yes
Ding Supervisor
Male 58 Incumbent 56.00 No
Hongming
Zheng Caiyun Supervisor Female 48 Incumbent 27.34 No
Wu Jianhua Financial Chief Male 44 Incumbent 26.82 No
Sun Meimei Board Secretary Female 50 Incumbent 23.09 No
Total -- -- -- -- 415.34 --
VI. Performance of directors in this reporting period
1. Board meetings convened during this reporting period
Meeting Convened date Disclosure date Resolutions
43
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Meeting Convened date Disclosure date Resolutions
The First Board Meeting in 2023 2023-03-04 2023-03-07 See www.cninfo.com.cn
The Second Board Meeting in 2023 2023-04-25 2023-04-26 See www.cninfo.com.cn
The Third Board Meeting in 2023 2023-05-19 2023-05-20 See www.cninfo.com.cn
The First Special Board Meeting in 2023 2023-07-12 2023-07-13 See www.cninfo.com.cn
The Fourth Board Meeting in 2023 2023-08-08 2023-08-09 See www.cninfo.com.cn
The Fifth Board Meeting in 2023 2023-10-27 2023-10-28 See www.cninfo.com.cn
The Sixth Board Meeting in 2023 2023-12-08 2023-12-09 See www.cninfo.com.cn
2. Attendance of directors in board meetings and meetings of shareholders
Attendance of directors in board meetings and meetings of shareholders
Board meeting Absence from
Attendance at Attendance at Shareholders’
director should Attendance at Absence from board meeting
board meeting by board meeting meeting
Director attend in this board meeting board meeting for two
telecommunication through a attended
reporting on site (times) (times) consecutive
(times) proxy (times) (times)
period (times) times
Cai Yuansong 7 7 0 0 0 NO 2
Lin Jidian 7 0 6 1 0 NO 0
Wang Youliang 7 0 6 1 0 NO 0
Cai Bingfeng 7 1 5 1 0 NO 1
Ge Xiaoping 2 2 0 0 0 NO 1
Liu Luhua 7 7 0 0 0 NO 2
Wu Yibing 7 6 1 0 0 NO 1
Tang Jinmu 5 5 0 0 0 NO 2
Explanation of failure to attend two consecutive Board meetings in person: None
3. Objections raised by directors on issues of the Company
Indicate by tick mark whether any directors raised any objections on issues of the Company.
Yes No
44
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
4. Other details about the performance of duties by directors
Indicate by tick mark whether any suggestions from directors were adopted by the Company.
Yes No
Statement of Directors' Recommendations to the Company Adopted or Not Adopted
The directors of the Company have diligently and conscientiously performed their duties and obligations in
accordance with the provisions of the Company Law, the Securities Law, the Articles of Association, the Rules of
Procedure of the Board of Directors, the Rules Governing the Listing of Stocks on the Shenzhen Stock Exchange
and other laws, regulations and systems, and their relevant suggestions on the day-to-day operation and
management of the Company, as well as on matters relating to the periodic reports, have been adopted. In respect
of the motions of the Board of Directors of the Company, on the basis of detailed understanding and full
communication with relevant personnel, they actively expressed their opinions and suggestions, exercised their
powers and played a positive role in promoting the formulation of the Company's decisions. The Independent
Directors issued independent and impartial opinions on the renewal of the appointment of the accounting firm, the
profit distribution plan, the projected annual daily connected transactions and other matters of the Company
during the reporting period, and supervised and verified the disclosure of information, thus safeguarding the
legitimate rights and interests of the Company and the small and medium-sized shareholders.
VII. Performance of duties by specialized committees under the Board during this reporting
period
Other Details about
Number Important
details about issues with
of Convened opinions and
Committee Members Content the objections
meetings date suggestions
performance
convened raised (if any)
of duties
1. The motion on the
controlling subsidiary
Zhangzhou Tsann Kuen
signing the "Supplementary
Memorandum to the
Memorandum of Co-operation
on Investment by Tsann Kuen
2023-07-12 Group in Zhangzhou".
Cai 2.On the motion of controlling
Yuansong, subsidiary Zhangzhou Tsann
Strategy Lin Jidian, Kuen signing the "Transitional
3
Committee Liu Luhua, Plant Lease Contract for
Wu Yibing, Renovation of Tsann Kuen
Tang Jinmu Industrial Park".
Resolution on the Capital
Reduction of Orient Star
2023-08-08
Investment, the Controlling
Grandson Company
Exploration of the company's
2023-12-08 business development strategy
and operational planning
2023-03-04 Proposal for Preliminary
Liu Luhua, Review of the Candidates for
Lin Jidian Directors of the Eleventh
(resigned on Session of the Board of
19 May Directors of the Company and
Nomination,
2023), Ge Their Remuneration
Remuneration
Xiaoping 2
and Appraisal 2023-05-19 1. Election of Convener of the
(resigned on
Committee Specialized Committee of the
19 May
2023), Cai Board of Directors – the Sixth
Yuansong, Nomination, Remuneration
Wu Yibing and Evaluation Committee
2. Proposal on the appointment
45
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Other Details about
Number Important
details about issues with
of Convened opinions and
Committee Members Content the objections
meetings date suggestions
performance
convened raised (if any)
of duties
of Mr. Cai Yuansong as the
general manager of the
Company
2023-03-04 1.2022 Annual Internal Control
Self-Evaluation Report
2.2022 Annual Report and
Report Summary
3.2022 Financial Accounts
Proposal
4.2022 Profit Distribution
Proposal
5.Projected daily connected
transactions for the year 2023
6.Summary report on the audit
work of RSM for the year of
2022
7. Proposal on the renewal of
the appointment of the
accounting firm
8.Proposal on the financial
derivatives transactions of the
Ge Xiaoping controlling subsidiary
(leaving on Zhangzhou Tsann Kuen(TKL)
19 May 9.The motion on the amount of
Audit
2023), Wu 6 entrusted financial
Committee
Yibing, Liu management of the controlling
Luhua, Tang subsidiary Zhangzhou Tsann
Jinmu Kuen(TKL)
10.The motion on the amount
of entrusted financial
management of controlling
grandson company Shanghai
Tsann Kuen (TKS)
2023-04-25 Company's First Quarter
Report 2023
2023-05-19 Election of the Convener of the
Sixth Audit Committee, a
Specialized Committee of the
Board of Directors
2023-08-08 Full text and summary report
of the Company's half-yearly
report for 2023
2023-10-27 Company's third quarterly
report for 2023
2023-12-08 Audit Plan 2024
VIII. Performance of duties by the Supervisory Board
Did the Supervisory Board find any risks to the Company during its supervision in this reporting period?
Yes No
46
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
IX. Employees
1. Number, functions and educational backgrounds of employees
Number of in-service employees of the Company 171
Number of in-service employees of main subsidiaries 3,562
Total number of in-service employees 3,733
Total number of employees with remuneration in this reporting period 3,919
Number of retirees to whom the Company or its main subsidiaries need to pay
0
retirement pension
Function
Category Number of employees
Production 2,531
Sales 104
Technical 407
Financial 45
Administrative 646
Total 3,733
Educational background
Category Number of employees
Doctor 1
Master 10
Bachelor 234
College graduates 300
Below college 3,188
Total 3,733
2. Employee remuneration policy
The Company has established its remuneration system and formulated Remuneration Management Measures and
Performance Appraisal Management Rules based position division according to the Labor Law, the internal HR
Administrative Rules and relevant laws and regulations in line with the Company’s strategic planning, the HR
allocation on the market, the talent demand, job responsibilities and job qualifications. The staff’s remuneration
level has comprehensively taken the Company’s operating conditions, profitability and internal fairness into
consideration based on the position’s value, job performance and personal ability.
3. Employee training plans
1. New staff training (on-site staff/cadres/managers/recruits boot camp).
2. Management cadre training and construction.
3. Job skills upgrading training for employees in various positions.
4. General studies courses to improve the overall quality of staff.
5. Internal instructor training team building and management.
4. Labor outsourcing
Applicable Inapplicable
47
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
X. List of the profits distribution and turning capital reserve into share capital of the
Company
List of the formulation, execution or adjustment of the profits distribution policies, especially the cash dividend
policies
Applicable Inapplicable
The first Board of Directors in 2023 considered and approved the Company's 2022 profit distribution proposal,
and the Company's 2022 annual general meeting held on 19 May 2023 considered and approved the annual profit
distribution proposal: based on the total share capital of 185,391,680 shares as at the end of 2022, a cash dividend
of RMB3.0 (inclusive of tax) per 10 shares was paid to all shareholders of the Company. The formulation of the
cash dividend policy is in line with the Shareholder Return Plan for the next three years (2021-2023) formulated
by the Company. The profit distribution plan was implemented on 16 June 2023 by the Company. There was no
share placement or issuance of new shares during the reporting period.
Special explanation of cash dividend policy
Whether conformed to the regulations of the Articles of association or the
Yes.
requirements of the resolutions of the shareholders’ meeting:
Whether the dividend standard and the proportion were definite and clear: Yes
Whether the relevant decision-making process and the system were complete: Yes
Whether the independent director acted dutifully and exerted the proper
Yes
function:
If the company has not made cash dividends, it should disclose the specific
reasons and the next steps it intends to take to enhance the level of investor N/A
returns:
Whether the medium and small shareholders had the chances to fully express
their suggestions and appeals, of which their legal interest had gained fully Yes
protection:
Whether the conditions and the process met the regulations and was
N/A
transparent of the adjustment or altered of the cash dividend policy:
The Company (including its subsidiaries) made profit in the reporting period and the profits distribution of the
common shares held by the shareholders of the Company (without subsidiaries) was positive, but it did not put
forward a preplan for cash dividend distribution of the common shares:
Applicable Inapplicable
Pre-plan for profit allocation and turning capital reserve into share capital for the reporting period
Applicable Inapplicable
Bonus shares for every 10 shares (share) -
Dividend for every 10 shares (RMB Yuan) (tax included) 2.50
Turning capital reserve into share capital for every 10 shares (share) -
Total shares as the basis for the allocation preplan (share) 185,391,680.00
Amount of cash dividend (RMB Yuan) (tax included) 46,347,920.00
Amount of cash dividend by other methods (like share repurchase) (RMB
-
Yuan)
Total cash dividends (including those by other methods) (RMB Yuan) 46,347,920.00
Distributable profit (RMB Yuan) 387,364,404.92
Percentage of total cash bonus (including those by other methods) of the
100%
total profits dividends
Cash dividend situation
If the development stage of the Company belongs to the mature period without any significant assets expenditure arrangement, when
executing the profits distribution, the ratio of the cash dividend to the profits distribution of the reporting period should at least reach
80%.
Details about the profit allocation or turning capital reserve into share capital
48
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
For 2023, the Company intended to distribute a cash dividend of RMB 2.50 (tax included) for every 10 shares held by its
shareholders, and the estimated distributable profits of the Company was RMB46,347,920 with the retained profits of
RMB341,016,484.92 for carry-forward to the next year. There was no turn from capital reserve to share capital for the year.
XI. Implementation of any equity incentive plan, employee stock ownership plan or other
incentive measures for employees
Applicable Inapplicable
No such cases in this reporting period.
XII. Establishment and implementation of internal control system in this reporting period
1. Establishment and implementation of internal control
The Company has established a relatively perfect, sound and effective internal control system which can be
effectively implemented.
2. Serious internal control defects found in this reporting period
Yes No
XIII. Management and control over subsidiaries in this reporting period
None
XIV. Internal control self-evaluation report and auditor’s report on internal control
1. Internal control self-evaluation report
Disclosure date of the internal
2024-03-12
control self-evaluation report
Index to the disclosed internal
www.cninfo.com.cn
control self-evaluation report
Total assets of the evaluated
entities as a percentage in the 100.00%
consolidated total assets
Operating revenues of the
evaluated entities as a percentage
100.00%
in the consolidated operating
revenues
Defect identification standards
Type Financial-report related Non-financial-report related
Serious defect: Serious defect:
Refer to one or several controlling defects Safety-a number of employee
groups in the enterprise which lead to the fatalities
enterprise's serious deviation from controlling Company reputation- negative
Nature standard
target. news spread around, the
Important defect: government or regulators
Refer to one or several controlling defects investigated which lead to public
groups, its severity and economic results attention, and cause huge loss of
49
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
lower than great defect which may lead to the customers, or need be report.
enterprise’s deviation from controlling target. Important defect:
Common defect: Safety-lead to a employ or citizen
Refer to any financial-report related internal disability or fatality
control defect that does not constitute serious Company reputation- negative
defect or important defect. news spread around the state, had
complained the media or lead to
the contract will be cancelled by
the customers.
Common defect:
Has occurred or is about to cause
harm to the health of workers or
citizens
Company reputation-negative
news spread around certain region
damaging the Company’s
reputation to some extent
Serious defect:
>5% of total profits of consolidated statements
in recent period
>1% of total assets of consolidated statements
in recent period
>2% of total operation revenue of
consolidated statements in recent period
A serious violation of laws, regulations and
rules and the government's policy, was Serious defect: RMB5 million
restricted enter industry, suspended business (including RMB5 million) or
licenses, forced to shut down. above.
Important defect: Important defect: Within RMB1
Within 3%~5% of total profits of consolidated million (including RMB1 million)
Quantitative standard statements in recent period to RMB5 million (including
Within 0.5%~1% of total assets of RMB5 million)
consolidated statements in recent period Common defect: less than RMB1
million
Within 1%~2% of total operation revenue of
consolidated statements in recent period
Common defect:
＜ 3% of total profits of consolidated
statements in recent period ＜ 0.5% of total
assets of consolidated statements in recent
period ＜ 1% of total operation revenue of
consolidated statements in recent period
A serious violation of laws, regulations and
rules and the government's policy, lead to
fines and penalty
Number of serious
financial-report-related defects 0
Number of serious
non-financial-report-related defects 0
Number of important
financial-report-related defects 0
Number of important
non-financial-report-related defects 0
50
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2. Auditor’s report on internal control
Applicable Inapplicable
Opinion paragraph in the auditor’s report on internal control
TSANN KUEN (CHINA) ENTERPRISE CO., LTD. has maintained effective internal control on financial report in all significant
respects according to the Basic Rules for Enterprise Internal Control and relevant regulations on 31 Dec. 2023.
Auditor’s report on internal control disclosed or not Disclosed
Disclosure date 2024-03-12
Index to the disclosed auditor’s report on internal control http://www.cninfo.com.cn
Type of the auditor’s opinion Standard unqualified opinion
Serious non-financial-report-related defects None
Indicate by tick mark whether any modified opinions are expressed by the CPAs firm in its auditor’s report on the
Company’s internal control.
Yes No
Indicate by tick mark whether the auditor’s report on the Company’s internal control issued by the CPAs firm is
consistent with the self-evaluation report of the Board.
Yes No
XV. Self-inspection and rectification in the specific project on governance of listed companies
None
Section V. Environmental & Social Responsibility
I. Significant environmental issues
Whether the Company or any of its subsidiaries is identified as a key polluter by the environment authorities
Yes No
There were no administrative penalties for environmental issues.
II. Social responsibilities
None
II. Poverty alleviation or rural revitalization activities
None
51
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Section VI. Significant Events
I. Performance of commitments
1. 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 Inapplicable
Time of
Commitment Commitment Period of
Commitment Contents making Fulfillment
maker type commitment
commitment
Commitment on share
reform
Commitment in the
acquisition report or the
report on equity
changes
Commitments made
upon the assets
replacement
Commitments made
upon first issuance or
refinance
Commitment on equity
incentive
Based on the The
confidence on the Company’s
continuous and stable stocks
development of the resumed
Company, it trading on 31
committed to increase Dec. 2012,
the shareholding if but the
the Company’s stock Company’s
price lower than stock price
HKD2.40 per share hasn’t met
after the the condition
Commitment implementation of the (closing
Other commitments FILLMAN
on shares contraction Long-term price was
made to minority INVESTMENTS 12/28/2012
shareholding and trading effective lower than
shareholders LIMITED
increase resumption, and it HKD2.40)
would increase no for
more than 2% shares shareholding
(i.e. 3.7078 million increase
shares) of the total since the date
shares issued by the of trading
Company within one resumption,
year since the date of FILLMAN
initial shareholding Investment
increase. If the plan Limited
on increasing holding hasn’t
2% shares of the total implemented
52
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Time of
Commitment Commitment Period of
Commitment Contents making Fulfillment
maker type commitment
commitment
shares is completed the
within 12 months, shareholding
and the stock price increase
has also reached the plan.
target price, it will
perform relevant
approval procedures,
and propose to CSRC
on continuous
implementation of
shareholding increase
by exemption of
offering.
Executed on time or not Yes
Specific reasons for
failing to fulfill
commitments on time
and plans for next step
(if any)
2. Where there had been an earnings forecast for an asset or project and this reporting period was still
within the forecast period, explain why the forecast has been reached for this reporting period.
Applicable Inapplicable
II. Occupation of the Company’s funds by the controlling shareholder or its related parties
for non-operating purposes
Applicable Inapplicable
III. Illegal provision of guarantees for external parties
Applicable Inapplicable
No such cases in this reporting period.
IV. Notes for the related information of “non-standard audit reports” for the latest period by
board of directors
Applicable Inapplicable
V. Explanations given by the Board of Directors, the Supervisory Board and the independent
directors (if any) regarding the “auditor’s non-standard report” issued by the CPAs firm for
this reporting period
Applicable Inapplicable
53
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
VI. YoY changes in accounting policies, estimations or correction of material accounting
errors
Applicable Inapplicable
VII. YoY changes in the scope of the consolidated financial statements
Applicable Inapplicable
In June 2023, the Company cancelled its subsidiary, Tsann Kuen Edge Intelligence Co., Ltd. (TKEI). From the date of
completion of the cancellation, Tsann Kuen Edge Intelligence Co., Ltd. (TKEI) will no longer be included in the scope
of consolidated statements.
VIII. Engagement and disengagement of CPAs firm
Current CPAs firm
Name of the domestic CPAs firm RSM China
The Company’s payment for the domestic CPAs firm (RMB’0,000) 108
Consecutive years of the audit service provided by the domestic CPAs firm 4 years
Names of the certified public accountants from the domestic CPAs firm Wu Xiaolei, Huang Huijun
Consecutive years of the audit service provided by the certified public
Wu Xiaolei(2 years), Huang Huijun(1 year)
accountants from the domestic CPAs firm
Indicate by tick mark whether the CPAs firm was changed in this reporting period
Yes No
CPAs firm, financial advisor or sponsor engaged for internal control audit
Applicable Inapplicable
IX. Possibility of delisting after disclosure of this Report
Applicable Inapplicable
X. Bankruptcy and restructuring
Applicable Inapplicable
XI. Significant litigations and arbitrations
Applicable Inapplicable
XII. Punishments and rectifications
Applicable Inapplicable
XIII. Credit conditions of the Company as well as its controlling shareholder and actual
controller
Applicable Inapplicable
54
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
XIV. Significant related-party transactions
1. Related-party transactions relevant to routine operation
Applicable Inapplicable
Unit: RMB’0,000
55
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Related Relationship Types Contents Principles Price Amount Proportion in Amount of Whether the Settlements Market value Date of Disclosure
parties for pricing the number of transactions approved of comparable Disclosure Index
similar limit limit is transactions
transactions approved exceeded available
(%)
Thermaster Companies Purchase of Purchase
Electronic controlled by goods of raw
(Xiamen) the actual material
Ltd. controller and parts and Pricing is 2,780.34 2.90 3,500.00 NO
his close machine based on
family parts market
members prices, Settlement
with both according to
Thermaster Companies Sale of Sale of
parties the contract http://www
Electronic controlled by goods parts and
following None signed by None 2023-3-7 .cninfo.co
(Xiamen) the actual finished
the both parties m.cn
Ltd. controller and products 0.12 0.00 0.00 YES
principle
his close
of fairness
family
and
members
reasonable
STAR Ultimate Sale of Sale of ness
COMGISTI holding goods parts and
289.98 0.20 1,000.00 NO
C CAPITAL company finished
CO., LTD. products
Total 3,070.44 4,500.00
Details of significant sales returns None
Actual performance during the reporting period for None
related-party transactions relevant to routine operation
expected to occur during the period and estimated by
category
Reasons for significant differences in transaction prices None
from market reference prices
56
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
2. Related-party transactions regarding purchase or sales of assets or equity interests
Applicable Inapplicable
3. Related-party transitions regarding joint investments
Applicable Inapplicable
4. Credits and liabilities with related parties
Applicable Inapplicable
Whether was any contract related to the non-operating credits and liabilities with related parties?
Yes No
5. Transactions with related finance company
Applicable Inapplicable
6. Transactions with related finance company controlled by the Company
Applicable Inapplicable
7. Other significant related-party transactions
Applicable Inapplicable
XV. Significant contracts and execution
1. Entrustment, contracting and leasing
(1) Entrustment
Applicable Inapplicable
57
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(2) Contracting
Applicable Inapplicable
(3) Leasing
Applicable Inapplicable
2. Significant guarantees
Applicable Inapplicable
Unit: RMB’0,000
Guarantees between subsidiaries
Disclosure date of Actual occurrence
Actual guarantee Guarantee for a
Guaranteed party the guarantee line Line of guarantee date (date of Type of guarantee Term of guarantee Due or not
amount related party or not
announcement agreement signing)
PT. STAR
2023/1/1-2023/12/ Pledged (50% credit +
COMGISTIC 2023/5/20 3,750.00 800.96 1 year NO NO
31 50% funding)
INDONESIA
Total guarantee line for subsidiaries approved during this Total actual guarantee amount for subsidiaries
3,750.00 1,990.20
Reporting Period (C1) during this Reporting Period (C2)
Total approved guarantee line for subsidiaries at the end of this Total actual guarantee balance for subsidiaries at the
3,750.00 800.96
Reporting Period (C3) end of this Reporting Period (C4)
Total guarantee amount
Total actual guarantee amounts during this
Total guarantee line approved during this Reporting Period (C1) 3,750.00 1,990.20
Reporting Period (C2)
Total approved guarantee line at the end of this Reporting Total actual guarantee balance at the end of this
3,750.00 800.96
Period (C3) Reporting Period (C4)
Proportion of the total actual guarantee amount (A4+B4+C4) in net assets of the Company 0.75%
Of which:
Amount of guarantees provided for shareholders, the actual controller and their related parties (D) 0.00
Amount of debt guarantees provided directly or indirectly for entities with a liability-to-asset ratio over
0.00
70% (E)
Portion of the total guarantee amount in excess of 50% of net assets (F) 0.00
Total amount of the three kinds of guarantees above (D+E+F) 0.00
Explanation on undue guarantee or possible joint liquidated liability undertaken None
Explanation on providing external guarantee violating established procedures None
58
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Specific notes on the use of composite guarantees
None
3. Entrusted cash management
(1) Entrusted asset management
Applicable Inapplicable
Overview of entrusted assets management in Reporting Period
Unit: RMB’0,000
Impaired amount for overdue
Type Resource of funds Amount incurred Undue balance Amount overdue
financial management
Bank financial product Self-owned fund 66,700.00 46,700.00 0.00 0.00
Total 66,700.00 46,700.00 0.00 0.00
Particular information of high-risk entrusted asset management with individual significant amount or low security and poor liquidity
Applicable Inapplicable
Unit: RMB’0,000
Whether Overview
Amount of Actual Whether
there is of the
Type Type Reso actual recovery of Amount go
Break-eve Annual wealth item and
of the of the urce Use of Estimate profits or profits or withdrawn through
Name of the trustee Amount Initial date Ended Date n floating yield for management the
truste produ of fund profit losses in losses in impairmen stator
proceeds reference entrustment related
e ct funds reporting reporting t provision procedur
plan in index for
period period es
future or not inquiring
Xiamen Bank
5,000 2022/3/10 2023/3/10 3.50% 177.43 177.43
(Zhangzhou)
Xiamen International
5,000 2022/4/1 2023/4/1 3.50% 177.43 177.43
Bank
Xiamen International
Break 5,000 2022/5/6 2023/5/5 Payment 3.50% 176.94 176.94
Bank Subject to
-even Self- of interest Recovered
Xiamen International upon the future http://ww
floati 6,000 owne 2022/8/24 2023/8/24 Structural and 3.50% 212.92 212.92
Bank Bank maturity N/A Yes market yield w.cninfo.
ng d deposit principal
and fund com.cn
proce fund at
Xiamen International condition
eds 5,500 2022/8/31 2023/8/31 maturity 3.50% 195.17 195.17
Bank
Xiamen International
5,000 2022/9/15 2023/9/15 3.50% 177.43 177.43
Bank
Xiamen International
5,000 2022/11/17 2023/11/17 3.40% 172.36 172.36
Bank
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Whether Overview
Amount of Actual Whether
there is of the
Type Type Reso actual recovery of Amount go
Break-eve Annual wealth item and
of the of the urce Use of Estimate profits or profits or withdrawn through
Name of the trustee Amount Initial date Ended Date n floating yield for management the
truste produ of fund profit losses in losses in impairmen stator
proceeds reference entrustment related
e ct funds reporting reporting t provision procedur
plan in index for
period period es
future or not inquiring
Xiamen Bank
5,000 2022/12/14 2023/12/14 3.45% 174.9 179.57
(Zhangzhou)
Xiamen Bank
5,000 2022/12/21 2023/12/21 3.45% 174.9 184.89
(Zhangzhou)
Xiamen International
5,000 2022/12/23 2023/12/23 3.40% 172.36 172.36
Bank
Xiamen Bank
5,000 2022/12/29 2023/12/29 3.45% 174.9 188.8
(Zhangzhou)
Xiamen Bank
5,000 2023/1/12 2023/12/25 3.45% 166.27 172.55
(Zhangzhou)
Xiamen International
5,000 2023/4/7 2024/4/6 3.40% 172.36 70.99
Bank
Xiamen International
5,000 2023/5/10 2024/5/9 3.40% 172.36 62.28
Bank
Xiamen International
6,000 2023/8/29 2024/8/28 3.26% 198.32 39.58
Bank
Xiamen International
5,700 2023/9/5 2024/9/4 3.26% 188.4 35.5
Bank
Undue
Xiamen International
5,000 2023/9/19 2024/9/18 3.26% 165.26 27.44
Bank
Xiamen Bank
5,000 2023/11/17 2024/11/15 3.29% 166.33 9.69
(Zhangzhou)
Xiamen Bank
5,000 2023/12/8 2024/12/6 3.23% 163.29 5.17
(Zhangzhou)
Xiamen International
5,000 2023/12/8 2024/12/7 3.11% 157.66 6.33
Bank
Xiamen Bank
5,000 2023/12/29 2024/12/27 3.19% 161.27 0.65
(Zhangzhou)
Total 108,200 3,698.26 2,445.48
Whether there is the case where the principal cannot be recovered at maturity or other case which may cause impairment for entrusted asset management
Applicable Inapplicable
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
(2) Entrusted loans
Applicable Inapplicable
4. Other significant contracts
Applicable Inapplicable
XVI. Other significant events
Applicable Inapplicable
XVII. Significant events of subsidiaries
Applicable Inapplicable
The Company's controlling subsidiary Tsann Kuen (Zhangzhou) Enterprise Co., Ltd.(TKL) has signed the
motion of "Supplementary Memorandum to the Memorandum of Cooperation on Investment of Tsann
Kuen Group to Zhangzhou" and "Transitional Plant Lease Contract for the Renovation of Tsann Kuen
Industrial Park" with the local government signing and the relevant departments on 12 July 2023, for
details, please refer to the Company's announcement [Announcement on the signing of Supplementary
Memorandum to the Memorandum of Cooperation on Investment of Tsann Kuen Group to Zhangzhou by
the Controlling Subsidiary of Tsann Kuen Group to Zhangzhou and the Transitional Plant Lease Contract
for the Renovation of Tsann Kuen Industrial Park] disclosed in the www.cninfo.com.cn on 13 July 2023.
This case was considered and approved at the First Extraordinary General Meeting of 2023 held on 28
July 2023.
At present, Tsann Kuen (Zhangzhou) Enterprise Co., Ltd. (TKL) has completed the return and handover
of the land according to the contract, the new park construction project has begun, at present industrial
technology center building is under construction, the rest of the project has not begun, there is no impact
on the production and operation.
Section VII. Change in Shares & Shareholders
I. Changes in shares
1. Changes in shares
Unit: share
Before Increase/decrease (+/-) After
Increase
Percentage New Bonus from Percentage
Number Other Subtotal Number
(%) issues shares capital (%)
reserve
1. Restricted shares 0 0.00% 0 0 0 0 0 0 0.00%
1.1 Shares held by state
1.2 Shares held by
state-owned corporations
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
1.3 Shares held by other
domestic investors
Among which: Shares held by
domestic corporations
Shares held by
domestic individuals
1.4 Shares held by foreign
investors
Among which: Shares held by
foreign corporations
Shares held by foreign
individuals
2. Unrestricted shares 185,391,680 100.00% 0 0 0 0 0 185,391,680 100.00%
2.1 RMB ordinary shares
2.2 Domestically listed foreign
185,391,680 100.00% 0 0 0 0 0 185,391,680 100.00%
shares
2.3 Foreign capital stocks
listed abroad
2.4 Other
3. Total shares 185,391,680 100.00% 0 0 0 0 0 185,391,680 100.00%
Reasons for the share changes
Applicable Inapplicable
Approval of share changes
Applicable Inapplicable
Transfer of share ownership
Applicable Inapplicable
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 Inapplicable
Other contents was necessary to the company or the securities regulators required to be disclosed
Applicable Inapplicable
2. Changes in restricted shares
Applicable Inapplicable
II. Issuance and listing of securities
1. Securities (excluding preference shares) issued in this reporting period
Applicable Inapplicable
2. Changes in total shares of the Company and the shareholder structure, as well as the asset
and liability structures
Applicable Inapplicable
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
3. Existing staff-held shares
Applicable Inapplicable
III. Shareholders and actual controller
1. Total number of shareholders and their shareholdings
Unit: share
Total number of
preference
shareholders
Total number of Total number of with resumed
Total number of common common shareholders preference shareholders voting rights at
shareholders at the 13,757 at the prior month-end 13,758 with resumed voting 0 the prior 0
period-end before the disclosure rights at the period-end month-end
of this Report before the
disclosure of this
Report
5% or greater shareholders or the top 10 shareholders
Numb Pledged, marked
Shareholding Total shares Increase/decrease er of Number of or frozen shares
Name of shareholder Nature of percentage held at the during this restric unrestricted
shareholder (%) period-end reporting period ted shares
shares Status Number
FORDCHEE Foreign 29.10% 53,940,530.00 Unchanged 0 53,940,530.00 N/A 0
DEVELOPMENT LIMITED corporation
EUPA INDUSTRY Foreign
CORPORATION LIMITED corporation 13.09% 24,268,840.00 Unchanged 0 24,268,840.00 N/A 0
GUOTAI JUNAN Foreign
SECURITIES(HONGKONG) corporation 4.93% 9,146,949.00 45,067 0 9,146,949.00 N/A 0
LIMITED
FILLMAN INVESTMENTS Foreign 2.49% 4,621,596.00 Unchanged 0 4,621,596.00 N/A 0
LIMITED corporation
Domestic
CHEN YONGQUAN individual 1.04% 1,929,476.00 Unchanged 0 1,929,476.00 N/A 0
CHEN YONGQING Foreign 0.87% 1,608,078.00 Unchanged 0 1,608,078.00 N/A 0
individual
Foreign
CHEN LIJUAN individual 0.86% 1,602,768.00 99,100 0 1,602,768.00 N/A 0
YANG WENLIANG Domestic 0.70% 1,292,749.00 -84,317 0 1,292,749.00 N/A 0
individual
SHENWAN HONGYUAN Foreign 0.61% 1,136,852.00 -615,283 0 1,136,852.00 N/A 0
SECURITIES (HK) LIMITED corporation
DING XIAOLUN Domestic 0.61% 1,131,800.00 1,800 0 1,131,800.00 N/A 0
individual
Strategic investor or general corporation
becoming a top ten shareholder due to None
placing of new shares
The first, the second and the fourth shareholders are the Company’s corporate controlling
Related or acting-in-concert parties among shareholders. It is unknown whether the other public shareholders are related parties or
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.
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Above shareholders involved in
entrusting/being entrusted with voting rights None
and giving up voting rights
Special account for share repurchases None
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 LIMITED 53,940,530.00 Domestically listed foreign share 53,940,530.00
EUPA INDUSTRY CORPORATION
LIMITED 24,268,840.00 Domestically listed foreign share 24,268,840.00
GUOTAI JUNAN 9,146,949.00 Domestically listed foreign share 9,146,949.00
SECURITIES(HONGKONG) LIMITED
FILLMAN INVESTMENTS LIMITED 4,621,596.00 Domestically listed foreign share 4,621,596.00
CHEN YONGQUAN 1,929,476.00 Domestically listed foreign share 1,929,476.00
CHEN YONGQING 1,608,078.00 Domestically listed foreign share 1,608,078.00
CHEN LIJUAN 1,602,768.00 Domestically listed foreign share 1,602,768.00
YANG WENLIANG 1,292,749.00 Domestically listed foreign share 1,292,749.00
SHENWAN HONGYUAN SECURITIES 1,136,852.00 Domestically listed foreign share 1,136,852.00
(HK) LIMITED
DING XIAOLUN 1,130,000.00 Domestically listed foreign share 1,130,000.00
Related or acting-in-concert parties among the The first, the second and the fourth shareholders are the Company’s corporate controlling
top ten unrestricted public shareholders and shareholders. It is unknown whether the other public shareholders are related parties or
between the top ten unrestricted public acting-in-concert parties as prescribed in the Administrative Methods for Disclosure of
shareholders and the top ten shareholders the Shareholding Changes of the Listed Company’s Shareholders.
Top ten common shareholders conducting
securities margin trading None
Did any of the top ten common shareholders or the top ten unrestricted common shareholders of the
Company conduct any promissory repurchase during the Reporting Period?
Yes No
2. Information about the controlling shareholder
Nature of controlling shareholder: foreign investment holding
Type of controlling shareholder: corporation
Legal representative / Date of
Name of controlling shareholder Organization code Business scope
company principal establishment
Fordchee Development Limited Cai Yuansong 1990-01-03 14676920-000-01-24-4 Investment
EUPA Industry Corporation Limited Cai Shuhui 1989-07-21 12959659-000-07-23-5 Investment
Fillman Investments Limited Cai Shuhui 1992-07-21 16269694-000-07-23-9 Investment
Shareholdings of the controlling
shareholder in other listed companies at None
home or abroad in this reporting period
There are no notes to the controlling shareholder for the Company
Change of the controlling shareholder during this reporting period
Applicable Inapplicable
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
3. Information about the actual controller and its acting-in-concert party
Nature of actual controller: foreign individual
Type of actual controller: individual
Relationship with Right of residence in other countries or
Name of actual controller Nationality
actual controller regions
Wu Tsann Kuen Self Taiwan, China None
Main occupation and duty Promoter of TSANN KUEN Group in China and Taiwan
Used-to-be-holding listed companies Actual controller of Tsann Kuen (Taiwan) Enterprise Co., Ltd. STAR COMGISTIC
at home and abroad in the last ten CAPITAL (Taiwan) CO., LTD. and Star International Travel Service (Taiwan) Co.,
years Ltd.
Change of the actual controller during this reporting period
Applicable Inapplicable
Ownership and control relations between the actual controller and the Company
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of
asset management.
Applicable Inapplicable
4. Accumulative pledged shares held by the Company’s controlling shareholder or the largest
shareholder and its acting-in-concert party accounts for 80% of shares of the Company held
by them
Applicable Inapplicable
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
5. 10% or greater corporate shareholders
Applicable Inapplicable
6. Limited shareholding decrease by the Company’s controlling shareholder, actual controller,
reorganizer and other commitment makers
Applicable Inapplicable
IV. Specific implementation of share repurchases during this reporting period
Implementation progress of share repurchases
Applicable Inapplicable
Progress on reducing the repurchased shares by way of centralized bidding
Applicable Inapplicable
Section VIII. Preference Shares
Applicable Inapplicable
No preference shares in this reporting period.
Section IX. Bonds
Applicable Inapplicable
No bonds in this reporting period.
Section X. Financial Report
I. Auditor’s Report
Type of audit opinions Standard unqualified opinions
Signing date of audit report 2024-03-09
Name of audit institution RSM China CPA LLP
No. of audit report RSM SZ [2024] NO. 518Z0020
Name of CPA Wu Xiaolei, Huang Huijun
II. Financial statements (attached)
1. Balance sheet
2. Income statement
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
3. Cash flow statement
4. Statement of Change in Owners’ Equity
5. Notes to the Financial Statements
Board Chairman: Cai Yuansong
The Board of Directors of Tsann Kuen (China)
Enterprise Co., Ltd.
09 March 2024
67
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
Auditor’s Report
RSM SZ [2024] NO.518Z0020
To the Shareholders of Tsann Kuen (China) Enterprise Co., Ltd.:
I. Opinion
We have audited the financial statements of Tsann Kuen (China) Enterprise Co., Ltd.
(hereafter referred to as “the Company”), which comprises the consolidated and the
parent company’s statement of financial position as of 31 December 2023, the
consolidated and the parent company’s statement of profit or loss and other
comprehensive income, the consolidated and the parent company’s statement of cash
flows, the consolidated and the parent company’s statement of changes in equity for the
year then ended, and the notes to the financial statements.
In our opinion, the accompanying the Company’s financial statements present fairly, in
all material respects, the consolidated and the company’s financial position as of 31
December 2023, and of their financial performance and cash flows for the year then
ended in accordance with Accounting Standards for Business Enterprises.
II. Basis for Opinion
We conducted our audit in accordance with Chinese Standards on Auditing (CSAs). Our
responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Financial Statements section of our report. We are
independent of the Company in accordance with the Code of Ethics for Professional
Accountants of the Chinese Institute of Certified Public Accountants, and we have
fulfilled our other ethical responsibilities. We believe that the audit evidences we
obtained are sufficient and appropriate to provide a basis for our opinion.
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, are of the most
significance in our audit of the financial statements of the current period. These matters
are addressed in the context of our audit of the financial statements as a whole, and
informing our opinion thereon, and we do not provide a separate opinion on these
matters.
i) Impairment allowance of inventories
a. Description
Please refer to Note 3.13 “Inventories” of the accounting policies and please refer to
Note 5.6 “Inventories” to the financial statement of the relevant disclosures.
As of 31 December 2023, the closing balance of inventories in the Company’s
consolidated statement is CNY 212,345,925.89, and impairment allowance of
inventories is CNY 19,936,592.07. At the balance sheet date, impairment test is carried
out by management and impairment allowance for inventories is made if the cost is
higher than the net realizable value. Net realizable value is determined by the estimated
selling prices minus the estimated costs of completion, the estimated selling expenses,
and related taxes.
The management should to make significant judgments and assumptions in the forecast,
especially for future selling prices, production costs, operating expenses and related
taxes. Due to the complexity of the impairment test, the annual inventory impairment
test involves key judgments and estimation, therefore, we listed the inventory
impairment allowance as a key audit item.
b. Audit Response
In response to the Company’s inventory impairment allowance, we have implemented
the following audit procedures:
69
2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
a) To understand and evaluate the effectiveness of the design and operation of
management's internal controls related to inventory impairments allowance.
b) To obtain the aging list of inventories and review the aging list and turn over situation,
and to discuss the accounting estimation of inventory impairment allowance with
management, to assess the reasonable of the inventory impairment allowance.
c) To perform the inventory observation procedures, to check the quantities and status of
inventories, and inspect inventories with high value or idle.
d) For inventories that were able to obtain open market sales prices, we independently
looked up the open market price information and compare them to the estimated selling
prices.
e) For inventories that were not able to obtain open market sales prices, we selected
samples to compare the estimated selling prices with the actual selling prices in the near
future or subsequent period.
f) To select samples to compare costs of completion with similar raw materials and
work in process in the current year, and assessed the rationality of the costs of
completion estimated by the Company.
ii) Recognition of revenues
a. Description
Please refer to Note 3.26 of accounting policy of revenue, and please refer to Note 5.34
to the financial statement of the relevant disclosures.
The operating revenue of the consolidated financial statement for the year 2023
amounted to CNY 1,495,632,805.41, decreasing of 5.59% compared with last year.
Since operating revenue is one of the Company's key performance indicators, and
changes in gross profit margin have a significant impact on the operating results of
current period of the Company, we identify revenue recognition as a key audit item.
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
b. Audit Response
In response to the Company’s recognition of revenues, we have implemented the
following audit procedures:
a) To understand and evaluate the effectiveness of the design and operation of
management's internal control related to revenue recognition.
b) Selecting samples to check the sales contracts and combining with interviews with
management to identify contract terms and conditions related to the transfer of control
of goods, evaluate the timing of ownership transfer related to product sales recognition,
evaluating whether the timing of the company's revenue recognition comply with the
requirements of corporate accounting standards.
c) Selecting samples of sales transactions during this year, checking the collection
records, sales invoices, export declarations, bills of lading(B/L), sales receipts,
performing confirmation letter or other alternative test procedures for the closing
balance of accounts receivable, and audit the authenticity of sales.
d) Performing analytical review procedures, including analyzing monthly revenue, cost,
and gross profit margin fluctuations for the current period; analyzing the revenue, cost,
and gross margin fluctuations between the current period and the previous period. The
factor analysis method is used to analyze the influence of each factor on gross profit,
and analyze the reasonableness of each factor affecting the gross profit.
e) For revenues recognized before and after the balance sheet date, we performed sales
cut-off test, including checking the outbound orders, export declarations, bills of
lading(B/L), and other supporting documents to assess whether the revenues were
included in the appropriate accounting period.
IV. Other information
Management of the Company is responsible for the other information. The other
information comprises the information included in the Annual Report of the Company
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
for the year of 2023, but does not include the financial statements and our auditor’s
report thereon.
Our opinion on the financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
V. Responsibilities of Management and Those Charged with Governance for the
Financial Statements
Management of the Company is responsible for the preparation and fair presentation of
the financial statements in accordance with Accounting Standards of Business
Enterprises, and for the design, implementation, and maintenance of such internal
controls as management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the Company or to cease operations, or have no
realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial
reporting process.
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
VI. Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high level
of assurance, but is not a guarantee that an audit conducted in accordance with CSAs
will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis
of these financial statements.
As part of an audit in accordance with CSAs, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
i) Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for
our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
ii) Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances.
iii) Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
iv) Conclude on the appropriateness of management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Company’s
ability to continue as a going concern. If we conclude that a material uncertainty exists,
we are required by the CSA to draw attention in our auditor’s report to the related
disclosures in the financial statements or, if such disclosures are inadequate, to modify
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2023 Annual Report of Tsann Kuen (China) Enterprise Co., Ltd.
our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Company to
cease to continue as a going concern.
v) Evaluate the overall presentation, structure and content of the financial statements,
and whether the financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
vi) Obtain sufficient and appropriate audit evidence regarding the financial information
of the entities or business activities within the Company to express an opinion on the
financial statements. We are responsible for the direction, supervision, and performance
of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal controls that we identify during our audit.
We also provide those charged with governance with a statement that we have complied
with relevant ethical requirements regarding independence, and to communicate with
them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine
those matters that are of most significance in the audit of the financial statements of the
current period and are therefore the key audit matters. We describe these matters in our
auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
74
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
(There is no text on this page, it is the stamp and signature page for the report RSM SZ [2024]
NO.518Z0020 of the Company.)
RSM China CPA LLP CICPA:
ChinaBeijing WU, Xiaolei (Partner)
CICPA:
HUANG, Huijun
09 March 2024
75
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Consolidated Statement of Financial Position
as at 31 December 2023
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
Item Note 2023/12/31 2022/12/31 Item Note 2023/12/31 2022/12/31
Current assets: Current liabilities:
Cash and cash equivalents 5.1 567,162,576.77 576,867,829.77 Short-term borrowings - -
Held-for-trading financial assets 5.2 470,009,033.34 569,493,788.89 Held-for-trading financial liabilities - -
Derivative financial assets - - Derivative financial liabilities - -
Notes receivable - - Notes payable 5.19 9,137,361.03 2,630,056.46
Accounts receivable 5.3 196,956,220.12 95,950,882.88 Accounts payable 5.20 491,874,918.44 398,955,150.23
Accounts receivable financing - - Advances from customers 5.21 2,624,268.27 7,880,418.84
Advances to suppliers 5.4 4,551,467.78 4,050,633.59 Contract liabilities 5.22 16,485,904.83 21,522,608.04
Other receivables 5.5 23,318,410.66 15,425,312.61 Employee benefits payable 5.23 49,108,630.97 41,947,199.38
Including: Interests receivable - - Taxes payable 5.24 58,404,241.58 39,426,557.19
Dividend receivable - - Other payables 5.25 35,202,629.21 36,311,863.30
Inventories 5.6 192,409,333.82 180,065,428.49 Including: Interests payables - -
Contract assets - - Dividend payables - -
Assets classified as held for sale - - Liabilities classified as held for sale - -
Non-current assets maturing within one year - - Non-current liabilities maturing within one year 5.26 883,368.79 9,494,026.90
Other current assets 5.7 460,078,523.03 428,851,919.37 Other current liabilities - -
Total current assets 1,914,485,565.52 1,870,705,795.60 Total current liabilities 663,721,323.12 558,167,880.34
Non-current assets: Non-current liabilities:
Debt investments 5.8 100,076,779.20 - Long-term borrowings - -
Other debt investments - - Bonds payable - -
Long-term receivables - - Including: Preference share - -
Long-term equity investments - - Perpetual capital securities - -
Other equity instrument investment 5.9 40,000.00 40,000.00 Lease liabilities 5.27 392,170,104.23 534,850,528.45
76
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Item Note 2023/12/31 2022/12/31 Item Note 2023/12/31 2022/12/31
Other non-current financial assets Long-term payables - -
Investment properties 5.10 18,464,309.18 19,148,198.30 Long-term employee benefits payable - -
Fixed assets 5.11 157,096,267.26 147,946,111.81 Estimated liabilities 5.28 - 480,930.00
Construction in progress 5.12 1,773,322.12 2,656,954.05 Deferred income - -
Productive biological assets - - Deferred tax liabilities 5.16 - 24,232,846.42
Oil and gas assets Other non-current liabilities - -
Right-of-use assets 5.13 368,563,991.68 525,637,136.84 Total non-current liabilities 392,170,104.23 559,564,304.87
Intangible assets 5.14 13,482,991.81 17,968,888.40 Total liabilities 1,055,891,427.35 1,117,732,185.21
Research and development expenditure - - Owners’ equity:
Goodwill - - Share capital 5.29 185,391,680.00 185,391,680.00
Long-term deferred expenses 5.15 7,770,803.06 8,946,053.72 Other equity instruments - -
Deferred tax assets 5.16 8,384,808.67 13,678,256.72 Including: Preference shares - -
Other non-current assets 5.17 136,429.00 813,512.56 Perpetual capital securities - -
Total non-current assets 675,789,701.98 736,835,112.40 Capital reserves 5.30 296,808,965.79 296,808,965.79
Less: Treasury stock - -
Other comprehensive income 5.31 10,227,053.51 8,130,895.08
Specific reserves - -
Surplus reserves 5.32 75,501,488.36 68,925,849.64
Retained earnings 5.33 507,010,039.53 481,265,907.40
Total owner’s equity attributable to parent
1,074,939,227.19 1,040,523,297.91
company
Non-controlling interests 459,444,612.96 449,285,424.88
Total owners’ equity 1,534,383,840.15 1,489,808,722.79
Total assets 2,590,275,267.50 2,607,540,908.00 Total liabilities and owners' equity 2,590,275,267.50 2,607,540,908.00
Legal Representative: Cai Yuansong Chief Financial Officer： Wu Jianhua Finance Manager：Wu Jianhua
77
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the year ended 31 December 2023
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
Item Note 2023 2022
I. Revenue 5.34 1,495,632,805.41 1,584,267,529.08
Including: operating revenue 5.34 1,495,632,805.41 1,584,267,529.08
II. Cost of sales 5.34 1,411,245,459.13 1,471,182,914.16
Including: operating cost 5.34 1,222,340,716.02 1,306,015,031.40
Taxes and surcharges 5.35 8,382,759.56 8,207,085.30
Selling and distribution expenses 5.36 27,727,538.87 22,718,269.59
General and administrative expenses 5.37 71,563,168.70 71,930,327.01
Research and development expenses 5.38 61,202,300.78 61,922,089.98
Finance costs 5.39 20,028,975.20 390,110.88
Including: Interest expense 5.39 26,125,546.52 28,205,548.36
Interest income 5.39 5,259,411.72 6,913,345.47
Add: Other income 5.40 3,727,263.16 7,999,361.25
Investment income/(losses) 5.41 34,242,870.37 25,925,914.30
Including: Investment income from associates and joint ventures - -
Gains /(losses) from derecognition of financial assets - -
measured at amortised cost
Income /(losses) from net exposure hedging - -
Gains/(losses) from changes in fair values 5.42 -1,484,755.55 -1,227,238.89
Impairment loss of credit 5.43 -2,010,093.67 1,883,894.53
Impairment loss of asset 5.44 -7,001,664.06 -12,371,666.30
Gains/(losses) from disposal of assets 5.45 12,237,257.34 742,730.95
III. Profit/(loss) from operations 124,098,223.87 136,037,610.76
Add: Non-operating income 5.46 6,015,235.74 3,161,103.92
Less: Non-operating expenses 5.47 541,357.59 104,951.52
IV. Profit/(loss) before tax 129,572,102.02 139,093,763.16
Less: Income tax expenses 5.48 12,769,135.07 13,445,056.84
V. Net profit/(loss) for the year 116,802,966.95 125,648,706.32
(I) Net profit/(loss) by continuity
1.Net profit/(loss) from continuing operation 116,802,966.95 125,648,706.32
2.Net profit/(loss) from discontinued operation
(II) Net profit/(loss) by ownership attribution
1.Attributable to owners of the parent 87,937,274.85 94,283,302.93
2.Attributable to non-controlling interests 28,865,692.10 31,365,403.39
VI. Other comprehensive income for the year, after tax 2,794,877.91 11,269,904.75
(I) Attributable to owners of the parent 2,096,158.43 8,452,428.56
1. Items that will not be reclassified subsequently to profit or loss - -
（1）Remeasurement of the net defined benefit liability (asset) - -
（2）Other comprehensive income using the equity method which will not be reclassified
subsequently to profit and loss
（3）Changes in fair value of other equity instrument investment
（4）Changes in fair value of the Company’s own credit risks
2. Items that may be reclassified subsequently to profit or loss 2,096,158.43 8,452,428.56
（1）Other comprehensive income using the equity method which will be reclassified
subsequently to profit or loss
（2）Changes in fair value of other debt instrument investment
（3）Other comprehensive income arising from the reclassification of financial assets
（4）Provision for credit impairment in other debt investments
（5）Reserve for cash flow hedges
（6）Exchange differences on translating foreign operations 2,096,158.43 8,452,428.56
(II) Attributable to non-controlling interests 698,719.48 2,817,476.19
VII. Total comprehensive income for the year 119,597,844.86 136,918,611.07
(I) Attributable to owners of the parent 90,033,433.28 102,735,731.49
(II) Attributable to non-controlling interests 29,564,411.58 34,182,879.58
VIII. Earnings per share
(I) Basic earnings per share 0.47 0.51
(II) Diluted earnings per share 0.47 0.51
Legal Representative: Cai Yuansong Chief Financial Officer:Wu Jianhua Finance Manager：Wu Jianhua
78
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Consolidated Statement of Cash Flows
for the year ended 31 December 2023
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
Item Note 2023 2022
I. Cash flows from operating activities
Cash received from the sale of goods and the rendering of
1,348,233,019.71 1,713,576,512.45
services
Cash received from tax refund 84,358,087.88 105,536,334.92
Other cash received relating to operating activities 5.50 122,553,601.21 90,269,998.24
Subtotal of cash inflows from operating activities 1,555,144,708.80 1,909,382,845.61
Cash payments for goods purchased and services received 1,022,514,505.63 1,380,854,782.39
Cash payments to and on behalf of employees 283,588,913.05 266,640,531.04
Payments of taxes 25,694,772.64 32,523,572.64
Other cash payments relating to operating activities 5.50 100,300,581.87 64,588,350.28
Subtotal of cash outflows from operating activities 1,432,098,773.19 1,744,607,236.35
Net cash flows from operating activities 123,045,935.61 164,775,609.26
II. Cash flows from investing activities
Cash received from disposal and redemption of
631,790,258.36 686,493,233.63
investments
Cash received from returns on investments 17,421,906.57 11,416,282.71
Net cash received from disposals of fixed assets, intangible
4,950,458.99 3,601,213.12
assets and other long-term assets
Net cash received from disposals of subsidiaries and other
- -
business units
Other cash received relating to investing activities 5.50 497,935,690.70 483,165,710.00
Subtotal of cash inflows from investing activities 1,152,098,314.62 1,184,676,439.46
Cash payments to acquire fixed, intangible and other
45,247,768.66 40,233,962.61
long-term assets
Cash payments to acquire investments 617,000,000.00 808,277,718.70
Net cash payments to acquire subsidiaries and other
- -
business units
Other cash payments relating to investing activities 5.50 518,774,200.00 624,630,729.27
Subtotal of cash outflows from investing activities 1,181,021,968.66 1,473,142,410.58
Net cash flows from investing activities -28,923,654.04 -288,465,971.12
III. Cash flows from financing activities
Cash received from capital contributions - -
Including: Cash received from absorbing minority
- -
shareholders' equity investment by subsidiaries
Cash received from borrowings 21,539,400.00 212,415,836.00
Other cash received relating to financing activities 5.50 8,193,634.09 10,734,861.05
Subtotal of cash inflows from financing activities 29,733,034.09 223,150,697.05
Cash repayments of debts 21,539,400.00 212,415,836.00
Cash payments for dividends, distribution of profit and
82,526,968.50 44,984,605.45
interest expenses
Including: Dividends, distribution of profit paid by
58,215,670.49 23,155,114.88
subsidiaries to minority shareholders
Other cash payments relating to financing activities 5.50 32,694,988.33 43,904,510.71
Subtotal of cash outflows from financing activities 136,761,356.83 301,304,952.16
Net cash flows from financing activities -107,028,322.74 -78,154,255.11
IV. Effect of foreign exchange rate changes on cash and cash
-795,341.12 6,505,097.21
equivalents
V. Net increase / (decrease) in cash and cash equivalents -13,701,382.29 -195,339,519.76
Plus: Cash and cash equivalents at the beginning of the
575,511,653.82 770,851,173.58
period
VI. Cash and cash equivalents at the end of the period 561,810,271.53 575,511,653.82
Legal Representative: Cai Yuansong Chief Financial Officer:Wu Jianhua Finance Manager：Wu Jianhua
79
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Consolidated Statement of Changes in Owners' Equity
for the year ended 31 December 2023
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
2023
Owners’ equity attributable to the parent company
Item Other equity instruments
Non-controlling Total owners’
Less: Other interests equity
Capital Specific Surplus Retained
Share capital Perpetual Treasury comprehensive Subtotal
Preference reserves reserves reserves earnings
capital Others stock income
shares
securities
I. Balance at 31 December 2022 185,391,680.00 - - - 296,808,965.79 - 8,130,895.08 - 68,925,849.64 481,265,907.40 1,040,523,297.91 449,285,424.88 1,489,808,722.79
Add：Changes in accounting policy - -
Correction of prior period errors - -
Business combination under common control - -
Others - -
II. Balance at 1 January 2023 185,391,680.00 - - - 296,808,965.79 - 8,130,895.08 - 68,925,849.64 481,265,907.40 1,040,523,297.91 449,285,424.88 1,489,808,722.79
III. Changes in equity during the reporting period - - - - - - 2,096,158.43 - 6,575,638.72 25,744,132.13 34,415,929.28 10,159,188.08 44,575,117.36
(I) Total comprehensive income 2,096,158.43 87,937,274.85 90,033,433.28 29,564,411.58 119,597,844.86
(II) Capital contributions or withdrawals by owners - - - - - - - - - - - - -
1.Ordinary shares contributed by
- -
shareholders
2.Capital contributed by holders of
- -
other equity instruments
3.Share-based payments recognised in owners’ equity - -
4.Others - -
(III) Profit distribution - - - - - - - - 6,575,638.72 -62,193,142.72 -55,617,504.00 -19,405,223.50 -75,022,727.50
1.Withdrawal of surplus reserves 6,575,638.72 -6,575,638.72 - -
80
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
2023
Owners’ equity attributable to the parent company
Item Other equity instruments
Non-controlling Total owners’
Less: Other interests equity
Capital Specific Surplus Retained
Share capital Perpetual Treasury comprehensive Subtotal
Preference reserves reserves reserves earnings
capital Others stock income
shares
securities
2.Profit distribution to owners (or shareholders) -55,617,504.00 -55,617,504.00 -19,405,223.50 -75,022,727.50
3.Others - -
(IV) Transfer between owners' equity - - - - - - - - - - - - -
1.Capital reserves transfer to share capital - -
2.Surplus reserves transfer to share capital - -
3.Surplus reserves used to cover accumulated deficits - -
4.Defined benefit plan transfer to retained earnings - -
5.Other comprehensive income transfer to retained earnings - -
6.Others - -
(V) Specific reserves - - - - - - - - - - - - -
1.Withdrawal during the reporting period - -
2.Usage during the reporting period - -
(VI) Others - -
IV. Balance at 31 December 2023 185,391,680.00 - - - 296,808,965.79 - 10,227,053.51 - 75,501,488.36 507,010,039.53 1,074,939,227.19 459,444,612.96 1,534,383,840.15
Legal Representative: Cai Yuansong Chief Financial Officer： Wu Jianhua Finance Manager：Wu Jianhua
Consolidated Statement of Changes in Owners' Equity
for the year ended 31 December 2023
81
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
2022
Owners’ equity attributable to the parent company
Item Other equity instruments
Non-controlling Total owners’
Less: Other interests equity
Capital Specific Surplus Retained
Share capital Perpetual Treasury comprehensive Subtotal
Preference reserves reserves reserves earnings
capital Others stock income
shares
securities
I. Balance at 31 December 2021 185,391,680.00 296,808,965.79 -321,533.48 61,371,246.13 413,076,375.98 956,326,734.42 438,874,639.34 1,395,201,373.76
Add：Changes in accounting policy - -
Correction of prior period errors - -
Business combination under common control - -
Others - -
II. Balance at 1 January 2022 185,391,680.00 - - - 296,808,965.79 - -321,533.48 - 61,371,246.13 413,076,375.98 956,326,734.42 438,874,639.34 1,395,201,373.76
III. Changes in equity during the reporting period - - - - - - 8,452,428.56 - 7,554,603.51 68,189,531.42 84,196,563.49 10,410,785.54 94,607,349.03
(I) Total comprehensive income 8,452,428.56 94,283,302.93 102,735,731.49 34,182,879.58 136,918,611.07
(II) Capital contributions or withdrawals by owners - - - - - - - - - - - -616,979.16 -616,979.16
1.Ordinary shares contributed by
- -616,979.16 -616,979.16
shareholders
2.Capital contributed by holders of
- -
other equity instruments
3.Share-based payments recognised in owners’ equity - -
4.Others - -
(III) Profit distribution - - - - - - - - 7,554,603.51 -26,093,771.51 -18,539,168.00 -23,155,114.88 -41,694,282.88
1.Withdrawal of surplus reserves 7,554,603.51 -7,554,603.51 - -
2.Profit distribution to owners (or shareholders) -18,539,168.00 -18,539,168.00 -23,155,114.88 -41,694,282.88
82
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
2022
Owners’ equity attributable to the parent company
Item Other equity instruments
Non-controlling Total owners’
Less: Other interests equity
Capital Specific Surplus Retained
Share capital Perpetual Treasury comprehensive Subtotal
Preference reserves reserves reserves earnings
capital Others stock income
shares
securities
3.Others - -
(IV) Transfer between owners' equity - - - - - - - - - - - - -
1.Capital reserves transfer to share capital - -
2.Surplus reserves transfer to share capital - -
3.Surplus reserves used to cover accumulated deficits - -
4.Defined benefit plan transfer to retained earnings - -
5.Other comprehensive income transfer to retained earnings - -
6.Others - -
(V) Specific reserves - - - - - - - - - - - - -
1.Withdrawal during the reporting period - -
2.Usage during the reporting period - -
(VI) Others - -
IV. Balance at 31 December 2022 185,391,680.00 - - - 296,808,965.79 - 8,130,895.08 - 68,925,849.64 481,265,907.40 1,040,523,297.91 449,285,424.88 1,489,808,722.79
Legal Representative: Cai Yuansong Chief Financial Officer： Wu Jianhua Finance Manager：Wu Jianhua
83
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Statement of Financial Position of Parent Company
as at 31 December 2023
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
Assets Note 2023/12/31 2022/12/31 Liabilities and owners' equity Note 2023/12/31 2022/12/31
Current assets: Current liabilities:
Cash and cash equivalents 7,989,557.11 7,931,576.16 Short-term borrowings - -
Held-for-trading financial assets - - Held-for-trading financial liabilities - -
Derivative financial assets - - Derivative financial liabilities - -
Notes receivable - - Notes payable - -
Accounts receivable 13.1 1,572,953.88 333,503.79 Accounts payable 2,667,658.77 3,968,243.67
Accounts receivable financing - - Advances from customers 2,235,364.98 2,041,705.86
Advances to suppliers 30,581.02 51,777.23 Contract liabilities 128,525.68 149,436.26
Other receivables 13.2 3,673,370.28 3,268,524.27 Employee benefits payable 6,860,001.30 6,777,516.33
Including: Interests receivable - - Taxes payable 3,162,838.05 4,438,418.71
Dividend receivable - - Other payables 26,986,789.58 36,906,239.73
Inventories 1,819,766.41 2,698,240.54 Including: Interests payables - -
Contract asset - - Dividend payables - -
Assets classified as held for sale - - Liabilities classified as held for sale - -
Non-current assets maturing within one year - - Non-current liabilities maturing within one year - 281,020.19
Other current assets - - Other current liabilities - -
Total current assets 15,086,228.70 14,283,621.99 Total current liabilities 42,041,178.36 54,562,580.75
Non-current assets: Non-current liabilities:
Debt investments - - Long-term borrowings - -
Other debt investments - - Bonds payable - -
Long-term receivables - - Including: Preference share - -
Long-term equity investments 13.3 923,414,701.56 923,414,701.56 Perpetual capital securities - -
84
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Assets Note 2023/12/31 2022/12/31 Liabilities and owners' equity Note 2023/12/31 2022/12/31
Other equity instrument investment 40,000.00 40,000.00 Lease liabilities - -
Other non-current financial assets Long-term payables - -
Investment properties 20,385,084.83 21,468,328.32 Long-term employee benefits payable - -
Fixed assets 413,885.43 250,663.84 Estimated liabilities - -
Construction in progress 166,338.56 244,253.46 Deferred income - -
Productive biological assets - - Deferred tax liabilities - -
Oil and gas assets Other non-current liabilities - -
Right-of-use assets - 268,718.44 Total non-current liabilities - -
Intangible assets - - Total liabilities 42,041,178.36 54,562,580.75
Research and development expenditure - - Owners’ equity:
Goodwill - - Share capital 185,391,680.00 185,391,680.00
Long-term deferred expenses 1,432,877.67 1,638,462.29 Other equity instruments - -
Deferred tax assets 849,924.71 2,562,810.80 Including: Preference shares - -
Other non-current assets - - Perpetual capital securities - -
Total non-current assets 946,702,812.76 949,887,938.71 Capital reserves 271,490,289.82 271,490,289.82
Less: Treasury stock - -
Other comprehensive income - -
Specific reserves - -
Surplus reserves 75,501,488.36 68,925,849.64
Retained earnings 387,364,404.92 383,801,160.49
Total owners’ equity 919,747,863.10 909,608,979.95
Total assets 961,789,041.46 964,171,560.70 Total liabilities and owners' equity 961,789,041.46 964,171,560.70
Legal Representative: Cai Yuansong Chief Financial Officer： Wu Jianhua Finance Manager：Wu Jianhua
85
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Statement of Profit or Loss and Other Comprehensive Income of Parent Company
for the year ended 31 December 2023
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
Item Note 2023 2022
I. Revenue 15.4 59,664,440.91 52,534,730.04
Less: Costs of sales 15.4 36,908,203.57 34,941,862.54
Taxes and surcharges 3,208,345.72 2,740,675.82
Selling and distribution expenses 4,693,773.74 4,030,945.26
Administrative expenses 3,704,127.55 3,681,000.24
Research and development expenses - -
Finance costs 445,969.38 -239,961.39
Including: Interest expense 19,466.61
Interest income 312,817.41 154,778.14
Add: Other income 90,476.54 189,026.77
Investment income/(losses) 15.5 58,215,670.49 69,465,344.64
Including: Investment income from associates and joint
ventures - -
Gains /(losses) from derecognition of - -
financial assets measured at amortised cost
Income /(losses) from net exposure hedging - -
Gains/(losses) from changes in fair values - -
Impairment loss of credit 135,589.71 -16,586.10
Impairment loss of asset -1,432,556.20 -670,777.78
Gains/(losses) from disposal of assets 369,026.55 -
II. Profit/(loss) from operations 68,082,228.04 76,347,215.10
Add: Non-operating income 202,445.81 1,226,044.22
Less: Non-operating expenses - 327.38
III. Profit/(loss) before tax 68,284,673.85 77,572,931.94
Less: Income tax expenses 2,528,286.70 2,026,896.83
IV. Net profit/(loss) for the year 65,756,387.15 75,546,035.11
(I) Net profit/(loss) from continuing operation 65,756,387.15 75,546,035.11
(II) Net profit/(loss) from discontinued operation
V. Other comprehensive income for the year, after tax - -
(I) Items that will not be reclassified subsequently to profit or loss - -
1.Remeasurement of the net defined benefit liability (asset)
2.Other comprehensive income using the equity method which will not
be reclassified subsequently to profit and loss
3.Changes in fair value of other equity instrument investment
4.Changes in fair value of the Company’s own credit risks
(II) Items that may be reclassified subsequently to profit or loss - -
1.Other comprehensive income using the equity method which will be
reclassified subsequently to profit or loss
2.Changes in fair value of other debt instrument investment
3.Other comprehensive income arising from the reclassification of
financial assets
4.Provision for credit impairment in other debt investments
5.Reserve for cash flow hedges
6.Exchange differences on translating foreign operations
VI. Total comprehensive income for the year 65,756,387.15 75,546,035.11
Legal Representative: Cai Yuansong Chief Financial Officer:Wu Jianhua Finance Manager：Wu Jianhua
86
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Statement of Cash Flows of Parent Company
for the year ended 31 December 2023
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
Item Note 2023 2022
I. Cash flows from operating activities
Cash received from the sale of goods and the rendering of services 8,337,627.54 10,206,274.70
Cash received from tax refund - 266,068.83
Other cash received relating to operating activities 57,329,814.51 49,697,929.40
Subtotal of cash inflows from operating activities 65,667,442.05 60,170,272.93
Cash payments for goods purchased and services received 7,199,248.32 3,883,818.95
Cash payments to and on behalf of employees 3,888,597.12 3,234,395.24
Payments of taxes 8,800,697.11 4,861,046.77
Other cash payments relating to operating activities 47,169,628.00 96,494,540.50
Subtotal of cash outflows from operating activities 67,058,170.55 108,473,801.46
Net cash flows from operating activities -1,390,728.50 -48,303,528.53
II. Cash flows from investing activities
Cash received from disposal and redemption of investments - -
Cash received from returns on investments 58,215,670.49 69,465,344.64
Net cash received from disposals of fixed assets, intangible assets and other 369,026.55 -
long-term assets
Net cash received from disposals of subsidiaries and other business units - -
Other cash received relating to investing activities - -
Subtotal of cash inflows from investing activities 58,584,697.04 69,465,344.64
Cash payments to acquire fixed, intangible and other long-term assets 614,493.26 1,004,394.94
Cash payments to acquire investments - -
Net cash payments to acquire subsidiaries and other business units - -
Other cash payments relating to investing activities - -
Subtotal of cash outflows from investing activities 614,493.26 1,004,394.94
Net cash flows from investing activities 57,970,203.78 68,460,949.70
III. Cash flows from financing activities
Cash received from capital contributions -
Cash received from borrowings -
Other cash received relating to financing activities -
Subtotal of cash inflows from financing activities - -
Cash repayments of debts -
Cash payments for dividends, distribution of profit and interest expenses 56,270,985.18 18,539,168.00
Other cash payments relating to financing activities 288,000.00 288,000.00
Subtotal of cash outflows from financing activities 56,558,985.18 18,827,168.00
Net cash flows from financing activities -56,558,985.18 -18,827,168.00
IV. Effect of foreign exchange rate changes on cash and cash equivalents 37,490.85 -
V. Net increase / (decrease) in cash and cash equivalents 57,980.95 1,330,253.17
Plus: Cash and cash equivalents at the beginning of the period 7,931,576.16 6,601,322.99
VI. Cash and cash equivalents at the end of the period 7,989,557.11 7,931,576.16
Legal Representative: Cai Yuansong Chief Financial Officer:Wu Jianhua Finance Manager：Wu Jianhua
87
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Statement of Changes in Owners' Equity of Parent Company
for the year ended 31 December 2023
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
2023
Other equity instruments
Item Capital Less: Other Specific Surplus Retained Total owners’
Share capital Preference Perpetual Treasury comprehensive
capital Others reserves stock income reserves reserves earnings equity
shares securities
I. Balance at 31 December 2022 185,391,680.00 - - - 271,490,289.82 - - - 68,925,849.64 383,801,160.49 909,608,979.95
Add：Changes in accounting policy -
Correction of prior period errors -
Others -
II. Balance at 1 January 2023 185,391,680.00 - - - 271,490,289.82 - - - 68,925,849.64 383,801,160.49 909,608,979.95
III. Changes in equity during the reporting period - - - - - - - - 6,575,638.72 3,563,244.43 10,138,883.15
(I) Total comprehensive income - 65,756,387.15 65,756,387.15
(II) Capital contributions or withdrawals by owners - - - - - - - - - - -
1.Ordinary shares contributed by -
shareholders
2.Capital contributed by holders of -
other equity instruments
3.Share-based payments recognised in owners’ equity -
4.Others -
(III) Profit distribution - - - - - - - - 6,575,638.72 -62,193,142.72 -55,617,504.00
1.Withdrawal of surplus reserves 6,575,638.72 -6,575,638.72 -
2.Profit distribution to owners (or shareholders) -55,617,504.00 -55,617,504.00
3.Others -
(IV) Transfer between owners' equity - - - - - - - - - - -
1.Capital reserves transfer to share capital -
2.Surplus reserves transfer to share capital -
3.Surplus reserves used to cover accumulated deficits -
4.Defined benefit plan transfer to retained earnings -
5.Other comprehensive income transfer to retained earnings -
6.Others -
(V) Specific reserves - - - - - - - - - - -
1.Withdrawal during the reporting period -
2.Usage during the reporting period -
(VI) Others -
IV. Balance at 31 December 2023 185,391,680.00 - - - 271,490,289.82 - - - 75,501,488.36 387,364,404.92 919,747,863.10
Legal Representative: Cai Yuansong Chief Financial Officer： Wu Jianhua Finance Manager：Wu Jianhua
88
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Statement of Changes in Owners' Equity of Parent Company
for the year ended 31 December 2023
Prepared by: TsannKuen (China) Enterprise Co., Ltd. Unit：Yuan Currency: CNY
2022
Other equity instruments
Less: Other
Item Perpetual Capital Specific Surplus Retained Total owners’
Share capital Preference Treasury comprehensive
capital Others reserves reserves reserves earnings equity
shares stock income
securities
I. Balance at 31 December 2021 185,391,680.00 - - - 271,490,289.82 - - - 61,371,246.13 334,348,896.89 852,602,112.84
Add：Changes in accounting policy -
Correction of prior period errors -
Others -
II. Balance at 1 January 2022 185,391,680.00 - - - 271,490,289.82 - - - 61,371,246.13 334,348,896.89 852,602,112.84
III. Changes in equity during the reporting period - - - - - - - - 7,554,603.51 49,452,263.60 57,006,867.11
(I) Total comprehensive income - 75,546,035.11 75,546,035.11
(II) Capital contributions or withdrawals by owners - - - - - - - - - - -
1.Ordinary shares contributed by
-
shareholders
2.Capital contributed by holders of
-
other equity instruments
3.Share-based payments recognised in owners’ equity -
4.Others -
(III) Profit distribution - - - - - - - - 7,554,603.51 -26,093,771.51 -18,539,168.00
1.Withdrawal of surplus reserves 7,554,603.51 -7,554,603.51 -
2.Profit distribution to owners (or shareholders) -18,539,168.00 -18,539,168.00
3.Others -
(IV) Transfer between owners' equity - - - - - - - - - - -
1.Capital reserves transfer to share capital -
2.Surplus reserves transfer to share capital -
3.Surplus reserves used to cover accumulated deficits -
4.Defined benefit plan transfer to retained earnings -
5.Other comprehensive income transfer to retained earnings -
6.Others -
(V) Specific reserves - - - - - - - - - - -
1.Withdrawal during the reporting period -
2.Usage during the reporting period -
(VI) Others -
IV. Balance at 31 December 2022 185,391,680.00 - - - 271,490,289.82 - - - 68,925,849.64 383,801,160.49 909,608,979.95
Legal Representative: Cai Yuansong Chief Financial Officer： Wu Jianhua Finance Manager：Wu Jianhua
89
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Tsann Kuen (China) Enterprise Co., Ltd.
Notes to the Financial Statements
For the Year Ended 31 December 2023
(All amounts are expressed in Renminbi Yuan (“CNY”) unless otherwise stated)
1. BASIC INFORMATION ABOUT THE COMPANY
1.1 Corporate Information
TsannKuen (China) Enterprise Co., Ltd. (hereafter “the Company or TKC”) was established
in the People’s 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 Development Limited, EUPA Industry Corporation Limited and Fillman
Investments Limited. 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. Until 31 December 2023,
the Company’s share capital is CNY 185,391,680.
Following 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.,
90
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
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) held by the Company’s shareholders,
EUPA Industry Corporation Limited, Fordchee Development Limited, and Fillman
Investments Limited to transfer into B shares. On 29 November 2007, these B shares could be
listed and exercised on Shenzhen Stock Exchange. Up to 31 December 2023, total B shares
held by the three legal shareholders (EUPA Industry Corporation Limited, Fordchee
Development Limited, and Fillman Investments Limited) are 82,830,966 shares after the
implementation of share reducing model (Accounts for 44.68% of the share capital).
Legal representative: CAI, Yuansong
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 company is actually engaged in the main business activities are: Develop, produce and
manufacture small home appliances of gourmet cooking, home helper, tea and coffee; design
and manufacture molds related to the above products, sell the products at home and abroad,
and provide after-sales service.
The financial statements approved by the resolution of the Board of Directors on 09 March
2024, in accordance with the Articles of Association, the financial statements will be
submitted to the shareholders meeting for consideration.
2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
2.1 Basis of Preparation
Based on going concern, according to actually occurred transactions and events, the Company
prepares its financial statements in accordance with the Accounting Standards for Business
Enterprises – Basic standards and concrete accounting standards, Accounting Standards for
Business Enterprises – Application Guidelines, Accounting Standards for Business
Enterprises – Interpretations and other relevant provisions (collectively known as
“Accounting Standards for Business Enterprises, issued by Ministry of Finance of PRC”). In
91
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
addition, the Company complies with the Compilation Rules for Information Disclosure by
Companies Offering Securities to the Public No.15 – General Provisions on Financial Reports
(2023 Revision) issued by the China Securities Regulatory Commission (CSRC) to disclose
its financial information.
2.2 Going Concern
The Company has assessed its ability to continually operate for the next twelve months from
the end of the reporting period, and no matters that may result in doubt on its ability as a
going concern were noted. Therefore, it is reasonable for the Company to prepare financial
statements on the going concern basis.
3. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
The following significant accounting policies and accounting estimates of the Company are
formulated in accordance with the Accounting Standards for Business Enterprises. Businesses
not mentioned are complied with relevant accounting policies of the Accounting Standards for
Business Enterprises.
3.1 Statement of Compliance with the Accounting Standards for Business Enterprises
The Company prepares its financial statements in accordance with the requirements of the
Accounting Standards for Business Enterprises, truly and completely reflecting the
Company’s financial position as at 31 December 2022, and its operating results, changes in
shareholders' equity, cash flows and other related information for the year then ended.
3.2 Accounting Period
The accounting year of the Company is from 1 January to 31 December in calendar year.
3.3 Operating Cycle
The normal operating cycle of the Company is one year.
3.4 Functional Currency
The Company takes Renminbi Yuan (“RMB”) as the functional currency.
The Company’s overseas subsidiaries choose the currency of the primary economic
environment in which the subsidiaries operate as the functional currency.
3.5 Methodology for determining materiality criteria and basis for selection
Items Materiality Criteria
92
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Significant debt investments Amount≥CNY 50,000,000.00
The Company identifies subsidiaries whose total revenue
Significant non-wholly owned subsidiaries exceeds 50% of the total group profits as significant
non-wholly owned subsidiaries
3.6 Accounting Treatment of Business Combinations under and not under Common
Control
3.6.1 Business combinations under common control
The assets and liabilities that the Company obtains in a business combination under common
control shall be measured at their carrying amount of the acquired entity at the combination
date. If the accounting policy adopted by the acquired entity is different from that adopted by
the acquiring entity, the acquiring entity shall, according to accounting policy it adopts, adjust
the relevant items in the financial statements of the acquired party based on the principal of
materiality. As for the difference between the carrying amount of the net assets obtained by
the acquiring entity and the carrying amount of the consideration paid by it, the capital reserve
(capital premium or share premium) shall be adjusted. If the capital reserve (capital premium
or share premium) is not sufficient to absorb the difference, any excess shall be adjusted
against retained earnings.
For the accounting treatment of business combination under common control by step
acquisitions, please refer to Note 3.7.6.
3.6.2 Business combinations not under common control
The assets and liabilities that the Company obtains in a business combination not under
common control shall be measured at their fair value at the acquisition date. If the accounting
policy adopted by the acquired entity is different from that adopted by the acquiring entity,
the acquiring entity shall, according to accounting policy it adopts, adjust the relevant items in
the financial statements of the acquired entity based on the principal of materiality. The
acquiring entity shall recognise the positive balance between the combination costs and the
fair value of the identifiable net assets it obtains from the acquired entity as goodwill. The
acquiring entity shall, pursuant to the following provisions, treat the negative balance between
the combination costs and the fair value of the identifiable net assets it obtains from the
acquired entity:
3.6.2.1 It shall review the measurement of the fair values of the identifiable assets, liabilities
and contingent liabilities it obtains from the acquired entity as well as the combination costs;
93
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.6.2.2 If, after the review, the combination costs are still less than the fair value of the
identifiable net assets it obtains from the acquired entity, the balance shall be recognised in
profit or loss of the reporting period.
For the accounting treatment of business combination under the same control by step
acquisitions, please refer to Note 3.7.(f).
3.6.3 Treatment of business combination related costs
The intermediary costs such as audit, legal services and valuation consulting and other related
management costs that are directly attributable to the business combination shall be charged
in profit or loss in the period in which they are incurred. The costs to issue equity or debt
securities for the consideration of business combination shall be recorded as a part of the
value of the respect equity or debt securities upon initial recognition.
3.7 Judgement Criteria for Control and Method of Preparing the Consolidated
Financial Statements
3.7.1 Judgement Criteria for Control and Scope of consolidation
Control exists when the Company has all the following: power over the investee; exposure, or
rights to variable returns from the Company’s involvement with the investee; and the ability
to use its power over the investee to affect the amount of the investor’s returns. The definition
of control consists of three basic elements: first, the investor has power over the investee;
second, it enjoys variable returns as a result of its participation in the investee's related
activities; and third, it has the ability to use its power over the investee to affect the amount of
its returns. When the Company's investment in an investee has these three elements, it
indicates that the Company is able to control the investee.
The scope of consolidated financial statements shall be determined based on control. It not
only includes subsidiaries determined based on voting power (or similar) or other
arrangement, but also structured entities under one or several contract arrangements.
Subsidiaries are the entities that controlled by the Company (including enterprise, a divisible
part of the investee, and structured entity controlled by the enterprise). A structured entity
(sometimes called a Special Purpose Entity) is an entity that has been designed so that voting
or similar rights are not the dominant factor in deciding who controls the entity.
3.7.2 Special requirement as the parent company is an investment entity
94
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
If the parent company is an investment entity, it should measure its investments in particular
subsidiaries as financial assets at fair value through profit or loss instead of consolidating
those subsidiaries in its consolidated and separate financial statements. However, as an
exception to this requirement, if a subsidiary provides investment-related services or activities
to the investment entity, it should be consolidated.
The parent company is defined as investment entity when meets following conditions:
3.7.2.1 Obtains funds from one or more investors for the purpose of providing those investors
with investment management services;
3.7.2.2 Commits to its investors that its business purpose is to invest funds solely for returns
from capital appreciation, investment income or both; and
3.7.2.3 Measures and evaluates the performance of substantially all of its investments on a fair
value basis.
If the parent company becomes an investment entity, it shall cease to consolidate its
subsidiaries at the date of the change in status, except for any subsidiary which provides
investment-related services or activities to the investment entity shall be continued to be
consolidated. The deconsolidation of subsidiaries is accounted for as though the investment
entity partially disposed subsidiaries without loss of control.
When the parent company previously classified as an investment entity ceases to be an
investment entity, subsidiary that was previously measured at fair value through profit or loss
shall be included in the scope of consolidated financial statements at the date of the change in
status. The fair value of the subsidiary at the date of change represents the transferred deemed
consideration in accordance with the accounting for business combination not under common
control.
3.7.3 Method of preparing the consolidated financial statements
The consolidated financial statements shall be prepared by the Company based on the
financial statements of the Company and its subsidiaries, and using other related information.
When preparing consolidated financial statements, the Company shall consider the entire
group as an accounting entity, adopt uniform accounting policies and apply the requirements
of Accounting Standard for Business Enterprises related to recognition, measurement and
presentation. The consolidated financial statements shall reflect the overall financial position,
operating results and cash flows of the group.
95
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.7.3.1 Like items of assets, liabilities, equity, income, expenses and cash flows of the parent
are combined with those of the subsidiaries.
3.7.3.2 The carrying amount of the parent’s investment in each subsidiary is eliminated
(off-set) against the parent’s portion of equity of each subsidiary.
3.7.3.3 Eliminate the impact of intragroup transactions between the Company and the
subsidiaries or between subsidiaries, and when intragroup transactions indicate an impairment
of related assets, the losses shall be recognised in full.
3.7.3.4 Make adjustments to special transactions from the perspective of the group.
3.7.4 Method of preparation of the consolidated financial statements when subsidiaries
are acquired or disposed in the reporting period
3.7.4.1 Acquisition of subsidiaries or business
Subsidiaries or business acquired through business combination under common control
When preparing consolidated statements of financial position, the opening balance of the
consolidated balance sheet shall be adjusted. Related items of comparative financial
statements shall be adjusted as well, deeming that the combined entity has always existed ever
since the ultimate controlling party began to control.
Incomes, expenses and profits of the subsidiary incurred from the beginning of the reporting
period to the end of the reporting period shall be included into the consolidated statement of
profit or loss. Related items of comparative financial statements shall be adjusted as well,
deeming that the combined entity has always existed ever since the ultimate controlling party
began to control.
Cash flows from the beginning of the reporting period to the end of the reporting period shall
be included into the consolidated statement of cash flows. Related items of comparative
financial statements shall be adjusted as well, deeming that the combined entity has always
existed ever since the ultimate controlling party began to control.
Subsidiaries or business acquired through business combination not under common control
When preparing the consolidated statements of financial position, the opening balance of the
consolidated statements of financial position shall not be adjusted.
Incomes, expenses and profits of the subsidiary incurred from the acquisition date to the end
of the reporting period shall be included into the consolidated statement of profit or loss.
96
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Cash flows from the acquisition date to the end of the reporting period shall be included into
the consolidated statement of cash flows.
3.7.4.2 Disposal of subsidiaries or business
When preparing the consolidated statements of financial position, the opening balance of the
consolidated statements of financial position shall not be adjusted.
Incomes, expenses and profits incurred from the beginning of the subsidiary to the disposal
date shall be included into the consolidated statement of profit or loss.
Cash flows from the beginning of the subsidiary to the disposal date shall be included into the
consolidated statement of cash flows.
3.7.5 Special consideration in consolidation elimination
3.7.5.1 Long-term equity investment held by the subsidiaries to the Company shall be
recognised as treasury stock of the Company, which is offset with the owner’s equity,
represented as “treasury stock” under “owner’s equity” in the consolidated statement of
financial position.
Long-term equity investment held by subsidiaries between each other is accounted for taking
long-term equity investment held by the Company to its subsidiaries as reference. That is, the
long-term equity investment is eliminated (off- set) against the portion of the corresponding
subsidiary’s equity.
3.7.5.2 Due to not belonging to paid-in capital (or share capital) and capital reserve, and being
different from retained earnings and undistributed profit, “Specific reserves” and “General
risk provision” shall be recovered based on the proportion attributable to owners of the parent
company after long-term equity investment to the subsidiaries is eliminated with the
subsidiaries’ equity.
3.7.5.3 If temporary timing difference between the book value of the assets and liabilities in
the consolidated statement of financial position and their tax basis is generated as a result of
elimination of unrealized inter-company transaction profit or loss, deferred tax assets of
deferred tax liabilities shall be recognised, and income tax expense in the consolidated
statement of profit or loss shall be adjusted simultaneously, excluding deferred taxes related
to transactions or events directly recognised in owner’s equity or business combination.
3.7.5.4 Unrealised inter-company transactions profit or loss generated from the Company
97
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
selling assets to its subsidiaries shall be eliminated against “net profit attributed to the owners
of the parent company” in full. Unrealized inter-company transactions profit or loss generated
from the subsidiaries selling assets to the Company shall be eliminated between “net profit
attributed to the owners of the parent company” and “non-controlling interests” pursuant to
the proportion of the Company in the related subsidiaries. Unrealized inter-company
transactions profit or loss generated from the assets sales between the subsidiaries shall be
eliminated between “net profit attributed to the owners of the parent company” and
“non-controlling interests” pursuant to the proportion of the Company in the selling
subsidiaries.
3.7.5.5 If loss attributed to the minority shareholders of a subsidiary in current period is more
than the proportion of non-controlling interest in this subsidiary at the beginning of the period,
non-controlling interest is still to be written down.
3.7.6 Accounting for Special Transactions
3.7.6.1 Purchasing of non-controlling interests
Where, the Company purchases non-controlling interests of its subsidiary, in the separate
financial statements of the Company, the cost of the long-term equity investment obtained in
purchasing non-controlling interests is measured at the fair value of the consideration paid. In
the consolidated financial statements, difference between the cost of the long-term equity
investment newly obtained in purchasing non-controlling interests and share of the
subsidiary’s net assets from the acquisition date or combination date continuingly calculated
pursuant to the newly acquired shareholding proportion shall be adjusted into capital reserve
(capital premium or share premium). If capital reserve is not enough to be offset, surplus
reserve and undistributed profit shall be offset in turn.
3.7.6.2 Gaining control over the subsidiary in stages through multiple transactions
Business combination under common control in stages through multiple transactions
On the combination date, in the separate financial statement, initial cost of the long-term
equity investment is determined according to the share of carrying amount of the acquiree’s
net assets in the ultimate controlling entity’s consolidated financial statements after
combination. The difference between the initial cost of the long-term equity investment and
the carrying amount of the long -term investment held prior of control plus book value of
additional consideration paid at acquisition date is adjusted into capital reserve (capital
98
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
premium or share premium). If the capital reserve is not enough to absorb the difference, any
excess shall be adjusted against surplus reserve and undistributed profit in turn.
In the consolidated financial statements, the assets and liabilities acquired during the
combination should be recognized at their carrying amount in the ultimate controlling entity’s
consolidated financial statements on the combination date unless any adjustment is resulted
from the difference in accounting policies. The difference between the carrying amount of the
investment held prior of control plus book value of additional consideration paid on the
acquisition date and the net assets acquired through the combination is adjusted into capital
reserve (capital premium or share premium). If the capital reserve is not enough to absorb the
difference, any excess shall be adjusted against retained earnings.
If the acquiring entity holds equity investment in the acquired entity prior to the combination
date and the equity investment is accounted for under the equity method, related profit or loss,
other comprehensive income and other changes in equity which have been recognised during
the period from the later of the date of the Company obtaining original equity interest and the
date of both the acquirer and the acquiree under common control of the same ultimate
controlling party to the combination date should be offset against the opening balance of
retained earnings at the comparative financial statements period respectively.
Business combination not under common control in stages through multiple transactions
On the consolidation date, in the separate financial statements, the initial cost of long-term
equity investment is determined according to the carrying amount of the original long-term
investment plus the cost of new investment.
In the consolidated financial statements, the equity interest of the acquired entity held prior to
the acquisition date shall be re-measured at its fair value on the acquisition date. Difference
between the fair value of the equity interest and its book value is recognised as investment
income. The other comprehensive income related to the equity interest held prior to the
acquisition date calculated through equity method, should be transferred to current investment
income of the acquisition period, excluding other comprehensive income resulted from the
remeasurement of the net assets or net liabilities under defined benefit plan. The Company
shall disclose acquisition-date fair value of the equity interest held prior to the acquisition date,
and the related gains or losses due to the remeasurement based on fair value.
3.7.6.3 Disposal of investment in subsidiaries without a loss of control
99
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
For partial disposal of the long-term equity investment in the subsidiaries without a loss of
control, when the Company prepares consolidated financial statements, difference between
consideration received from the disposal and the corresponding share of subsidiary’s net
assets cumulatively calculated from the acquisition date or combination date shall be adjusted
into capital reserve (capital premium or share premium). If the capital reserve is not enough to
absorb the difference, any excess shall be offset against retained earnings.
3.7.6.4 Disposal of investment in subsidiaries with a loss of control
Disposal through one transaction
If the Company loses control in an investee through partial disposal of the equity investment,
when the consolidated financial statements are prepared, the retained equity interest should be
re-measured at fair value at the date of loss of control. The difference between i) the fair value
of consideration received from the disposal plus non-controlling interest retained; ii) share of
the former subsidiary’s net assets cumulatively calculated from the acquisition date or
combination date according to the original proportion of equity interest, shall be recognised in
current investment income when control is lost.
Moreover, other comprehensive income and other changes in equity related to the equity
investment in the former subsidiary shall be transferred into current investment income when
control is lost, excluding other comprehensive income resulted from the remeasurement of the
movement of net assets or net liabilities under defined benefit plan.
Disposal in stages
In the consolidated financial statements, whether the transactions should be accounted for as
“a single transaction” needs to be decided firstly.
If the disposal in stages should not be classified as “a single transaction”, in the separate
financial statements, for transactions prior of the date of loss of control, carrying amount of
each disposal of long-term equity investment need to be recognized, and the difference
between consideration received and the carrying amount of long-term equity investment
corresponding to the equity interest disposed should be recognized in current investment
income; in the consolidated financial statements, the disposal transaction should be accounted
for according to related policy in “Disposal of long-term equity investment in subsidiaries
without a loss of control”.
If the disposal in stages should be classified as “a single transaction”, these transactions
100
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
should be accounted for as a single transaction of disposal of subsidiary resulting in loss of
control. In the separate financial statements, for each transaction prior of the date of loss of
control, difference between consideration received and the carrying amount of long-term
equity investment corresponding to the equity interest disposed should be recognised as other
comprehensive income firstly, and transferred to profit or loss as a whole when control is lost;
in the consolidated financial statements, for each transaction prior of the date of loss of
control, difference between consideration received and proportion of the subsidiary’s net
assets corresponding to the equity interest disposed should be recognised in profit or loss as a
whole when control is lost.
In considering of the terms and conditions of the transactions as well as their economic impact,
the presence of one or more of the following indicators may lead to account for multiple
transactions as a single transaction:
The transactions are entered into simultaneously or in contemplation of one another.
The transactions form a single transaction designed to achieve an overall commercial
effect.
The occurrence of one transaction depends on the occurrence of at least one other
transaction.
One transaction, when considered on its own merits, does not make economic sense, but
when considered together with the other transaction or transactions would be considered
economically justifiable.
3.7.6.5 Diluting equity share of parent company in its subsidiaries due to additional capital
injection by the subsidiaries’ minority shareholders.
Other shareholders (minority shareholders) of the subsidiaries inject additional capital in the
subsidiaries, which resulted in the dilution of equity interest of parent company in these
subsidiaries. In the consolidated financial statements, difference between share of the
corresponding subsidiaries’ net assets calculated based on the parent’s equity interest before
and after the capital injection shall be adjusted into capital reserve (capital premium or share
premium). If the capital reserve is not enough to absorb the difference, any excess shall be
adjusted against retained earnings.
3.8 Classification of Joint Venture Arrangement and Accounting of Joint Operation
101
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
The joint venture arrangement refers to an arrangement jointly controlled by two or more
parties. The joint venture arrangement of this company is divided into joint operation and
joint venture.
3.8.1 Joint Operation
Joint operation refers to a joint venture arrangement in which this company owns the assets
related to the arrangement and assumes the liabilities related to the arrangement.
The Company recognizes the following items related to its share of interests in joint
operations and conducts accounting treatment in accordance with the provisions of the
relevant accounting standards for business enterprises:
3.8.1.1 Recognition of assets held separately and jointly held assets according to their shares;
3.8.1.2 Recognition of liabilities borne separately and jointly liabilities in accordance with
their shares;
3.8.1.3 Recognition of income from the sale of its share of the output of the joint operation;
3.8.1.4 Recognition of the income generated by the sale of output from joint operations on
share-by-share basis;
3.8.1.5 Recognition of expenses incurred separately and expenses incurred in joint operations
according to their share.
3.8.2 Joint Venture
Joint venture refers to a joint arrangement in which the Company has rights only to the net
assets of the arrangement.
The Company accounts for its investments in joint ventures in accordance with the provisions
of the equity method of accounting relating to long-term equity investments.
3.9 Cash and Cash Equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash
equivalents include short-term (generally within three months of maturity at acquisition),
highly liquid investments that are readily convertible into known amounts of cash and which
are subject to an insignificant risk of changes in value.
3.10 Foreign Currency Transactions and Translation of Foreign Currency Financial
102
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Statements
3.10.1 Determination of the exchange rate for foreign currency transactions
At the time of initial recognition of a foreign currency transaction, the amount in the foreign
currency shall be translated into the amount in the functional currency at the spot exchange
rate of the transaction date, or at an exchange rate which is determined through a systematic
and reasonable method and is approximate to the spot exchange rate of the transaction date
(hereinafter referred to as the approximate exchange rate).
3.10.2 Translation of monetary items denominated in foreign currency on the balance
sheet date
The foreign currency monetary items shall be translated at the spot exchange rate on the
balance sheet date. The balance of exchange arising from the difference between the spot
exchange rate on the balance sheet date and the spot exchange rate at the time of initial
recognition or prior to the balance sheet date shall be recorded into the profits and losses at
the current period. The foreign currency non-monetary items measured at the historical cost
shall still be translated at the spot exchange rate on the transaction date; for the foreign
currency non-monetary items restated to a fair value measurement, shall be translated into the
at the spot exchange rate at the date when the fair value was determined, the difference
between the restated functional currency amount and the original functional currency amount
shall be recorded into the profits and losses at the current period.
3.10.3 Translation method of foreign currency financial statements
Before translating the financial statements of foreign operations, the accounting period and
accounting policy shall be adjusted so as to conform to the Company. The adjusted foreign
operation financial statements denominated in foreign currency (other than functional
currency) shall be translated in accordance with the following method:
3.10.3.1 The asset and liability items in the statement of financial position shall be translated
at the spot exchange rates at the date of that statement of financial position. The owners’
equity items except undistributed profit shall be translated at the spot exchange rates when
they are incurred.
3.10.3.2 The income and expense items in the statement of profit and other comprehensive
income shall be translated at the spot exchange rates or approximate exchange rate at the date
of transaction.
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.10.3.3 Foreign currency cash flows and cash flows of foreign subsidiaries shall be translated
at the spot exchange rate or approximate exchange rate when the cash flows are incurred. The
effect of exchange rate changes on cash is presented separately in the statement of cash flows
as an adjustment item.
3.10.3.4 The differences arising from the translation of foreign currency financial statements
shall be presented separately as “other comprehensive income” under the owners’ equity
items of the consolidated statement of financial position.
When disposing a foreign operation involving loss of control, the cumulative amount of the
exchange differences relating to that foreign operation recognised under other comprehensive
income in the statement of financial position, shall be reclassified into current profit or loss
according to the proportion disposed.
3.11 Financial Instruments
Financial instrument is any contract which gives rise to both a financial asset of one entity and
a financial liability or equity instrument of another entity.
3.11.1 Recognition and derecognition of financial instruments
A financial asset or a financial liability should be recognised in the statement of financial
position when, and only when, an entity becomes party to the contractual provisions of the
instrument.
A financial asset can only be derecognised when meets one of the following conditions:
3.11.1.1 The rights to the contractual cash flows from a financial asset expire
3.11.1.2 The financial asset has been transferred and meets one of the following derecognition
conditions:
Financial liabilities (or part thereof) are derecognised only when the liability is
extinguished—i.e., when the obligation specified in the contract is discharged or cancelled or
expires. An exchange of the Company (borrower) and lender of debt instruments that carry
significantly different terms or a substantial modification of the terms of an existing liability
are both accounted for as an extinguishment of the original financial liability and the
recognition of a new financial liability.
Purchase or sale of financial assets in a regular-way shall be recognised and derecognised
using trade date accounting. A regular-way purchase or sale of financial assets is a transaction
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
under a contract whose terms require delivery of the asset within the time frame established
generally by regulations or convention in the market place concerned. Trade date is the date at
which the entity commits itself to purchase or sell an asset.
3.11.2 Classification and measurement of financial assets
At initial recognition, the Company classified its financial asset based on both the business
model for managing the financial asset and the contractual cash flow characteristics of the
financial asset: financial asset at amortised cost, financial asset at fair value through profit or
loss (FVTPL) and financial asset at fair value through other comprehensive income
(FVTOCI). Reclassification of financial assets is permitted if, and only if, the objective of the
entity’s business model for managing those financial assets changes. In this circumstance, all
affected financial assets shall be reclassified on the first day of the first reporting period after
the changes in business model; otherwise the financial assets cannot be reclassified after
initial recognition.
Financial assets shall be measured at initial recognition at fair value. For financial assets
measured at FVTPL, transaction costs are recognised in current profit or loss. For financial
assets not measured at FVTPL, transaction costs should be included in the initial
measurement. Notes receivable or accounts receivable that arise from sales of goods or
rendering of services are initially measured at the transaction price defined in the accounting
standard of revenue where the transaction does not include a significant financing component.
Subsequent measurement of financial assets will be based on their categories:
3.11.2.1 Financial asset at amortised cost
The financial asset at amortised cost category of classification applies when both the
following conditions are met: the financial asset is held within the business model whose
objective is to hold financial assets in order to collect contractual cash flows, and the
contractual term of the financial asset gives rise on specified dates to cash flows that are
solely payment of principal and interest on the principal amount outstanding. These financial
assets are subsequently measured at amortised cost by adopting the effective interest rate
method. Any gain or loss arising from derecognition according to the amortization under
effective interest rate method or impairment are recognised in current profit or loss.
3.11.2.2 Financial asset at fair value through other comprehensive income (FVTOCI)
The financial asset at FVTOCI category of classification applies when both the following
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
conditions are met: the financial asset is held within the business model whose objective is
achieved by both collecting contractual cash flows and selling financial assets, and the
contractual term of the financial asset gives rise on specified dates to cash flows that are
solely payment of principle and interest on the principal amount outstanding. All changes in
fair value are recognised in other comprehensive income except for gain or loss arising from
impairment or exchange differences, which should be recognised in current profit or loss. At
derecognition, cumulative gain or loss previously recognised under OCI is reclassified to
current profit or loss. However, interest income calculated based on the effective interest rate
is included in current profit or loss.
The Company make an irrevocable decision to designate part of non-trading equity instrument
investments as measured through FVTOCI. All changes in fair value are recognised in other
comprehensive income except for dividend income recognised in current profit or loss. At
derecognition, cumulative gain or loss are reclassified to retained earnings.
3.11.2.3 Financial asset at fair value through profit or loss (FVTPL)
Financial asset except for above mentioned financial asset at amortised cost or financial asset
at fair value through other comprehensive income (FVTOCI), should be classified as financial
asset at fair value through profit or loss (FVTPL). These financial assets should be
subsequently measured at fair value. All the changes in fair value are included in current
profit or loss.
3.11.3 Classification and measurement of financial liabilities
The Company classified the financial liabilities as financial liabilities at fair value through
profit or loss (FVTPL), loan commitments at a below-market interest rate and financial
guarantee contracts and financial asset at amortised cost.
Subsequent measurement of financial assets will be based on the classification:
3.11.3.1 Financial liabilities at fair value through profit or loss (FVTPL)
Held-for-trading financial liabilities (including derivatives that are financial liabilities) and
financial liabilities designated at FVTPL are classified as financial liabilities at FVTP. After
initial recognition, any gain or loss (including interest expense) are recognised in current
profit or loss except for those hedge accounting is applied. For financial liability that is
designated as at FVTPL, changes in the fair value of the financial liability that is attributable
to changes in the own credit risk of the issuer shall be presented in other comprehensive
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
income. At derecognition, cumulative gain or loss previously recognised under OCI is
reclassified to retained earnings.
3.11.3.2 Loan commitments and financial guarantee contracts
Loan commitment is a commitment by the Company to provide a loan to customer under
specified contract terms. The provision of impairment losses of loan commitments shall be
recognised based on expected credit losses model.
Financial guarantee contract is a contract that requires the Company to make specified
payments to reimburse the holder for a loss it incurs because a specified debtor fails to make
payment when due in accordance with the original or modified terms of a debt instrument.
Financial guarantee contracts liability shall be subsequently measured at the higher of: The
amount of the loss allowance recognised according to the impairment principles of financial
instruments; and the amount initially recognised less the cumulative amount of income
recognised in accordance with the revenue principles.
3.11.3.3 Financial liabilities at amortised cost
After initial recognition, the Company measured other financial liabilities at amortised cost
using the effective interest method.
Except for special situation, financial liabilities and equity instrument should be classified in
accordance with the following principles:
3.11.3.3.1 If the Company has no unconditional right to avoid delivering cash or another
financial instrument to fulfill a contractual obligation, this contractual obligation meet the
definition of financial liabilities. Some financial instruments do not comprise terms and
conditions related to obligations of delivering cash or another financial instrument explicitly,
they may include contractual obligation indirectly through other terms and conditions.
3.11.3.3.2 If a financial instrument must or may be settled in the Company's own equity
instruments, it should be considered that the Company’s own equity instruments are
alternatives of cash or another financial instrument, or to entitle the holder of the equity
instruments to sharing the remaining rights over the net assets of the issuer. If the former is
the case, the instrument is a liability of the issuer; otherwise, it is an equity instrument of the
issuer. Under some circumstances, it is regulated in the contract that the financial instrument
must or may be settled in the Company's own equity instruments, where, amount of
contractual rights and obligations are calculated by multiplying the number of the equity
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
instruments to be available or delivered by its fair value upon settlement. Such contracts shall
be classified as financial liabilities, regardless that the amount of contractual rights and
liabilities is fixed, or fluctuate totally or partially with variables other than market price of the
entity’s own equity instruments (such as interest rate, price of some kind of goods or some
kind of financial instrument).
3.11.4 Derivatives and embedded derivatives
At initial recognition, derivatives shall be measured at fair value at the date of derivative
contracts are signed and subsequently measured at fair value. The derivative with a positive
fair value shall be recognized as an asset, and with a negative fair value shall be recognised as
a liability.
Gains or losses arising from the changes in fair value of derivatives shall be recognised
directly into current profit or loss except for the effective portion of cash flow hedges which
shall be recognised in other comprehensive income and reclassified into current profit or loss
when the hedged items affect profit or loss.
An embedded derivative is a component of a hybrid contract with a financial asset as a host,
the Company shall apply the requirements of financial asset classification to the entire hybrid
contract. If a host that is not a financial asset and the hybrid contract is not measured at fair
value with changes in fair value recognised in profit or loss, and the economic characteristics
and risks of the embedded derivative are not closely related to the economic characteristics
and risks of the host, and a separate instrument with the same terms as the embedded
derivative would meet the definition of a derivative, the embedded derivative shall be
separated from the hybrid instrument and accounted for as a separate derivative instrument. If
the Company is unable to measure the fair value of the embedded derivative at the acquisition
date or subsequently at the balance sheet date, the entire hybrid contract is designated as
financial assets or financial liabilities at fair value through profit or loss.
3.11.5 Impairment of financial instrument
The Company shall recognise a loss allowance based on expected credit losses on a financial
asset that is measured at amortised cost, a debt investment at fair value through other
comprehensive income, a contract asset, a lease receivable, a loan commitment and a financial
guarantee contract.
3.11.5.1 Measurement of expected credit losses
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Expected credit losses are the weighted average of credit losses of the financial instruments
with the respective risks of a default occurring as the weights. Credit loss is the difference
between all contractual cash flows that are due to the Company in accordance with the
contract and all the cash flows that the Company expects to receive (ie all cash shortfalls),
discounted at the original effective interest rate or credit- adjusted effective interest rate for
purchased or originated credit-impaired financial assets.
Lifetime expected credit losses are the expected credit losses that result from all possible
default events over the expected life of a financial instrument.
12-month expected credit losses are the portion of lifetime expected credit losses that
represent the expected credit losses that result from default events on a financial instrument
that are possible within the 12 months after the reporting date (or the expected lifetime, if the
expected life of a financial instrument is less than 12 months).
At each reporting date, the Company classifies financial instruments into three stages and
makes provisions for expected credit losses accordingly. A financial instrument of which the
credit risk has not significantly increased since initial recognition is at stage 1. The Company
shall measure the loss allowance for that financial instrument at an amount equal to 12-month
expected credit losses. A financial instrument with a significant increase in credit risk since
initial recognition but is not considered to be credit-impaired is at stage 2. The Company shall
measure the loss allowance for that financial instrument at an amount equal to the lifetime
expected credit losses. A financial instrument is considered to be credit-impaired as at the end
of the reporting period is at stage 3. The Company shall measure the loss allowance for that
financial instrument at an amount equal to the lifetime expected credit losses.
The Company may assume that the credit risk on a financial instrument has not increased
significantly since initial recognition if the financial instrument is determined to have low
credit risk at the reporting date and measure the loss allowance for that financial instrument at
an amount equal to 12-month expected credit losses.
For financial instrument at stage 1, stage 2 and those have low credit risk, the interest revenue
shall be calculated by applying the effective interest rate to the gross carrying amount of a
financial asset (ie, impairment loss not been deducted). For financial instrument at stage 3,
interest revenue shall be calculated by applying the effective interest rate to the amortised cost
after deducting of impairment loss.
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
For notes receivable, accounts receivable and accounts receivable financing, no matter it
contains a significant financing component or not, the Company shall measure the loss
allowance at an amount equal to the lifetime expected credit losses.
3.11.5.1.1 Receivables
For the notes receivable, accounts receivable, other receivables, accounts receivable financing,
and long-term receivables which are demonstrated to be impaired by any objective evidence,
or applicable for individual assessment, the Company shall individually assess for impairment
and recognize the loss allowance for expected credit losses. If the Company determines that
no objective evidence of impairment exists for notes receivable, accounts receivable, other
receivables, accounts receivable financing, and long-term receivables, or the expected credit
loss of a single financial asset cannot be assessed at reasonable cost, such notes receivable,
accounts receivable, other receivables, accounts receivable financing, and long-term
receivables shall be divided into several groups based on similar credit risk characteristics and
calculate collectively on the expected credit loss. The determination basis of groups is as
following:
a. Notes Receivables
For notes receivable classified as portfolios, the Company calculates expected credit losses
based on default exposure and expected credit loss rates throughout the life of the Company,
considering historical credit loss experience, combined with current conditions and the
forecast of the future economic conditions.
Item Basis for determining the groups
Bank acceptance bill The acceptor is a bank with less credit risk.
According to the credit risk of the acceptor, it should be the same as the portfolios of
Commercial acceptance bill
accounts receivable.
b. Accounts Receivables
For accounts receivables that do not contain significant financing components, the Company
measures the loss impairment in accordance with the amount equivalent to the expected credit
loss in the whole duration.
For accounts receivables and lease receivables that contain significant financing components,
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
the Company continuously chooses to measure the loss impairment in accordance with the
amount equivalent to the expected credit loss in the whole duration.
Other than the accounts receivable whose credit risk is assessed individually, the other
accounts receivables are grouped based on their credit risk characteristics:
Group Basis for determining the groups
Aging of Accounts
This group uses the accounts receivables aging as the credit risk characteristics.
Receivables
Related parties Related party relationships (Unless there is evidence that a credit loss may occur).
c. Other Receivables
The Company assesses whether the credit risk of other receivables has significantly increased
since initial recognition, and utilizes the amount equivalent to the expected credit loss in the
next 12 months or the whole duration to measures the impairment loss accordingly. Besides
the other receivables that have individually assessed credit risk, the rest of the other
receivables are classified into different groups based on their credit risk characteristics:
Group Basis for determining the groups
This group of receivables includes deposit receivables, advances on behalf of others and
Deposit guarantee
quality guarantee deposits to be collected in daily activities.
Export tax refund This group is the declared export tax refund funds that have not been received.
Open credits This group uses the age of accounts receivable as the credit risk characteristics.
Related parties Related party relationships (Unless there is evidence that a credit loss may occur)
The Company's aging calculation method based on the combination of aging recognition
credit risk characteristics:
The aging of accounts receivables for the portfolio of credit risk features recognized by aging
is calculated as follows:
Aging Accrual ratio（%）
Not overdue 0.50
1-30 days overdue 4.50
31-60 days overdue 20.00
61-90 days overdue 45.00
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Aging Accrual ratio（%）
More than 90 days overdue 100.00
The aging of other receivables for the portfolio of credit risk features recognized by aging is
calculated as follows:
Aging Accrual ratio（%）
1-90 days 0.00
90-180 days 10.00
180-270 days 30.00
270-360 days 50.00
More than one year 100.00
3.11.5.1.2 Debt investment and other debt investment
For debt investment and other debt investment, the Company shall calculate the expected
credit loss through the default exposure and the 12-month or lifetime expected credit loss rate
based on the nature of the investment, counterparty and the type of risk exposure.
3.11.5.2 Low credit risk
If the financial instrument has a low risk of default, the borrower has a strong capacity to meet
its contractual cash flow obligations in the near term and adverse changes in economic and
business conditions in the longer term may, but will not necessarily, reduce the ability of the
borrower to fulfill its contractual cash flow obligations.
3.11.5.3 Significant increase in credit risk
The Company shall assess whether the credit risk on a financial instrument has increased
significantly since initial recognition, using the change in the risk of a default occurring over
the expected life of the financial instrument, through the comparison of the risk of a default
occurring on the financial instrument as at the reporting date with the risk of a default
occurring on the financial instrument as at the date of initial recognition.
To make that assessment, the Company shall consider reasonable and supportable information,
that is available without undue cost or effort, and that is indicative of significant increases in
credit risk since initial recognition, including forward-looking information. The information
considered by the Company are as following:
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Significant changes in internal price indicators of credit risk as a result of a change in
credit risk since inception
Existing or forecast adverse change in the business, financial or economic conditions of
the borrower that results in a significant change in the borrower’s ability to meet its debt
obligations；
An actual or expected significant change in the operating results of the borrower; An
actual or expected significant adverse change in the regulatory, economic, or technological
environment of the borrower；
Significant changes in the value of the collateral supporting the obligation or in the
quality of third-party guarantees or credit enhancements, which are expected to reduce the
borrower’s economic incentive to make scheduled contractual payments or to otherwise
influence the probability of a default occurring;
Significant change that are expected to reduce the borrower’s economic incentive to make
scheduled contractual payments;
Expected changes in the loan documentation including an expected breach of contract
that may lead to covenant waivers or amendments, interest payment holidays, interest rate
step-ups, requiring additional collateral or guarantees, or other changes to the contractual
framework of the instrument；
Significant changes in the expected performance and behavior of the borrower；
Contractual payments are more than 30 days past due.
Depending on the nature of the financial instruments, the Company shall assess whether the
credit risk has increased significantly since initial recognition on an individual financial
instrument or a group of financial instruments. When assessed based on a group of financial
instruments, the Company can group financial instruments on the basis of shared credit risk
characteristics, for example, past due information and credit risk rating.
Generally, the Company shall determine the credit risk on a financial asset has increased
significantly since initial recognition when contractual payments are more than 30 days past
due. The Company can only rebut this presumption if the Company has reasonable and
supportable information that is available without undue cost or effort, that demonstrates that
the credit risk has not increased significantly since initial recognition even though the
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
contractual payments are more than 30 days past due.
3.11.5.4 Credit-impaired financial asset
The Company shall assess at each reporting date whether the credit impairment has occurred
for financial asset at amortised cost and debt investment at fair value through other
comprehensive income. A financial asset is credit-impaired when one or more events that
have a detrimental impact on the estimated future cash flows of that financial asset have
occurred. Evidences that a financial asset is credit-impaired include observable data about the
following events:
Significant financial difficulty of the issuer or the borrower；a breach of contract, such as a
default or past due event; the lender(s) of the borrower, for economic or contractual reasons
relating to the borrower’s financial difficulty, having granted to the borrower a concession(s)
that the lender(s) would not otherwise consider；it is becoming probable that the borrower will
enter bankruptcy or other financial reorganisation;the disappearance of an active market for
that financial asset because of financial difficulties；the purchase or origination of a financial
asset at a deep discount that reflects the incurred credit losses.
3.11.5.5 Presentation of impairment of expected credit loss
In order to reflect the changes of credit risk of financial instrument since initial recognition,
the Company shall at each reporting date remeasure the expected credit loss and recognise in
profit or loss, as an impairment gain or loss, the amount of expected credit losses addition (or
reversal). For financial asset at amortised cost, the loss allowance shall reduce the carrying
amount of the financial asset in the statement of financial position; for debt investment at fair
value through other comprehensive income, the loss allowance shall be recognised in other
comprehensive income and shall not reduce the carrying amount of the financial asset in the
statement of financial position.
3.11.5.6 Write-off
The Company shall directly reduce the gross carrying amount of a financial asset when the
Company has no reasonable expectations of recovering the contractual cash flow of a
financial asset in its entirety or a portion thereof. Such write-off constitutes a derecognition of
the financial asset. This circumstance usually occurs when the Company determines that the
debtor has no assets or sources of income that could generate sufficient cash flow to repay the
write-off amount.
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Recovery of financial asset written off shall be recognised in profit or loss as reversal of
impairment loss.
3.11.6 Transfer of financial assets
Transfer of financial assets refers to following two situations:
Transfers the contractual rights to receive the cash flows of the financial asset;
Transfers the entire or a part of a financial asset and retains the contractual rights to
receive the cash flows of the financial asset, but assumes a contractual obligation to pay the
cash flows to one or more recipients.
3.11.6.1 Derecognition of transferred assets
If the Company transfers substantially all the risks and rewards of ownership of the financial
asset, or neither transfers nor retains substantially all the risks and rewards of ownership of
the financial asset but has not retained control of the financial asset, the financial asset shall
be derecognised.
Whether the Company has retained control of the transferred asset depends on the transferee’s
ability to sell the asset. If the transferee has the practical ability to sell the asset in its entirety
to an unrelated third party and is able to exercise that ability unilaterally and without needing
to impose additional restrictions on the transfer, the Company has not retained control.
The Company judges whether the transfer of financial asset qualifies for derecognition based
on the substance of the transfer.
If the transfer of financial asset qualifies for derecognition in its entirety, the difference
between the following shall be recognised in profit or loss:
The carrying amount of transferred financial asset;
The sum of consideration received and the part derecognised of the cumulative changes
in fair value previously recognised in other comprehensive income (The financial assets
involved in the transfer are classified as financial assets at fair value through other
comprehensive income in accordance with Article 18 of the Accounting Standards for
Business Enterprises - Recognition and Measurement of Financial Instruments).
If the transferred asset is a part of a larger financial asset and the part transferred qualifies for
derecognition, the previous carrying amount of the larger financial asset shall be allocated
between the part that continues to be recognised (For this purpose, a retained servicing asset
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
shall be treated as a part that continues to be recognised) and the part that is derecognised,
based on the relative fair values of those parts on the date of the transfer. The difference
between following two amounts shall be recognised in profit or loss:
The carrying amount (measured at the date of derecognition) allocated to the part
derecognised；
The sum of the consideration received for the part derecognised and part derecognised of
the cumulative changes in fair value previously recognised in other comprehensive income
(The financial assets involved in the transfer are classified as financial assets at fair value
through other comprehensive income in accordance with Article 18 of the Accounting
Standards for Business Enterprises - Recognition and Measurement of Financial
Instruments).
3.11.6.2 Continuing involvement in transferred assets
If the Company neither transfers nor retains substantially all the risks and rewards of
ownership of a transferred asset, and retains control of the transferred asset, the Company
shall continue to recognise the transferred asset to the extent of its continuing involvement
and also recognise an associated liability.
The extent of the Company’s continuing involvement in the transferred asset is the extent to
which it is exposed to changes in the value of the transferred asset
3.11.6.3 Continue to recognise the transferred assets
If the Company retains substantially all the risks and rewards of ownership of the transferred
financial asset, the Company shall continue to recognise the transferred asset in its entirety
and the consideration received shall be recognised as a financial liability.
The financial asset and the associated financial liability shall not be offset. In subsequent
accounting period, the Company shall continuously recognise any income (gain) arising from
the transferred asset and any expense (loss) incurred on the associated liability.
3.11.7 Offsetting financial assets and financial liabilities
Financial assets and financial liabilities shall be presented separately in the statement of
financial position and shall not be offset. When meets the following conditions, financial
assets and financial liabilities shall be offset and the net amount presented in the statement of
financial position:
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
The Company currently has a legally enforceable right to set off the recognised amounts; The
Company intends either to settle on a net basis, or to realise the asset and settle the liability
simultaneously.
In accounting for a transfer of a financial asset that does not qualify for derecognition, the
Company shall not offset the transferred asset and the associated liability.
3.11.8 Determination of fair value of financial instruments
Determination of financial assets and financial liabilities please refer to Note 3.12
3.12 Fair Value Measurement
Fair value refers to the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date.
The Company determines fair value of the related assets and liabilities based on market value
in the principal market, or in the absence of a principal market, in the most advantageous
market price for the related asset or liability. The fair value of an asset or a liability is
measured using the assumptions that market participants would use when pricing the asset or
liability, assuming that market participants act in their economic best interest.
The principal market is the market in which transactions for an asset or liability take place
with the greatest volume and frequency. The most advantageous market is the market which
maximizes the value that could be received from selling the asset and minimizes the value
which is needed to be paid in order to transfer a liability, considering the effect of transport
costs and transaction costs both.
If the active market of the financial asset or financial liability exists, the Company shall
measure the fair value using the quoted price in the active market. If the active market of the
financial instrument is not available, the Company shall measure the fair value using
valuation techniques.
A fair value measurement of a non-financial asset takes into account a market participant’s
ability to generate economic benefits by using the asset in its highest and best use or by
selling it to another market participant that would use the asset in its highest and best use.
3.12.1 Valuation techniques
The Company uses valuation techniques that are appropriate in the circumstances and for
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
which sufficient data are available to measure fair value, including the market approach, the
income approach and the cost approach. The Company shall use valuation techniques
consistent with one or more of those approaches to measure fair value. If multiple valuation
techniques are used to measure fair value, the results shall be evaluated considering the
reasonableness of the range of values indicated by those results. A fair value measurement is
the point within that range that is most representative of fair value in the circumstances.
When using the valuation technique, the Company shall give the priority to relevant
observable inputs. The unobservable inputs can only be used when relevant observable inputs
is not available or practically would not be obtained. Observable inputs refer to the
information which is available from market and reflects the assumptions that market
participants would use when pricing the asset or liability. Unobservable Inputs refer to the
information which is not available from market and it has to be developed using the best
information available in the circumstances from the assumptions that market participants
would use when pricing the asset or liability.
3.12.2 Fair value hierarchy
To Company establishes a fair value hierarchy that categorises into three levels the inputs to
valuation techniques used to measure fair value. The fair value hierarchy gives the highest
priority to Level 1 inputs and second to the Level 2 inputs and the lowest priority to Level 3
inputs. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or
liabilities that the entity can access at the measurement date. Level 2 inputs are inputs other
than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability.
3.13 Inventories
3.13.1 Classification of inventories
Inventories are finished goods or products held for sale in the ordinary course of business, in
the process of production for such sale, or in the form of materials or supplies to be consumed
in the production process or the rendering of services, including raw materials, work in
progress, homemade semi-finished products, goods in stock, low-value consumables and
goods in transit etc.
3.13.2 Measurement method of cost of inventories sold or used
The cost of inventories used or sold is determined on the weighted average basis.
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.13.3 Inventory system
The perpetual inventory system is adopted. The inventories should be counted at least once a
year, and surplus or losses of inventory stocktaking shall be included in current profit and
loss.
3.13.4 Recognition standards and accrual methods of inventory impairment allowance
Inventories are stated at the lower of cost and net realizable value. The excess of cost over net
realizable value of the inventories is recognised as provision for impairment of inventory, and
recognised in current profit or loss.
Net realizable value of the inventory should be determined on the basis of reliable evidence
obtained, and factors such as purpose of holding the inventory and impact of post balance
sheet event shall be considered.
3.13.4.1 In normal operation process, finished goods, products and materials for direct sale,
their net realizable values are determined at estimated selling prices less estimated selling
expenses and relevant taxes and surcharges; for inventories held to execute sales contract or
service contract, their net realizable values are calculated based on contract price. If the
quantities of inventories specified in sales contracts are less than the quantities held by the
Company, the net realizable value of the excess portion of inventories shall be based on
general selling prices. Net realizable value of materials held for sale shall be measured based
on market price.
3.13.4.2 For materials in stock need to be processed, in the ordinary course of production and
business, net realisable value is determined at the estimated selling price less the estimated
costs of completion, the estimated selling expenses and relevant taxes. If the net realisable
value of the finished products produced by such materials is higher than the cost, the materials
shall be measured at cost; if a decline in the price of materials indicates that the cost of the
finished products exceeds its net realisable value, the materials are measured at net realisable
value and differences shall be recognised at the provision for impairment.
3.13.4.3 The company generally makes provision for inventory impairment based on an
individual basis. For inventories with large quantity and low unit price, the provisions for
inventory impairment are determined on a category basis. Provision for impairment in the
value of inventories is made for inventories held in stock for more than 180 days based on the
estimated realisable value of inventories sold by material category group.
3.13.4.4 If any factor rendering write-downs of the inventories has been eliminated at the
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
reporting date, the amounts written down are recovered and reversed to the extent of the
inventory impairment, which has been provided for. The reversal shall be included in profit or
loss.
3.13.5 Amortisation method of low-value consumables
Low-value consumables: One-off writing off method is adopted
Package material: One-off writing off method is adopted
3.14 Contract Assets and Contract Liabilities
The Company shall present contract assets or contract liabilities in the statement of financial
position, depending on the relationship between the Company’s satisfying a performance
obligation and the customer’s payment. A contract asset shall be presented if the Company
has the right to consideration in exchange for goods or services that the Company has
transferred to a customer when that right is conditioned on something other than the passage
of time. A contract liability shall be presented if the Company has the obligation to transfer
goods or services to a customer for which the Company has received consideration (or the
amount is due) from the customer.
Method of determination and accounting for expected credit loss for contract assets please
refer to Note 3.11.
Contract assets and contract liabilities shall be presented separately in the statement of
financial position. The contract asset and contract liability for the same contract shall be
presented on a net basis. A net balance shall be listed in the item of "Contract assets" or
"Other non-current assets" according to its liquidity; a credit balance shall be listed in the item
of "Contract liabilities" or "Other non-current liabilities" according to its liquidity. Contract
assets and contract liabilities for different contracts cannot be offset.
3.15 Contract costs
Contract costs include costs to fulfill a contract and the costs to obtain a contract.
The Company shall recognise an asset from the costs incurred to fulfill a contract only if those
costs meet all of the following criteria:
3.15.1 the costs relate directly to a contract or to an anticipated contract, including: direct
labour, direct materials, manufacturing costs (or similar costs), costs that are explicitly
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
chargeable to the customer under the contract and other costs that are incurred only because
an entity entered into the contract;
3.15.2 the costs enhance resources of the Company that will be used in satisfying performance
obligations in the future; and
3.15.3 the costs are expected to be recovered.
The incremental costs of obtaining a contract shall be recognised as an asset if the Company
expects to recover them.
An asset related to contract costs shall be amortised on a systematic basis that is consistent
with the revenue recognition of the goods or services to which the asset relates. The Company
recognises the contract acquisition costs as an expense when incurred if the amortisation
period of the asset that the Company otherwise would have recognised is one year or less.
The Company shall accrue the provision for impairment, recognise an impairment loss in
profit or loss to the extent that the carrying amount of an asset related to the contract cost
exceeds the difference of below two items, and further consider whether the estimated
liability related to the onerous contract needs to be accrued:
3.15.3.1 the remaining amount of consideration that the Company expects to receive in
exchange for the goods or services to which the asset relates; less
3.15.3.2 the costs that relate directly to providing those goods or services and that have not
been recognised as expenses.
The Company shall recognise in profit or loss a reversal of some or all of an impairment loss
previously recognised when the impairment conditions no longer exist or have improved. The
increased carrying amount of the asset shall not exceed the amount that would have been
determined (net of amortisation) if no impairment loss had been recognised previously.
Providing that the costs to fulfil a contract satisfy the requirement to be recognised as an asset,
the Company shall present them in the account “Inventory” if the contract has an original
expected duration of one year (or a normal operating cycle) or less, or in the account “Other
non-current assets” if the contract has an original expected duration of more than one year (or
a normal operating cycle).
Providing that the costs to obtain a contract satisfy the requirement to be recgonised as an
asset, the Company shall present them in the account “Other current asset” if the contract has
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
an original expected duration of one year (or a normal operating cycle) or less, or in the
account “Other non-current assets” if the contract has an original expected duration of more
than one year (or a normal operating cycle).
3.16 Long-term Equity Investments
Long-term equity investments refer to equity investments where an investor has control of, or
significant influence over, an investee, as well as equity investments in joint ventures.
Associates of the Company are those entities over which the Company has significant
influence.
3.16.1 Determination basis of joint control or significant influence over the investee
Joint control is the relevant agreed sharing of control over an arrangement, and the arranged
relevant activity must be decided under unanimous consent of the parties sharing control. In
assessing whether the Company has joint control of an arrangement, the Company shall assess
first whether all the parties, or a group of the parties, control the arrangement. When all the
parties, or a group of the parties, considered collectively, are able to direct the activities of the
arrangement, the parties control the arrangement collectively. Then the Company shall assess
whether decisions about the relevant activities require the unanimous consent of the parties
that collectively control the arrangement. If two or more groups of the parties could control
the arrangement collectively, it shall not be assessed as have joint control of the arrangement.
When assessing the joint control, the protective rights are not considered.
Significant influence is the power to participate in the financial and operating policy decisions
of the investee but is not control or joint control of those policies. In determination of
significant influence over an investee, the Company should consider not only the existing
voting rights directly or indirectly held but also the effect of potential voting rights held by the
Company and other entities that could be currently exercised or converted, including the
effect of share warrants, share options and convertible corporate bonds that issued by the
investee and could be converted in current period.
If the Company holds, directly or indirectly 20% or more but less than 50% of the voting
power of the investee, it is presumed that the Company has significant influence of the
investee, unless it can be clearly demonstrated that in such circumstance, the Company cannot
participate in the decision-making in the production and operating of the investee.
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.16.2 Determination of initial investment cost
3.16.2.1 Long-term equity investments generated in business combinations
For a business combination involving enterprises under common control, if the Company
makes payment in cash, transfers non-cash assets or bears liabilities as the consideration for
the business combination, the share of carrying amount of the owners’ equity of the acquiree
in the consolidated financial statements of the ultimate controlling party is recognised as the
initial cost of the long-term equity investment on the combination date. The difference
between the initial investment cost and the carrying amount of cash paid, non-cash assets
transferred and liabilities assumed shall be adjusted against the capital reserve; if capital
reserve is not enough to be offset, undistributed profit shall be offset in turn.
For a business combination involving enterprises under common control, if the Company
issues equity securities as the consideration for the business combination, the share of
carrying amount of the owners’ equity of the acquiree in the consolidated financial statements
of the ultimate controlling party is recognised as the initial cost of the long-term equity
investment on the combination date. The total par value of the shares issued is recognised as
the share capital. The difference between the initial investment cost and the carrying amount
of the total par value of the shares issued shall be adjusted against the capital reserve; if
capital reserve is not enough to be offset, undistributed profit shall be offset in turn.
For business combination not under common control, the assets paid, liabilities incurred or
assumed and the fair value of equity securities issued to obtain the control of the acquiree at
the acquisition date shall be determined as the cost of the business combination and
recognised as the initial cost of the long-term equity investment. The audit, legal, valuation
and advisory fees, other intermediary fees, and other relevant general administrative costs
incurred for the business combination, shall be recognised in profit or loss as incurred.
3.16.2.2 Long-term equity investments acquired not through the business combination, the
investment cost shall be determined based on the following requirements:
For long-term equity investments acquired by payments in cash, the initial cost is the actually
paid purchase cost, including the expenses, taxes and other necessary expenditures directly
related to the acquisition of long-term equity investments.
For long-term equity investments acquired through issuance of equity securities, the initial
cost is the fair value of the issued equity securities.
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
For the long-term equity investments obtained through exchange of non-monetary assets, if
the exchange has commercial substance, and the fair values of assets traded out and traded in
can be measured reliably, the initial cost of long-term equity investment traded in with
non-monetary assets are determined based on the fair values of the assets traded out together
with relevant taxes. Difference between fair value and book value of the assets traded out is
recorded in current profit or loss. If the exchange of non-monetary assets does not meet the
above criterion, the book value of the assets traded out and relevant taxes are recognised as
the initial investment cost.
For long-term equity investment acquired through debt restructuring, the initial cost is
determined based on the fair value of the equity obtained and the difference between initial
investment cost and carrying amount of debts shall be recorded in current profit or loss.
3.16.3 Subsequent measurement and recognition of profit or loss
Long-term equity investment to an entity over which the Company has ability of control shall
be accounted for at cost method. Long-term equity investment to a joint venture or an
associate shall be accounted for at equity method.
3.16.3.1 Cost method
For Long-term equity investment at cost method, cost of the long-term equity investment shall
be adjusted when additional amount is invested or a part of it is withdrawn. The Company
recognises its share of cash dividends or profits which have been declared to distribute by the
investee as current investment income.
3.16.3.2 Equity method
If the initial cost of the investment is in excess of the share of the fair value of the net
identifiable assets in the investee at the date of investment, the difference shall not be adjusted
to the initial cost of long-term equity investment; if the initial cost of the investment is in
short of the share of the fair value of the net identifiable assets in the investee at the date
investment, the difference shall be included in the current profit or loss and the initial cost of
the long-term equity investment shall be adjusted accordingly.
The Company recognises the share of the investee’s net profits or losses, as well as its share
of the investee’s other comprehensive income, as investment income or losses and other
comprehensive income respectively, and adjusts the carrying amount of the investment
accordingly. The carrying amount of the investment shall be reduced by the share of any
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
profit or cash dividends declared to distribute by the investee. The investor’s share of the
investee’s owners’ equity changes, other than those arising from the investee’s net profit or
loss, other comprehensive income or profit distribution, shall be recognised in the investor’s
equity, and the carrying amount of the long-term equity investment shall be adjusted
accordingly. The Company recognises its share of the investee’s net profits or losses after
making appropriate adjustments of investee’s net profit based on the fair values of the
investee’s identifiable net assets at the investment date. If the accounting policy and
accounting period adopted by the investee is not in consistency with the Company, the
financial statements of the investee shall be adjusted according to the Company’s accounting
policies and accounting period, based on which, investment income or loss and other
comprehensive income, etc., shall be adjusted. The unrealized profits or losses resulting from
inter-company transactions between the company and its associate or joint venture are
eliminated in proportion to the company’s equity interest in the investee, based on which
investment income or losses shall be recognised. Any losses resulting from inter-company
transactions between the investor and the investee, which belong to asset impairment, shall be
recognised in full.
Where the Company obtains the power of joint control or significant influence, but not
control, over the investee, due to additional investment or other reason, the relevant long-term
equity investment shall be accounted for by using the equity method, initial cost of which
shall be the fair value of the original investment plus the additional investment. Where the
original investment is classified as other equity investment, difference between its fair value
and the carrying value, in addition to the cumulative changes in fair value previously recorded
in other comprehensive income, shall be recogised into retained earnings of the period of
using equity method.
If the Company loses the joint control or significant influence of the investee for some reasons
such as disposal of equity investment, the retained interest shall be measured at fair value and
the difference between the carrying amount and the fair value at the date of loss the joint
control or significant influence shall be recognised in profit or loss. When the Company
discontinues the use of the equity method, the Company shall account for all amounts
previously recognised in other comprehensive income under equity method in relation to that
investment on the same basis as would have been required if the investee had directly
disposed of the related assets or liabilities.
3.16.4 Impairment testing and provision for impairment loss
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
For investment in subsidiaries, associates or a joint venture, provision for impairment loss
please refer to Note 3.22.
3.17 Investment Properties
3.17.1 Classification of investment properties
Investment properties are properties to earn rentals or for capital appreciation or both,
including:
3.17.1.1 Land use right leased out
3.17.1.2 Land held for transfer upon appreciation
3.17.1.3 Buildings leased out
3.17.2 The measurement model of investment property
The Company adopts the cost model for subsequent measurement of investment properties.
Refer to Note 3.22 for provision for impairment.
The Company calculates the depreciation or amortisation based on the net amount of
investment property cost less the accumulated impairment and the net residual value using
straight-line method. Investment property is depreciated or amortised in accordance with the
policy consistent with that of buildings or land use rights.
3.18 Fixed Assets
Fixed assets refer to the tangible assets with higher unit price held for the purpose of
producing commodities, rendering services, renting or business management with useful lives
exceeding one year.
3.18.1 Recognition criteria of fixed assets
Fixed assets will only be recognised at the actual cost paid when obtaining as all the following
criteria are satisfied:
3.18.1.1 It is probable that the economic benefits relating to the fixed assets will flow into the
Company;
3.18.1.2 The costs of the fixed assets can be measured reliably.
Subsequent expenditure for fixed assets shall be recorded in cost of fixed assets, if recognition
criteria of fixed assets are satisfied, otherwise the expenditure shall be recorded in current
profit or loss when incurred.
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.18.2 Depreciation methods of fixed assets
The Company begins to depreciate the fixed asset from the next month after it is available for
intended use using the straight-line-method. The estimated useful life and annual depreciation
rates which are determined according to the categories, estimated economic useful lives, and
estimated net residual rates of fixed assets are listed as followings:
Residual Estimated useful Annual depreciation rates
Category Depreciation method
rates (%) life (year) (%)
Buildings and
Straight-line method 7.00-10.00 20 4.50-4.65
constructions
Machinery equipment Straight-line method 0.00 5-15 6.67-20.00
Electrical equipment,
Straight-line method 0.00 5-6 16.67-20.00
Model, and other
Vehicles Straight-line method 0.00 6 16.67
Improvement expenditure Amortisation shall be made according to the
Straight-line method 0.00
of leased fixed assets shorter of benefit period and lease period
For the fixed assets with impairment provided, the impairment provision should be excluded
from the cost when calculating depreciation.
At the end of reporting period, the Company shall review the useful life, estimated net
residual value and depreciation method of the fixed assets. Estimated useful life of the fixed
assets shall be adjusted if it is changed compared to the original estimation.
3.19 Construction in Progress
3.19.1 Classification of construction in progress
Construction in progress is measured on an individual project basis.
3.19.2 Recognition criteria and timing of transfer from construction in progress to fixed
assets
The initial book values of the fixed assets are stated at total expenditures incurred before they
are ready for their intended use, including construction costs, original price of machinery
equipment, other necessary expenses incurred to bring the construction in progress to get
ready for its intended use and borrowing costs of the specific loan for the construction or the
proportion of the general loan used for the constructions incurred before they are ready for
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
their intended use. The construction in progress shall be transferred to fixed asset when the
installation or construction is ready for the intended use. For construction in progress that has
been ready for their intended use but relevant budgets for the completion of projects have not
been completed, the estimated values of project budgets, prices, or actual costs should be
included in the costs of relevant fixed assets, and depreciation should be provided according
to relevant policies of the Company when the fixed assets are ready for intended use. After the
completion of budgets needed for the completion of projects, the estimated values should be
substituted by actual costs, but depreciation already provided is not adjusted.
3.20 Borrowing Costs
3.20.1 Recognition criteria and period for capitalization of borrowing costs
The Company shall capitalize the borrowing costs that are directly attributable to the
acquisition, construction or production of qualifying assets when meet the following
conditions:
3.20.1.1 Expenditures for the asset are being incurred;
3.20.1.2 Borrowing costs are being incurred, and;
3.20.1.3 Acquisition, construction or production activities that are necessary to prepare the
assets for their intended use or sale are in progress.
Other borrowing cost, discounts or premiums on borrowings and exchange differences on
foreign currency borrowings shall be recognized into current profit or loss when incurred.
Capitalization of borrowing costs is suspended during periods in which the acquisition,
construction or production of a qualifying asset is interrupted abnormally and the interruption
is for a continuous period of more than 3 months.
Capitalization of such borrowing costs ceases when the qualifying assets being acquired,
constructed or produced become ready for their intended use or sale. The expenditure incurred
subsequently shall be recognised as expenses when incurred.
3.20.2 Capitalization rate and measurement of capitalized amounts of borrowing costs
When funds are borrowed specifically for purchase, construction or manufacturing of assets
eligible for capitalization, the Company shall determine the amount of borrowing costs
eligible for capitalisation as the actual borrowing costs incurred on that borrowing during the
period less any interest income on bank deposit or investment income on the temporary
investment of those borrowings.
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Where funds allocated for purchase, construction or manufacturing of assets eligible for
capitalization are part of a general borrowing, the eligible amounts are determined by the
weighted-average of the cumulative capital expenditures in excess of the specific borrowing
multiplied by the general borrowing capitalization rate. The capitalisation rate will be the
weighted average of the borrowing costs applicable to the general borrowing.
3.21 Intangible Assets
3.21.1 Measurement method of intangible assets
Intangible assets are recognised at actual cost at acquisition.
3.21.2 The useful life and amortisation of intangible assets
3.21.2.1 The estimated useful lives of the intangible assets with
finite useful lives are as follows:
Category Estimated useful life Basis
Land use right 50 years Legal right of use
The service life is determined by reference to the period that can
Software 5 years
bring economic benefits to the Company
For intangible assets with finite useful life, the estimated useful life and amortisation method
are reviewed annually at the end of each reporting period and adjusted when necessary. No
change has incurred in current year in the estimated useful life and amortisation method upon
review.
3.21.2.2 Assets of which the period to bring economic benefits to the Company are
unforeseeable are regarded as intangible assets with indefinite useful lives. The Company
reassesses the useful lives of those assets at every year end. If the useful lives of those assets
are still indefinite, impairment test should be performed on those assets at the balance sheet
date.
3.21.2.3 Amortisation of the intangible assets
For intangible assets with finite useful lives, their useful lives should be determined upon
their acquisition and systematically amortised on a straight-line basis over the useful life. The
amortisation amount shall be recognised into current profit or loss according to the beneficial
items. The amount to be amortised is cost deducting residual value. For intangible assets
which has impaired, the cumulative impairment provision shall be deducted as well. The
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
residual value of an intangible asset with a finite useful life shall be assumed to be zero unless:
there is a commitment by a third party to purchase the asset at the end of its useful life; or
there is an active market for the asset and residual value can be determined by reference to
that market; and it is probable that such a market will exist at the end of the asset’s useful life.
Intangible assets with indefinite useful lives shall not be amortised. The Company reassesses
the useful lives of those assets at every year end. If there is evidence to indicate that the useful
lives of those assets become finite, the useful lives shall be estimated and the intangible assets
shall be amortised systematically and reasonably within the estimated useful lives.
3.21.3 Scope of Research and Development(R&D) expenditure Classification
The Company classifies all costs directly related to the conduct of research and development
activities as research and development expenses, including research and development
employee compensation, depreciation and amortisation expenses, testing expenses,
maintenance expenses, patent fees and other expenses.
3.21.4 Criteria of classifying expenditures on internal research and development
projects into research phase and development phase
3.21.4.1 Preparation activities related to materials and other relevant aspects undertaken by
the Company for the purpose of further development shall be treated as research phase.
Expenditures incurred during the research phase of internal research and development projects
shall be recognised in profit or loss when incurred.
3.21.4.2 Development activities after the research phase of the Company shall be treated as
development phase.
3.21.5 Criteria for capitalization of qualifying expenditures during the development
phase
Expenditures arising from development phase on internal research and development projects
shall be recognised as intangible assets only if all of the following conditions have been met:
3.21.4.1 Technical feasibility of completing the intangible assets so that they will be available
for use or sale;
3.21.4.2 Its intention to complete the intangible asset and use or sell it;
3.21.4.3 The method that the intangible assets generate economic benefits, including the
Company can demonstrate the existence of a market for the output of the intangible assets or
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
the intangible assets themselves or, if it is to be used internally, the usefulness of the
intangible assets;
3.21.4.4 The availability of adequate technical, financial and other resources to complete the
development and to use or sell the intangible asset; and
3.21.4.5 Its ability to measure reliably the expenditure attributable to the intangible asset.
3.22 Impairment of Long-Term Assets
Impairment loss of long-term equity investment in subsidiaries, joint ventures and associates,
investment properties subsequently measured at cost, fixed assets, constructions in progress,
right-of-use assets, intangible assets, etc. (excluding inventories, investment properties
measured at fair value, deferred tax assets, financial assets), shall be determined according to
following method:
The Company shall assess at the end of each reporting period whether there is any indication
that an asset may be impaired. If any such indication exists, the Company shall estimate the
recoverable amount of the asset and test for impairment. Irrespective of whether there is any
indication of impairment, the Company shall test for impairment of goodwill acquired in a
business combination, intangible assets with an indefinite useful life or intangible assets not
yet available for use annually.
The recoverable amounts of the long-term assets are the higher of their fair values less costs
to dispose and the present values of the estimated future cash flows of the long-term assets.
The Company estimate the recoverable amounts on an individual basis. If it is difficult to
estimate the recoverable amount of the individual asset, the Company estimates the
recoverable amount of the groups of assets that the individual asset belongs to. Identification
of a group of asset is based on whether the cash inflows from it are largely independent of the
cash inflows from other assets or groups of assets.
If, and only if, the recoverable amount of an asset or a group of assets is less than its carrying
amount, the carrying amount of the asset shall be reduced to its recoverable amount and the
provision for impairment loss shall be recognised accordingly.
The mentioned impairment loss will not be reversed in subsequent accounting period once it
had been recognised.
3.23 Long-term Deferred Expenses
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Long-term deferred expenses are various expenses already incurred, which shall be amortized
over current and subsequent periods with the amortization period exceeding one year.
Long-term deferred expenses are amortized on a straight-line basis during the benefit period.
3.24 Employee Benefits
Employee benefits refer to all forms of consideration or compensation given by the Company
in exchange for service rendered by employees or for the termination of employment
relationship. Employee benefits include short-term employee benefits, post-employment
benefits, termination benefits and other long-term employee benefits. Benefits provided to an
employee's spouse, children, dependents, family members of decreased employees, or other
beneficiaries are also employee benefits.
According to liquidity, employee benefits are presented in the statement of financial position
as “Employee benefits payable” and “Long-term employee benefits payable”.
3.24.1 Short-term employee benefits
3.24.1.1 Employee basic salary (salary, bonus, allowance, subsidy)
The Company recognises, in the accounting period in which an employee provides service,
actually occurred short-term employee benefits as a liability, with a corresponding charge to
current profit except for those recognised as capital expenditure based on the requirement of
accounting standards.
3.24.1.2 Employee welfare
The Company shall recognise the employee welfare based on actual amount when incurred
into current profit or loss or related capital expenditure. Employee welfare shall be measured
at fair value as it is a non-monetary benefit.
3.24.1.3 Social insurance such as medical insurance, work injury insurance and maternity
insurance, housing funds, labor union fund and employee education fund
Payments made by the Company of social insurance for employees, such as medical insurance,
work injury insurance and maternity insurance, payments of housing funds, and labor union
fund and employee education fund accrued in accordance with relevant requirements, in the
accounting period in which employees provide services, is calculated according to required
accrual bases and accrual ratio in determining the amount of employee benefits and the
related liabilities, which shall be recognised in current profit or loss or the cost of relevant
asset.
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.24.1.4 Short-term paid absences
The company shall recognise the related employee benefits arising from accumulating paid
absences when the employees render service that increases their entitlement to future paid
absences. The additional payable amounts shall be measured at the expected additional
payments as a result of the unused entitlement that has accumulated. The Company shall
recognise relevant employee benefit of non-accumulating paid absences when the absences
actually occurred.
3.24.1.5 Short-term profit-sharing plan
The Company shall recognise the related employee benefits payable under a profit-sharing
plan when all of the following conditions are satisfied:
The Company has a present legal or constructive obligation to make such payments as a
result of past events; and
A reliable estimate of the amounts of employee benefits obligation arising from the
profit- sharing plan can be made.
3.24.2 Post-employment benefits
3.24.2.1 Defined contribution plans
The Company shall recognise, in the accounting period in which an employee provides
service, the contribution payable to a defined contribution plan as a liability, with a
corresponding charge to the current profit or loss or the cost of a relevant asset.
When contributions to a defined contribution plan are not expected to be settled wholly before
twelve months after the end of the annual reporting period in which the employees render the
related service, they shall be discounted using relevant discount rate (market yields at the end
of the reporting period on high quality corporate bonds in active market or government bonds
with the currency and term which shall be consistent with the currency and estimated term of
the defined contribution obligations) to measure employee benefits payable.
3.24.2.2 Defined benefit plan
The present value of defined benefit obligation and current service costs
Based on the expected accumulative welfare unit method, the Company shall make estimates
about demographic variables and financial variables in adopting the unbiased and consistent
actuarial assumptions and measure defined benefit obligation, and determine the obligation
period. The Company shall discount the obligation arising from defined benefit plan using
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
relevant discount rate (market yields at the end of the reporting period on high quality
corporate bonds in active market or government bonds with the currency and term which shall
be consistent with the currency and estimated term of the defined benefit obligations) in order
to determine the present value of the defined benefit obligation and the current service cost.
The net defined benefit liability or asset
The net defined benefit liability (asset) is the deficit or surplus recognised as the present value
of the defined benefit obligation less the fair value of plan assets (if any).
When the Company has a surplus in a defined benefit plan, it shall measure the net defined
benefit asset at the lower of the surplus in the defined benefit plan and the asset ceiling.
The amount recognised in the cost of asset or current profit or loss
Service cost comprises current service cost, past service cost and any gain or loss on
settlement. Other service cost shall be recognised in profit or loss unless accounting standards
require or allow the inclusion of current service cost within the cost of assets.
Net interest on the net defined benefit liability (asset) comprising interest income on plan
assets, interest cost on the defined benefit obligation and interest on the effect of the asset
ceiling, shall be included in profit or loss.
The amount recognised in other comprehensive income
Changes in the net liability or asset of the defined benefit plan resulting from the
remeasurements including:
Actuarial gains and losses, the changes in the present value of the defined benefit
obligation resulting from experience adjustments or the effects of changes in actuarial
assumptions;
Return on plan assets, excluding amounts included in net interest on the net defined
benefit liability or asset;
Any change in the effect of the asset ceiling, excluding amounts included in net interest
on the net defined benefit liability (asset).
Remeasurements of the net defined benefit liability (asset) recognised in other comprehensive
income shall not be reclassified to profit or loss in a subsequent period. However, the
Company may transfer those amounts recognised in other comprehensive income within
equity.
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.24.3 Termination benefits
The Company providing termination benefits to employees shall recognise an employee
benefits liability for termination benefits, with a corresponding charge to the profit or loss of
the reporting period, at the earlier of the following dates:
3.24.3.1 When the Company cannot unilaterally withdraw the offer of termination benefits
because of an employment termination plan or a curtailment proposal.
3.24.3.2 When the Company recognises costs or expenses related to a restructuring that
involves the payment of termination benefits.
If the termination benefits are not expected to be settled wholly before twelve months after the
end of the annual reporting period, the Company shall discount the termination benefits using
relevant discount rate (market yields at the end of the reporting period on high quality
corporate bonds in active market or government bonds with the currency and term which shall
be consistent with the currency and estimated term of the defined benefit obligations) to
measure the employee benefits.
3.24.4 Other long-term employee benefits
3.24.4.1 Meet the conditions of the defined contribution plan
When other long-term employee benefits provided by the Company to the employees satisfies
the conditions for classifying as a defined contribution plan, all those benefits payable shall be
accounted for as employee benefits payable at their discounted value.
3.24.4.2 Meet the conditions of the defined benefit plan
At the end of the reporting period, the Company recognised the cost of employee benefit from
other long-term employee benefits as the following components:
Service costs;
Net interest cost for net liability or asset of other long-term employee benefits
Changes resulting from the remeasurements of the net liability or asset of other long-term
employee benefits
In order to simplify the accounting treatment, the net amount of above items shall be
recognised in profit or loss or relevant cost of assets.
3.25 Estimated Liabilities
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.25.1 Recognition criteria of estimated liabilities
The Company recognises the estimated liabilities when obligations related to contingencies
satisfy all the following conditions:
3.25.1.1 That obligation is a current obligation of the Company;
3.25.1.2 It is likely to cause any economic benefit to flow out of the Company as a result of
performance of the obligation; and
3.25.1.3The amount of the obligation can be measured reliably.
3.25.2 Measurement method of estimated liabilities
The estimated liabilities of the Company are initially measured at the best estimate of
expenses required for the performance of relevant present obligations. The Company, when
determining the best estimate, has had a comprehensive consideration of risks with respect to
contingencies, uncertainties and the time value of money. The carrying amount of the
estimated liabilities shall be reviewed at the end of every reporting period. If conclusive
evidences indicate that the carrying amount fails to be the best estimate of the estimated
liabilities, the carrying amount shall be adjusted based on the updated best estimate.
3.26 Revenue recognition principle and measurement
3.26.1 General Principle
Revenue is defined as the gross inflow of economic benefits arising in the course of the
ordinary activities of the Company when those inflows result in the increases in shareholders’
equity, other than increases relating to contributions from shareholders.
The Company shall recognise revenue when it satisfies a performance obligation in the
contract as the customer obtains control of a good or service. Control of a good or service
refers to the ability to direct the use of, and obtain substantially all of the remaining economic
benefits from, the good or service.
When the contract has two or more obligation performances, the Company shall allocate the
transaction price to each performance obligation in proportion to a relative stand-alone selling
price at contract inception of the promised good or service underlying each performance
obligation in the contract and recognize revenue based on the transaction price allocated to
each performance obligation.
The transaction price refers to the amount of consideration that the Company is expected to be
entitled to receive due to the transfer of goods or services to customers, excluding payments
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
collected on behalf of third parties. When determining the transaction price of the contract, if
the contract includes a variable consideration, the Company shall determine the best estimate
of the variable consideration based on the expected value or the most likely amount and
include in the transaction price only to the extent that it is highly probable that a significant
reversal in the amount of cumulative revenue recognised will not occur when the uncertainty
associated with the variable consideration is subsequently resolved. If there is a significant
financing component in the contract, the Company will determine the transaction price based
on the amount payable in cash when the customer obtains the control right of the commodity.
The difference between the transaction price and the contract consideration will be amortised
by the effective interest method during the contract period. If the interval between the control
right transfer and the customer's payment is less than one year, the company will not consider
the financing component.
The Company satisfies a performance obligation over time, if one of the following criteria is
met; otherwise a performance obligation is satisfied at a point in time:
3.26.1.1 The customer simultaneously receives and consumes the benefits provided by the
Company’s performance as the Company performs;
3.26.1.2 The Company’s performance creates or enhances an asset (for example, work in
progress) that the customer controls as the asset is created or enhanced;
3.26.1.3 The Company’s performance does not create an asset with an alternative use to the
Company and the Company has an enforceable right to payment for performance completed
to date.
For each performance obligation satisfied over time, the Company shall recognise revenue
over time by measuring the progress towards complete satisfaction of that performance
obligation, unless those progress cannot be reasonably measured. The Company measures the
progress of a performance obligation for the service rendered using input methods (or output
methods). In some circumstances, the Company cannot be able to reasonably measure the
progress of a performance obligation, but the Company expects to recover the costs incurred
in satisfying the performance obligation. In those circumstances, the Company shall recognise
revenue only to the extent of the costs incurred until such time that it can reasonably measure
the progress of the performance obligation.
The Company shall recognise revenue at the point in which a customer obtains control of a
promised good or service if a performance obligation is satisfied at a point in time. To
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
determine the point in time at which a customer obtains control of a promised good or service,
the Company shall consider indicators of the transfer of control, which include, but are not
limited to, the followings:
(i) The Company has a present right to payment for the good or service – a customer is
presently obliged to pay for the good or service;
(ii) The Company has transferred legal title of an asset to a customer - the customer has legal
title to the asset;
(iii) The Company has transferred physical possession of an asset to a customer - the customer
has physical possession of the asset;
(iv) The Company has transferred the significant risks and rewards of ownership of the asset
to a customer - the customer has the significant risks and rewards of ownership of the asset;
(v) The customer has accepted the goods, etc.
3.26.2 Specific methods
The specific methods of the Company's revenue recognition are as follows:
The sales contract between the Company and the customer includes the performance
obligation of transferring the goods, which belongs to the performance obligation at a certain
point in time.
Recognition of domestic sales product revenue must meet the following conditions: the
Company has delivered the products to the customer according to the contract and the
customer has accepted the products; the payment has been recovered or the receipt of
payment has been obtained, and the relevant economic benefits are likely to flow in; the main
risks and rewards of the ownership of the goods have been transferred, and the legal
ownership of the goods has been transferred.
Recognition of exporting revenue must meet the following conditions: The Company
recognizes revenue for exporting goods based on the sales contracts or sales orders, regardless
of the sales model adopted. For sales model of FOB, the revenue is recognised after the
products are shipped and the customs declaration and export formalities are handled; For sales
model of FCA, the revenue is recognised when products are delivered to the carrier
designated by the buyer
Treatment of sales return: according to the general rules of international trade, the adoption of
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
FOB and CIF settlement indicates that the buyer has accepted the purchased goods at the
place of shipment, and the relevant risks have been undertaken by the buyer after the
acceptance and shipment. Therefore, the Company does not make provision for the above
matters separately, but directly records them into the profits and losses in the current period.
Processing of product claims: the estimated claim expense rate is calculated based on the
actual claim amount in the past two years (excluding special claims) as a percentage of the
annual sales revenue, and accrued at period end based on the current sales revenue and the
estimated claim expense rate to recognize the claim expenses for products sold in the current
period.
3.26.2 Service contract
The performance obligation of the service contract between the Company and the customer.
Since the customer obtains and consumes the economic benefits brought by the Company’s
performance at the same time as the Company fulfills the contract, the Company recognises it
as a performance obligation performed within a certain period of time, and amortized equally
during the service provision period.
3.26.3 Construction contract
For the performance obligation of the construction contract between the Company and the
customer, since the customer can control the goods under construction in the process of the
Company's performance, the Company takes it as the performance obligation to perform in a
certain period of time, and recognizes the income according to the performance progress,
except that the performance progress cannot be reasonably determined. The Company
determines the progress of the performance of providing services in accordance with the
output method. The progress of the performance shall be determined according to the
proportion of the completed contract workload to the expected total contract workload. On the
balance sheet date, the Company re-estimates the progress of completed performance or
completed services to reflect the changes in performance.
3.27 Government Grants
3.27.1 Recognition of government grants
A government grant shall not be recgonised until there is reasonable assurance that:
3.27.1.1 The Company will comply with the conditions attaching to them; and
3.27.1.2 The grants will be received.
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
3.27.2 Measurement of government grants
Monetary grants from the government shall be measured at amount received or receivable,
and non-monetary grants from the government shall be measured at their fair value or at a
nominal value of RMB 1.00 when reliable fair value is not available.
3.27.3 Accounting for government grants
3.27.3.1 Government grants related to assets
Government grants pertinent to assets mean the government grants that are obtained by the
Company used for purchase or construction, or forming the long-term assets by other ways.
The government subsidies related to assets offset the book value of related assets,. Grants
measured at their nominal value shall be directly recognised in profit or loss of the period
when the grants are received. When the relevant assets are sold, transferred, written off or
damaged before the assets are terminated, the remaining deferred income shall be transferred
into profit or loss of the period of disposing relevant assets.
3.27.3.2 Government grants related to income
Government grants not related to assets are classified as government grants related to income.
Government grants related to income are accounted for in accordance with the following
criteria:
If the government grants related to income are used to compensate the enterprise’s relevant
expenses or losses in future periods, such government grants shall be recognised as deferred
income and included into profit or loss in the same period as the relevant expenses or losses
are recognised;
If the government grants related to income are used to compensate the enterprise’s relevant
expenses or losses incurred, such government grants are directly recognised into current profit
or loss (or write down related expenses).
For government grants comprised of part related to assets as well as part related to income,
each part is accounted for separately; if it is difficult to identify different parts, the
government grants are accounted for as government grants related to income as a whole.
Government grants related to daily operation activities are recognised in other income in
accordance with the nature of the activities, and government grants irrelevant to daily
operation activities are recognised in non-operating income.
The treasury allocates the subsidized interest rate funds directly to the Company, and the
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Company reduces the corresponding subsidized interest by the relevant borrowing costs.
3.27.3.3 Repayment of the government grants
Repayment of the government grants shall be recorded by increasing the carrying amount of
the asset if the book value of the asset has been written down, or reducing the balance of
relevant deferred income if deferred income balance exists, any excess will be recognised into
current profit or loss; or directly recognised into current profit or loss for other circumstances.
3.28 Deferred Tax Assets and Deferred Tax Liabilities
Temporary differences are differences between the carrying amount of an asset or liability in
the statement of financial position and its tax base at the balance sheet date. The Company
recognise and measure the effect of taxable temporary differences and deductible temporary
differences on income tax as deferred tax liabilities or deferred tax assets using liability
method. Deferred tax assets and deferred tax liabilities shall not be discounted.
3.28.1 Recognition of deferred tax assets
Deferred tax assets should be recognised for deductible temporary differences, the
carryforward of unused tax losses and the carryforward of unused tax credits to the extent that
it is probable that taxable profit will be available against which the deductible temporary
differences, the carryforward of unused tax losses and the carryforward of unused tax credits
can be utilised at the tax rates that are expected to apply to the period when the asset is
realised, unless the deferred tax asset arises from the initial recognition of an asset or liability
in a transaction that:
Is not a business combination; and
At the time of the transaction, affects neither accounting profit nor taxable profit (tax
loss)
The Company shall recognise a deferred tax asset for all deductible temporary differences
arising from investments in subsidiaries, associates and joint ventures, only to the extent that,
it is probable that:
The temporary difference will reverse in the foreseeable future; and
Taxable profit will be available against which the deductible temporary difference can be
utilised.
At the end of each reporting period, if there is sufficient evidence that it is probable that
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
taxable profit will be available against which the deductible temporary difference can be
utilized, the Company recognises a previously unrecognised deferred tax asset.
The carrying amount of a deferred tax asset shall be reviewed at the end of each reporting
period. The Company shall reduce the carrying amount of a deferred tax asset to the extent
that it is no longer probable that sufficient taxable profit will be available to allow the benefit
of part or all of that deferred tax asset to be utilised. Any such reduction shall be reversed to
the extent that it becomes probable that sufficient taxable profit will be available.
3.28.2 Recognition of deferred tax liabilities
A deferred tax liability shall be recognised for all taxable temporary differences at the tax rate
that are expected to apply to the period when the liability is settled.
3.28.2.1 No deferred tax liability shall be recognised for taxable temporary differences arising
from:
The initial recognition of goodwill; or
The initial recognition of an asset or liability in a transaction which: is not a business
combination; and at the time of the transaction, affects neither accounting profit nor taxable
profit (tax loss)
3.28.2.2 An entity shall recognise a deferred tax liability for all taxable temporary differences
associated with investments in subsidiaries, associates, and joint ventures, except to the extent
that both of the following conditions are satisfied:
The Company is able to control the timing of the reversal of the temporary difference;
and
It is probable that the temporary difference will not reverse in the foreseeable future.
3.28.3 Recognition of deferred tax liabilities or assets involved in special transactions or
events
3.28.3.1 Deferred tax liabilities or assets related to business combination
For the taxable temporary difference or deductible temporary difference arising from a
business combination not under common control, a deferred tax liability or a deferred tax
asset shall be recognised, and simultaneously, goodwill recognised in the business
combination shall be adjusted based on relevant deferred tax expense (income).
3.28.3.2 Items directly recognised in equity
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Current tax and deferred tax related to items that are recognised directly in equity shall be
recognised in equity. Such items include: other comprehensive income generated from fair
value fluctuation of other debt investments; an adjustment to the opening balance of retained
earnings resulting from either a change in accounting policy that is applied retrospectively or
the correction of a prior period (significant) error; amounts arising on initial recognition of the
equity component of a compound financial instrument that contains both liability and equity
component.
3.28.3.3 Unused tax losses and unused tax credits
Unused tax losses and unused tax credits generated from daily operation of the Company
itself
Deductible loss refers to the loss calculated and permitted according to the requirement of tax
law that can be offset against taxable income in future periods. The criteria for recognising
deferred tax assets arising from the carryforward of unused tax losses and tax credits are the
same as the criteria for recognising deferred tax assets arising from deductible temporary
differences. The Company recognises a deferred tax asset arising from unused tax losses or
tax credits only to the extent that there is convincing other evidence that sufficient taxable
profit will be available against which the unused tax losses or unused tax credits can be
utilised by the Company. Income taxes in current profit or loss shall be deducted as well.
Unused tax losses and unused tax credits arising from a business combination
Under a business combination, the acquiree’s deductible temporary differences which do not
satisfy the criteria at the acquisition date for recognition of deferred tax asset shall not be
recognised. Within 12 months after the acquisition date, if new information regarding the facts
and circumstances exists at the acquisition date and the economic benefit of the acquiree’s
deductible temporary differences at the acquisition is expected to be realised, the Company
shall recognise acquired deferred tax benefits and reduce the carrying amount of any goodwill
related to this acquisition. If goodwill is reduced to zero, any remaining deferred tax benefits
shall be recognised in profit or loss. All other acquired deferred tax benefits realised shall be
recognised in profit or loss.
3.28.3.4 Temporary difference generated in consolidation elimination
When preparing consolidated financial statements, if temporary difference between carrying
value of the assets and liabilities in the consolidated financial statements and their taxable
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
bases is generated from elimination of inter-company unrealized profit or loss, deferred tax
assets or deferred tax liabilities shall be recognised in the consolidated financial statements,
and income taxes expense in current profit or loss shall be adjusted as well except for deferred
tax related to transactions or events recognised directly in equity and business combination.
3.28.3.5 Share-based payment settled by equity
If tax authority permits tax deduction that relates to share-based payment, during the period in
which the expenses are recognised according to the accounting standards, the Company
estimates the tax base in accordance with available information at the end of the accounting
period and the temporary difference arising from it. Deferred tax shall be recognised when
criteria of recognition are satisfied. If the amount of estimated future tax deduction exceeds
the amount of the cumulative expenses related to share-based payment recognised according
to the accounting standards, the tax effect of the excess amount shall be recognised directly in
equity.
3.28.4 The basis for presentation of deferred tax assets and deferred tax liabilities on a
net way
Deferred tax assets and deferred tax liabilities are presented net of offsets when all the
following conditions are met:
The Company has a legal right to settle current income tax assets and current income tax
liabilities on a net basis;
Deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax
authority on the same taxable entity or on different taxable entities, but in each future period
in which deferred tax assets and deferred tax liabilities of significance are reversed, the
taxable entities involved intend to settle current income tax assets and liabilities on a net basis,
or to realize the assets and settle the liabilities simultaneously.
3.29 Leases
3.29.1 Identifying a lease
At inception of a contract, the Company shall assess whether the contract is, or contains, a
lease. A contract is, or contains, a lease if the contract conveys the right to control the use of
one or more identified assets for a period of time in exchange for consideration. To assess
whether a contract conveys the right to control the use of an identified asset for a period of
time, the Company shall assess whether, throughout the period of use, the customer has the
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
right to obtain substantially all of the economic benefits from use of the identified asset and to
direct the use of the identified asset.
3.29.2 Identifying a separate lease component
When a contract includes more than one separate lease components, the Company shall
separate components of the contract and account for each lease component separately. The
right to use an underlying asset is a separate lease component if both conditions have been
satisfied: (i) the lessee can benefit from use of the underlying asset either on its own or
together with other resources that are readily available to the lessee; (ii) the underlying asset is
neither highly dependent on, nor highly interrelated with, the other underlying assets in the
contract.
3.29.3 The Company as a lessee
At the commencement date, the Company identifies the lease that has a lease term of 12
months or less and does not contain a purchase option as a short-term lease. A lease qualifies
as a lease of a low-value asset if the nature of the asset is such that, when new, the asset is
typically of low value. If the Company subleases an asset, or expects to sublease an asset, the
head lease does not qualify as a lease of a low-value asset.
For all short-term leases and for lease which the underlying asset is of low value, the
Company shall recognise the lease payments associated with those leases as cost of relevant
asset or expenses in current profit or loss on a straight-line basis method over the lease term.
Except for the election of simple treatment as short-term lease or lease of a low-value asset as
mentioned above, at the commencement date, the Company shall recognise a right-of-use
asset and a lease liability.
3.29.3.1 Right-of-use asset
A right-of-use asset is an asset that represents a lessee’s right to use an underlying asset for the
lease term.
At the commencement date, the Company shall initially measure the right-of-use asset at cost.
The cost of the right-of-use asset shall comprise:
The amount of the initial measurement of the lease liability；
Any lease payments made at or before the commencement date, less any lease incentives
received;
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Any initial direct costs incurred by the lessee; and
An estimate of costs to be incurred by the lessee in dismantling and removing the
underlying asset, restoring the site on which it is located or restoring the underlying asset to
the condition required by the terms and conditions of the lease. The Company recognises and
measures the cost in accordance with the recognition criteria and measurement method for
estimated liabilities, details please refer to Notes 3.25. Those costs incurred to produce
inventories shall be included in the cost of inventories.
The right-of-use asset shall be depreciated according to the categories using straight‐line
method (or units of production method, double declining balance method and sum of the
years digit method). If it is reasonably certain that the ownership of the underlying asset shall
be transferred to the lessee by the end of the lease term, the depreciation rate shall be
determined based on the classification of the right-of- use asset and estimated residual value
rate from the commencement date to the end of the useful life of the underlying asset.
Otherwise, the depreciation rate shall be determined based on the classification of the
right-of-use asset from the commencement date to the earlier of the end of the useful life of
the right-of-use asset or the end of the lease term.
The depreciation method, estimated useful life, residual rates and annual depreciation rates
which are determined according to the categories of right-of-use asset are listed as followings:
Estimated useful life Residual Annual depreciation rates
Category Depreciation method
(year) rates (%) (%)
Buildings and
straight-line basis Lease period - -
constructions
3.29.3.2 Lease liability
At the commencement date, the lease liability shall be measured at the present value of the
lease payments that are not paid at that date. The lease payments included in the measurement
of the lease liability comprise the following 5 items:
Fixed payments and in-substance fixed payments, less any lease incentives receivable;
Variable lease payments that depend on an index or a rate；
The exercise price of a purchase option if the lessee is reasonably certain to exercise that
option；
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Payments of penalties for terminating the lease, if the lease term reflects the lessee
exercising an option to terminate the lease；
Amounts expected to be payable by the lessee under residual value guarantees.
In order to calculate the present value of the lease payments, interest rate implicit in the lease
shall be used as the discount rate. If that rate cannot be readily determined, the Company shall
use the incremental borrowing rate. The difference between the lease payments and its present
value shall be recognised as unrecognised financing charges, calculated bases on the discount
rate of the present value of the lease payments in each period within the lease term and
recorded as interest expense in current profit or loss. Variable lease payments not included in
the measurement of lease liabilities shall be recognised in current profit or loss when incurred.
After the commencement date, the Company shall remeasure the lease liability based on the
revised present value of the lease payments and adjust the carrying amount of the right-of-use
asset if there is a change in the in-substance fixed payments, or change in the amounts
expected to be payable under a residual value guarantee, or change in an index or a rate used
to determine lease payments, or change in the assessment or exercising of an option to
purchase the underlying asset, or an option to extend or terminate the lease.
3.29.4 The Company as a lessor
At the commencement date, the Company shall classify a lease as a finance lease if it transfers
substantially all the risks and rewards incidental to ownership of an underlying asset,
otherwise it shall be classified as an operating lease.
3.29.4.1 Operating leases
The Company shall recognise lease payments from operating leases as income on a
straight-line basis / units of production method (or other systematic and rational basis) over
the term of the relevant lease and the initial direct costs incurred in obtaining an operating
lease shall be capitalised and recognised as an expense over the lease term on the same basis
as the lease income. The Company shall recognise the variable lease payments relating to the
operating lease but not included in the measurement of the lease receivables into current profit
or loss when incurred.
3.29.4.2 Finance leases
At the commencement date, the Company shall recognise the lease receivables at an account
equal to the net investment in the lease (the sum of the present value of the unguaranteed
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
residual values and the lease payment that are not received at the commencement date
discounted at the interest rate implicit in the lease) and derecognise the asset relating to the
finance lease. The Company shall recognise interest income using the interest rate implicit in
the lease over the lease term.
The Company shall recognise the variable lease payments relating to the finance lease but not
included in the measurement of the net investment in the lease into current profit or loss when
incurred.
3.29.5 Lease modifications
3.29.5.1 A lease modification accounted for as a separate lease
The Company shall account for a modification to a lease as a separate lease, if both:
The modification increases the scope of the lease by adding the right to use one or more
underlying assets; and
The consideration for the lease increases by an amount commensurate with the
stand-alone price for the increase in scope.
3.29.5.2 A lease modification not accounted for as a separate lease
The Company as a lessee
At the effective date of the lease modification, the Company shall redetermine the lease term
of the modified lease and remeasure the lease liability by discounting the revised lease
payments using a revised discount rate. The revised discount rate is determined as the interest
rate implicit in the lease for the remainder of the lease term, if that rate can be readily
determined, or the incremental borrowing rate at the effective date of the modification, if the
interest rate implicit in the lease cannot be readily determined.
The Company shall account for the remeasurement of the lease liability by:
Decreasing the carrying amount of the right-of-use asset to reflect the partial or full
termination of the lease for lease modifications that decrease the scope of the lease or shorten
the lease term. The Company shall recognise in profit or loss any gain or loss relating to the
partial or full termination of the lease.
Making a corresponding adjustment to the carrying amount of the right-of-use asset for
all other lease modifications.
The Company as a lessor
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
The Company shall account for a modification to an operating lease as a new lease from the
effective date of the modification, considering any prepaid or accrued lease payments relating
to the original lease as part of the lease payments for the new lease.
For a modification to a finance lease that is not accounted for as a separate lease, the
Company shall account for the modification as follows:
If the lease would have been classified as an operating lease had the modification been in
effect at the inception date, the Company shall account for the lease modification as a new
lease from the effective date of the modification and measure the carrying amount of the
underlying asset as the net investment in the lease immediately before the effective date of the
lease modification;
If the lease would have been classified as a finance lease had the modification been in
effect at the inception date, the Company shall account for the lease modification according to
the requirements in the modification or renegotiation of the contract.
3.30 Changes in Significant Accounting Policies and Accounting Estimates
3.30.1 Significant changes in accounting polices
Implementation of Enterprise Accounting Standard Interpretation No. 16, "Accounting
for Deferred Taxes on Assets and Liabilities Arising from a Single Transaction to Which
the Initial Recognition Exemption Does Not Apply"
On 30 November 2022, the Ministry of Finance ("MOF") issued "Interpretation No. 16 of the
Accounting Standards for Business Enterprises" ("ASBE") (Caikuai [2022] No. 31,
hereinafter referred to as "Interpretation No. 16"), of which "Accounting for Deferred Taxes
on Assets and Liabilities Arising from a Single Transaction to which the Initial Recognition
Exemption Does Not Apply" came into effect on 1 January 2023, and the implementation of
this provision of the interpretation of Interpretation No. 16 did not have any material effect on
the Company's financial statements for the reporting period.
3.30.2 Significant changes in accounting estimates
The Company has no significant changes in accounting estimates for the reporting period.
4. TAXATION
4.1 Major Categories of Tax and Tax Rates Applicable to the Company
Categories of tax Basis of tax assessment Tax rate
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Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Categories of tax Basis of tax assessment Tax rate
Calculates output tax based on the tax rate of
taxable income, and calculates the value-added 0%、1%、5%、6%、9%、
Value added tax (VAT)
tax based on the difference after deducting the 11%、13%
deductible input tax in the current period
Urban maintenance and construction tax Payable turnover tax, tax exemption 7%、5%
Educational surcharge Payable turnover tax, tax exemption 3%
Local education surcharge Payable turnover tax, tax exemption 2%
Enterprise income tax Taxable profits 25%、22%、20%、15%
4.2 Tax rates of income tax of different subsidiaries are stated as below:
4.2.1 TsannKuen (Zhangzhou) Enterprise Co., Ltd. (hereafter, TKL)
Categories of tax Basis of tax assessment Tax rate
Calculates output tax based on the tax rate of
taxable income, and calculates the value-added
Value added tax 0%、5%、6%、9%、13%
tax based on the difference after deducting the
deductible input tax in the current period
Urban maintenance and construction tax Payable turnover tax, tax exemption 5%
Educational surcharge Payable turnover tax, tax exemption 3%
Local education surcharge Payable turnover tax, tax exemption 2%
Enterprise income tax Taxable profits 15%
4.2.2 TsannKuen China (Shanghai) Enterprise Co., Ltd. (hereafter, TKS)
Categories of tax Basis of tax assessment Tax rate
Calculates output tax based on the tax rate of
taxable income, and calculates the value-added
Value added tax 5%、9%、13%
tax based on the difference after deducting the
deductible input tax in the current period
Urban maintenance and construction tax Payable turnover tax, tax exemption 5%
Educational surcharge Payable turnover tax, tax exemption 3%
Local education surcharge Payable turnover tax, tax exemption 2%
150
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Categories of tax Basis of tax assessment Tax rate
Enterprise income tax Taxable profits 25%
4.2.3 Xiamen TsannKuen Property Service Co., Ltd. (hereafter, TKW)
Categories of tax Basis of tax assessment Tax rate
Calculates output tax based on the tax rate of
taxable income, and calculates the value-added
Value added tax 1%、5%
tax based on the difference after deducting the
deductible input tax in the current period
Enterprise income tax Taxable profits 20%
4.2.4 Pt.Star Comgistic Indonesia
Categories of tax Basis of tax assessment Tax rate
Calculates output tax based on the tax rate of
taxable income, and calculates the value-added
Value added tax 11%
tax based on the difference after deducting the
deductible input tax in the current period
Enterprise income tax Taxable profits 22%
4.3 Preferential tax policy
(1) According to the principle of “The Second Batch of High-tech Enterprise Filing List of
Fujian Province's Accreditation Organisations for 2023 Accreditation Reporting”, TKL was
identified as Fujian Province High-tech Enterprise, and the certification was valid for 3 years
(Certification No. GR202335003031), in accordance with the Enterprise Income Tax Law of
the People's Republic of China, the Implementation Regulations of the Enterprise Income Tax
Law of the People's Republic of China and other relevant provisions, the income tax rate of
Tsann Kuen (Zhangzhou) Enterprise Co., Ltd. enjoys a 10% reduction for three years from
2023, which the income tax rate is 15%.
(2) According to “the Announcement on Further Implementation of Preferential Policies on
Income Tax for Small and Micro Enterprises” (Announcement No. 13 of 2022 by the
Ministry of Finance and the State Administration of Taxation), during the period from 1
January 2022 to 31 December 2024, the portion of the annual taxable income of small and
micro enterprises over RMB1 million but not exceeding RMB3 million will be deducted from
151
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
the taxable income by 25%, and the enterprise income tax will be payable at a tax rate of 20%.
According to the Announcement on Preferential Policies on Income Tax for Small and Micro
Enterprises and Individual Industrial and Commercial Households (Announcement No. 6 of
2023 of the Ministry of Finance and the State Administration of Taxation), during the period
from 1 January 2023 to 31 December 2024, the portion of the annual taxable income of a
small and micro-enterprise that is not more than 1 million yuan will be deducted from the
taxable income by 25% and will be subject to an enterprise income tax at a tax rate of 20%.
TKW, a subsidiary of the Company, is entitled to the above tax incentives.
5. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5.1 Cash and Cash Equivalents
Items 31 December 2023 31 December 2022
Cash on hand 810,688.40 843,413.66
Cash in bank 560,871,966.69 574,436,355.52
Other monetary funds 5,479,921.68 1,588,060.59
Total 567,162,576.77 576,867,829.77
Including：The total amount deposited overseas 33,298,617.03 45,070,898.68
Among the other monetary funds, CNY 5,352,305.24 represents the margin deposited by the
Tsann Kuen (Zhangzhou) Enterprise Co., Ltd. for the opening of the letter of credit, CNY
127,616.44 is the balance of the company's Alipay account. In addition, there are no funds
other than the deposit for letter of credit in the monetary funds at the end of the period that
have restrictions on use and potential recovery risks due to mortgages, pledges or freezes.
5.2 Held-for-trading financial assets
Items 31 December 2023 31 December 2022
Financial assets measured at fair value through Profit or Loss 470,009,033.34 569,493,788.89
Including: Derivative financial assets 432,800.00 1,138,900.00
Structured Deposit Investment 469,576,233.34 568,354,888.89
Total 470,009,033.34 569,493,788.89
5.3 Accounts Receivables
5.3.1 Accounts receivable by aging
152
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Aging 31 December 2023 31 December 2022
Within 1 year 199,933,855.42 97,042,217.74
Including：Within 90 days 184,755,154.07 92,464,137.64
91 days to 180 days 15,178,641.95 4,291,123.54
181 days to 270 days 4.80 286,956.56
271 days to 365 days 54.60
1 year to 2 years 20,000.00 9,677.56
2 years to 3 years 9,677.56 110,740.52
Over 3 years 115,740.52 5,000.00
Subtotal 200,079,273.50 97,167,635.82
Less：provision for bad debt 3,123,053.38 1,216,752.94
Total 196,956,220.12 95,950,882.88
5.3.2 Accounts receivable by bad debt provision method
31 December 2023
Book balance Provision for bad debt
Category
Proportion Provision ratio Carrying amount
Amount Amount
(%) (%)
Provision for bad debt
recognized individually
Provision for bad debt
200,079,273.50 100.00 3,123,053.38 1.56 196,956,220.12
recognized collectively
Including: Portfolio by age 199,353,223.66 99.64 3,123,053.38 1.57 196,230,170.28
Portfolio by related parties 726,049.84 0.36 726,049.84
Total 200,079,273.50 100.00 3,123,053.38 1.56 196,956,220.12
31 December 2022
Book balance Provision for bad debt
Category
Proportion Provision ratio Carrying amount
Amount Amount
(%) (%)
153
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
31 December 2022
Book balance Provision for bad debt
Category
Proportion Provision ratio Carrying amount
Amount Amount
(%) (%)
Provision for bad debt
recognized individually
Provision for bad debt
97,167,635.82 100.00 1,216,752.94 1.25 95,950,882.88
recognized collectively
Including：Portfolio by age 96,070,918.17 98.87 1,216,752.94 1.27 94,854,165.23
Portfolio by related parties 1,096,717.65 1.13 1,096,717.65
Total 97,167,635.82 100.00 1,216,752.94 1.25 95,950,882.88
Specific instructions for provision for bad debts:
① At 31 December 2023, accounts receivable prepared for bad debts were accrued on an
ageing basis
31 December 2023 31 December 2022
Bad
Bad debt
Aging Provision for debt Provision for bad
Book balance Book balance ration
bad debt ration debt
(%)
(%)
Not overdue 173,313,895.66 866,569.51 0.50 88,212,429.63 441,062.13 0.50
Overdue 1 - 30
22,200,028.43 999,001.31 4.50 6,748,662.10 303,689.81 4.50
days
Overdue 31 - 60
1,954,882.39 390,976.48 20.00 797,281.80 159,456.36 20.00
days
Overdue 61 - 90
1,850,747.41 832,836.31 45.00
days
Overdue more than
33,669.77 33,669.77 100.00 312,544.64 312,544.64 100.00
90 days
Total 199,353,223.66 3,123,053.38 1.57 96,070,918.17 1,216,752.94 1.27
② As at 31 December 2023, accounts receivable provided for bad debts were accrued on a
154
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
related party basis
31 December 2023 31 December 2022
Aging Provision Bad debt Provision for Bad debt
Book balance Book balance
for bad debt ration (%) bad debt ration (%)
Portfolio by related
726,049.84 1,096,717.65
parties
Total 726,049.84 1,096,717.65
See Note 3.11 for the recognition criteria and instructions for the provision for bad debts by
groups.
5.3.3 Changes of provision for bad debt during the reporting period
Changes during the reporting period
31 December 31 December
Category Recovery or
2022 Provision Write-off Other 2023
reversal
Provision for bad
1,216,752.94 3,016,195.73 1,116,984.56 7,089.27 3,123,053.38
debt by group
Total 1,216,752.94 3,016,195.73 1,116,984.56 7,089.27 3,123,053.38
5.3.4 Top five of closing balances of customers
The total amount of the top five customers with largest accounts receivables balances at year
end is CNY 163,409,393.81, accounting for 81.67% of the total amount of accounts
receivable at the end of the year, and the total amount of bad debt provision at the end of the
year is CNY 1,675,384.31.
5.4 Advances to Suppliers
5.4.1 Advances to suppliers by aging
31 December 2023 31 December 2022
Aging
Amount Proportion (%) Amount Proportion (%)
Within 1 year 4,551,467.78 100.00 4,050,633.59 100.00
Total 4,551,467.78 100.00 4,050,633.59 100.00
5.4.2 Top five of closing balances of suppliers
The total amount of the top five suppliers with the largest prepaid amounts at the end of the
155
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
year is CNY 1,425,730.47, accounting for 31.32% of the total amount of the prepayment at
the end of the year.
5.5 Other Receivables
5.5.1 Other receivables by category
Items 31 December 2023 31 December 2022
Interest receivable
Dividend receivable
Other receivables 23,318,410.66 15,425,312.61
Total 23,318,410.66 15,425,312.61
5.5.2 Other Receivables
5.5.2.1 Other receivables by aging
Aging 31 December 2023 31 December 2022
Within 1 year 22,529,217.76 14,220,711.94
Including: Within 90 days 22,335,217.72 14,054,615.52
91 days to 180 days 102,300.00 125,742.31
181 days to 270 days 10,000.00 30,000.00
271 days to 365 days 81,700.04 10,354.11
1year to 2 years 141,700.00 325,368.70
2 years to 3 years 15,000.00
3 years to 4 years
4 years to 5years 50,000.00
Over 5 years 1,111,395.56 1,167,252.13
Subtotal 23,782,313.32 15,778,332.77
Less: provision for bad debt 463,902.66 353,020.16
Total 23,318,410.66 15,425,312.61
5.5.2.2 Other receivables by nature
Nature 31 December 2023 31 December 2022
Export tax refund 15,000,000.00 8,000,401.16
156
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Nature 31 December 2023 31 December 2022
Other current balances 7,504,920.31 6,301,879.48
Deposit 1,277,393.01 1,476,052.13
Subtotal 23,782,313.32 15,778,332.77
Less: Provision for bad debt 463,902.66 353,020.16
Total 23,318,410.66 15,425,312.61
5.5.2.3 Other receivables by bad debt provision method
A. On 31 December 2023, provision for bad debt recognized based on three stages model
Stages Book balance Provision for bad debt Carrying amount
Stage 1 23,455,890.68 137,480.02 23,318,410.66
Stage 2
Stage 3 326,422.64 326,422.64
Total 23,782,313.32 463,902.66 23,318,410.66
On 31 December 2023, provision for bad debt at stage 1:
Provision ratio Provision for Carrying
Category Book balance Reason
(%) bad debt amount
Provision for bad debt
recognized individually
Provision for bad debt Credit risk has not
23,455,890.68 0.59 137,480.02 23,318,410.66
recognized by portfolio increased significantly
Credit risk has not
1. Export tax refund 15,000,000.00 15,000,000.00
increased significantly
Credit risk has not
2. Other current account 7,178,497.67 1.92 137,480.02 7,041,017.65
increased significantly
Credit risk has not
3. Deposit 1,277,393.01 1,277,393.01
increased significantly
Total 23,455,890.68 0.59 137,480.02 23,318,410.66
As at 31 December 2023, the Company had no provision for bad debts in Stage 2.
As at 31 December 2023, provision for bad debt at stage 3:
157
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Book Provision Provision for Carrying
Category Reason
balance ratio (%) bad debt amount
The financial situation of the
Provision for bad debt trading partner has deteriorated and
326,422.64 100.00 326,422.64
recognized individually the amount is expected to be
unrecoverable
Provision for bad debt
recognized by portfolio
Total 326,422.64 100.00 326,422.64
B. On 31 December 2022, provision for bad debt recognized based on three stages model
Stages Book balance Provision for bad debt Carrying amount
Stage 1 15,778,332.77 353,020.16 15,425,312.61
Stage 2
Stage 3
Total 15,778,332.77 353,020.16 15,425,312.61
On 31 December 2022, provision for bad debt at stage 1:
Provision Provision for Carrying
Category Book balance Reason
ratio (%) bad debt amount
Provision for bad debt
recognized individually
Provision for bad debt
15,778,332.77 2.24 353,020.16 15,425,312.61
recognized by portfolio
Credit risk has not
1. Export tax refund 8,000,401.16 8,000,401.16
increased significantly
Credit risk has not
2. Other current account 6,301,879.48 5.60 353,020.16 5,948,859.32
increased significantly
Credit risk has not
3. Deposit 1,476,052.13 1,476,052.13
increased significantly
Total 15,778,332.77 2.24 353,020.16 15,425,312.61
As at 31 December 2022, the Company had no provision for bad debts in Stage 2.
As at 31 December 2022, the Company had no provision for bad debts in Stage 3.
The basis for the provision for bad debts in the current period is:
See Note 3.11 for the recognition criteria and instructions for the provision for bad debts by
158
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
groups.
5.5.4.4 Changes of provision for bad debt during the reporting period
Stage 1 Stage 2 Stage 3
Expected credit Expected credit loss
Expected
loss for the for the whole
Provision for bad debt credit loss Total
whole duration duration (Credit
for the next
(no credit impairment has
12 months
impairment) occurred)
Closing balance as of 12/31/2022 353,020.16 353,020.16
Carrying amount of other
receivables in current period on — — — —
12/31/2022
--Turn to stage 2
--Turn to stage 3
--Turn back to stage 2
--Turn back to stage 1
Recognition 326,422.64 326,422.64
Reversal 215,540.14 215,540.14
Used
Written off
Other movements
Closing balance as of 31/12/2023 137,480.02 326,422.64 463,902.66
5.5.4.5 Top five closing balances by entity
Proportion of the
Balance at 31 balance to the total Provision for
Entity name Nature Aging
December 2023 other receivables bad debt
(%)
Zhangzhou Taiwan
investment zone State Export tax refund 15,000,000.00 1- 90 days 63.07
Administration of
159
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Proportion of the
Balance at 31 balance to the total Provision for
Entity name Nature Aging
December 2023 other receivables bad debt
(%)
Taxation
State Grid Fujian
Accounts payable and
Longhai Power Supply 3,954,686.41 1- 90 days 16.63
receivable
Co., Ltd
China Export & Credit
Insurance Corporation Deposit 648,450.00 Over 5 years 2.73
Fujian Branch
PT.PLN (PERSERO) Deposit 412,943.01 Over 5 years 1.74
Guangdong Songqing
Accounts payable and
Intelligent Technology 326,422.64 1- 90 days 1.37 326,422.64
receivable
Co., Ltd
Total 20,342,502.06 85.54 326,422.64
5.6 Inventories
5.6.1 Inventories by category
31 December 2023 31 December 2022
Items Provision for Carrying Provision for Carrying
Book balance Book balance
impairment amount impairment amount
Raw materials 81,685,745.08 10,419,316.94 71,266,428.14 81,697,745.57 10,439,601.05 71,258,144.52
Work in process 22,218,317.04 22,218,317.04 5,826,097.72 5,826,097.72
Self-manufactured
semi-finished 31,940,139.03 3,414,119.26 28,526,019.77 25,687,483.15 2,723,371.49 22,964,111.66
goods
Finished goods 75,637,116.35 6,103,155.87 69,533,960.48 87,375,174.01 9,397,802.00 77,977,372.01
Low-value
508,994.84 508,994.84 566,890.42 566,890.42
consumables
Materials in 355,613.55 355,613.55 1,472,812.16 1,472,812.16
160
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
31 December 2023 31 December 2022
Items Provision for Carrying Provision for Carrying
Book balance Book balance
impairment amount impairment amount
transit
Total 212,345,925.89 19,936,592.07 192,409,333.82 202,626,203.03 22,560,774.54 180,065,428.49
5.6.2 Provision for impairment
Increase in current year Decrease in current year
31 December 31 December
Item Impact of changes Recovered or
2022 Accrual Other 2023
in exchange rates Written-off
Raw materials 10,439,601.05 2,511,570.29 33,044.57 2,564,898.97 10,419,316.94
Self-manufactured
semi-finished 2,723,371.49 690,747.77 3,414,119.26
goods
Goods in store 9,397,802.00 2,970,368.43 6,443.51 6,271,458.07 6,103,155.87
Total 22,560,774.54 6,172,686.49 39,488.08 8,836,357.04 19,936,592.07
Note: The criteria for making provision for the decline in value of inventories on a portfolio
basis are set out in Note 3.13.
5.7 Other Current Assets
Item 31 December 2023 31 December 2022
Reclassification of VAT debit balances, etc. 16,539,595.69 11,522,932.71
Financial investment 443,538,927.34 417,328,986.66
Total 460,078,523.03 428,851,919.37
5.8 Debt Investment
5.8.1 Situation of debt investment
31 December 2023 31 December 2022
Item
Provision for Provision for Carrying
Book balance Carrying amount Book balance
impairment impairment amount
161
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
31 December 2023 31 December 2022
Item
Provision for Provision for Carrying
Book balance Carrying amount Book balance
impairment impairment amount
Large certificate
100,076,779.20 100,076,779.20
of deposit
Subtotal 100,076,779.20 100,076,779.20
Less: Debt
investments due
within one year
Total 100,076,779.20 100,076,779.20
5.8.2 Significant debt investments at the end of the period
31 December 2023
Item Overdue
Face value Coupon rate Effective rate Expiry date
principal
Xiamen Bank Large 50,000,000.00 3.30% 3.30% 2026/12/21
Certificates of Deposit 50,000,000.00 3.30% 3.30% 2026/12/26
Total 100,000,000.00 — — —
5.9 Other Equity Instrument Investment
Item 31 December 2023 31 December 2022
Non-trading investments in equity instruments 40,000.00 40,000.00
Total 40,000.00 40,000.00
5.10 Investment Properties
5.10.1 Investment properties accounted for using cost model
Items Building and plants Land use rights Total
Initial cost:
1. Balance on 31 December 2022 65,737,686.21 29,260,577.51 94,998,263.72
2. Increase during the period
(1) Acquisition
(2) Transfer from fixed assets
3. Decrease during the period
(1) Disposal
(2) Other transferred out
4. Balance on 31 December 2023 65,737,686.21 29,260,577.51 94,998,263.72
Accumulated depreciation and amortization:
162
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Items Building and plants Land use rights Total
1. Balance on 31 December 2022 59,065,304.18 16,784,761.24 75,850,065.42
2. Increase during the period 61,777.32 622,111.80 683,889.12
(1) Accrual or amortization 61,777.32 622,111.80 683,889.12
(2) Transfer from fixed assets
3. Decrease during the period
(1) Disposal
(2) Other transferred out
4. Balance on 31 December 2023 59,127,081.50 17,406,873.04 76,533,954.54
Provision for impairment:
1. Balance on 31 December 2022
2. Increase during the period
(1) Accrual
(2) Other
3. Decrease during the period
(1) Disposal
(2) Other transferred out
4. Balance on 31 December 2023
Carrying amount:
1. Balance on 31 December 2023 6,610,604.71 11,853,704.47 18,464,309.18
2. Balance on 31 December 2022 6,672,382.03 12,475,816.27 19,148,198.30
5.10.2 Investment properties without certificate of title
Item Carrying amount Reason
Lvyuan three country villa 710,583.91
Note: Lvyuan three country villa is the houses with limited property rights purchased by
the TsannKuen China (Shanghai) Enterprise Co., Ltd. which is the subsidiary of the Company
from Shanghai Lvsheng Real State Development Co., Ltd. in 1999. In January 2006,
Shanghai Lvsheng Real State Development Co., Ltd. and Shanghai Jiading district, Huangdu
town Lvyuan community residents' committees issued the certificate jointly to prove the right
of this property belongs to TsannKuen China (Shanghai) Enterprise Co., Ltd.
5.11 Fixed Assets
5.11.1 Fixed assets by category
Items 31 December 2023 31 December 2022
163
Tsann Kuen (China) Enterprise Co., Ltd. Notes to the financial statements
Items 31 December 2023 31 December 2022
Fixed assets 157,096,267.26 147,946,111.81
Disposal of fixed assets
Total 157,096,267.26 147,946,111.81
164
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.11.2 Fixed assets
5.11.2.1 General information of fixed assets
Electronic devices, Improvement expense of
Items Houses and buildings Machinery Vehicles Total
modules and others leased fixed assets
Initial cost:
1. Balance on 31 December 2022 103,409,644.08 177,943,487.51 810,401,422.35 19,232,932.59 49,787,095.13 1,160,774,581.66
2. Increase during the period 780,336.35 20,090,905.45 25,742,060.64 494,950.11 136,683.95 47,244,936.50
(1) Acquisition 3,332.51 261,546.28 264,878.79
(2) Transfer from construction in progress 19,470,106.39 24,877,529.60 435,645.86 44,783,209.85
(3) Impact of changes in exchange rates 780,336.35 617,466.55 602,984.76 59,295.25 136,683.95 2,196,766.86
3. Decrease during the period 48,463,134.36 4,724,078.18 3,588,399.31 30,703,590.46 87,479,202.31
(1) Disposal 48,463,134.36 4,724,078.18 3,588,399.31 30,703,590.46 87,479,202.31
(2) Impact of changes in exchange rate
4. Balance on 31 December 2023 104,189,980.43 149,571,258.60 831,419,404.81 16,139,483.39 19,220,188.62 1,120,540,315.85
Accumulated depreciation:
1. Balance on 31 December 2022 62,230,094.09 102,710,195.32 740,635,516.97 17,816,288.03 49,033,472.80 972,425,567.21
2. Increase during the reporting period 3,740,709.65 8,592,168.06 21,801,893.37 817,445.74 306,701.28 35,258,918.10
(1) Provision 3,442,722.38 8,163,142.45 21,330,780.51 763,718.59 180,537.12 33,880,901.05
(2) Other
(3) Impact of changes in exchange rate 297,987.27 429,025.61 471,112.86 53,727.15 126,164.16 1,378,017.05
3. Decrease during the period 31,109,746.03 3,253,474.84 3,588,399.31 30,676,208.58 68,627,828.76
(1) Disposal 31,109,746.03 3,253,474.84 3,588,399.31 30,676,208.58 68,627,828.76
(2) Impact of changes in exchange rate
165
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Electronic devices, Improvement expense of
Items Houses and buildings Machinery Vehicles Total
modules and others leased fixed assets
4. Balance on 31 December 2023 65,970,803.74 80,192,617.35 759,183,935.50 15,045,334.46 18,663,965.50 939,056,656.55
Provision for impairment:
1. Balance on 31 December 2022 21,850,745.19 18,505,584.03 8,319.24 38,254.18 40,402,902.64
2. Increase during the period 383,111.70 548,025.23 95.39 184.50 931,416.82
(1) Provision 318,175.47 510,802.09 828,977.56
(2) Impact of changes in exchange rate 64,936.23 37,223.14 95.39 184.50 102,439.26
3. Decrease during the period 16,810,839.91 108,705.63 27,381.88 16,946,927.42
(1) Disposal 16,810,839.91 108,705.63 27,381.88 16,946,927.42
(2) Impact of changes in exchange rate
4. Balance on 31 December 2023 5,423,016.98 18,944,903.63 8,414.63 11,056.80 24,387,392.04
Carrying amount:
1. Balance on 31 December 2023 38,219,176.69 63,955,624.27 53,290,565.68 1,085,734.30 545,166.32 157,096,267.26
2. Balance on 31 December 2022 41,179,549.99 53,382,547.00 51,260,321.35 1,408,325.32 715,368.15 147,946,111.81
166
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.11.2.2 Idle fixed assets
Accumulated Provision for Carrying
Item Initial cost Note
depreciation impairment amount
Temporarily idle assets 4,511,276.15 3,185,973.23 1,325,302.92
Total 4,511,276.15 3,185,973.23 1,325,302.92
5.11.2.3 Fixed assets without certificate of title
Item Carrying amount on 31 December 2023 Reason
Lvyuan three country villa 129,197.08
Jingying garden 86,638.00 Legal procedures in process
Total 215,835.08
5.12 Construction in Progress
5.12.1 Construction in progress by category
Items 31 December 2023 31 December 2022
Construction in progress 1,773,322.12 2,656,954.05
Total 1,773,322.12 2,656,954.05
5.12.2 Construction in progress
31 December 2023 31 December 2022
Items Provision for Carrying Provision for Carrying
Book balance Book balance
impairment amount impairment amount
Sporadic project 868,012.40 868,012.40 772,770.46 772,770.46
Equipment to be
905,309.72 905,309.72 1,884,183.59 1,884,183.59
inspected
Total 1,773,322.12 1,773,322.12 2,656,954.05 2,656,954.05
5.13 Right-of-use Assets
Item Houses and buildings Total
Initial cost:
1. Balance on 31 December 2022 560,915,515.04 560,915,515.04
2. Increase during the reporting period
167
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Item Houses and buildings Total
3. Decrease during the reporting period 152,180,078.48 152,180,078.48
4. Impact of changes in exchange rates
5. Balance on 31 December 2023 408,735,436.56 408,735,436.56
Accumulated depreciation:
1. Balance on 31 December 2022 35,278,378.20 35,278,378.20
2. Increase during the reporting period 16,461,393.00 16,461,393.00
2.1 Accrual 16,461,393.00 16,461,393.00
3. Decrease during the reporting period 11,568,326.32 11,568,326.32
3.1 Disposal 11,568,326.32 11,568,326.32
3.2Impact of changes in exchange rates
4. Balance on 31 December 2023 40,171,444.88 40,171,444.88
Provision for impairment:
1. Balance on 31 December 2022
2. Increase during the period
3. Decrease during the reporting period
4. Balance on 31 December 2023
Carrying amount:
1. Carrying amount on 31 December 2023 368,563,991.68 368,563,991.68
2. Carrying amount on 31 December 2022 525,637,136.84 525,637,136.84
5.14 Intangible Assets
Items Land use rights Software Total
Initial cost:
1. Balance on 31 December 2022 18,877,216.55 53,703,759.54 72,580,976.09
2. Increase during the period 473,845.95 111,731.85 585,577.80
(1) Acquisition 111,731.85 111,731.85
(2) Transfer from construction in progress
(3) Impact of changes in exchange rates 473,845.95 473,845.95
168
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Items Land use rights Software Total
3. Decrease during the reporting period 45,533.01 45,533.01
(1) Disposal
(2) Impact of changes in exchange rates 45,533.01 45,533.01
4. Balance on 31 December 2023 19,305,529.49 53,815,491.39 73,121,020.88
Accumulated amortization:
1. Balance on 31 December 2022 6,151,357.80 48,460,729.89 54,612,087.69
2. Increase during the period 762,912.52 4,263,028.86 5,025,941.38
(1) Accrual 639,685.46 4,263,028.86 4,902,714.32
(2) Impact of changes in exchange rates 123,227.06 123,227.06
3. Decrease during the period
(1) Disposal
(2) Impact of changes in exchange rates
4. Balance on 31 December 2023 6,914,270.32 52,723,758.75 59,638,029.07
Provision for impairment:
1. Balance on 31 December 2022
2. Increase during the period
(1) Accrual
(2) Impact of changes in exchange rates
3. Decrease during the period
(1) Disposal
(2) Impact of changes in exchange rates
4. Balance on 31 December 2023
Carrying amount:
1. Carrying amount on 31 December 2023 12,391,259.17 1,091,732.64 13,482,991.81
2. Carrying amount on 31 December 2022 12,725,858.75 5,243,029.65 17,968,888.40
5.15 Long-term Deferred Expenses
169
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Decrease during the reporting
31 December Increase during the 31 December
Items period
2022 reporting period 2023
Amortization Other decrease
Houses and buildings
8,931,746.98 3,084,091.89 3,383,739.86 907,773.33 7,724,325.68
renovation expenses
Telecommunications
14,306.74 49,056.60 16,885.96 46,477.38
project expenses
Total 8,946,053.72 3,133,148.49 3,400,625.82 907,773.33 7,770,803.06
5.16 Deferred Tax Assets and Deferred Tax Liabilities
5.16.1 Deferred tax assets before offsetting
31 December 2023 31 December 2022
Items Deductible temporary Deferred tax Deductible temporary Deferred tax
differences assets differences assets
Provision for asset
34,434,912.22 5,425,006.11 54,779,559.38 9,123,516.27
impairment
Provision for credit
2,471,988.41 374,128.32 1,350,615.63 219,481.38
impairment
Unrealized intragroup
334,417.48 83,604.37 360,395.40 90,098.85
profit
Accrued expenses 8,611,855.82 1,368,648.92 8,960,731.00 1,444,532.40
Lease liabilities 393,053,473.02 58,958,020.95 18,670,852.22 2,800,627.82
Total 438,906,646.95 66,209,408.67 84,122,153.63 13,678,256.72
5.16.2 Deferred tax liabilities before offsetting
31 December 2023 31 December 2022
Items Deductible temporary Deferred tax Deductible temporary Deferred tax
differences liabilities differences liabilities
Policy relocation 84,032,696.08 21,008,174.02
Financial assets held for
2,258,216.67 338,732.50 4,493,788.89 750,939.17
trading
170
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
31 December 2023 31 December 2022
Items Deductible temporary Deferred tax Deductible temporary Deferred tax
differences liabilities differences liabilities
Depreciation of fixed
14,675,125.02 2,201,268.75 16,491,554.88 2,473,733.23
assets accelerates
Right-of-use Assets 368,563,991.68 55,284,598.75
Total 385,497,333.37 57,824,600.00 105,018,039.85 24,232,846.42
5.16.3 Deferred tax assets or liabilities on a net basis after elimination
The amount of The amount of
deferred tax assets and Balance after offsetting deferred tax assets and Balance after offsetting
Item
liabilities offset on 31 on 31 December 2023 liabilities offset on 31 on 31 December 2022
December 2023 December 2022
Deferred tax -57,824,600.00 8,384,808.67 13, 678,256.72
assets
Deferred tax -57,824,600.00 24,232,846.42
liabilities
5.16.4 Unrecognized deferred tax assets
Items 31 December 2023 31 December 2022
Provision for asset impairment 9,889,071.89 8,184,117.80
Provision for credit impairment 1,114,967.63 219,157.47
Accrued expenses 10,070,400.14 7,015,412.51
Payroll liability 2,025,286.49 11,247,362.19
Undistributed deficit 42,007,659.51 70,208,609.05
Total 65,107,385.66 96,874,659.02
5.16.5 Deductible losses not recognised as deferred tax assets will expire in the following
periods:
Year 31 December 2023 31 December 2022 Note
Year 2023 15,495,274.18 15,495,274.18
Year 2024 14,343,181.96 14,387,986.24
Year 2025 1,829,557.47
Year 2026 7,540,562.18
171
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Year 31 December 2023 31 December 2022 Note
Year 2027 6,631,108.51 18,753,466.44
Year 2028 to 2033 5,538,094.86 12,201,762.54
Total 42,007,659.51 70,208,609.05
5.17 Other Non-current Assets
Items 31 December 2023 31 December 2022
Prepaid mold fee 11,500.00
Prepaid equipment fee 136,429.00 802,012.56
Total 136,429.00 813,512.56
5.18 Assets with restricted ownership or right of use
Items Carrying amount (2023/12/31) Reasons
Monetary funds 5,352,305.24 Letter of credit margin
Total 5,352,305.24 /
Items Carrying amount (2022/12/31) Reasons
Monetary funds 1,356,175.95 Letter of credit margin
Total 1,356,175.95 /
5.19 Notes Payable
Type 31 December 2023 31 December 2022
Bank acceptance bills 9,137,361.03 2,630,056.46
Total 9,137,361.03 2,630,056.46
5.20 Accounts Payable
Items 31 December 2023 31 December 2022
Within 1 year 486,454,528.92 392,695,758.24
Over 1 year 5,420,389.52 6,259,391.99
Total 491,874,918.44 398,955,150.23
172
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.21 Advance Received
Items 31 December 2023 31 December 2022
Within 1 year 2,506,352.46 4,555,321.32
Over 1 year 117,915.81 3,325,097.52
Total 2,624,268.27 7,880,418.84
5.22 Contract Liabilities
Item 31 December 2023 31 December 2022
Advance from merchandise 16,485,904.83 21,522,608.04
Total 16,485,904.83 21,522,608.04
5.23 Employee Benefits Payable
5.23.1 Details of employee benefits payable
Increase during Decrease during Impact of
31 December 31 December
Item the reporting the reporting changes in
2022 2023
period period exchange rate
1. Short-term employee
41,875,000.77 274,852,608.74 267,663,484.51 35,261.69 49,099,386.69
benefits
2. Post-employment
benefits-defined contribution 72,198.61 15,889,678.81 15,953,669.49 1,036.35 9,244.28
plans
3. Termination benefits 137,770.06 137,770.06
4. Other benefits due within
one year
Total 41,947,199.38 290,880,057.61 283,754,924.06 36,298.04 49,108,630.97
5.23.2 Details of short-term employee benefits
Impact of
Increase during Decrease during
changes in 31 December
Item 31 December 2022 the reporting the reporting
exchange 2023
period period
rate
1. Salaries, bonuses,
28,306,162.35 235,849,539.53 230,856,809.57 35,036.18 33,333,928.49
allowances and
173
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Impact of
Increase during Decrease during
changes in 31 December
Item 31 December 2022 the reporting the reporting
exchange 2023
period period
rate
subsidies
2. Employee benefits 17,108,085.45 17,108,085.45
3. Social insurance 20,381.60 11,165,413.89 11,179,972.56 225.51 6,048.44
Including: (1) Health
6,931.52 8,510,812.57 8,512,081.40 2.95 5,665.64
insurance
(2) Work-related injury
13,450.08 2,044,171.15 2,057,460.99 222.56 382.80
insurance
(3) Birth insurance 610,430.17 610,430.17 -
4. Housing
11,252,090.19 7,726,382.81 5,702,018.32 13,276,454.68
accumulation fund
5. Labour union funds
and employee 520,231.98 520,231.98
education funds
6. Short-term absence
2,296,366.63 2,482,955.08 2,296,366.63 2,482,955.08
pay
Total 41,875,000.77 274,852,608.74 267,663,484.51 35,261.69 49,099,386.69
5.23.3 Details of defined contribution plans
Impact of
31 December Increase during the Decrease during the 31 December
Item changes in
2022 reporting period reporting period 2023
exchange rate
Post-employment
benefits
1. Basic
endowment 71,856.51 15,492,085.84 15,556,008.92 1,036.35 8,969.78
insurance
2.
342.10 397,592.97 397,660.57 274.50
Unemployment
174
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Impact of
31 December Increase during the Decrease during the 31 December
Item changes in
2022 reporting period reporting period 2023
exchange rate
Post-employment
benefits
insurance
Total 72,198.61 15,889,678.81 15,953,669.49 1,036.35 9,244.28
5.24 Taxes Payable
Item 31 December 2023 31 December 2022
Enterprise income tax 54,382,240.91 35,271,667.38
Other 1,722,378.93 1,573,439.94
Value added tax (VAT) 894,039.02 1,286,227.97
Individual income tax 561,566.16 556,713.88
City construction tax 422,008.28 376,322.10
Educational surcharge 422,008.28 362,185.92
Total 58,404,241.58 39,426,557.19
5.25 Other Payables
5.25.1 Other payables by category
Item 31 December 2023 31 December 2022
Interest payable
Dividend payable
Other payable 35,202,629.21 36,311,863.30
Total 35,202,629.21 36,311,863.30
5.25.2 Other payables
5.25.2.1 Other payables by ageing
Item 31 December 2023 31 December 2022
Within 1 year 22,733,597.34 23,690,913.19
Over 1 year 12,469,031.87 12,620,950.11
175
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Item 31 December 2023 31 December 2022
Total 35,202,629.21 36,311,863.30
5.25.2.2 Other payables by nature
Item 31 December 2023 31 December 2022
Accrued expenses 18,682,255.96 15,976,143.51
Security deposit 11,267,553.12 13,859,235.05
Current payments
5,252,820.13 6,476,484.74
and others
Total 35,202,629.21 36,311,863.30
5.26 Non-current liabilities due within one year
Item 31 December 2023 31 December 2022
Lease liabilities due within one year 883,368.79 9,494,026.90
Total 883,368.79 9,494,026.90
5.27 Lease liabilities
Item 31 December 2023 31 December 2022
Lease payments 711,067,541.70 995,018,122.73
Less：unrecognized financing charges 318,014,068.68 450,673,567.38
Subtotal 393,053,473.02 544,344,555.35
Less：Lease liabilities due within one year 883,368.79 9,494,026.90
Total 392,170,104.23 534,850,528.45
5.28 Estimated liabilities
Project 31 December 2023 31 December 2022 Reasons
Pending litigation 480,930.00
Total 480,930.00
5.29 Share Capital
Item 31 December Changes during the reporting period (+,-) 31 December
2022 2023
176
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Bonus Capitalization
New issues Other Subtotal
issues of reserves
Number of
185,391,680.00 185,391,680.00
total shares
5.30 Capital Reserves
31 December Increase during the Decrease during the 31 December
Item
2022 reporting period reporting period 2023
Capital premium (share
210,045,659.80 210,045,659.80
premium)
Other capital reserves 86,763,305.99 86,763,305.99
Total 296,808,965.79 296,808,965.79
177
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.31 Other Comprehensive Income
Current year
Less: previously Less: previously
31 December After tax After tax 31 December
Item recognized in other recognized in other
2022 Amount for the Less: Income attributable to attributable to 2023
comprehensive income comprehensive income
year before tax tax expense the parent minority
transferred into profit transferred into retained
company shareholders
or loss earnings
1. Other comprehensive income will
41,036.56 41,036.56
not be reclassified to profit or loss
Including：Remeasurement of
41,036.56 41,036.56
changes in defined benefit plans
Other comprehensive income that
cannot be converted into profit or
loss under the equity method
Fair value changes of investments in
other equity instruments
Fair value changes of the enterprise's
own credit risk
2. Items will be reclassified to profit
8,089,858.52 2,794,877.91 2,096,158.43 698,719.48 10,186,016.95
or loss
Including: Other comprehensive
income will be reclassified into profit
or loss under equity method
Fair value changes of other debt
investments
The amount of financial assets that
are reclassified into other
comprehensive income
Other credit impairment provisions
for debt investments
Cash flow hedging reserves
178
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Current year
Less: previously Less: previously
31 December After tax After tax 31 December
Item recognized in other recognized in other
2022 Amount for the Less: Income attributable to attributable to 2023
comprehensive income comprehensive income
year before tax tax expense the parent minority
transferred into profit transferred into retained
company shareholders
or loss earnings
Exchange differences on translating 8,089,858.52 2,794,877.91 2,096,158.43 698,719.48 10,186,016.95
foreign operations
Total 8,130,895.08 2,794,877.91 2,096,158.43 698,719.48 10,227,053.51
179
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
5.32 Surplus Reserves
Decrease during
Increase during the
Item 31 December 2022 the reporting 31 December 2023
reporting period
period
Statutory surplus reserves 68,925,849.64 6,575,638.72 75,501,488.36
Total 68,925,849.64 6,575,638.72 75,501,488.36
The increase in surplus reserve in the current period is due to the withdrawal of the statutory
surplus reserve fund by the Company at 10% of the net profit of the current period in
accordance with the relevant provisions of the Company Law and the articles of association of
the Company.
5.33 Retained Earnings
Item 2023 2022
Balance at the end of last period before adjustments 481,265,907.40 413,076,375.98
Adjustments for the opening balance (increase /(decrease))
Balance at the beginning of the reporting period after adjustments 481,265,907.40 413,076,375.98
Add: net profit attributable to owners of the parent company for the
87,937,274.86 94,283,302.93
reporting period
Less: appropriation to statutory surplus reserves 6,575,638.72 7,554,603.51
Appropriation to discretionary surplus reserves
Provision for general risk reserves
Payment of ordinary share dividends 55,617,504.00 18,539,168.00
Payment of ordinary share dividends
Retained Earnings at the end of this period 507,010,039.53 481,265,907.40
5.34 Revenue and Cost of Sales
2023 2022
Item
Revenue Costs of sales Revenue Costs of sales
Principal activities 1,416,916,663.23 1,200,616,079.86 1,500,156,144.12 1,280,524,186.68
Other activities 78,716,142.18 21,724,636.16 84,111,384.96 25,490,844.72
180
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
2023 2022
Item
Revenue Costs of sales Revenue Costs of sales
Total 1,495,632,805.41 1,222,340,716.02 1,584,267,529.08 1,306,015,031.40
5.34.1 Revenue from principal activities (by industry or business)
2023 2022
Industry (business)
Revenue Costs of sales Revenue Costs of sales
Household appliances
1,416,916,663.23 1,200,616,079.86 1,500,156,144.12 1,280,524,186.68
industry
Total 1,416,916,663.23 1,200,616,079.86 1,500,156,144.12 1,280,524,186.68
5.34.2 Revenue from principal activities (by product)
2023 2022
Product
Revenue Costs of sales Revenue Costs of sales
Catering and Cooking 876,649,556.62 740,036,637.13 944,835,478.47 808,741,287.29
Home helper 423,317,994.57 367,608,077.02 366,208,675.06 319,155,173.77
Tea/Coffee makers 107,759,750.66 87,621,207.90 169,414,501.98 140,499,683.64
Other 9,189,361.38 5,350,157.81 19,697,488.61 12,128,041.98
Total 1,416,916,663.23 1,200,616,079.86 1,500,156,144.12 1,280,524,186.68
5.34.3 Revenue from principal activities (by region)
2023 2022
Region
Revenue Costs of sales Revenue Costs of sales
America 644,953,338.13 551,073,582.25 622,677,921.09 537,370,246.55
Europe 433,422,726.13 362,539,500.90 419,003,051.04 349,905,513.15
Asia 298,574,813.83 255,338,601.14 386,542,095.31 334,436,478.07
Africa 20,888,061.42 16,172,452.85 35,772,966.67 28,464,470.69
Australia 19,077,723.72 15,491,942.72 36,160,110.01 30,347,478.22
Total 1,416,916,663.23 1,200,616,079.86 1,500,156,144.12 1,280,524,186.68
5.35 Taxes and Surcharges
181
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Item 2023 2022
Property tax 2,685,209.67 2,184,363.22
City construction tax 2,225,762.25 2,400,175.74
Educational surcharge 2,163,111.65 2,341,816.56
Stamp duty 903,975.01 825,856.56
Town land use tax 392,026.92 440,317.41
Other 12,674.06 14,555.81
Total 8,382,759.56 8,207,085.30
5.36 Selling and Distribution Expenses
Item 2023 2022
Employee remunerations 15,245,952.54 13,569,924.31
Other expenses 3,906,950.26 3,335,639.23
Advertisements charges and sales promotion 3,334,290.34 1,452,784.28
Sales commission and after sales service fees 3,182,961.16 2,418,261.29
Claims experiment expenses 1,202,860.43 1,043,138.90
Travel expenses 707,164.48 761,211.78
Administrative expenses 124,214.30 113,848.66
Rental expenses 23,145.36 23,461.14
Total 27,727,538.87 22,718,269.59
5.37 General and Administrative Expenses
Item 2023 2022
Employee remunerations 39,253,705.13 38,756,709.78
Depreciation and amortization 12,083,209.71 12,360,833.24
Other 6,958,953.98 5,042,835.94
Travel expenses 4,371,053.55 3,813,708.03
Maintenance expenses 2,362,890.23 4,443,704.91
Insurance expenses 1,902,441.69 2,285,813.04
Consultant fees 2,906,196.95 4,053,590.78
182
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Item 2023 2022
Administrative expenses 1,417,789.04 963,568.28
Rental expenses 306,928.42 209,563.01
Total 71,563,168.70 71,930,327.01
5.38 Research and Development Expenses
Item 2023 2022
Employee remunerations 42,032,420.62 41,658,361.64
Depreciation and amortization 7,105,995.06 8,494,707.66
Test expenses 5,092,211.99 3,426,697.09
Others 2,513,252.06 2,586,006.14
Maintenance expenses 1,824,488.02 3,217,804.82
Certification expenses 1,445,855.18 1,021,969.20
Patent expenses 440,114.68 1,027,477.20
Travel expenses 438,539.83 408,579.37
Consultant fees 268,309.50 30,681.29
Rental expenses 41,113.84 49,805.57
Total 61,202,300.78 61,922,089.98
5.39 Finance Expenses
Item 2023 2022
Interest expenses 26,125,546.52 28,205,548.36
Including: interest expense on lease liabilities 20,342,871.33 24,915,064.28
Less: Interest income 5,259,411.72 6,913,345.47
Net interest expenses 20,866,134.80 21,292,202.89
Foreign exchange losses -1,658,341.14 -21,831,663.76
Bank charges and others 821,181.54 929,571.75
Total 20,028,975.20 390,110.88
5.40 Other Income
183
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Item 2023 2022 Related to assets /income
1. Government grant recognized in other income 3,727,263.16 7,993,459.91
Including: Government grant related to deferred
Related to income
income
Government grant related to deferred income Related to income
Government grant directly recognised in current
3,727,263.16 7,993,459.91 Related to income
profit or loss
2. Others related to daily operation activities and
5,901.34
recognized in other income
Including: Charges of withholding individual
income tax
Additional deduction of input tax 5,901.34
Total 3,727,263.16 7,999,361.25
5.41 Investment Income
Item 2023 2022
Investment income from the disposal of long-term equity 128,459.45
Investment income earned during the holding period of a trading
20,640,166.64 16,222,024.54
financial asset
Investment income from the disposal of trading financial assets -1,038,850.00 -4,069,250.00
Other current assets’ investment and wealth management 14,513,094.28 13,773,139.76
Total 34,242,870.37 25,925,914.30
5.42 Gains on Changes in Fair Values
Sources of gains on changes in fair value 2023 2022
Held-for-trading financial assets -1,484,755.55 -1,227,238.89
Including: Changes in fair value of derivatives -706,100.00 -3,013,100.00
Financial products -778,655.55 1,785,861.11
Total -1,484,755.55 -1,227,238.89
5.43 Impairment Loss of Credit
184
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Item 2023 2022
Bad debt of accounts receivables -1,899,211.17 1,969,870.20
Bad debt of other receivables -110,882.50 -85,975.67
Total -2,010,093.67 1,883,894.53
5.44 Impairment Loss of Assets
Item 2023 2022
Impairment of inventories -6,172,686.49 -11,264,767.54
Impairment of fixed assets -828,977.57 -1,106,898.76
Total -7,001,664.06 -12,371,666.30
5.45 Gains from Disposal of Assets
Item 2023 2022
Income from the disposal of fixed assets 2,628,054.68 742,730.95
Income from the disposal related to the right-of-use assets 9,609,202.66
Total 12,237,257.34 742,730.95
5.46 Non-operating Income
Recognized in current extraordinary gains
Item 2023 2022
and losses
Other 6,015,235.74 3,161,103.92 6,015,235.74
Total 6,015,235.74 3,161,103.92 6,015,235.74
5.47 Non-operating Expenses
Recognized in current extraordinary
Item 2023 2022
gains and losses
Loss from damage or scrapping of
41,357.59 12,015.10 41,357.59
non-current assets
Including: loss from scrapping of
41,357.59 12,015.10 41,357.59
fixed assets
Donations 500,000.00 29,765.53 500,000.00
Penalty and late payment 9,000.00
185
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Recognized in current extraordinary
Item 2023 2022
gains and losses
Other 54,170.89
Total 541,357.59 104,951.52 541,357.59
5.48 Income Tax Expenses
5.48.1 Details of income tax expenses
Item 2023 2022
Current tax expenses 31,708,533.44 12,135,450.91
Deferred tax expenses -18,939,398.37 1,309,605.93
Total 12,769,135.07 13,445,056.84
5.48.2 Reconciliation of accounting profit and income tax expenses
Item 2023 2022
Profit before tax 129,572,102.02 139,093,763.16
Income tax expense at the statutory /applicable tax rate 32,393,025.51 34,773,440.79
Effect of different tax rate of subsidiaries -25,057,991.77 -12,848,881.94
Adjustments of impact from prior period income tax -124,467.18 3,368.83
Effect of income that is exempt from taxation -559,083.05
Effect of non-deductible costs, expenses or losses 580,624.18 291,085.80
Effect of previously unrecognized deductible losses recognized as -783.41 -648,800.85
deferred tax assets
Effect of deductible temporary differences and deductible losses
10,983,042.08 1,535,695.73
not recognized as deferred tax assets
R&D expenses plus deduction -6,004,314.34 -6,621,141.17
Depreciation of fixed assets (accelerates) -2,480,627.30
Income tax expenses 12,769,135.07 13,445,056.84
5.49 Other Comprehensive Income
For details of the other comprehensive income and related tax effect, transfer to profit or loss
and adjustment of other comprehensive income, refer to Note 5.31 Other Comprehensive
186
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Income.
5.50 Notes to the Statement of Cash Flow
5.50.1 Cash relating to operating activities
Other cash received relating to operating activities
Item 2023 2022
Government grants 3,727,263.16 7,993,459.91
Interest income 5,259,411.72 6,822,525.97
Rent income 56,631,989.37 61,897,576.19
Funds in current account and others 56,934,936.96 13,556,436.17
Total 122,553,601.21 90,269,998.24
Other cash payments relating to operating activities
Item 2023 2022
Penalties and donations 500,000.00 38,765.53
Bank charges 821,182.07 929,571.75
Sales expenses, general and administrative expenses, and
41,164,217.42 35,773,564.34
research and development expenses paid by cash
Current accounts and others 57,815,182.38 27,846,448.66
Total 100,300,581.87 64,588,350.28
5.50.2 Cash relating to investing activities
Other cash received relating to investing activities
Item 2023 2022
A term deposit deposited with a financial institution to earn
497,935,690.70 483,165,710.00
interest income at maturity
Total 497,935,690.70 483,165,710.00
Other cash payments relating to investing activities
Item 2023 2022
A term deposit deposited with a financial institution for earning 518,774,200.00 624,630,729.27
187
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Item 2023 2022
interest income
Total 518,774,200.00 624,630,729.27
5.50.3 Cash relating to financing activities
Other cash received relating to financing activities
Item 2023 2022
Letter of credit margin 8,193,634.09 10,734,861.05
Total 8,193,634.09 10,734,861.05
Other cash payments relating to financing activities
Item 2023 2022
Lease payments of right-of-use assets 20,505,225.48 34,451,792.72
Letter of credit deposit 12,189,762.85 8,835,738.83
Return of investment 616,979.16
Total 32,694,988.33 43,904,510.71
Changes in liabilities arising from financing activities
Increase during the reporting period Decrease during the reporting period
31 December
Item 31 December 2022 Non-cash
Cash changes Cash changes Non-cash changes 2023
changes
Lease
liabilities
(including
544,344,555.35 20,505,225.48 130,785,856.85 393,053,473.02
those due
within one
year)
Short-term
21,539,400.00 21,539,400.00
borrowing
Total 544,344,555.35 21,539,400.00 42,044,625.48 130,785,856.85 393,053,473.02
5.51 Supplementary Information to the Statement of Cash Flows
5.51.1 Supplementary information to the statement of cash flows
Supplementary information 2023 2022
1. Adjustments of net profit to cash flows from operating activities:
Net profit 116,802,966.95 125,648,706.32
Add: Provisions for impairment of assets 7,001,664.06 12,371,666.30
188
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Supplementary information 2023 2022
Impairment loss of credit 2,010,093.67 -1,883,894.53
Depreciation of fixed assets, investment real estate, oil and gas assets,
35,942,807.22 37,488,119.50
productive biological assets
Depreciation of right-of-use assets 16,461,393.00 18,581,182.05
Amortisation of intangible assets 5,025,941.38 6,972,612.50
Amortisation of long-term deferred expenses 3,400,625.82 3,932,957.60
Gain on disposal of fixed assets, intangible assets, and other long-term assets
-12,237,257.34 -742,730.95
(Gain expressed with “-”)
Loss on scrapping of fixed assets (Gain expressed with “-”) 41,357.59 12,015.10
Loss on changes in fair value (Gain expressed with “-”) 1,484,755.55 1,227,238.89
Financial expense (Income expressed with “-”) 26,779,027.17 18,181,928.86
Investment loss (Income expressed with “-”) -34,242,870.37 -25,925,914.30
Decreases in deferred tax assets (Increase expressed with “-”) 5,293,448.05 -976,426.19
Increases in deferred tax liabilities (Decrease expressed with “-”) -24,232,846.42 2,286,032.12
Decrease in inventories (Increase expressed with “-”) -18,556,079.89 60,939,374.72
Decrease in operating receivables (Increase expressed with “-”) -115,854,307.61 169,748,051.83
Increases in operating payables (Decrease expressed with “-”) 107,925,216.78 -263,085,310.56
Other
Net cash flows from operating activities 123,045,935.61 164,775,609.26
2. Significant activities not involving cash receipts and payments:
Conversion of debt into capital
Convertible corporate bonds maturing within one year
Leased assets (except for simplified processing)
3. Net increases in cash and cash equivalents:
Cash at the end of the reporting period 561,810,271.53 575,511,653.82
Less: Cash at the beginning of the reporting period 575,511,653.82 770,851,173.58
Add: Cash equivalents at the end of the reporting period
189
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Supplementary information 2023 2022
Less: Cash equivalents at the beginning of the reporting period
Net increase in cash and cash equivalents -13,701,382.29 -195,339,519.76
5.51.2 The components of cash and cash equivalents
Item 31 December 2023 31 December 2022
1. Cash 561,810,271.53 575,511,653.82
Including: Cash on hand 810,688.40 843,413.66
Cash in bank available for immediate use 560,871,966.69 574,436,355.52
Other monetary funds available for immediate use 127,616.44 231,884.64
Deposit in the central banks available for immediate use
Deposit in peer firms
Loan to peer firms
2. Cash equivalents
Including: Bond investments maturing within three months
3. Cash and cash equivalents at the end of the reporting period 561,810,271.53 575,511,653.82
Including: Using restricted cash and cash equivalents by the parent company
or intra-group subsidiary
5.51.3 Monetary funds that are not cash and cash equivalents
Item 2023 2022 Reasons
Not withdrawable at any
Letter of credit margin 5,352,305.24 1,356,175.95
time
Total 5,352,305.24 1,356,175.95
5.52 Foreign Currency Monetary Items
5.52.1 Details for foreign currency monetary items:
Carrying amount in foreign currency Carrying amount in CNY on
Item Exchange rate
on 31 December 2023 31 December 2023
Cash and cash equivalents 126,432,534.81
Including: USD 17,344,056.91 7.0827 122,842,751.88
JPY 57,287,799.62 0.050213 2,876,592.28
190
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Carrying amount in foreign currency Carrying amount in CNY on
Item Exchange rate
on 31 December 2023 31 December 2023
EUR 38,572.70 7.8592 303,150.56
HKD 102,814.22 0.9062 93,170.25
GBP 9,419.63 9.0411 85,163.82
IDR 500,093,139.52 0.00046 230,042.84
HUF 81,016.00 0.020529 1,663.18
Accounts receivables 202,329,483.53
Including: USD 27,951,411.06 7.0827 197,971,459.11
JPY 78,939,560.00 0.050213 3,963,792.13
IDR 857,026,721.00 0.00046 394,232.29
Accounts payables 66,103,441.28
Including: USD 9,252,423.79 7.0827 65,532,141.98
EUR 39,716.40 7.8592 312,139.13
IDR 380,376,292.45 0.00046 174,973.09
HKD 20,585.70 0.9062 18,654.76
JPY 1,305,086.70 0.050213 65,532.32
Other receivables 534,297.53
Including: USD 5,762.77 7.0827 40,815.97
IDR 1,072,786,000.00 0.00046 493,481.56
Other payables 1,158,796.87
Including: USD 121,466.45 7.0827 860,310.43
IDR 475,782,910.13 0.00046 218,860.14
HKD 57,603.30 0.9062 52,200.11
JPY 546,197.00 0.050213 27,426.19
5.52.2 Description of overseas business entities
Name of the overseas operating entity: Pt.Star Comgistic Indonesia
Main business area: Indonesia
191
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Accounting standard currency: US dollars
5.53 Lease
5.53.1 The Company as the lessee
Current profit and loss and cash flow related to the lease
Project 2023
Short-term lease expenses included in the profit and loss of the current period 441,127.08
Lease expense of low-value assets included in current period (except short-term lease)
Interest expense of the lease liability 20,342,871.33
Variable lease payments not included in the measurement of lease liabilities as included in current
profits and losses
Income obtained from the sublease of the use right assets 40,933,338.90
Total cash outflow related to leasing 20,505,225.48
5.53.2 The company shall be the lessor
5.53.2.1 Operation lease
Lease income
Project 2023
Lease income 15,698,650.47
Including: income related to variable lease payments not included in the measurement of
lease receipts
6. R&D expenditures (Research and Development)
Item 2023 2022
Employee remunerations 42,032,420.62 41,658,361.64
Depreciation and amortization 7,105,995.06 8,494,707.66
Test expenses 5,092,211.99 3,426,697.09
Others 2,513,252.06 2,586,006.14
Maintenance expenses 1,824,488.02 3,217,804.82
Certification expenses 1,445,855.18 1,021,969.20
Travel expenses 438,539.83 408,579.37
Patent expenses 440,114.68 1,027,477.20
Consultant fees 268,309.50 30,681.29
192
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Item 2023 2022
Rental expenses 41,113.84 49,805.57
Total 61,202,300.78 61,922,089.98
Including: Expense recognition 61,202,300.78 61,922,089.98
Capitalization
7. CHANGES IN THE SCOPE OF CONSOLIDATION
7.1 Other reasons for change of consolidated scope
In June 2023, the Company cancelled its subsidiary, Tsannkuen Edge Intelligence Co., Ltd. (TKEI). From
the date of completion of the cancellation, Tsannkuen Edge Intelligence Co., Ltd. (TKEI) will no longer
be included in the scope of consolidated statements.
193
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
8. INTERESTS IN OTHER ENTITIES
8.1 Interests in Subsidiaries
8.1.1 Composition of corporate group
Percentage of equity
Principal place of interests by the Company
Name of subsidiary Abbreviation Registered City Nature of business Methods of acquisition
business (%)
Direct Indirect
Tsann Kuen (Zhangzhou) Enterprise Manufactures home
TKL Zhangzhou Zhangzhou 75.00 Acquired through establishment
Co., Ltd. electronic appliance
Tsann Kuen China (Shanghai) Manufactures home Acquired through business combination
TKS Shanghai Shanghai 46.875
Enterprise Co., Ltd. electronic appliance under common control
Xiamen Tsannkuen Property Services
TKW Xiamen Xiamen Property services 100.00 Acquired through establishment
Co., Ltd.
Acquired through business combination
East Sino Development Limited East Sino Hong Kong Hong Kong Investment, Trading 75.00
under common control
Manufactures home Acquired through business combination
Pt.Star Comgistic Indonesia SCI Indonesia Indonesia 75.00
electronic appliance under common control
Pt.Star Comgistic Property
SCPDI Indonesia Indonesia Real estate development 75.00 Acquired through establishment
Development Indonesia
194
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Percentage of equity
Principal place of interests by the Company
Name of subsidiary Abbreviation Registered City Nature of business Methods of acquisition
business (%)
Direct Indirect
Acquired through business
Orient Star Investments Limited OSI Hong Kong Hong Kong Investment, Trading 75.00
combination not under common control
Acquired through business combination
Tsannkuen Edge Intelligence Co., Ltd. TKEI Taiwan Taiwan Industrial design 75.00
under common control
Note: In June 2023, the Company cancelled its subsidiary, Tsannkuen Edge Intelligence Co., Ltd. (TKEI).
8.1.2 Significant non-wholly owned subsidiaries
Profit or loss attributable to Dividends declared to distribute Non-controlling
Shareholding ratio of non-
Name of subsidiary non- controlling interests during to non-controlling interests interests at the end of the
controlling interests
the reporting period during the reporting period reporting period
Tsann Kuen (Zhangzhou) Enterprise Co., Ltd. 25.00% 18,310,960.08 19,405,233.49 342,188,926.77
8.1.3 Main financial information of significant non-wholly owned subsidiaries
31 December 2023
Name of subsidiary
Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities
Tsann Kuen (Zhangzhou)
1,509,634,463.61 820,943,048.06 2,330,577,511.67 569,651,700.35 392,170,104.23 961,821,804.58
Enterprise Co., Ltd.
195
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
(Continued)
31 December 2022
Name of subsidiary
Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities
Tsann Kuen (Zhangzhou)
1,482,227,964.03 928,152,276.64 2,410,380,240.67 498,883,526.15 538,363,953.77 1,037,247,479.92
Enterprise Co., Ltd.
2023
Name of subsidiary Net cash flows from operating
Revenue Net profit/(loss) Total comprehensive income
activities
Tsann Kuen (Zhangzhou)
1,352,725,459.57 73,243,840.32 151,454,516.12
Enterprise Co., Ltd.
(Continued)
2022
Name of subsidiary Net cash flows from operating
Revenue Net profit/(loss) Total comprehensive income
activities
Tsann Kuen (Zhangzhou)
1,422,956,876.66 86,245,437.76 191,129,189.64
Enterprise Co., Ltd.
196
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
9. Government Grants
Item in P&L statement 2023 2022
Other earnings 3,727,263.16 7,999,361.25
Total 3,727,263.16 7,999,361.25
10. RISKS RELATED TO FINANCIAL INSTRUMENTS
Risks related to the financial instruments of the Company arise from the recognition of
various financial assets and financial liabilities during its operation, including credit risk,
liquidity risk and market risk.
Management of the Company is responsible for determining risk management objectives and
policies related to financial instruments. Operational management is responsible for the daily
risk management through functional departments (e.g. credit management department of the
Company reviews each credit sale). Internal audit department is responsible for the daily
supervision of implementation of the risk management policies and procedures, and report
their findings to the audit committee in a timely manner.
Overall risk management objective of the Company is to establish risk management policies
to minimize the risks without unduly affecting the competitiveness and resilience of the
Company.
10.1 Credit Risk
Credit risk is the risk of one party of the financial instrument face to a financial loss because
the other party of the financial instrument fails to fulfill its obligation. The credit risk of the
Company is related to cash and equivalent, accounts receivables, other receivables and debt
investments, etc. Credit risk of these financial assets is derived from the counterparty’s breach
of contract. The maximum risk exposure is equal to the carrying amount of these financial
instruments.
Cash and cash equivalent of the Company has lower credit risk, as they are mainly deposited
in such financial institutions as commercial bank, of which the Company thinks with higher
reputation and financial position.
For accounts receivables, other receivables and debt investments, the Company establishes
related policies to control their credit risk exposure. The Company assesses credit capability
197
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
of its customers and determines their credit terms based on their financial position, possibility
of the guarantee from third party, credit record and other factors (such as current market status,
etc.). The Company monitors its customers’ credit record periodically, and for those
customers with poor credit record, the Company will take measures such as written call,
shortening or cancelling their credit terms so as to ensure the overall credit risk of the
Company is controllable.
10.1.1 Determination of significant increases in credit risk
The Company assesses at each reporting date as to whether the credit risk on financial
instruments has increased significantly since initial recognition. When the Company
determines whether the credit risk has increased significantly since initial recognition, it
considers based on reasonable and supportable information that is available without undue
cost or effort, including quantitative and qualitative analysis of historical information, external
credit ratings and forward-looking information. The Company determines the changes in the
risk of a default occurring over the expected life of the financial instrument through
comparing the risk of a default occurring on the financial instrument as at the reporting date
with the risk of a default occurring on the financial instrument as at the date of initial
recognition based on individual financial instrument or a group of financial instruments with
the similar credit risk characteristics.
When met one or more of the following quantitative or qualitative criteria, the Company
determines that the credit risk on financial instruments has increased significantly: the
quantitative criteria applied mainly because as at the reporting date, the increase in the
probability of default occurring over the lifetime is more than a certain percentage since the
initial recognition; the qualitative criteria applied if the debtor has adverse changes in business
and economic conditions, early warning list of customer, and etc.
10.1.2 Definition of credit-impaired financial assets
The criteria adopted by the Company for determination of credit impairment are consistent
with internal credit risk management objectives of relevant financial instruments in
considering both quantitative and qualitative indicators.
When the Company assesses whether the debtor has incurred the credit impairment, the main
factors considered are as following: Significant financial difficulty of the issuer or the
198
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
borrower; a breach of contract, e.g., default or past-due event; a lender having granted a
concession to the borrower for economic or contractual reasons relating to the borrower’s
financial difficulty that the lender would not otherwise consider; the probability that the
borrower will enter bankruptcy or other financial re-organisation; the disappearance of an
active market for the financial asset because of financial difficulties of the issuer or the
borrower; the purchase or origination of a financial asset at a deep discount that reflects the
incurred credit losses.
10.1.3 The parameter of expected credit loss measurement
The company measures impairment provision for different assets with the expected credit loss
of 12-month or the lifetime based on whether there has been a significant increase in credit
risk or credit impairment has occurred. The key parameters for expected credit loss
measurement include default probability, default loss rate and default risk exposure. The
Company sets up the model of default probability, default loss rate and default risk exposure
in considering the quantitative analysis of historical statistics (such as counterparties’ ratings,
guarantee method and collateral type, repayment method, etc.) and forward-looking
information.
Relevant definitions are as following:
Default probability refers to the probability of the debtor will fail to discharge the repayment
obligation over the next 12 months or the entire remaining lifetime;
Default loss rate refers to the Company's expectation of the loss degree of default risk
exposure. The default loss rate varies depending on the type of counterparty, recourse method
and priority, and the collateral. The default loss rate is the percentage of the risk exposure loss
when default has occurred and it is calculated over the next 12 months or the entire lifetime;
The default risk exposure refers to the amount that the company should be repaid when
default has occurred in the next 12 months or the entire lifetime. Both the assessment of
significant increase in credit risk of forward-looking information and the calculation of
expected credit losses involve forward-looking information. Through historical data analysis,
the Company identifies key economic indicators that have impact on the credit risk and
expected credit losses for each business.
The maximum exposure to credit risk of the Company is the carrying amount of each
199
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
financial asset in the statement of financial position. The Company does not provide any other
guarantees that may expose the Company to credit risk.
For the accounts receivable of the Company, the amount of top five clients represents 81.67%
of the total (31 December 2022: 67.79%); for the other receivables, the amount of the top five
entities represents 84.84% of the total (31 December 2022: 62.85%).
10.2 Liquidity Risk
Liquidity risk is the risk of shortage of funds when fulfilling the obligation of settlement by
delivering cash or other financial assets. The Company is responsible for the capital
management of all of its subsidiaries, including short-term investment of cash surplus and
dealing with forecasted cash demand by raising loans. The Company’s policy is to monitor
the demand for short-term and long-term floating capital and whether the requirement of loan
contracts is satisfied so as to ensure to maintain adequate cash and cash equivalents.
10.3 Market Risk
10.3.1 Foreign currency risk
The main exchange rate risk of the Company comes from the foreign currency assets and
liabilities held by the Company and its subsidiaries that are not denominated in its functional
currency. The Company bears the foreign exchange risk primarily concerned with USD, JPY,
IDR, EUR, HKD and NTD. Three of the Company’s subsidiaries use foreign currencies for
purchasing and sales, including SCI uses USD for purchasing and sales, SCPDI uses IDR for
purchasing and sales. Other than the three subsidiaries mentioned above, other major business
activities of the Company are priced and settled in CNY.
10.3.1.1 As of December 31, 2023, the main foreign exchange exposure of the Company’s
foreign currency assets and liabilities are as follows (For presentation purpose, the exposures
are presented in CNY and transferred at the spot rate of the balance sheet date):
Items 31 December 2023 31 December 2022
Cash and cash equivalent 126,432,534.81 180,922,873.80
Accounts receivable 202,329,483.53 96,920,556.63
Other receivables 534,297.53 567,689.72
Accounts payable 66,103,441.28 45,588,213.27
Other payables 1,158,796.87 3,077,517.25
200
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
The Company continuously monitors the volume of foreign currency transactions and foreign
currency assets and liabilities to minimize the foreign currency risk. 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.
10.3.2 Interest rate risk
Interest rate risk of the Company primarily arises from its long-term interest-bearing debts,
such as long-term loans and bonds payables, etc. Financial liabilities with floating interest rate
make the Company subject to cash flow interest rate risk, and financial liabilities with fixed
interest rate make the Company subject to fair value interest rate risk. The Company
determines the relative proportion of the fixed interest contracts and floating interest contracts
based on the current market environment.
Finance department of the Company’s headquarter monitors interest rate of the group
continuously. Increase of the interest rate will result in the increase of the cost of new
interest-bearing debts and the interest expense of the unpaid interest-bearing debts with
floating rate, and subsequently lead to significant negative impact on the financial
performance of the Company. The management makes adjustment in accordance with the
update market condition in a timely manner.
11. FAIR VALUE DISCLOSURES
The inputs used in the fair value measurement in its entirety are to be classified in the level of
the hierarchy in which the lowest level input that is significant to the measurement is
classified.
Level 1: Inputs consist of unadjusted quoted prices in active markets for identical assets
or liabilities
Level 2: Inputs for the assets or liabilities (other than those included in Level 1) that are
either directly or indirectly observable.
Level 3: Inputs are unobservable inputs for the assets or liabilities
11.1 Assets and Liabilities Measured at Fair Value at 31 December 2023
Fair value at 31 December 2023
Items
Level 1 Level 2 Level 3 Total
Recurring fair value measurements
(a) Held-for-trading financial assets 470,009,033.34 470,009,033.34
201
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Fair value at 31 December 2023
Items
Level 1 Level 2 Level 3 Total
(i) Financial assets at fair value through profit or loss 470,009,033.34 470,009,033.34
Debt instruments 469,576,233.34 469,576,233.34
Equity instruments
Derivatives 432,800.00 432,800.00
(ii)Financial assets at fair value through profit or loss
Debt instruments
Equity instruments
Derivatives 40,000.00 40,000.00
(b) Investments in other equity instruments 470,049,033.34 470,049,033.34
Total assets measured at fair value on a recurring
basis
Total liabilities measured at fair value on a recurring
basis
11.2 Determination for the Quoted Prices of Fair Value Measurement in Level 2 on a
Recurring or Nonrecurring Basis
The fair value measurement of derivative financial assets is based on the valuation provided
by the bank for the outstanding forward foreign exchange on the balance sheet date; The fair
value of debt instrument investment is measured on the basis of the principal of the structural
deposit that is not due on the balance sheet date and the interest rate agreed with the bank.
12. RELATED PARTIES AND RELATED PARTY TRANSACTIONS
Recognition criteria for related parties: one party controls, jointly controls or exerts significant
influence on the other party, and two or more parties are controlled and jointly controlled by
one party constitute related parties.
12.1 General Information of the Parent Company
Percentage of equity Voting rights in
Registered Nature of the
Name of the parent Registered capital interests in the the Company
address business
Company (%) (%)
202
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Percentage of equity Voting rights in
Registered Nature of the
Name of the parent Registered capital interests in the the Company
address business
Company (%) (%)
Manufactures
STAR COMGISTIC Taiwan and sales
NTD 3,000,000,000.00 42.90 44.68
CAPITAL CO., LTD. (China) electrical
equipment
Note: The ultimate controlling party of the Company is STAR COMGISTIC CAPITAL CO.,
LTD.
12.2 General Information of Subsidiaries
Details of the subsidiaries please refer to Notes 8 INTERESTS IN OTHER ENTITIES.
12.3 Other Related Parties of the Company
Name Relationship with the Company
The company is directly controlled by
Thermaster Electronic (Xiamen) Ltd. the key management and closed family
members
Tsann Kuen Enterprise Co., Ltd. Same actual controller
12.4 Related Party Transactions
12.4.1 Purchases or sales of goods, rendering or receiving of services
Purchases of goods, receiving of services:
Related parties Nature of the transaction(s) 2023 2022
Thermaster Electronic (Xiamen) Ltd. Purchase of goods 27,803,373.75 25,501,621.08
Total 27,803,373.75 25,501,621.08
Sales of goods and rendering of services:
Nature of the
Related parties 2023 2022
transaction(s)
STAR COMGISTIC CAPITAL CO., LTD. Sales of goods 2,899,791.41 8,717,630.50
Thermaster Electronic (Xiamen) Ltd. Sales of goods 1,231.55 29,129.50
203
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Nature of the
Related parties 2023 2022
transaction(s)
Total 2,901,022.96 8,746,760.00
12.4.2 Leases
The Company as lessee:
2023
Rental charges for
Variable lease Interest
short term leases
Type of payments not expense on Increase in
The lessor and leases of low Rental
assets included in the lease right-of-use
value assets payments
measurement of liabilities assets
processed on a
lease liabilities assumed
simplified basis
STAR
COMGISTIC
Property
CAPITAL CO.,
LTD.
(Continued)
2022
Rental charges for
Variable lease Interest
short term leases
Type of payments not expense on Increase in
The lessor and leases of low Rental
assets included in the lease right-of-use
value assets payments
measurement of liabilities assets
processed on a
lease liabilities assumed
simplified basis
STAR
COMGISTIC
Property 586,752.71 39,146.36 -3,209,286.63
CAPITAL CO.,
LTD.
12.4.3 Transfers of assets and debt restructuring
204
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Related parties Nature of the transaction(s) 2023 2022
Tsann Kuen Enterprise Co., Ltd. Sale of fixed assets 15,580.58
STAR COMGISTIC CAPITAL CO., LTD. Sale of fixed assets 35,949.98
Thermaster Electronic (Xiamen) Ltd. Puchase of fixed assets 200,884.95 79,646.02
Total 200,884.95 131,176.58
12.4.4 Key management personnel compensation
Unit: Ten thousand yuan
Item 2023 2022
Key management personnel compensation 415.34 411.30
12.4.5 Other related parties transactions
Related parties Nature of the transaction(s) 2023 2022
STAR COMGISTIC CAPITAL CO., LTD. Quality claim payment 4,293.24 32,196.78
STAR COMGISTIC CAPITAL CO., LTD. Accept service 104,743.56
Tsann Kuen Enterprise Co., Ltd. Accept labor service 40,260.53
Tsann Kuen (Japan) Electric Co., Ltd. Accept labor service 1,462,091.65
Total 1,466,384.89 177,200.87
12.5 Receivables and Payables with Related Parties
12.5.1 Receivables
31 December 2023 31 December 2022
Items Related parties Bad debt Bad debt
Book balance Book balance
provision provision
Accounts STAR COMGISTIC CAPITAL
726,049.84 1,096,717.65
receivable CO., LTD.
Total 726,049.84 1,096,717.65
12.5.2 Payables
Items Related parties 31 December 2023 31 December 2022
205
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Items Related parties 31 December 2023 31 December 2022
Accounts payable Thermaster Electronic (Xiamen) Ltd. 7,328,112.41 5,955,654.84
Total 7,328,112.41 5,955,654.84
13. COMMITMENTS AND CONTINGENCIES
13.1 Significant Commitments
As at 31 December 2023, the Company has no significant commitments need to be disclosed.
13.2 Contingencies
Significant contingencies existing at the balance sheet date:
As of 31st December 2023, The Company has no significant contingencies need to be
disclosed.
14. Events after the balance sheet date
14.1 Profit Distribution
On 9 March 2024, the first Board Meeting of 2024 held by the Company reviewed and
approved the profit distribution plan for 2023. Based on the total share capital of 185,391,680
shares as at the end of 2023, cash dividend of CNY2.50 per 10 shares will be distributed to all
shareholders of the Company (tax included). The profit for distribution of the Company is
CNY 46,347,920.00 The proposal still needs to be approved by the shareholders' general
meeting of the Company.
14.2 Other events after the balance sheet date
Until 9 March 2024 (Report date approved by the Board of Directors), the Company has no
other events after the reporting period need to be disclosed.
15. NOTES TO THE MAIN ITEMS OF THE FINANCIAL STATEMENTS OF THE
PARENT COMPANY
15.1 Accounts Receivable
15.1.1 Accounts receivable by aging
Aging 31 December 2023 31 December 2022
Within 1 year 1,460,836.35 240,067.21
Including: 1 – 90 days 1,460,719.66 219,897.21
206
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Aging 31 December 2023 31 December 2022
91 – 180 days 57.29 20,170.00
181 – 270 days 4.80
271 – 365 days 54.60
1-2 years 20,000.00 9,677.56
2-3 years 9,677.56 110,740.52
Over 3 years 115,740.52 5,000.00
Subtotal 1,606,254.43 365,485.29
Less: Provision for bad debt 33,300.55 31,981.50
Total 1,572,953.88 333,503.79
15.1.2 Accounts receivable by bad debt provision method
31 December 2023
Book balance Provision for bad debt
Category
Provision Carrying amount
Amount Proportion (%) Amount
ratio (%)
Provision for bad debt
recognised individually
Provision for bad debt
1,606,254.43 100.00 33,300.55 2.07 1,572,953.88
recognised collectively
Including: Portfolio by age 1,577,938.02 98.24 33,300.55 2.11 1,544,637.47
Portfolio by related parties 28,316.41 1.76 28,316.41
Total 1,606,254.43 100.00 33,300.55 2.07 1,572,953.88
(Continued)
31 December 2022
Book balance Provision for bad debt
Category
Proportion Provision ratio Carrying amount
Amount Amount
(%) (%)
Provision for bad debt recognised
individually
207
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
31 December 2022
Book balance Provision for bad debt
Category
Proportion Provision ratio Carrying amount
Amount Amount
(%) (%)
Provision for bad debt recognised
365,485.29 100.00 31,981.50 8.75 333,503.79
collectively
Including: Portfolio by age 365,485.29 100.00 31,981.50 8.75 333,503.79
Portfolio by related parties
Total 365,485.29 100.00 31,981.50 8.75 333,503.79
Specific instructions for provision for bad debts:
As of 31 December 2023, accounts receivable with bad debt provision recognised collectively
by aging
31 December 2023 31 December 2022
Aging Book Provision for Provision Provision for Provision
Book balance
balance bad debt ratio (%) bad debt ratio (%)
Not overdue 1,552,309.24 7,761.55 0.50 294,654.84 1,473.27 0.50
Overdue 1 – 30 days 94.01 4.23 4.50 26,634.37 1,198.55 4.50
Overdue 31 – 60 days 18,608.00 3,721.60 20.00
Overdue 61 – 90 days
Overdue more than 90 days 25,534.77 25,534.77 100.00 25,588.08 25,588.08 100.00
Total 1,577,938.02 33,300.55 2.11 365,485.29 31,981.50 8.75
See Note 3.11 for the recognition criteria and instructions for the provision for bad debts by
groups.
15.1.3 Changes of provision for bad debt during the reporting period
Changes during the reporting period
31 December 31 December
Category Recovery or Write-off
2022 Provision 2023
reversal and others
Provision for bad debt
31,981.50 39,318.33 37,999.28 33,300.55
recognised collectively
Total 31,981.50 39,318.33 37,999.28 33,300.55
208
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
15.1.4 Top five closing balances by entity at the reporting date
Proportion of the balance to
Balance at 31 Provision for
Entity name the total accounts receivable
December 2023 bad debt
(%)
Walmart (China) Investment Co., Ltd 1,383,546.24 86.13 6,917.73
Electrolux (China) Electric Co., Ltd. Shanghai
100,000.00 6.23 500.00
Branch
Haoyigou Family Shopping Ltd 50,573.00 3.15 252.87
TsannKuen (Zhangzhou) Enterprise Co., Ltd. 28,316.41 1.76
Suning Procurement Center of
20,418.08 1.27 20,418.08
SUNING.COMCO.,LTD.
Total 1,582,853.73 98.54 28,088.68
15.2 Other Receivables
15.2.1 Other receivables by category
Items 31 December 2023 31 December 2022
Interest receivable
Dividend receivable
Other receivables 3,673,370.28 3,268,524.27
Total 3,673,370.28 3,268,524.27
15.2.2 Other Receivables
15.2.2.1 Other receivables by aging
Aging 31 December 2023 31 December 2022
Within 1 year 3,593,370.28 3,230,581.33
Including: 1 – 90 days 3,592,370.28 3,121,427.22
91 – 180 days 500.00 68,800.00
181 – 270 days 30,000.00
271 – 365 days 500.00 10,354.11
1-2 years 30,000.00 124,851.70
209
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Aging 31 December 2023 31 December 2022
2-3 years
Over 3 years 50,000.00 50,000.00
Subtotal 3,673,370.28 3,405,433.03
Less: Provision for bad debt 136,908.76
Total 3,673,370.28 3,268,524.27
15.2.4.2 Other receivables by nature
Nature 31 December 2023 31 December 2022
Deposit 136,000.00 308,800.00
Due from related parties 1,427,011.05 1,476,761.65
Other current balances 2,110,359.23 1,619,871.38
Subtotal 3,673,370.28 3,405,433.03
Less: Provision for bad debt 136,908.76
Total 3,673,370.28 3,268,524.27
15.2.4.3 Other receivables by bad debt provision method
A. As at 31 December 2023, provision for bad debt of other receivable recognised based on
three stages model:
On December 31,2023, the Company had no bad debt provision in Stage 1.
On December 31,2023, the Company had no bad debt provision in Stage 2.
On December 31,2023, the Company had no bad debt provision in Stage 3.
B. As of 31 December 2022, provision for bad debt recognised based on three stages model:
Stages Book balance Provision for bad debt Carrying amount
Stage 1 3,405,433.03 136,908.76 3,268,524.27
Stage 2
Stage 3
Total 3,405,433.03 136,908.76 3,268,524.27
As at 31 December 2022, provision for bad debt at stage 1:
210
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
12-month
Provision for bad
Category Book balance expected credit Carrying amount Reason
debt
losses rate (%)
Provision for bad debt
recognised individually
Provision for bad debt
3,405,433.03 4.02 136,908.76 3,268,524.27
recognised collectively
Deposit 308,800.00 308,800.00
Due from related parties 1,476,761.65 1,476,761.65
Other current balances 1,619,871.38 8.45 136,908.76 1,482,962.62
Total 3,405,433.03 4.02 136,908.76 3,268,524.27
On December 31,2022, the Company had no bad debt provision in Stage 2.
On December 31,2022, the Company had no bad debt provision in Stage 3.
Basis for the amount of bad debt provisions for the current period:
Note 3.11 for the recognition criteria and instructions for the provision for bad debts by
groups.
15.2.4.4 Changes of provision for bad debt during the reporting period
Stage 1 Stage 2 Stage 3
12-month Lifetime expected Lifetime expected
Provision for loss allowance Total
expected credit credit losses (not credit losses
losses credit-impaired) (credit-impaired)
Balance at 31 December 2022 136,908.76 136,908.76
Balance at 31 December 2022
recognised in the reporting — — — —
period
Transfer to stage 2
Transfer to stage 3
Transfer back to stage 2
Transfer back to stage 1
Provision
211
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial statements
Stage 1 Stage 2 Stage 3
12-month Lifetime expected Lifetime expected
Provision for loss allowance Total
expected credit credit losses (not credit losses
losses credit-impaired) (credit-impaired)
Recovery 136,908.76 136,908.76
Reversal
Write-off
Other changes
Balance on 31 December 2023
15.2.4.5 Other receivables of the top five ending balances collected by the debtor party
Balance as of Proportion of the
Provision
Entity name Nature 31 December Aging balance to the total
for bad debt
2023 other receivables (%)
TsannKuen (Zhangzhou) Related
1,427,011.05 Within 90 days 38.85
Enterprise Co., Ltd.(TKL) party
Tmall supply and marketing
Deposit 50,000.00 Within 90 days 1.36
platform
Xiamen TsannKuen Flagship
Deposit 50,000.00 Over 5 years 1.36
Store Alipay
Xiamen Yishan Sports Current
31,370.10 Within 90 days 0.85
Technology Co., Ltd balances
Tesla Motors Sales & Service Current
26,766.83 Within 90 days 0.73
(Xiamen) Co., Ltd balances
Total 1,585,147.98 43.15
212
TsannKuen (China) Enterprise Co., Ltd. Notes to the financial
statements
15.3 Long-term Equity Investments
15.3.1 Situation of long-term equity investments
31 December 2023 31 December 2022
Items Provision for Provision for
Book balance Book value Book balance Book value
impairment impairment
Subsidiaries 923,414,701.56 923,414,701.56 923,414,701.56 923,414,701.56
Total 923,414,701.56 923,414,701.56 923,414,701.56 923,414,701.56
15.3.2 Investments in subsidiaries
Provision for Provision for
Increase during the Decrease during the
Investees 31 December 2022 31 December 2023 impairment during the impairment at 31
reporting period reporting period
reporting period December 2022
TsannKuen (Zhangzhou) Enterprise Co.,
921,914,701.56 921,914,701.56
Ltd. (TKL)
Xiamen Tsannkuen Property Services
1,500,000.00 1,500,000.00
Co., Ltd. (TKW)
Total 923,414,701.56 923,414,701.56
213
TsannKuen (China) Enterprise Co., Ltd.
Notes to the financial statements
15.4 Revenue and Cost of Sales
2023 2022
Items
Revenue Costs of sales Revenue Costs of sales
Principal activities 5,453,342.54 3,965,398.07 5,021,963.53 3,493,646.19
Other activities 54,211,098.37 32,942,805.50 47,512,766.51 31,448,216.35
Total 59,664,440.91 36,908,203.57 52,534,730.04 34,941,862.54
15.5 Investment Income
Items 2023 2022
Investment income from long-term equity investments under cost
58,215,670.49 69,465,344.64
method
Total 58,215,670.49 69,465,344.64
16. SUPPLEMENTARY INFORMATION
16.1 Extraordinary Gains or Losses
Items 2023 Description
Losses on disposal of non-current assets, including the write-off portion of the
12,195,899.75
provision for impairment of assets
Government grants included in the current profit or loss, except for government
subsidies that are closely related to the company's normal business operations,
comply with national policies and regulations, are enjoyed in accordance with the 3,727,263.16
determined standards, and have a continuous impact on the company's profit and
loss
In addition to the effective hedging business related to the normal operation of the
company, the fair value change gains and losses arising from the holding of
18,116,561.09
financial assets and financial liabilities by non-financial enterprises and the gains
and losses arising from the disposal of financial assets and financial liabilities
Other non-operating income and expenses other than those listed above 5,515,235.74
Other profit or loss items that meet the definition of non-recurring profit or loss 128,459.45
Total non-recurring profit or loss 39,683,419.19
Less: The income tax impact of non-recurring gains and losses 6,566,012.29
214
TsannKuen (China) Enterprise Co., Ltd.
Notes to the financial statements
Items 2023 Description
Net non-recurring gains or losses 33,117,406.90
Less: Net non-recurring gains or losses attributable to minority shareholders 9,385,520.75
Net non-recurring gains or losses attributable to common shareholders of the 23,731,886.15
Company
16.2 Return on Net Assets and Earnings Per Share (‘EPS’)
16.2.1 2023
Weighted average return on EPS
Profit for the reporting period
net assets (%) Basic Diluted
Net profit attributable to ordinary shareholders 8.35 0.47 0.47
Net profit attributable to ordinary shareholders after
6.10 0.35 0.35
extraordinary gains and losses
16.2.2 2022
Weighted average return on EPS
Profit for the reporting period
net assets (%) Basic Diluted
Net profit attributable to ordinary shareholders 9.46 0.51 0.51
Net profit attributable to ordinary shareholders after
7.34 0.39 0.39
extraordinary gains and losses
Name of the Company: Tsann Kuen (China) Enterprise Co., Ltd.
Date: 9 March 2024
215
